Course Terms Flashcards
Non–payment of taxes
Abandonment
A history of the ownership of a parcel of land which lists transfers of title, rights, and liabilities.
Abstract of Title
States that upon default, all of the principal installments come due immediately.
Acceleration Clause
The idea that the owner of land is entitled to all that the soil produces or all that is added to the land either intentionally or by mistake. Trade fixtures not removed are “assessed” by the owner of the property.
Accession
Refers to land which is accumulated by the gradual washing or motion of water.
Accretion
An accumulation.
Accrued
A formal declaration made by the grantor conveying the property to the grantee—a necessary element for validity of a deed.
Acknowledgment
A measure of land equal to 43,560 square feet.
Acre
The lawsuit filed by a person to remove or clear the claims of others against property.
Action to Quiet Title
The actual knowledge that a person has about the existence of a particular fact.
Actual Notice
The actual knowledge that a person has about the existence of a particular fact.
Ad Valorem
A method of acquiring original title to property by open, notorious and hostile possession for a statutory period of time; also referred to as prescription. POACH.
Adverse Possession
A relationship in which one party (the principal) authorizes another party (the agent) to act as the principal’s representative in dealing with third parties.
Agency
One who acts for and in place of a principal for the purpose of affecting the principal’s legal relations with third persons.
Agent
The right to use, control and occupy the space above a particular parcel of land.
Air Rights
A provision in a mortgage requiring full payment of the debt upon the transfer of title to the property, due on sale. Prevents loan assumptions.
Alienation Clause
The free and full ownership of rights in land by individuals, which is the basis of real property in the United States.
Allodial
The repayment of a financial obligation over a period of time in a series of periodic installments. In a levelpayment mortgage, this is the portion of the debt service that reduces the principal.
Amortization
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.
Amortized Loan
The yearly cost of credit. Interest Rate plus finance charge.
Annual Percentage Rate (APR)
An opinion or estimate of value performed by a person licensed to do so.
Appraisal
Any right or privilege which belongs to and passes with land.
Appurtenance
Occurs between willing buyer and willing seller with each party completely knowledgeable about the market. A purchaser of property between relatives (father & son) would not be an “arms length transaction”.
Armslength Transaction
Not on time; late in making payments or completing work. Interest is paid in arrears.
Arrears
A phrase which disclaims any promises or warranties. A person purchasing real estate “as is” takes it in exactly the condition in which it is found. Seller cannot hide latent defects.
As is
Bringing two or more lots together under one ownership.
Assemblage
The value placed on property, by the tax assessor, for the purpose of determining the property tax.
Assessed Value
(1) the means by which a person transfers contract rights;(2) occurs when the lessee parts with the entire estate, retaining no interest.
Assignment
The process of taking a person’s property into legal custody by a court order called a writ of attachment. Property is frozen.
Attachment
The act of witnessing a person’s signing of an instrument by a notary public.
Attestation
A person given the authority to act on behalf of another under a power of attorney.
Attorney in Fact
A statement issued by an attorney after analyzing an abstract as to quality of title.
Attorney’s Opinion of Title
Occurs in cases where there is a sudden loss of land through nature.
Avulsion
Title with defects making it unmarketable.
Bad Title
The remaining balance, at maturity, on a loan that has not been completely repaid through periodic payments. Once paid, the outstanding balance is zero. Partially amortized loan.
Balloon Payment
An instrument conveying title which recites a valuable consideration and commonly uses the words “bargain and sale” or words of similar import.
Bargain and Sale Deed
A bronze disk permanently placed and precisely identified by government survey teams.
Bench mark
A contract in which a promise is given for the promise of another. It becomes binding when mutual promises are communicated. (A real estate contract).
Bilateral Contract
A document used to transfer ownership of personal property.
Bill of Sale
A mortgage which covers more than one piece of real estate. Often used by a developer in the financing of undeveloped lots. Contains a partial release clause.
Blanket Mortgage
Means of subdividing large tracts of land into smaller sections, each of which is numbered. For example, Lot 4, Block 8.
Block A
Any activity which attempts to drive prices down for the purpose of causing transition from one ethnic group to another. This is a violation of Federal Fair Housing Laws. Also called “panic selling”.
Blockbusting
Refers to boundaries; used with the word “metes” in the metes and bounds method of land description.
Bounds
A failure to perform, as promised, at the time the performance was due.
Breach of Contract
A means by which planners use space to separate two adjoining districts which have incompatible uses. A buffer zone consists of uses which are compatible with uses in each adjoining district.
