Cleaned Glossary H-St Flashcards
Habendum Clause
A clause in a deed, usually beginning with “to have and to hold,” that describes the type of estate granted.
Half Timbering
A construction method in which the external walls have exposed wood framing constructed of timber frames, with other materials such as plaster or brick filling the space between them.
Have
The part of the auctioneer’s chant that indicates the current bid. (“I have 50, who’ll give me 60?”)
Heat Pump
A combination heating and cooling system consisting of compressors, refrigerants, blowers, and ducts.
Heterogeneity
A characteristic of real property; each piece of land, each building, and each house is a unique piece of real estate. Also called Uniqueness.
Highest and Best Use
The most profitable, legally permitted, feasible, and physically possible use of a piece of property.
Holder in Due Course
One who acquires a negotiable instrument in good faith and for consideration, and thus has certain rights above the original payee.
Holdover Tenant
A lessee who remains in possession of property after the lease has expired; a tenant who refuses to surrender possession of property at the tenancy’s end.
Home Acquisition Debt
A loan that a taxpayer takes out to buy, build, or substantially improve a qualified home.
Home Energy Rating System (HERS)
A measurement of a home’s energy efficiency used primarily in the United States; in the HERS Index, the higher the score, the less energy efficient the home is.
Home Equity Debt
A loan that does not qualify as home acquisition debt but is secured by a qualified home.
Home Equity Line of Credit (HELOC)
Available money that a homeowner can borrow, secured by a second mortgage on the principal residence. The homeowner can access HELOC funds at any time up to a predetermined borrowing limit and use them for non-housing expenditures.
Home Equity Loan
A loan taken by a homeowner that is secured by a mortgage on their principal residence.
Home Inspection
An unbiased, systematic, noninvasive, visual inspection of the physical structure and systems of a home.
Home Inspection Report
A written report that a home inspector issues after a home inspection detailing issues found.
Home Warranty
A contract between a homeowner and a home warranty company that provides coverage for the covers repair or replacement of named components of the home for a specified period of time, such as one year.
Homeowners Association (HOA)
A nonprofit association composed of homeowners in a subdivision, responsible for enforcing the subdivision’s CC&Rs and managing other community affairs.
Homestead
A statutory or legal life estate recognized in some states that protects the interests in real estate belonging to a deceased person for the use of a surviving spouse and minor children.
Horizontal Property Acts
A generic name given to state laws that create the legal framework that allows a condominium form of ownership. These acts make it possible for lenders to provide mortgages on condominiums, for tax authorities to assess property taxes, etc.
Hot Water or Steam System
A type of heating system consisting of boilers, pipes, and radiators.
Housing Expense Ratio
The relationship of a borrower’s total monthly housing expense to gross monthly income, expressed as a percentage (Total Housing Expense ÷ Income = Ratio%). Also called Income-to-Payment Ratio or Front-End Ratio
HVAC
Heating, ventilation, and air conditioning.
Hypothecation
The act of pledging property to be the security for a loan without giving up possession of it, as with a mortgage.
Illegal Flipping
A scheme in which property is purchased at a low price, appraised at an inflated value without justification, and resold at the higher price.
Illegal Per Se
Something deemed unlawful on the face of the evidence, without need to consider context or intent; generally made so by a statute, constitution, or case law.
Illiquidity
The difficulty of converting an asset to cash.
Immobility
A physical characteristic of real estate referring to the fact that it cannot be moved from one place to another.
Implicit Bias
The attitudes or stereotypes that affect our understanding, actions, and decisions in an unconscious way, making them difficult to control.
Implied Agency
An agency relationship created through the behavior (actions or words) of one or both parties.
Implied Contract
An agreement that hasn’t been put into words but is implied by actions of one or both parties.
Implied Warranty of Habitability
The lessor’s implicit promise that the premises comply with building codes and health and safety regulations and are otherwise safe for occupancy.
Improvement
A substantial, manufactured addition to real property, such as a building.
Imputed Knowledge
The legal concept that information communicated to the agent has been communicated to the principal, i.e., notice to the agent is notice to the client.
Incentive Zoning
A system by which developers receive zoning incentives on the condition that they provide specific physical, social, or cultural benefits to the community.
Incidental Authority
The authority to do everything reasonably necessary to carry out the principal’s express orders.
Income Approach
An appraisal method in which an opinion of the value of real property is derived by analyzing the amount of revenue the property generates or could generate.
Income Approach
An appraisal method that estimates the value of real estate by analyzing the amount of revenue, or income, the property currently generates, or could generate. Also called Capitalization Approach.
Income Statement
A report that details the income (e.g., in a property management report, the rent and any other income) and expenses associated with an investment over a specific period of time. Also called Profit and Loss Statement.
Increasing and Decreasing Returns
Economic principle stating the addition of more factors of production will add higher amounts to new income up to a certain point, which is the point where the maximum value of the asset has been reached; any further addition of factors of production will do nothing to increase the value.
Incurable Depreciation
Elements of a structure which are neither physically possible nor economically feasible to correct.
Independent Contractor
A term often erroneously applied to real estate licensees who are actually self-employed individuals under the supervision of their brokers (statutory non- employees, in IRS terms).
Indestructibility
A characteristic of real estate; land can’t be destroyed.
Index
A statistical report that is generally a reliable indicator of the approximate change in the cost of money; often used to adjust the interest rate of adjustable rate mortgages.
Index Lease
A lease in which the amount of the rent is tied to some common index indicator, such as the Consumer Price Index or the Wholesale Price Index. As the agreed-upon index increases, the rent goes up by the same percentage of change.
Index Method
A method for determining the cost of a building by taking its original cost and multiplying that number by an index factor based on how long ago the building was constructed.
Index Mortgage
A fixed-rate mortgage with payments that increase by a predetermined amount, with the increased payment amount applied to principal reduction.
Inflation
An increase in the cost of goods or services.
Inheritable
An interest in land that can be passed to a relative upon the death of the owner.
In-House Transaction
A situation in which a single brokerage represents both the buyer and seller in the same real estate transaction.
Injunction
A court-ordered prohibition against a particular act, as opposed to a judgment for money. Also called Injunctive Relief.
Injunctive Relief
A court-ordered prohibition against a specific act or conduct, as opposed to a judgment for money. Also called Injunction.
Inquiry Notice
When circumstances should have alerted someone to a possible problem prompting further investigation, a person may be held to have had notice of the problem even if they do not have actual knowledge of it.
Inspection Contingency
A purchase contract clause giving a buyer the right to have the home inspected during a specified period of time and to terminate the agreement should the inspection turn up issues the buyer and seller are unable to negotiate.
Inspection Period
The period specified in the purchase agreement during which the buyer has the opportunity to conduct an inspection.
Insulation
A material that is used to slow the flow of heat, moisture, shock, or sound.
Insurable Title
Title to property that a title insurance company has agreed to insure against defects that could affect its ownership or value of the property.
Insurance Value
The amount for which an owner can insure a property; usually only the replacement cost of the structure, disregarding any value for the land.
Interest Rate
The cost of using money expressed as a percent per period.
Intermediation
The flow of deposits into lending institutions that creates a mortgage money supply.
Interstate Land Sales Full Disclosure Act
A federal law that protects consumers from fraud and abusive marketing practices in the sale and lease of land through interstate commerce.
Intestate
The state of dying without making a will, causing the decedent’s estate to pass on according to the state laws of descent and distribution.
Invalid
Without legal force.
Inventory
The number of available homes on the market listed as active or pending.
