Cleaned Glossary (A-G) Flashcards
1031 Exchange
The Internal Revenue Code Section that allows a taxpayer to sell an investment property and purchase another investment property in its place without paying capital gains on the proceeds from the sale. Also called Like-Kind Exchange or Tax-Deferred
Abandonment
Non-payment of taxes.
Absolute Auction
An auction where the property is sold to the highest qualified bidder; there is no minimum bid or reserve or right of confirmation. Also called Without Reserve.
Abstract of Title
A brief, chronological summary of the recorded documents affecting title to a particular parcel of real property.
Acceleration Clause
A contract clause that gives the lender the right to declare all outstanding payments immediately due upon a default by the borrower.
Acceptance
When a party agrees to the terms of an offer to enter into a contract, thereby creating a binding contract.
Accession
The acquisition of title to land by its addition to real estate already owned, through human actions or natural processes.
Accounting
In an agency relationship, the agent’s fiduciary duty to the principal to strictly account for all monies received.
Accretion
A gradual addition to dry land by the forces of nature, as when the tide deposits waterborne sediment onto shoreline property.
Accrued
An accumulation.
Accrued Expense
Item on a settlement statement for which the cost has been incurred, but the expense has not yet been paid. Such expenses are considered to be paid in arrears.
Acknowledgment
Recognition of validity; a document signer’s declaration to an authorized official (usually a notary public) that he is signing voluntarily.
Acre
A measure of land area that is equal to 43,560 square feet. One square mile contains 640 acres.
Actionable Fraud
Fraud that meets certain criteria, so that a victim can successfully sue. The victim must prove the defendant concealed material facts or made false statements (intentionally or negligently) with the intent to induce the victim to enter a transaction, and the victim was harmed by relying on misrepresentations.
Actual Eviction
The legal process of forcing someone off of a property or preventing someone from re-entering the property.
Actual Fraud
An intentional misrepresentation or concealment of a material fact; when a person actively conceals material information or makes statements that he knows are false or misleading.
Actual Notice
Personal knowledge of a fact, rather than knowledge imputed or inferred by law.
Ad Valorem
Latin phrase meaning “according to value,” used to refer to taxes assessed on the value of property.
Adequate Consideration
Consideration that is comparable in value to the consideration the other party to the contract is giving.
Adjustable Rate Mortgage (ARM)
A type of loan structure that permits the lender to periodically change or vary the interest rate charged, based on a standard index.
Administrator
A person appointed by the probate court to manage and distribute the estate of a deceased person when no executor is named in the will or there is no will.
Adverse Possession
The open, notorious, hostile, adverse, exclusive, and continuous possession of another person’s property for a statutory number of years, after which time the adverse possessor may seek to obtain title to the property.
Advertisement
A public notification in any type of media featuring property for sale or rent or marketing brokerage services; must follow guidelines of federal, state, and local fair housing laws.
Affidavit of Title
A statement, sworn in front of a notary public or other authorized official, by the seller or grantor of property that identifies the grantor, identifies the grantor’s marital status, and certifies that the grantor has no new judgments, liens, divorces, unrecorded deeds, or other potential title defects since the title examination was completed. It also certifies that the grantor is indeed in possession of the property.
Affiliated Business Arrangement (AfBA)
A situation where a person in a position to refer settlement services—or an associate of that person—has either an affiliate relationship with or a direct or beneficial ownership interest of more than 1% in a provider of settlement services and who then refers business to that provider or in some way influences the selection of that provider.
Agency
A relationship of trust created when one person (the principal) gives another person (the agent) the right to represent the principal in dealings with third parties.
Agency Coupled with an Interest
A situation in which the agent has a personal interest in the subject of the agency, as when one co-owner has been authorized by the others to sell their property.
Agent
A licensed broker who represents another (the principal) in a real estate transaction; a person authorized to represent the principal in dealings with third parties (clients or customers).
Aggregate Rent
The total rent for the full term of the lease.
Air Rights
The right to undisturbed use and control of the airspace over a parcel of land (within reasonable limits for air travel); may be transferred separately from the land.