Buffer Zone
Ordinances passed by local governments with special minimum standards of construction for new buildings. They also apply to major additions to old construction.
Building Code
The rights of an owner to possess, control, enjoy, sell, lease, mortgage, and dispose of the property.
Bundle of Rights
Legal documentation in a condominium regime which provides the establishment of the homeowner’s association; provides the powers and authority given to the board of directors; and indicates various rights and responsibilities of the unit owners.
Bylaws
Used in the income approach to value. To capitalize income means to convert future income into present (current) value.
Capitalization
The rate of return considered to be a reasonable return on investment—given the risk.
Capitalization Rate
Means “Let the Buyer beware”.
Caveat Emptor
The first thing a veteran should request if attempting to purchase a property using VA eligibility.
Certificate
Given to veterans bearing evidence of their qualifications for a VA mortgage loan.
Certificate of Eligibility Certificate
Issued by the Veterans Administration to certify the value of property secured by a VA mortgage. Appraisal.
Certificate of Reasonable Value (CPR)
A document given by the title examiner stating the quality of title the seller possesses.
Certificate of Title
A history of the ownership affecting title to a parcel of land.
Chain of Title
One in which personal property is pledged to secure a note.
Chattel Mortgage
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.
City Planning
A law which prohibits discrimination in all real estate transactions based on race—commercial and residential.
Civil Rights Act of 1866
Any claim affecting title to property.
Cloud on Title
Property which has been pledged as security for a loan.
Collateral
Adverse possession.
Color of Title
Illegally mixing deposits or monies, collected from a client, with one’s personal or business account. Taking money out too soon or putting it into escrow too late (10 banking days).
Commingling
Property jointly owned on a pro–rata basis with other unit owners in a condominium regime.
Common Elements
(1) a body of legal rules derived from accepted customs and procedures in England. Serves as the foundation for most laws in every state except Louisiana, which uses the system of civil law; (2) system of judge–made law (“case law”) as opposed to codified or statutory law.
Common Law
Any property acquired in certain states by purchase, or as compensation by either spouse during the period of marriage, is considered to be owned in an undivided half interest by each.
Community Property
A method of determining the value of property in which the selling prices of similar properties are used as the basis for estimating the value of the subject property.
Comparative Analysis
Those who are legally capable of entering into contracts.
Competent Parties
The process of exercising eminent domain through court action.
Condemnation
Anything of value offered to induce someone to enter into a contractual agreement. For example, sale price, earnest money, a promise for a promise.
Consideration
Occurs when the tenant’s use of the premises is substantially disturbed or interfered with by the landlord’s actions or failure to act where there is a duty to act. The tenant is effectively forced to move out and terminate the lease without further liability for further rent.
Constructive Eviction
The knowledge that the law presumes a person has about a particular fact irrespective of whether the person knows about the fact or not. (Recording).
Constructive Notice
An agreement resulting from the objective expression of mutual assent by competent parties, which the law recognizes in some way as a duty, and the breach of which the law gives a remedy.
Contract
A means by which the seller passes possession but retains title to the property until the total or a substantial portion of the purchase price is paid. Installment contract. The two parties here are the vendor (owner) and the vendee (buyer).
Contract for a Deed
The transfer of title to land from one party to another.
Conveyance
A method of estimating value based on the economic principle of substitution; the value of a building cannot be greater than the cost of purchasing a similar site and constructing a building of equal utility.
Cost Approach
A rejection of an offer to buy or sell, by a seller or buyer, with a simultaneous substitute offer.
Counteroffer
Included in a deed; a guarantee.
Covenant
The assurance that no encumbrances other than those specified in the deed exist.
Covenant Against Encumbrances
A promise that the grantor will perform further acts reasonably necessary to correct any defects in the title or in the deed instrument.
Covenant of Further Assurance
A promise that no one has superior or paramount title to that of the grantor; assures the grantee of peaceful possession without fear of being ousted by a person with a superior claim to the property.
Covenant of Quiet Enjoyment
Gives the assurance that the grantor has the exact estate in the quantity and quality which is being conveyed. “I own and I have the right to sell it.”
Covenant of Seisin
The rights that a husband acquires in the wife’s property upon her death.
Curtesy
Depreciation is considered curable if the cost of the repair is less than what the repair adds to the value of property.
Curable Depreciation
Court order
Decree
A written instrument, usually under seal, which contains an agreement to transfer some property interest from a grantor to a grantee.