Investment Value
The value of a property to a particular investor based on that investor’s specific investment expectation and criteria.
Involuntary Alienation
When title to property is transferred during the owner’s lifetime without the owner’s consent.
Involuntary Lien
A lien that arises by operation of law, without the consent of the property owner.
Irrevocable
Not capable of being changed or terminated.
IRS Form 1099-S
A report indicating the seller’s proceeds from the sale or transfer of real estate that a settlement officer submits to the Internal Revenue Service.
IRV Formula
A simple calculation for finding the net operating income (I), the capitalization rate (R), or the value (V) of an investment property. When any two factors are known, the third can be determined. Also called Capitalization Rate Formula.
Joint Tenancy
A form of co-ownership in which the co-owners have equal undivided interests and the right of survivorship. Requires the unities of time, title, interest, and possession.
Joint Venture
Two or more individuals or companies joining together for one project or a series of related projects, but not as an ongoing business.
Joists
Long beams of wood or steel that span the perimeter a foundation or the load-bearing walls of a roof.
Judgment Lien
A recorded claim against another for a wrongful act, as ordered by a court (often for money owed). The result of a judgment lien can be the forced public sale of real estate.
Judicial Foreclosure
A lawsuit filed by a lender or other creditor to foreclose on a mortgage or other lien; a court-ordered sheriff’s sale of the property to repay the debt.
Jumbo Loan
A loan that exceeds the maximum loan amount that Fannie Mae and Freddie Mac will buy, making it nonconforming.
Junior Lien
An encumbrance that is second in priority to a previously recorded lien or to a lien to which the encumbrance has been subordinated.
Junk Fees
Charges assessed to a borrower by the loan originator that serve little if any function and are often hidden in the mortgage documents. Junk fees may or may not pay for an actual service to the borrower, but they typically are not known to the borrower prior to signing.
Just Compensation
Generally, the fair market value for property; a requirement when the government exercises its constitutional power of eminent domain.
Kickback
Fee or other compensation given as undisclosed commission for business referrals.
Kickbacks are prohibited by
RESPA.
Laches
The loss of a right through undue delay or a failure to assert.
Land
The surface of the earth, everything under the ground to the center of the earth, and everything over the earth into the air (allowances for air traffic).
Land Contract
A real estate installment agreement under which the buyer (vendee) makes payment to the seller (vendor) in exchange for the right to occupy and use the property. No deed or title is transferred until all, or a specified portion of, payments have been made. Also called Agreement for Sale, Installment Sales Agreement, Contract for Deed, or Land Sales
Land Lease
A lease under which the tenant leases the land from the owner, but the tenant owns the building. Also called Ground Lease.
Land Trust
A trust in which real estate is the only asset. The beneficiary has the right to possess the property as well as receive income or proceeds from its sale. The trustee manages the real estate as directed by the beneficiary; however, they are usually the same person.
Landlocked
A parcel that is completely shut in by adjoining parcels of land with no access to public roads.
Latent Defect
A flaw that is not visible or apparent; a hidden defect that would not be discovered in a reasonably thorough inspection of property.
Lawful and Possible Objective
The requirement that a contract’s terms not be illegal or impossible.
Lead
A bluish-white metal added to both exterior and interior paint as a drying agent and for pigmentation before 1978. Also, once used for pipes in plumbing systems in homes and businesses; can cause health issues, especially for children.
Lead
A person who has shown interest in a real estate service. Also called Prospect.
Lease
A contract in which one party pays the other rent in exchange for possession of real estate; also a conveyance of a leasehold estate from the property owner to a tenant.
Lease Purchase
A bilateral contract in which a tenant pays rent for temporary possession but is obligated to complete the purchase at some point in the future.
Lease with Option to Buy
A unilateral contract in which a tenant pays rent for temporary possession and also receives the option to purchase the property at some point in the future.
Leased Fee Estate
The owner’s interest in a leased estate, which is reversionary because possession reverts to the property owner (lessor) when the lease ends.
Leasehold Estate
The temporary interest that an owner gives to a tenant (lessee) that includes the right of possession and quiet enjoyment, without title. Also called Less-Than-Freehold
Leasehold Improvement
A fixture attached to real property by a landlord for the use of a tenant.
Legal Description
A precise description of a specific piece of property; the most common systems are lot and block, metes and bounds, rectangular (or government) survey.
Legal Title
The interest in property held by the rightful owner; the seller’s interest in property under a land contract.
Lessee
A person who leases property; a tenant.
Lessor
A person who leases property to another.
Leverage
Using borrowed money to increase a return on investment.
License
Revocable, non-assignable permission to enter another person’s land for a stated purpose.
Licensed Assistant
Someone who is licensed and chooses to be a personal assistant on a real estate team.
Licensed Residential Appraiser
An appraiser who may accept assignments to appraise one- to four-unit residential properties with some limitations on complexity and the transaction value.
Licensee
A person licensed under state law to practice real estate.
Lien
A non-possessory interest in property, giving a lienholder the right to foreclose if the owner does not pay a debt owed the lienholder.
Lien Theory State
A state in which real estate loans are regarded as liens and title remains with the lender.
Life Estate
An interest in real property, the duration of which is limited by the life of its owner or another designated person.
Life Estate Pur Autre Vie
A life estate where the measuring life is someone other than the life tenant. Pur autre vie translates for another’s life.
Life Tenant
Someone who owns a life estate; the person entitled to possession of the property during the measuring life.
Limited Common Areas
Areas in a condominium or cooperative which are owned by all, but used by only one owner (e.g., a balcony or designated parking space).
Limited Liability Company (LLC)
A legal entity that blends the characteristics of a corporation and limited partnership, offering its members the advantage of reduced personal liability (like a corporation) and a choice of how the business will be taxed.
Limited Partnership
A partnership composed of one or more general partners who run the business and one or more limited partners. Limited partners have no say in partnership matters and their liability is limited to their investment.
Limited Warranty Deed
A deed in which the grantor warrants title only against defects arising during the time they owned the property and not against defects arising before their ownership. Also called Special Warranty Deed.
Linear Feet
The total length in feet around a perimeter. For example, a 20-foot x 30-foot garden will take 100 linear feet of fencing (20 + 30 + 20 + 30 = 100).
Liquidated Damages
A sum of money that the parties to a contract agree to in advance that will serve as compensation in the event of breach. Often, it’s the forfeiture of the earnest money deposit in purchase contracts.
Liquidation Value
The value of a property if sold under duress or in a must-sell situation with less than typical market exposure.
Liquidity
The ability to convert an asset into cash quickly without the loss of principal.
Lis Pendens
A recorded notice stating that there is a lawsuit pending that may affect title to the defendant’s property.
Listing Agreement
A written agency contract between a seller and a broker, stating that the broker earns a commission for finding (or attempting to find) a buyer for the seller’s real property.
Listing Price
The amount of money at which a seller offers their property for sale as stated in a listing agreement.
Litigation
The process of taking legal action, such as filing a civil lawsuit.
Littoral Rights
Water rights of landowners whose land touches a commercial lake, sea, or ocean (i.e., a non-flowing body of water).
Load Factor
The ratio of rentable square footage to usable square footage. Also called Add- on Factor.
Loan Estimate
The disclosure of loan terms, annual percentage rate and other credit costs, and estimated settlement costs that lenders must present to borrowers within three business days of a completed loan application in order to satisfy provisions of the Truth in Lending Act and the Real Estate Settlement Procedures Act.
Loan Value
The amount of money a lender is willing to lend someone to finance a property.