Alienation
The transfer of ownership or an interest in property from one person to another, by any means.
Alienation Clause
A mortgage clause allowing the lender to demand the full and immediate payment of the mortgage because the owner transferred or pledged to transfer ownership of the property. Also called Due on Sale Clause.
Allodial System
The system of land ownership that allows anyone to own land.
Alluvion
Solid material deposited along a shore by accretion. Also called Alluvium.
Amenity
A tangible or intangible feature that enhances or adds value to real estate.
Amenity Purchaser
A person who values a property based on its ability to fulfill their specific business needs or use, unlike investors who value a property based primarily on its investment return.
American Land Title Association (ALTA)
A national association of title companies, abstractors, and attorneys. Members agree to promote uniformity, quality, and professional standards in title insurance policies. Policies issued by ALTA members follow specific guidelines.
Americans with Disabilities Act (ADA)
A wide-ranging federal civil rights law, signed in 1990, that prohibits, under certain circumstances, discrimination based on disability.
Amortization
Occurs when a loan balance decreases because of periodic installments paid on the principal and interest.
Amortized Loan
A financial debt that is paid off over a period of time by a series of periodic payments. A loan can be fully amortized or partially amortized requiring a balloon payment to satisfy the debt at the end of the term.
Amperage
Amount of electricity going through electric wires, measured in amperes (amps).
Anchor Tenant
Major department or chain store strategically located at shopping centers to give maximum exposure to smaller satellite stores. A center may have several anchor tenants. Also called Magnet Store.
Annexation
Attaching personal property to land so that it becomes a fixture and the law views it as part of the real property.
Annexation, Actual
The process of physically attaching personal property to land, causing it to be a fixture.
Annexation, Constructive
Personal property associated with real property in such a way that the law treats it as a fixture, even though it is not physically attached to the real property.
Annexer
A person who owns an item as personal property and brings it onto real property, making it a part of the real property.
Annual Percentage Rate (APR)
Relationship between the total cost of borrowing and the amount financed, represented as a percentage. Also called Effective Rate of Interest.
Anticipation
An economic principle that says value is created by the expectation of future benefits, such as profit on resale, pleasure, tax shelter, production, income, etc. Anticipation is the foundation of the income approach.
Anticipatory Repudiation
When one party to a contract informs the other before the set time of performance that he or she doesn’t intend to perform as agreed. The other party may immediately file a lawsuit for breach of contract without making a tender offer. Also called Anticipatory Breach.
Antitrust
An area of federal law concerned with maintaining competition in private markets by prohibiting unlawful restraint on trade.
Appraisal
A professional estimate or opinion of the value of a piece of property (parcel of land), as of a certain date, that’s supported by objective data.
Appraisal Foundation
Nonprofit organization recognized as the authority for professional appraisal standards.
Appraisal Management Company (AMC)
An entity that, for compensation, acts as a third party intermediary by contracting with independent real estate appraisers to perform appraisals for lenders.
Appraiser
A person who estimates the value of property, especially an expert qualified to do so by education and experience.
Appreciation
The increase in value of an asset over time.
Appropriative Rights
Water rights allocated by government permit, according to an appropriation system. It is not necessary to own property beside the body of water in order to apply for an appropriation permit.
Appurtenance
A right that goes along with ownership of real property; usually transferred with the property but may be sold separately.
Arbitration
An alternative to a court proceeding where the parties agree to submit facts and evidence to an impartial third party for a decision.
Area Variance
Entitles landowners to use land in a way that is typically not allowed by the dimensional or physical requirements of the zoning law.
Length Transaction
A transaction that occurred under typical conditions in the marketplace, with each party acting in their own best interest.
As of Right Zoning
A property owner’s right to use or develop the property if the proposed use accords with the zoning by-laws.
Asbestos
A fibrous material that was once common in many building materials because of its insulating and heat-resistant properties; can cause breathing issues and illness when particles are inhaled.
Ascending Bid
An auction method where the bidding starts low and the auctioneer asks for more, allowing buyers to bid more until the item is sold to the highest bidder.
As-Is Clause
A statement in a contract that indicates the property is being sold without warranty in its present condition at the time of the contract.
