Chapter 4 Flashcards
Adjustable Rate Mortgage (ARM)
a mortgage loan that has an interest rate on the note that periodically adjusts based on an index that reflects the cost to the lender. also called variable rate mortgage
Acceleration clause
a clause in loan documents that allows the lender to call the note all due and payable if borrower breaches the terms
Alienation clause
a clause used in a mortgage allowing the lender to demand the full and immediate payment of the mortgage because the owner transferred ownership of the property. Also called due on sale clause
Amortization
payment of debt in regular, periodic installments of principal and interest (as opposed to interest-only payments)
Appurtenances
something that belongs to property and pass with the property, but need not be attached to it (ie. outbuildings, easements). An Appurtenance “runs with the land”
Balloon Payment
a lump sum payment that is due at the end of a note term, because the note used paid only part of the principal and/or interest. Also called partially amortized mortgage
Blanket Mortgage
a single mortgage loan where two or more different parcels of property are offered as security for the loan
Budget mortgage
a mortgage agreement where payments include principal and interest on the loan, plus 1/12 of the year’s property taxes and hazard insurance premiums
CC&Rs
a declaration of covenants, conditions, and restrictions; usually recorded by a developer to create a general plan of private restrictions for a subdivision
Collateral
property pledged as security for a debt
Collateral Lien Document
the interest a creditor may acquire in the debtor’s property to ensure that the debt will be paid . Also called security instrument
Deed of Trust
a three-party security instrument that conveys naked title to a trustee. The borrower, called the truster, has legal title. The trustee has bare legal title. The lender is the beneficiary. In Arizona, a deed of trust is more common than a mortgage because a deed of trust allows the trustee to sell the property if the truster defaults, thereby bypassing the judicial foreclosure procedure (using a power of sale clause). Once the note is repaid the trustee clears the lien agains the property. Also called a trust deed
Defeasance clause
- a clause used to defeat or cancel a certain right upon the occurrence of a specific event, for example, requiring a lender to give a borrower a release of the lien once the loan is repaid. 2. Clause used to give a borrower the right to redeem real estate after default on a note by paying the full amount due plus fees and court costs
Dominant Tenant
a person with easement rights on another’s property; either the owner of a dominant tenement, or someone who has an easement in gross
Dominant Tenement
a person with easement rights on another’s property; either the owner of a dominant tenement, or someone who has an easement in gross
Easement
the non-ownership right acquired by a person to use the land of another for a specific purpose. An easement is irrevocable and creates an interest in the property
Estoppel Certificate
s legal instrument used by a lender so that beyond a certain date, the borrower agrees that the loan balance is correct if no dispute is made; and thus there is no defense to challenge it. This is generally used when a note is sold and so is for the benefit of the investor who buys the note. These may also be used when commercial property is sold and the tenant verify the terms of the lease. Also called Certificate of Ne Defense or Certificate of No Set-Off
Graduated Payment Mortgage
a payment structure that allows the borrower to make smaller payment sin early years of the mortgage, with payments increasing on a scheduled basis at a predetermined point until they are sufficient to fully amortize the loan over the remainder of its term
Hypothecation
the pledging of the property to be the security for a loan without giving up possession of it (as with a mortgage or deed of trust)
Inchoate
incomplete; as an interest in property (ie. a mechanic’s lien that has been filed but not enforced)
Lien
a nonpossessory interest in property, giving a lien holder the right to foreclose if the owner does not pay a debt owed the lien holder
Lienee
a person who has a lien against his or her property; a borrower
Lienor
the person or entity that owns a lien (ie. the lender)
Lis Pendens
a recorded document giving constructive notice of a pending legal action against a specific piece of property
Mechanic’s Lien
a specific lien claimed by someone who performed work on the property (construction, repairs, or improvements) or supplied materials and has not bee paid. also called materialman’s lien
Naked Title
an interest in real property that lacks the usual rights and privileges enjoyed by an owner, for example, that which is held by trustee in a deed of trust. Also called bare legal title
Negative Amortization
an increase in the balance of a loan when payments are not enough to cover the interest
Promissory Note
an instrument that evidences a promise to pay a specific amount of money to a specific person within a specific time frame. A written, legally binding promise to repay a debt.
Servient Tenant
the owner of a servant tenement; that is someone whose property is burdened by an easement
Servient Tenement
property burdened by an easement; the owner of the servient tenement (the servant tenant) is required to allow someone who has an easement (the dominant tenant) to use his property
Writ of Attachment
a recorded legal writ giving the court custody of real property until a creditor’s suit is settled
Writ of Execution
a court order directing the sheriff to seize and sell as much of the defendant’s property as necessary to satisfy the debt and the expense of the title