Loan-to-Value Ratio (LTV)
The amount of money borrowed, compared to the value (the lesser of the sales price or appraised value) of the property.
Lockbox
A secured container for a key, usually attached to a house that’s for sale, accessible only by authorized individuals.
Lock-In Agreement
An agreement between a lender and a mortgage loan applicant which obligates the lender to make a mortgage loan at a specified rate for a specific period.
Lot
A parcel of land; a parcel in a subdivision.
Lot and Block System
A type of legal description used for platted property. The description states only the property’s lot number and block number in a particular subdivision. To find out the exact location of the property’s boundaries, one can consult the plat map for that subdivision at the county recorder’s office.
Loyalty
A fiduciary duty that requires a real estate licensee to put the principal’s interests above all others’ interests, including their own.
Management Agreement
A written agreement that governs the relationship between the property owner/investor and the property manager and outlines the duties of the property manager.
Management Proposal
A plan created by the property manager for overseeing the principal’s property, including market analysis, and developing a variety of financial reports, including the operating budget.
Manufactured Home
A type of prefabricated residence built with standardized parts constructed and assembled in a factory and transported to a home site to be installed on either a permanent or temporary foundation.
Margin
The difference between the index value and the interest rate charged to the borrower with an adjustable rate mortgage; the lender’s profit.
Marital Property
Property acquired by either a spouse or a legal partner during the course of a marriage or civil union.
Market
A place where buyers and sellers come together to buy and sell services or products.
Market Absorption Analysis
An evaluation of how many similar homes are for sale and historically how long it will take to sell that amount given current economic conditions.
Market Allocation
An antitrust violation where competitors agree to not compete with each other in specific markets by dividing up geographic areas, types of products, or types of customers. Also called Territory Allocation.
Market Analysis
A component of a property management proposal prepared by property managers that describes economic factors, population, zoning regulations, transportation, and other factors pertinent to the property’s location; used by property owners to make decisions about future investments, fair rental value, and how to set rental rates to cover expenses and costs.
Market Data Approach
A means of estimating value by comparing similar properties. Used when there is an active market and where comparables can be identified. Also called Comparable Sales Approach or Sales Comparison Approach
Market Extraction Method
A depreciation method based on sales of comparable properties with similar traits; focuses on the depreciation recognized for each comparable. Also called Market Abstraction Method.
Market Position
The position an agent’s listing is in compared to similar homes in the same neighborhood at a similar price.
Market Rent
The lease revenue a property should bring if available for lease.
Market Share
The percentage of total sales made by a real estate brokerage in a specific service area.
Market Value
The most probable price a property should bring on an open and competitive market under all conditions essential to a fair sale.
Marketable Title
A title that is free and clear from undisclosed encumbrances or other defects that would expose a purchaser to litigation or impede a purchaser’s ability to enjoy the property or to later sell the property; required to be delivered by the seller to the purchaser at settlement. Also called Merchantable Title
Master Deed
A document that converts a parcel of land into a condominium, identifying all individual dwelling units and the areas that make up the common elements.
Master Plan
A written document prepared by a local planning board that identifies the goals, objectives, principles, guidelines, policies, standards, and strategies for the growth and development of a community, including its housing needs. Also called Comprehensive Plan.
Matched Pair Analysis
Process of determining the value of specific property characteristics or features by comparing pairs of similar properties.
Material Breach
An unexcused failure to perform according to the terms of a contract that are important enough to excuse the non-breaching party from performing their contractual obligations.
Material Fact
A fact that would change the individual’s actions if it were known; in real estate, this usually refers specifically to things wrong with the property itself.
Materialman
A person who supplies materials, equipment, or fuel for a construction project.
Mayoral Campaign
Real estate marketing dialogue involving asking a new contact, “If you were buying or selling a home, or had a friend or family member who was, do you have an agent you would refer them to?”
Measuring Life
A person whose life determines the length of a life estate.
Mechanic’s Lien
A specific lien claimed by someone who performed work on the property (construction, repairs, improvements, etc.) to secure the amount of the charges for services with interest and costs. This term is often used in a general sense, referring to broker’s liens or materialman’s liens as well as actual mechanic’s liens. Also called Materialman’s Lien or Construction Lien.
Mechanical Exhaust Systems
Ventilation systems that use exhaust fans; typically located in the kitchen and bathrooms where warm, moist air is generated.
Meeting of the Minds
When all parties involved agree to the terms of a contract. This is achieved through offer and acceptance. Also called Mutual Agreement or Mutual Consent.
Metes and Bounds System
A legal description that starts at an easily identifiable point of beginning (POB), then describes the property’s boundaries in terms of courses (compass directions) and distances, ultimately returning to the point of beginning.
Mill
A measurement equal to one–tenth of one cent (.001) used to state the property tax rate.
Millage
A rate of taxation for real property calculated as $1 per $1,000 (or .001) of assessed value.
Mineral Rights
Rights to the minerals located beneath the surface of the land.gov
Ministerial Act
Tasks that a licensee may perform for a customer that are informative or clerical in nature and do not rise to the level of active agency representation.
Minor
One who has not attained the age of majority in a state and does not have legal capacity to be bound by most contracts.
Misrepresentation
A false or misleading statement.
Mitigation
Action taken by the non-breaching party to minimize the losses resulting from a breach of contract.
Mixed-Use Property
A development that combines residential, retail, and/or office space.
Mobile Home
A manufactured home built prior to 1976.
Mold
A fungus that can release toxins into the environment causing allergic reactions in some people.
Monetary Policy
Actions taken by the Federal Reserve to influence the availability and cost of money and credit as a means of promoting national economic goals.
Monopoly
A situation where only one or very few companies dominate the market share of a particular product or service.
Months’ Supply
The amount of time (expressed in 30-day increments) predicted to take to deplete inventory, given the number of homes on the market and the rate of recent closings .
Month Tenancy
A lease that has a term of one month but is renewable for successive months at the option of both parties; a type of periodic tenancy.
Monument
Any natural or man-made marker used to establish lines and boundaries in a metes and bounds survey. Also called Marker.
Moral Suasion
The use of persuasive influences rather than coercion or regulation to encourage changes in the public and financial markets.
Mortgage
A security instrument that creates a voluntary lien on real property to secure repayment of a debt.
Mortgage Banker
A financial institution that usually originates and funds its own loans, which may then be sold on the secondary market. Also called Mortgage Banking Company.
Mortgage Broker
A person who, for compensation, makes, negotiates, acquires, sells, or arranges for a mortgage loan.
Mortgage Contingency
A clause in a contract that states the agreement is contingent on the buyer obtaining approval for a mortgage loan.
Mortgage Fraud
Any scheme, whether for profit or property, involving misrepresentation, concealment, or omission used in an attempt to obtain a financing.
Mortgage Insurance Premium (MIP)
The mandatory fee charged for FHA mortgage insurance coverage. The initial premium can be financed, and there is a monthly premium. Also called Upfront Mortgage Insurance Premium (UFMIP).
Mortgage Loan Originator (MLO)
A person who solicits, negotiates, explains, or finalizes the terms of a mortgage loan for residential real estate.
Mortgage Servicer
A company that collects monthly mortgage payments, pays taxes, insurance, and other items as they come due, and notifies the borrower of late payments.
Backed Securities
A bundle of mortgage loans that lenders sell to investors who receive a share of the principal and interest collected from borrowers every month.
Mortgagee
A lender who accepts a mortgage as security for the repayment of a loan.
Mortgagee’s Policy
A type of title insurance that the lender may have drawn in its own name to protect its interests in the property. This policy is for the loan amount that’s outstanding at the time a claim would be paid.