Assemblage
The act of combining two or more parcels of land into one larger parcel.
Assessed Value
The value placed on a property by a taxing authority for the purpose of taxation.
Asset
An item of economic value owned by an individual, especially those that can be converted to cash.
Asset Class
A grouping of investments that have similar characteristics and are subject to the same laws and regulations.
Assignment
The transfer of rights or interests under a contract to another party.
Assignment of Mortgage
A situation in which the lender (mortgagee) transfers its rights under the agreement to another party (assignee), who receives the right to enforce the agreement’s terms against the borrower (mortgagor).
Assistance Animal
An animal that provides emotional or physical support to an individual with a disability, lessening the effects of the disability. Also called Emotional Support Animal.
Association Fees
Monthly dues collected by homeowners associations from property owners to pay for common area expenses such as utilities, management, building maintenance, hazard and liability insurance, and amenities.
Assumable Loan
A financing arrangement in which a borrower transfers their outstanding loan and its terms to a subsequent buyer; requires the approval of the lender.
Assumption
When one party takes over the payments and primary liability for the loan of another party; usually lender approval is needed. A release is needed; without one, the original party remains secondarily liable for the loan.
Attachment Lien
A lien acquired on property by a creditor in order to prevent property transfer pending the outcome of litigation.
Attestation
The act of witnessing a person’s signing of an instrument by a notary public.
Attorney-In-Fact
A person specifically designated in an instrument (e.g., power of attorney) to act on behalf of another, but not necessarily authorized to practice law.
Attorney’s Opinion of Title
A statement issued by an attorney after analyzing an abstract as to the quality of the title.
Attornment
An act in which tenants acknowledge their obligations to a new landlord.
Auctioneer
A person licensed or authorized to conduct a public auction of item(s) belonging to someone else. In some states, auctioneers selling real property must be licensed as real estate brokers, whereas in others they must be licensed auctioneers.
Automated Clearinghouse (ACH)
A settlement system used for financial transactions by U.S. commercial lenders; a nationwide network to exchange paperless payments among financial institutions and government agencies.
Automated Underwriting
A computerized evaluation of a borrower’s creditworthiness, based on statistical models.
Avulsion
A natural process in which land is removed from one person’s property and deposited onto another’s. Avulsion happens very suddenly, as in a flash flood.
Backup Offer
An offer made and accepted, after another offer has been accepted, that is contingent on the failure of the first contract.
Bad Title
Title with defects making it unmarketable.
Bait and Switch
A deceptive sales technique that involves advertising to a consumer a particular product, service, or rate, then persuading the consumer to accept something else.
Balance (Four Factors of Production)
The right mix of capital, entrepreneurship/management, labor, and land that results in the best return on investment from land (remember: C-E-L-L).
Balance Sheet
A financial statement (such as a property management report) that lists assets, liabilities, and ownership equity at a specific moment in time.
Balloon Framing
A technique of framing where the long vertical pieces (studs) are installed in a continuous piece from foundation to roofline.
Balloon Payment
A lump-sum payment made at the end of a loan term to pay off the remaining balance of principal and interest that was not covered by payments during the loan term.
Bankruptcy
A court process that cancels some debt and provides some relief for creditors.
Bargain and Sale Deed
A type of deed that implies that the grantor owns the property and has the right to convey it, but there are no warranties that go with it.
Base Rent
The minimum amount of rent indicated in a lease.
Base Year
A period for determining a property’s actual operating expenses, typically over the first year of a lease term, which is used as the point of reference against which increases in subsequent years are compared and then passed on to the tenant.
Baseline
The principle east-west line (i.e., a parallel) upon which all rectangular surveys in a defined area are based.
Basic Sector
The segment of a local economy that is made up of businesses and industries that bring income into the local economy by selling goods or services to consumers outside the community.
Basis Point
One hundredth of one percent, used chiefly to express differences in interest rates.
Beam
A long piece of timber or metal that spans an opening or part of a building and provides support to a roof or floor above it. Beams are installed horizontally.
Benchmark
A bronze disk permanently placed and precisely identified by government survey teams.