Mortgagor
A person who borrows money and gives a mortgage to the lender as security for repayment.
Murphy Exemption
A limited exemption from the federal Fair Housing Act for the rental of a unit or a room in an owner-occupied dwelling with four or fewer units. Provided only when rental advertising is not discriminatory, a real estate licensee is not involved, and there is no discrimination based on race or color.
Multiple Listing
Service (MLS) A cooperative service and database of available listed properties in an area conducted by a group of brokers, usually members of a real estate association.
Mutual Assent
An offer and acceptance which together form the terms of a contract.
National Association of REALTORS® (NAR®)
America’s largest trade association, representing members involved in all aspects of the residential and commercial real estate industries, including brokers, salespeople, property managers, appraisers, and counselors.
National Do Not Call Registry
A database managed by the Federal Trade Commission listing the telephone numbers of consumers who do not want to be contacted by commercial telemarketers.
Natural Ventilation
Air circulation achieved through airflow and vents.
Negative Amortization
The effect when a loan balance grows because of deferred interest when payments are not covering the interest portion of the loan.
Negligence
Conduct that falls below the standard of care that a reasonable person would exercise under the same circumstances; an unintentional breach of a legal duty resulting from carelessness, recklessness, or incompetence.
Negotiable Instrument
A promissory note or other finance instrument that is freely transferrable.
Neighborhood
A contiguous area labeled by similar traits or physical boundaries.
Net Lease
A lease agreement that requires the lessee (tenant) to pay some of the operating expenses and other costs of the property in addition to paying the rent.
Net Listing
A compensation strategy in which the seller sets a net amount that is acceptable for the property; if the actual selling price exceeds that amount, the broker is entitled to keep the excess as commission. Net listings are illegal in many states and discouraged in others due to their inherent conflict of interest.
Net Operating Income (NOI)
Income remaining after deducting all vacancy losses and operating expenses from gross income.
Net to Seller
An estimate of the money a seller should receive from a real estate transaction based on a certain selling price after all costs and expenses have been paid. Also called Net or Seller’s Share
Net Zero Home
A home that produces as much energy as it consumes.
Nominal Interest Rate
The interest rate for a loan as indicated in lender advertising; this is generally lower than the actual rate.
Basic Sector
The sector of a local economy that is made up of businesses and industries that sell goods or services to consumers within the community.
Nonconforming Loan
Loan that does not meet Fannie Mae/Freddie Mac standards and thus cannot be sold on the secondary market.
Nonconforming Use
A land use that is prohibited by current zoning laws but is allowed because the property was being used that way before the current zoning law was passed. Also referred to as being “grandfathered in.”
Nonexclusive Buyer Agency Agreement
An agreement between a buyer and any number of brokers in which a broker earns a commission only if the broker is the one who introduces the buyer to the property the buyer purchases. Also called Open Buyer Agency Agreement.
Homogeneity
A characteristic of real property; each piece of land, each building, and each house is a unique piece of real estate. Also called Uniqueness or Heterogeneity.
Nonjudicial Foreclosure
Foreclosure by a trustee under the power of sale clause in a deed of trust without the involvement of a court; not used in all states.
Nonmarital Property
Any property that was owned prior to the marriage or civil union or that was given or devised by will only to one spouse or legal partner during the term of the marriage or civil union.
Nonpublic Personal Information
A consumer’s personal financial information that would not be easily obtainable by the general public, such as credit reports, bank accounts, and transactions.
Nonrecourse Loan
A loan in which the lender cannot collect the personal assets of the borrower or the borrower’s heirs when the collateral for the loan is sold for less than the amount owed on the loan.
Notary Public
A person with the authority to take oaths and acknowledgments.
Note
A signed instrument acknowledging the existence of a debt and the promise to pay.
Notice of Foreclosure
The notification given by a lender to a borrower who has failed to repay a debt according to the terms of the loan, accelerating the due date of the debt to the present and requiring the borrower to repay the entire outstanding balance of the loan at once.
Notice of Value
A certificate establishing the current market value of a property based on an approved VA appraisal. Also called Certificate of Reasonable Value.
Notice to Quit
A landlord’s notice to a tenant, demanding that he vacate the leased property. Also called Notice to Vacate
Novation
The release of liability of the original tenant on a lease, and the substitution of a subsequent tenant with the lessor’s approval.
Null and Void
Invalid and unenforceable.
Obedience
A fiduciary duty that requires a licensee to follow the lawful instructions of the principal.
Obsolescence
A loss in value due to reduced desirability and usefulness of a structure because its design and construction have become obsolete.
Occupancy Standard
The maximum number of inhabitants allowable in a given rental dwelling, intended to help promote an adequate and safely occupied inventory of housing.
Offer
The first step in forming a contract, when one party makes an offer to another party. An offer requires intent to contract and definite terms.
Offer and Acceptance
The necessary elements of mutual assent; for example, an agreement of one party to buy and another party to sell.
Offer of Cooperation
Usually published in a multiple listing service that includes the amount (most frequently a percentage of the sales price or a flat fee) offered as compensation to another brokerage for participating in a property transaction, for example, as a selling agent, buyer’s agent, or leasing agent.
Offeree
A person who receives an offer or to whom an offer is made.
Offeror
A person who makes an offer.
Omission
Failure to mention or disclose information.
Open Listing
A non-exclusive listing, given by a seller to as many brokers as she chooses; a broker is only entitled to a commission if the broker is the procuring cause of the sale.
Open Market Operations
When the Federal Reserve Board sells or buys government securities (or U.S. dollars) as a means of controlling supply and demand and confidence in those items.
Open End Mortgage
A loan containing a clause that allows the mortgagor to borrow additional money without rewriting the mortgage.
Operating Budget
A budget created to project the income and expenses for a property over a one-year period.
Opt Out
A consumer’s right to terminate future electronic communication from business and commercial entities.
Option to Purchase
A unilateral contract in which a seller gives a potential buyer an exclusive right, but not an obligation, to buy property owned by the seller at an agreed price during a specified period.
Optionee
A person to whom an option is given.
Optionor
A person who gives an option.
Order of Eviction
A court-ordered directive to a public officer (often the sheriff or marshal) to seize the property to regain possession for the owner. Also called Writ of Possession.
Ordinance
A statute enacted by the legislative branch of a local government.
Ordinary Life Estate
A conventional life estate in which the measuring life and the life tenant are the same person.
Origination
The process of making or initiating a new loan.
Origination Fee
A fee charged by a lender to cover the administrative costs of making a loan, usually based on a percentage of the loan amount.
Ostensible Agent
A person who has been given the appearance of being an employee or acting (an agent) for another (principal), which would lead anyone dealing with the ostensible agent to reasonably believe the person was an employee or agent.
Outbuilding
An accessory structure other than the main structure on land.
Overage Rent
The amount above the base rent that a tenant owes according to the terms of a percentage lease. Also called Percentage Rent.
Policy
A type of title insurance issued in the name of the property owner. Coverage runs from the time of purchase for as long as the policyholder owns the property.
Ownership in Severalty
Ownership by a single individual person or legal entity, as opposed to co-ownership. Also called Sole Ownership or Separate Property.
P.O.C. (Paid Outside of Closing)
Any expenses associated with a real estate transaction that are paid outside of closing. Such payments should be noted on a settlement statement.
Package Mortgage
A mortgage where personal property (e.g., freestanding appliances) is included in a real estate sale and financed with one contract.
Parcel
A specific lot or piece of real estate, particularly a specified part of a larger tract.
Parol Evidence
Evidence concerning negotiations or oral agreements that were not included in a written contract, altering or contradicting the terms of the written contract.
Partial Performance
A potential remedy to breach of contract where the injured party agrees to accept less than the full terms of the original contract. Also called Accord and Satisfaction.
Partially Amortized Mortgage
A method of loan repayment in which the balance of the outstanding loan is not zero at maturity, and thus a balloon payment is due at that time.
Partition, Judicial
A court action to divide real property among its co-owners, so that each owns part of it in severalty, or (if it’s not practical to physically divide the property) each gets a share of the sale proceeds.
Partition, Voluntary
When co-owners agree to terminate their co-ownership, dividing the property so each owns a piece of the property in severalty.
Partnership
A working arrangement in which two or more people combine their money and skills to operate a business.
Pass-Through
An additional operating cost that is passed from a property owner to a tenant, such as when property taxes go up.
Patent Defect
A visible, apparent defect that can be seen in a reasonably thorough inspection of property.
Payment Cap
A limit on the amount of mortgage payment increases that can occur with an adjustable-rate mortgage.
Pecuniary Loss
Monetary loss.
Percentage Fee
A fee that is based on a property’s gross collectible income.
Percentage Lease
A lease under which a tenant pays a percentage of the tenant’s sales in addition to rent.
Periodic Estate
A leasehold estate that continues for successive periods of equal length (such as from week to week or month to month), until terminated by proper notice from either party. Also called Periodic Tenancy, Estate from Year to Year, or Period-to-Period Tenancy.
Permits
Official government documents that acknowledge work a person wants to do on a property and allow it to be done.
Personal Property
Tangible items that (usually) are not permanently attached to or part of real estate; any property that is not real property; movable property not affixed to land. Also called Chattel or Personalty
Physical Deterioration
The loss in value due to wear and tear of the structure.
Pitch
A roof’s vertical rise in inches, divided by its horizontal span in feet.
PITI
A typical mortgage payment that includes Principal, Interest, Taxes, and Insurance. It would also include any homeowners association fees required as a condition of ownership.
Planned Unit Development (PUD)
A housing development not subject to the standard zoning requirements; instead, the developer works with the local government to develop criteria that will determine common areas, private areas and building guidelines.
Planning Board
A local entity consisting of appointed members who hold public hearings, investigate solutions for the planning issues in the community, and make long-term recommendations; a planning board is also responsible for approving development projects in the community. Also called Planning Commission.
Plat
A detailed survey map of a subdivision, recorded in the county where the land is located. Also called Plat Map
Platform Framing
A technique of framing where a platform is built over the basement or crawl space, and then studs are extended up to the next level, where another platform is built; finally, studs are extended to the roofline.
Platted Property
Land that has been subdivided into blocks and lots.
Plottage
An increase in value, over the cost of acquiring the separate parcels, by successful assemblage, usually due to a change in use.
Pocket Listing
A property for which a broker holds a signed listing agreement with a seller that is not entered into the multiple listing service (MLS).
Point
One percent of the loan amount. A fee charged by a lender for making a loan, calculated based on the loan amount.
Police Power
The constitutional authority of state and local governments to enact and enforce laws that protect the public’s health, safety, morals, and general welfare.
Polychlorinated Biphenyls (PCBs)
A group of human-made chemicals most commonly associated with electrical equipment in capacitors and transformers, lubricants, and plasticizers; banned by the EPA in 1979, but still present in the environment.
Porter’s Wage Escalation Formula
Ties the rent escalation to the wages of the building’s cleaning and building maintenance personnel (called “porters”). The formula provides tenants’ rent will increase a specific amount per square foot for a specified increase in the porter’s hourly wages.
Portfolio Lenders
Financial institutions that make real estate loans that they keep and service in-house instead of selling them on the secondary markets.
Possession
The physical control of real property.
Possessory Interest
An interest in property that entitles the holder to possess and occupy the property, now or in the future; an estate, which may be either a freehold or leasehold.
Power of Attorney
An instrument authorizing one person (called an attorney-in-fact) to act as another’s agent, to the extent stated in the instrument.
Power of Sale Clause
A clause that allows the trustee to sell trust deed property, without court supervision, when terms of the trust deed are not kept.
Preapproval
The formal but preliminary process by which a lender determines if potential borrowers can be financed through the lender, and for what amount of money. Preapproval is generally binding on the lender.
Predatory Lending
Loan tactics that take advantage of ill-informed consumers through excessively high fees, misrepresented loan terms, or frequent refinancing that does not benefit the borrower.
Preliminary Title Report
A search of liens, encroachments, easements, and any recorded documents in the county records in order to issue title insurance.
Prelisting Inspection
A home inspection conducted for a homeowner before the owner puts the home on the market.
Prepaid Expenses
Expense items on a settlement statement the seller has already paid in advance, usually at the beginning of a month for the rest of the month, or at the beginning of the year for the rest of the year or longer.
Prepayment Clause
A contract clause that gives a lender the right to charge the borrower a penalty for paying off a loan early.
Prepayment Penalty
Additional money charged by a lender for the borrower paying a loan off early. Not permitted for FHA-insured loans or VA-guaranteed loans.
Prequalification
The informal process of determining how much a potential homebuyer might be eligible to borrow.
Prescriptive Easement
An easement obtained by the open, notorious, hostile, and continuous use of the property belonging to someone else for a statutory period of time.
Preventive Maintenance
Routine maintenance and inspections to keep equipment and the property in good working order.
Price
The amount asked, offered, or paid for a property.
Price Fixing
An antitrust violation that occurs when two or more competitors agree to fix the prices that they will charge. In real estate it might occur when brokers agree with other brokers on commission rates; even the implication that brokers have discussed and/or reached agreement on fees could be illegal.
Primary Market
The market in which lenders, such as banks and other financial institutions, make mortgage loans directly to borrowers.
Prime Rate
The short-term interest rate a bank charges its most creditworthy customers.
Principal
The person who gives authority to an agent, thereby creating an agency relationship. Also called Client
Principal Meridian
North-south lines designated and named throughout the country for use with the government survey system.
Principle of Decreasing Returns
The theory stating that beyond a certain point, the added value of a feature, addition, repair, etc., is less than the actual cost of that item. Also called Principle of Diminishing Returns
Principle of Increasing Returns
The theory stating that the added value of an additional feature, addition, repair, etc., is more than the actual cost of the item.
Private Mortgage Insurance (PMI)
An insurance policy paid for by a borrower using conventional financing that protects a lender if the borrower defaults on their loan obligation; usually required when the loan-to-value ratio is greater than 80%.
Private Restriction
A restriction imposed on property by a previous owner or the subdivision developer; a restrictive covenant, or a condition in a deed.
Probate
A judicial proceeding in which the validity of a will is established and the executor is authorized to distribute the estate property; when there is no valid will, a judicial proceeding in which an administrator is appointed to distribute the estate to heirs according to the laws of intestate succession.
Procurement Fee
Compensation arrangement typically paid to a licensee by a tenant representative for finding space for the tenant. Procurement fees are often fixed fees but could be percentage-based.
Procuring Cause
An uninterrupted series of events leading to the creation of a contract; the party whose efforts resulted in the creation of a binding contract for sale. For example, the broker whose efforts caused a contract to be executed by both parties is the procuring cause of the sale.
Professional Association
A corporation made up entirely of persons who have a specific type of license or other legal authorization for the purpose of delivering services in one specific area.