Beneficiary
One who receives a benefit; in real estate, the lender in a trust deed.
Bilateral Contract
A contract in which both parties make a binding promise to the other.
Bill of Sale
A document used to transfer ownership of personal property from one person to another.
Binder
A non-binding document used to communicate the terms of a buyer’s offer to purchase property; serves as a blueprint for creating a purchase agreement.
Biweekly Payment Plan
A fixed-rate mortgage set up like a standard 30-year conventional loan, but payments are made every two weeks instead of every month.
Blanket Mortgage
A mortgage loan that covers more than one parcel of real estate, usually used to finance entire subdivision developments rather than an individual unit or lot.
Blind Advertisement
A real estate advertisement used by a licensee regarding the sale or lease of real estate or of licensed activities that does not include the broker’s name or business name. Prohibited in most states.
Blockbusting
The illegal practice of inducing owners to sell their homes (often at a deflated price) by suggesting the ethnic or racial composition of the neighborhood is changing, with the implication that property values will decline as a result. Also called Panic Selling or Panic
Blue Sky Laws
State laws regulating the sale of securities; intended to protect consumers from fraud.
Blueprint
A detailed diagram, usually created by an architect, which is used to evaluate design, determine feasibility, and guide the construction of a structure.
Boilerplate
Standardized language used in contracts for the sake of efficiency and completeness.
Book Value
The value of an asset, such as real estate or equipment, as indicated in the company’s financial records (may differ from market value).
Boot
Extra, non-like-kind property that can be a part of a like-kind exchange to make up for pricing disparity between like-kind properties.
Bounds
Refers to boundaries; used with the word “metes” in the metes and bounds method of land description.
Boycott
A concerted refusal by two or more people to deal with a particular person or company.
Breach
Violation of an obligation, duty, or law.
Breach of Contract
An unexcused failure to perform according to the terms of a contract.
Breach of Trust
The failure by someone entrusted with care or property of others to discharge the duties imposed on them under the terms of an agreement or other obligation; may be malicious or due to negligence or carelessness.
Breakdown Method
Estimating physical depreciation by estimating all items of depreciation individually and then adding the individual estimates together and deducting the sum from the estimated reproduction or replacement cost.
Bridge Mortgage
A mortgage loan that occurs between the termination of one mortgage and the commencement of another. When the next mortgage is taken out, the bridge is repaid.
British Thermal
Unit (BTU) The amount of heat needed to raise the temperature of one pound of water by one degree Fahrenheit; used to measure the capacity of furnaces and air- conditioning units.
Broker
A real estate licensee with several years of experience who has received advanced training and passed a broker exam.
Broker Price
Opinion (BPO) The estimated value of a property as determined by a real estate licensee or other qualified individual, often done at the request of a lender for non-federally related property transactions.
Broker Protection Clause
A provision in an agency agreement that entitles the broker to a commission if the property is sold during a certain time period after the agency agreement expires. Also called Carryover Provision or Extender Clause.
Brokerage
A firm with real estate licensees who may be retained by consumers to negotiate the purchase, sale, and lease of real property
Broker -Dealer
A person or organization that engages in the business of trading securities, such as stocks and bonds, for its own account or on behalf of its customers.
Brownfield
A former industrial or commercial site where future use is affected by real or perceived environmental contamination.
Budget Mortgage
A mortgage agreement where payments include principal and interest on the loan, plus 1/12 of the year’s ad valorem property taxes and hazard insurance premiums.
Buffer Zone
A means by which planners use space to separate two adjoining districts which have incompatible uses. A buffer zone consists of uses that are compatible with uses in each adjoining district.
Building Code
A set of regulations, written by city or county officials with the help of construction professionals, that governs design and construction standards and requires builders to use particular methods and materials.
Building Department
An agency responsible for issuing building permits and seeing that building codes are followed and that construction and renovations are performed by licensed professionals.
Building Efficiency
The ratio of usable square footage to rentable square footage.
Building Inspection
A process whereby local government officials ensure compliance with state and local building codes.
Building Permit
An official document from a local government or other authority that allows a construction or remodeling project to proceed.
Bump Clause
A provision in a purchase agreement that allows the seller to keep the property on the market while the prospective buyer’s purchase is contingent on the sale of the buyer’s property.
Bundle of Rights
All real property rights that are conferred with ownership, including the right of possession, right of quiet enjoyment, right of disposition, right of exclusion, and right of control. Also called Bundle of Sticks.
Buyer Agency Agreement
An employment contract between a buyer and a broker that grants the broker the right to represent the buyer in the purchase of property and stipulates the terms under which the broker will be compensated. Also called Buyer Broker Agreement.
Buyer’s Agent
A real estate licensee who represents the interests of the buyer of a property.
Buyer’s Choice
A type of auction for multiple parcels where the winning bidder gets to select which of the parcels they want.
Buyer’s Market
A situation in the housing market where there are many homes available for sale, but few people looking to buy.
Buyer’s Premium
A compensation structure in which the winning buyer at an auction pays the auctioneer/auction company, generally a percentage of the high bid in addition to the bid amount.
Bylaws
Homeowners association rules and regulations that govern property owners’ activities, including rules for elections and voting, and frequency of board of directors’ or shareholders’ meetings.
Cancellation
Termination of a contract without undoing acts that have been performed under it; can be done without going to court.
CAN-SPAM Act
A federal law enacted to limit unsolicited commercial email and text messages, requiring senders to provide an opt-out option.
Cap
The maximum increase in the interest rate, or the maximum interest rate, that a lender can charge on an adjustable-rate mortgage.
Capital Expense
A cost incurred to improve a property with the expectation of long-term benefits; an investment in the business of the property. Also called Reserves for Replacement.
Capital Gain
Profit made from an investment.
Capitalization
Used in the income approach to value. To capitalize income means to convert future income into present (current) value.
Capitalization Rate
The rate of return considered to be a reasonable return on investment given the risk.
Carbon Monoxide
A colorless, odorless gas that is a natural byproduct of fuel combustion and is dangerous when inhaled.
Cash Flow
A measure of the money being transferred into and out of an investment, calculated as net operating income minus debt service.
Cash to Close
The amount of money a buyer must bring to settlement to close the transaction after all credits and debits have been reconciled.
Cash Return
The yield of an investment expressed as a percentage by dividing the investment’s cash flow by the total amount expended to acquire the property.
Caveat Emptor A
Latin phrase meaning “Let the buyer beware;” implies that a purchaser is expected to examine property carefully instead of relying on seller disclosures.
CC&Rs
A declaration of covenants, conditions, and restrictions; usually recorded by a developer to create private restrictions for a subdivision or condominium community.
Cease and Desist Order
An administrative agency directive to stop an offending activity.
Ceiling
The maximum increase or decrease in the periodic payment allowable over the life of an adjustable-rate mortgage. Also called Lifetime Cap.
Ceiling Height
The height in feet from the floor to the steel girders. Also called Feet Under
Certificate of
Eligibility (COE) A document issued by the Department of Veterans Affairs to establish status and amount of a veteran’s eligibility to qualify for a loan guarantee.
Certificate of Occupancy
A document issued to builders after all inspections have been made and the property is deemed fit for livability by meeting the appropriate standards for health and safety.
Certificate of Permanent Location
A document recorded in the county in which a manufactured home has been permanently affixed to real property with common ownership between the land and the home.
Certificate of Purchase
A document that is given to the winning bidder of a real estate tax or foreclosure sale. Once the sale is confirmed, a deed will be issued to convey title.
Certificate of
Title 1. A document prepared by an attorney, title company, or title abstractor stating their opinion of the status of the title to a piece of property after performing a title search and reviewing the public records. Also called Opinion of Title. 2. A document proving ownership of a vehicle.
Chain of Title
The chronological succession of changes in ownership of a piece of property from one owner to the next, as disclosed in the public record.
Change
A principle of value that says all factors that influence real estate—physical, economic, governmental, social (P-E-G-S)—are constantly changing and, thus, property value itself is subject to constant change as well.
Chant
The way in which an auctioneer verbally communicates to engage and inform prospective bidders, indicating the current bid and the desired bid.