Proforma Statement
A schedule of the projected income and expenses for a real estate investment over a given period.
Progression
A principle of value that says the value of an inferior property is positively affected when it is surrounded by superior properties.
Promissory Note
A financing 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.
Property Disclosure Statement
A standardized form that sellers of residential property might be required to complete, identifying defects and issues related to the condition of the property for sale, including its improvements and fixtures, to the best of the seller’s knowledge.
Property Inspection
An evaluation of the conditions of a property by a trained professional, often required by a lender before approval of a loan is granted. Inspections usually include looking for evidence of termites, structural integrity, septic systems, etc.
Property Management
Managing the leasing or renting, or offering to lease or rent, real property of others for a fee, commission, compensation, or other valuable consideration under the terms of a property management agreement.
Property Management Agreement
A written agreement that creates an agency relationship between the property owner/investor and the property manager.
Property Manager
A person hired by a real property owner to administer, market, and maintain property.
Proprietary Lease
An exclusive, longer-term lease given to a person who lives in and owns stock in a cooperative.
Rata Share
The equitable distribution of expenses among tenants for the operating expenses of a building, generally based on the percentage of the property occupied by the tenant.
Proration
The allocation of expenses between a buyer and a seller in proportion to their actual usage of the item or service.
Prospect ID Form
A form used to gather and document identifying data about a prospective real estate client; brokerages often require licensees to complete before working with consumers.
Prospecting
Attempting to find business through any number of methods: phone calls, networking, direct mail, etc.
Protected Class
A group of people who share a common trait and who are legally protected against discrimination or harassment on the basis of that trait.
Public Accommodation
An establishment that is intended to be available to everyone, either as a place of business or commerce or for federal, state, or local government business. It includes hotels, restaurants, retail, gas stations, theaters, museums, etc.
Puffing
Superlative statements about the quality of a property that should not be considered assertions of fact.
Punitive Damages
A damages award that is added to compensatory damages to punish the defendant for malicious or outrageous conduct and discourage others from engaging in similar acts.
Purchase Agreement
A contract in which a seller promises to convey title to real property to a buyer in exchange for the purchase price. Also called Purchase and Sale Agreement,
Purchase
Contract, Sales Contract, or Earnest Money Agreement.
Purchase Money Mortgage
A mortgage by which the seller finances all or part of the sales price for the buyer.
Purchase Price
Amount paid for a property.
Quantity Survey Method
A method to determine the cost of a building by specifying the number or quantity of each type of part or material used to build a structure.
Quiet Enjoyment
Use and possession of real property without interference from the previous owner, the lessor, or anyone else claiming title.
Quiet Title
A court action to remove a cloud on the title.
Quitclaim Deed
A deed that grants any interest in property that the grantor may have without making any promises; often used to clear clouds on title.
Radiator
A heating device consisting of a series of connected pipes, typically inside an upright metal structure, through which steam or hot water is circulated.
Radon
A naturally occurring radioactive gas that emanates from the earth; odorless, colorless, and tasteless and the second leading cause of lung cancer in the U.S.
Range
The six-mile distance between range lines in the rectangular survey system.
Range Line
A line that runs parallel to a principal meridian, marking the land into six-mile strips known as ranges and numbered east or west of a principal meridian in the rectangular survey system.
Rate of Return
A percentage relationship between the investment price or equity invested and the composite returns.
Real Estate
The actual physical land and everything, both natural and man-made, that is attached (or appurtenant) to it.
Real Estate Cycles
General swings in real estate activity, resulting in increasing or decreasing activity and property values; may be caused by economic or annual trends.
Real Estate Investment Trust (REIT)
A company that owns and often operates income- producing real estate; it is organized as a trust with the investors as the beneficiaries.
Real Estate Market Owned (REO)
The mechanism by which rights and interests in real estate are sold, prices set, supply adjusted to demand, space allocated among competing alternate uses, and land use patterns set.
Real Estate
Property acquired by a lending institution through foreclosure and held in inventory.
Real Estate Settlement Procedures Act (RESPA)
Federal law, implemented by Regulation X, regarding real estate closings; provides specific procedures and guidelines for the disclosure of settlement costs.
Real Property
The physical land and everything attached to it, and the rights of ownership (bundle of rights) in the real estate. Also called Realty.
REALTOR
Any real estate licensee who is a member of the National Association of REALTORS® (NAR) and affiliated state/local boards. Only members may use the term
Reasonable Accommodation
Any change in practices (e.g., rules, services, policies) that enables a qualified individual with a disability to enjoy equal opportunities.
Reasonable Modification
A structural change that is made to allow persons with disabilities the full enjoyment of the housing and related facilities.
Reasonable Skill and Care
A fiduciary duty that requires agents to protect clients from foreseeable harm, act in accordance with the high standards set by their profession, and perform their duties as promised.
Receiver
A court–appointed person who is charged with preserving a property, collecting rents, and doing anything necessary to maintain the property’s condition.
Recession
A period of temporary economic decline, generally identified by two successive quarters of a reduction in gross domestic product.
Reciprocity
The recognition that states give whereby a licensee of one state can be involved in real estate transactions in other states.
Recital
An element in a deed that identifies how and when the grantor took title to the property. Also called Source Clause
Reconciliation
The analysis and weighting of the values arrived at from the different appraisal approaches to arrive at a final opinion of value.
Recording Fees
Fees charged for filing documents at the county recorder’s office so that they become part of the public record.
Recourse Loan
A loan in which, in the event of default, the lender can take action against the borrower personally in addition to foreclosing on the property.
Rectangular Survey System
Method of land description used in about 30 states based on imaginary lines of longitude (meridians) and latitude (baselines). Also called Government Survey System
Redemption Period
The right of a mortgagor (borrower) to remedy a loan default within a specified time and receive the property back.
Redlining
A lender’s illegal decision to deny mortgage loans in certain neighborhoods, based on the neighborhood’s racial or ethnic composition.
Referree’s Deed
A deed issued by the court to a property buyer from a bankruptcy sale.
Referral
For the purposes of RESPA, any oral or written action directed to a person that has the effect of affirmatively influencing the selection of a provider of a settlement service or business.
Referral Fee
A fee paid from one employing broker to another employing broker for directing a buyer or seller to a real estate agent in that brokerage.
Refinancing
A description of an extension of the existing financing either through the same lender or through a new financial arrangement.
Reformation
Changes or modifications to a contract by a court to reflect the true intention of the parties, such as to remedy a minor clerical error.
Regression
A principle that says the value of a superior property is negatively affected when it is surrounded by inferior properties.
Regulation Z
The rules implementing the Truth in Lending Act that require borrowers to be shown how much they will pay for credit in dollars and percentages; require the use of the annual percentage rate (APR) and full disclosure of credit terms in advertising once any specific financials are mentioned.
Rejection
An irreversible refusal of an offer by an offeree.
Reliction
When a body of water gradually recedes, exposing land that was previously underwater.
Remainder
A future interest in real property that becomes possessory when a life estate terminates, and that is held by someone other than the grantor of the life estate.
Remainderman
A person, other than the grantor, who has a future interest in the fee estate when a life estate ends. A remainder interest is inheritable.
Remaining Economic Life
The period of usefulness that a building has remaining as of the effective date of the appraisal.
Remediation
The act of stopping or reversing something specific, often environmental damage.
Rent
Consideration paid by a tenant to a landlord in exchange for possession and property use.
Rent Roll
A report or spreadsheet listing key information about a property (i.e., total number of units, tenant names and apartment numbers, lease dates, and the rent each tenant pays).