Charrette
An intense work effort in which a team of design professionals across multiple disciplines works with community stakeholder participants within a highly focused, compressed timeframe to develop a plan.
Chattel
A piece of personal property.
Chattel Mortgage
A loan that uses only personal property as security.
City Planning
The effort on the part of the city to coordinate, direct, and control the type of development taking place so as to ensure maximum benefits to the populace.
Civil Rights
Fundamental rights guaranteed to all persons by the law, primarily in reference to constitutional and statutory protections against discrimination based on protected class status.
Civil Rights
Act of 1866 A federal law prohibiting discrimination based on race and color against all native-born Americans in all property transactions (personal, commercial, residential), without exception.
Clearspan
Open distance between inside faces of support members.
Client
A person being represented by a licensee. Also called Principal.
Closing
The transfer of real property ownership from seller to buyer, according to terms and conditions in a purchase agreement or escrow instructions; the final stage in a real estate transaction. Also called Settlement.
Closing Costs
The expenses incurred and paid at the time of settlement in the transferring of property.
Closing Disclosure
A standardized document that presents a final, detailed accounting for a real estate transaction, listing each party’s debits and credits and the amount each will receive or be required to pay at closing; required for all RESPA-related transactions. Also called Settlement Staement
Cloud on the Title
A claim, encumbrance, or defect that could place the title to real property in question, reducing its marketability.
Cluster Zoning
A method that allows developers to provide a varied selection of lot sizes and housing choices within a single area.
Code of Ethics
A set of principles and standards based on core values by which a group of professionals are expected to conduct themselves.
Insurance
A common clause or provision in building insurance policies under which the insured agrees to maintain insurance on their property in an amount equal to at least 80% of the replacement cost. If the property is not insured to that amount and a loss is incurred, the insurance company will make the insured share in the loss on a pro–rata basis.
Cold Calling
The practice of making unsolicited phone calls to possible customers with whom there is no prior relationship or inquiry.
Collateral
Property pledged as security for a debt.
Collusion
Secret agreement or cooperation among people, especially for deceitful or fraudulent purposes.
Combined
Loan-to-Value (CLTV) The relationship between the unpaid principal balances of all mortgage loans and the appraised value or sales price, whichever is lower, of the property.
Commercial Banks
The largest financial intermediaries directly involved in the financing of real estate. Their primary real estate activity involves short–term loans.
Commercial Property
Property zoned and used for business purposes, such as warehouses, restaurants, and office buildings (as distinguished from residential, industrial, or agricultural property). Commercial residential property has five or more units.
Commingling
Illegally mixing personal or business funds with money held in trust on behalf of a third party.
Commission
Compensation paid to a broker for services in a real estate transaction; usually a percentage of the sales price. Commission is negotiable and should be clearly spelled out in a written brokerage agreement.
Commission Association Manager
Provides a large range of services for communities, typically tailoring those services to the needs of an individual community.
Common Area
Maintenance (CAM) All costs incurred in maintaining the common areas of a commercial property, including parking lot sweeping and repair, snow removal, common utilities, landscaping, and other maintenance tasks. CAM costs are usually prorated among all tenants.
Common Areas
The land and improvements in a condominium or cooperative that all residents use and own as tenants in common, such as the parking lot, hallways, and recreational facilities.
Common Interest Ownership
A situation where individual ownership (fee simple) and group ownership (tenants in common) are present in the same community subject to an owners association.
Common Law
Law that has developed over many years through court decisions and other precedents.
Community Property
In some states, property acquired during marriage that is owned jointly by the married couple.
Comparables
Recently sold properties with similar characteristics (size, room count, design, utility, etc.) that are in close proximity to the property being valued. Also called Comps.
Comparative Unit Method
A method for determining the replacement cost of a building based on the cost of recently built comparable buildings.
Compensation
Valuable consideration given by one person or entity to another person or entity in exchange for the performance of some activity or service.
Compensatory Damages
An award of damages intended to compensate a plaintiff for harm caused by the defendant’s act or failure to act, including personal injuries, property damage, and financial loss.
Competency
The ability to do something successfully or efficiently.