Rent Survey
A compilation of the rents being generated (and often rent history) in a particular market for a particular property type.
Rentable Square Feet
The usable square feet plus a pro-rata portion of the common areas shared among all of the tenants, such as corridors, lobbies, and restrooms. This is the number typically used for calculating base rent. Also called Gross Square Feet.
Renunciation
When someone who has been granted something or has accepted something later gives it up or rejects it, as when an employing broker withdraws from an agency relationship with a principal.
Replacement
Building the functional equivalent of the original building, using modern materials, usually the same size, layout, quality, and utility as the original.
Replacement Cost
The cost of constructing a building that is the functional equivalent of the original building, using modern techniques and materials.
Reproduction
Building an exact duplicate of the original building, giving the new structure the exact same look and feel as the original.
Reproduction Cost
The cost of constructing a building that is an exact replica of the original building, using the same construction techniques and materials.
Request to Remedy or Repair
A written list of items that the buyer asks the seller to repair prior to closing.
Rescission
When a contract is terminated, and each party gives anything acquired under the contract back to the other party (both parties are returned to their original position).
Reserve Requirement
The percentage of customers’ deposits that commercial banks are required to keep on deposit, either on hand at the bank or in the bank’s own accounts; in other words, money the bank cannot lend to other people.
Reserves
Cash on deposit or other highly liquid assets a borrower must have to cover two
months of PITI mortgage payments after they make the cash down payment and pay all closing costs.
Reserves for Replacement
An amount of money, considered as an operating expense, set aside for future replacement of major items, such as the roof or heating system.
Resident Manager
Represents a property management firm and may live on the premises of the building being managed.
Residential Lead-Based Paint Hazard Reduction Act
A federal law that requires sellers and landlords to disclose known lead paint hazards for homes built before 1978.
Residual Income
The amount of a borrower’s income remaining after subtracting taxes, housing expenses, and all recurring debts and obligations; a factor when qualifying prospective borrowers for VA-guaranteed loans.
Restitution
The return of consideration by both parties when a contract is rescinded.
Restrictive Covenant
A restriction on real property use imposed by a former owner; promise to do or not do an act relating to real property; usually an owner’s promise to not use property in a particular way. May or may not run with the land.
Retaliatory Eviction
When a lessor attempts to remove a tenant in retaliation for complaining about code violations or for participating in a tenants’ rights group; generally illegal.
Return of Investment
The protection of an investor’s equity in an investment.
Return on Investment (ROI)
The gain/profit an investor experiences from an investment relative to its cost to acquire.
Reverse Mortgage
A type of mortgage in which qualified homeowners aged 62 or older can convert equity in the home into a lump sum, a monthly cash stream, or a line of credit; becomes due when the last surviving borrower dies, sells the home, or ceases to live in the home for 12 consecutive months.
Reversion
A future interest that becomes possessory when a temporary estate (such as a life estate) terminates, and that the grantor (or grantor’s successors in interest) holds. Also called reversionary interest
Reversioner
The person who has a future estate interest in reversion.
Revocation
The termination of an offer by the offeror by withdrawing the offer before itis accepted.
Rider
An addition, amendment, or addendum to a document or contract.
Right of First Offer
A right to have the first chance to buy or lease property if the owner decides to sell or lease it.
Right of First Refusal
An agreement to be given the first chance to buy or lease property if the owner decides to sell or lease it after receiving a bona fide offer from a third party. Also called Right of Pre-emption
Right of Redemption
The legal ability to buy back one’s property within the time specified in each state after a judicial sale by paying the debt, interest, and certain costs.
Right of Rescission
The right of a consumer to rescind any credit transaction involving their principal residence as collateral (except first mortgages), lasting up to midnight of the third business day after the transaction.
Right of Survivorship
A characteristic of statutory survivorship tenancy, joint tenancy, and tenancy by the entirety; surviving co-tenants automatically acquire a deceased co-tenant’s interest in the property.
Right of Way (ROW)
An easement giving the holder the right to cross another person’s land.
Ringman
An individual positioned among auction attendees to spot bidders for the auctioneer.
Riparian Rights
Water rights of landowners whose land touches a natural body of flowing water, such as a stream, a creek, or a river.
Risk
The probability that events will not occur as expected.
Risk Management
The process of identifying potential hazards and threats and then implementing procedures necessary to minimize their impacts.
Robocalls
Prerecorded marketing telephone calls delivered to a broad audience via an automated dialing system.
Root of Title
The deed or other document of transfer that was the first recorded, going back at least as far as required by state law.
Rough-Ins
Any type of interior work to a house or building that is not part of the finish work (e.g., plumbing, HVAC, electrical).
Roundtable Closing
A settlement procedure conducted with all parties present.
Rule of Capture
A legal principle that grants a landowner the right to all oil and gas produced by wells on their land, even if it migrated from underneath land belonging to another.
Runs with the
Land (Appurtenance) Rights, conditions, or restrictions that are associated with the property (as opposed to the individual who owns the property)will pass from owner to owner when the land is conveyed.
S Corporation
A business entity that operates like a corporation but is treated like a partnership for tax purposes.
Safeguards Rule
A provision of the federal Gramm-Leach-Bliley Act that requires all financial institutions to implement and maintain safety measures to protect the confidentiality and integrity of personal customer information.
Safety App
Mobile phone software that can be used for personal security, such as tracking devices or alarms.
Sale and Leaseback
A method for financing commercial or industrial properties in which a company constructs the building, and then becomes a tenant by selling the building to an investor who becomes their lessor.
Sales Comparison Approach
An appraisal method that estimates the value of real property by performing a market analysis of the area where the subject property is located; data regarding comparable properties are collected, and adjustments are made for the differences between the subject and comparable properties. Also called Market Data Approach.
Sales Contract
An agreement in which the buyer and seller agree to the terms and conditions of the sale of property. Also called Purchase Agreement.
Salesperson
A real estate licensee who works under the supervision of a broker. Also called Sales Associate
Satisfaction of Lien
The document a mortgagee gives the mortgagor acknowledging the debt has been paid in full and the mortgage is no longer a lien against the property. Also called Discharge of Mortgage, Satisfaction of Mortgage, or Release of Lien.
Savings and Loan Association
An institution whose primary function is to promote thrift and homeownership. All savings and loan associations must be chartered, either by the federal government or by the state in which they are located. Federally chartered savings and loan associations are owned by the depositors.
Scarcity
A physical characteristic of real property that says there is a limited supply of real estate; the perceived supply of a good or service relative to the demand for the item.
Sealed Bid
A method of selling in which prospective buyers submit bids that are opened at a designated time, with the high bid winning. Most auctioneers argue that this is not an auction, as there is no transparency and no genuine competitiveness.
Second Mortgage
A mortgage subordinate to a first mortgage. Also called Junior Mortgage.
Secondary Financing
A loan obtained in addition to a first mortgage that is used to pay for part of the purchase price or closing costs.
Secondary Market
Private investors and government enterprises and agencies that buy and sell mortgages.
Secret Profit
A financial benefit that an agent takes from a transaction without authorization from the principal and without informing the principal of the benefit retained (this is a violation of an agent’s duties of loyalty and disclosure).
Section
Part of a township, one-mile by one-mile square. Used for the rectangular survey system; one section equals 640 acres and 36 sections equal one township.
Section 203(b) FHA Loan
The basic FHA-insured fixed-rate, long-term financing program for the purchase of a one- to four-unit owner-occupied home.
Section 502 Loan
A home financing program through the U.S. Department of Agriculture that either guarantees loans made by approved private lenders or makes direct loans if no local lender is available.
Securitization
The act of pooling mortgages and then selling them as mortgage-backed securities.
Security
An investment that creates a financial interest in a business with no management authority; the federal Securities and Exchange Commission regulates securities; states generally require that securities dealers be licensed.
Security Deposit
Money a tenant gives a landlord at the beginning of the tenancy to ensure the tenant will comply with the lease terms. The landlord may retain all or part of the deposit at the end of the tenancy to cover unpaid rent, repair costs, or other damages.
Seizin
The possession of a freehold estate; ownership. Also spelled Seisin or Seizen.
Self Dealing
When a fiduciary takes advantage of their position in a transaction and acts in their own interests rather than in the interests of their clients.
Self Employment Tax
Medicare tax and Social Security tax not paid by an employer.
Self Help Eviction
When a lessor uses physical force, a lockout, or a utility shutoff to remove a tenant, instead of going through the legal process; generally illegal.
Seller’s Agent
A licensee representing the interests of the seller of a property. Also called Listing Agent
Seller’s Market
A situation in the housing market where a large number of buyers are looking for housing in an area of limited availability.
Selling Agent
The licensee who secures a buyer for a property; may also be the buyer’s agent if an agency relationship was created.
Service Animal
A dog or miniature horse that is individually trained to do work or perform tasks for the benefit of an individual with a disability.
Servicing
The process of collecting loan payments, keeping records, and handling defaults.
Servient Tenant
The owner of a servient tenant, that is, someone whose property is burdened by an easement.
Servient Tenement
Property burdened by an easement; the owner of the servient tenement (the servient tenant) is required to allow someone who has an easement (the dominant tenant) to use their property.
Setback
The minimum distance that a building must be from a designated position, such as a property line, as determined by zoning requirements.
Settlement Officer
The person charged with coordinating the activities and documentation necessary for completing a real estate transaction; usually the one who prepares the settlement statement and conducts the closing. Also called Closing Officer, Closing Agent, Escrow Title Agent
Settlement Services
Any service provided in connection with a prospective or actual settlement of a real estate transaction, including, but not limited to, those provided by lenders, title companies, real estate brokers, property inspectors, attorneys, appraisers, etc.
Settlement Statement
A detailed accounting of a real estate transaction, usually prepared by the settlement officer, showing cash received and disbursed as well as buyer and seller debits and credits.
Severable
The concept that one part or provision of a contract that can be held unenforceable without making the entire contract unenforceable.
Severalty Ownership
Ownership by one person.
Severance
A process through which fixtures are detached from the land and so revert back to personal property.
Share Loan
A co-op loan signifying a buyer is purchasing shares in a corporation rather than a mortgage for property ownership.
Sheathing
A layer of boards or other wood or fiber materials applied to the outer studs, joists, and rafters to strengthen the structure and serve as a base for exterior weatherproof covering.
Sherrif’s Deed
A deed issued by the court to a property buyer from a foreclosure sale.
Sherrif’s Sale
A foreclosure sale held after a judicial foreclosure. Also called Execution Sale.
Short Sale
A lender-approved sale from which the proceeds are not sufficient to cover the mortgage amount(s).
Showings
Touring properties with a buyer.
Site
A tract of land that has been prepared for construction, i.e., includes access, utilities, etc.
Site Value
The value of land with the enhancements necessary to make it ready for building, such as water, sewer, electricity, etc.
Situs
A place where something exists; an area with preferred features, giving it value to the property.
Slab-on-Grade Construction
A concrete foundation built directly on the ground.
Slander
Defamation of another’s character or reputation through that which is spoken or heard.
Sloped Joist
A roof construction with joists angled up from the outer load-bearing walls to the pitch of the roof allowing for vaulted ceilings.
Social Media
Various online tools and applications that allow users to create online communities in order to communicate and share ideas and content.
Sole Proprietorship
A business owned and managed by one person (or for tax purposes, legally married spouses) who is personally liable for all business debts. It could be organized under a fictitious or assumed name.
Spam
The use of any electronic messaging system to send unsolicited bulk messages indiscriminately.
Special Agent
An agent authorized by the principal to perform a specific activity or participate in a specific transaction, for example, a real estate broker acting under a listing agreement. Also called Limited Agent.
Special Assessment
A tax levied only against properties that benefit from a public improvement (e.g., a sewer or streetlight) to cover the cost of the improvement; creates a special assessment lien (an involuntary, specific lien).
Special Warranty Deed
A deed in which the grantor warrants against defects that have occurred after the grantor acquired title.
Specific Lien
A lien that attaches only to a particular parcel of property.
Specific Performance
Legal remedy in which a court orders someone who has breached a contract to perform as agreed, rather than paying monetary damages.
Specifications
Written documents describing in detail the requirements for the scope of construction, including materials, standards, and expected quality of the finished structure. Also called Specs.
Sphere of Influence
A group of people known to a salesperson who know, trust, and are likely to do business with the salesperson, including referring business.
Spot Zoning
A rezone, usually illegal, that favors (or restricts) a particular property owner (or a small group of owners) without justification.
Square Foot Method
A cost approach appraisal method for determining the cost of a building, relying on cost manuals.
Squatter
A person who unlawfully occupies an uninhabited building or unused land.
Stable Monthly Income
Income that can reasonably be expected to continue in the future.
Stakeholder
Someone with a vested interest in a project.
Standard Coverage
A title insurance policy that protects against possible clouds or problems with the title, such as liens or unpaid taxes; protects the homeowner from claimants not listed in the insurance policy, as well as from defects and mistakes in the public record such as forged documents and improper deeds; does not require a physical inspection of the property.
Statute
A law passed by a state legislature.
Statute of Frauds
A state law that requires certain types of contracts to be in writing and signed to be enforced.
Statute of Limitations
A law requiring parties to file a particular type of lawsuit within a specified time after the event giving rise to the suit occurred.
Statutory Nonemployee
A special IRS category of workers that applies to most real estate licensees; although they work independently and are self-employed, they are not independent contractors for tax purposes because they are subject to their broker’s supervision.
Statutory Right of Redemption
Allows a borrower to redeem property for a set period after a foreclosure sale, regardless of the timing of other events. Time frames for statutory right of redemption vary by state; not available in all states.
Statutory Right of Reinstatement
A way for borrowers to cure the default by bringing the mortgage current—including all accumulated costs and fees—between the time they receive a notice of foreclosure and the time a foreclosure action is filed.
Statutory Year
A year in which each month is treated as having 30 days (and the year having 360 days), as opposed to using the actual number of days in each month. Also called Banker’s
Steering
Channeling prospective buyers or tenants to or away from particular neighborhoods based on their race, religion, national origin, ancestry, or membership in any other protected class.
Stigmatized Property
A property that is undesirable to most people because of a past event, such as a crime or death. Such stigmas as not considered material facts that must be disclosed.
Straight Loan
A non-amortized loan in which the regular payments cover only the interest over the term of the loan. Also called Bullet Loan.
Straight Line Depreciation
Simple depreciation method that takes the total cost of a building and divides that by the number of years the building is expected to be useful.
Straw Buyer
A person who receives payment from a conspirator for the use of that person’s name and credit history to apply for a loan, generally as part of a mortgage fraud scheme.
Strict Foreclosure
An uncommon foreclosure action where the court establishes a date by which the borrower must pay the balance in full; once the deadline passes, the lender is awarded title to the property.
Stud
A vertical beam that serves to frame a structure (also known as a wood-framing member).