Deed
Used by the mortgagor (borrower) who is in default to convey the property to the mortgagee (lender) in order to eliminate the need for a foreclosure.
Deed in Lieu of Foreclosure
Given by lien holders, remainder–men or mortgages to relinquish their claims on the property.
Deed of Release
A deed to real property, which serves the same purpose as a mortgage, involving three parties instead of two. The third party holds naked title for the benefit of the lender. Beneficiary (Lender), Trustor (Borrower), Trustee (Third Party)
Deed of Trust
A necessary mortgage clause in title theory states. When the debt is satisfied, this clause causes title to pass automatically back to the borrower. Satisfaction of mortgage; release from records.
Defeasance Clause
- Or FEE SIMPLE DEFEASIBLE Ownership with conditional restrictions which, if broken, can result in title to the property reverting back to the grantor or his heirs.
Defeasible Fee Simple
Any lien, claim or encumbrance, on a particular piece of real estate, that has been properly recorded in the public records. Recorded defects impair clear title and may result in the title being unmarketable.
Defect in Title
A personal claim based on a judicial order against the debtor. This occurs when the property fails to bring in a price at the foreclosure sale which covers the mortgage amount.
Deficiency Judgment
A decrease in value due to physical deterioration, functional or economic obsolescence.
Depreciation
Refers to any passage of title to property, upon intestacy to those heirs, related by blood or marriage, whom the law designates.
Descent
Transferring title to real property by means of a will.
Devise
A fee charged by the lender at settlement that results in increasing the lender’s effective yield on the money borrowed. One discount point equals one percent of the loan amount.
Discount Points
The tract of land in an easement appurtenant which benefits from the easement.
Dominant Estate
The rights that a wife acquires in her husband’s fee simple property. Down Payment
The amount paid by the purchaser, which when added to the mortgage amount, equals the total sales price. At time of closing this is referred to as equity.
Dower
A clause, included in many mortgages, permitting the lender to require the borrower to repay the outstanding balance when the property is sold. Prevents loan assumption.
Due–on–Sale Clause
Involves the use of force or improper actions, against a person or property, in order to induce a party to enter into a contract.
Duress
A right to limited use or enjoyment by one or more persons in the land of another.
Easement
An easement created to benefit adjacent land.
Easement Appurtenant
Occurs because of necessity, such as the conveyance of a land–locked property.
Easement by Implication
A personal right to use the land of another.
Easement in Gross
The time period over which an improvement to land earns more income than the cost incurred in generating the income. Profitability.
Economic Life
A loss in value due to factors outside the subject property, such as changes in competition or surrounding land use. Also referred to as external obsolescence.
Economic Obsolescence
The amount of rental which a building would receive, if set by the market, as opposed to contract rent set by the lease.
Economic Rent
The difference between the theoretical economic life of a structure and its actual remaining economic life. Maintaining the property.
Effective Age
Refers to crops which require annual planting.
Emblements
The right of government to acquire property, for a public purpose, after paying just compensation.
Eminent Domain
The extension of some improvement or object across the boundary of an adjoining tract. (Off sides).
Encroachment
Any interest in or claim on, the land of another, which in some manner burdens or diminishes the value of the property.
Encumbrance
A federal act, which prohibits discrimination by lenders on the basis of sex or marital status in any aspect of a credit transaction.
Equal Credit Opportunity Act. (ECOA)
Created when justice and fairness would require a court of equity to declare such a lien exists or when conduct of parties would imply that a lien was intended.
Equitable Lien
(1) in finance, permits the lender to raise the interest rate upon the occurrence of certain stipulated condition, (2) in leasing, permits the lessor to raise lease payments upon the occurrence of certain stipulated condition.
Escalation Clause
The right of government to ownership of property, which is left by a deceased property owner who leaves no will, and dies without descendants.
Escheat
A legally recognized interest in the use, possession, control and disposition that a person has in land, and defines the nature, degree, extent and duration of a person’s ownership in land.
Estate
Retention of possession without the consent of the landlord after the lease has expired; also referred to as tenancy at sufferance.
Estate at Sufferance
An occupation of space, for an indefinite period, which can be terminated by either the lessor or lessee at any time. Also referred to as tenancy at will.
Estate at Will
A conveyance of realty for a definite stated period of time. The term may be one year, one month, one week or even one day. No notice needed to terminate.
Estate for Years
A leasehold, which is automatically renewed for the same term as in the original lease; also referred to as a periodic tenancy or an estate from period to period. Month to month rental. Notice needed to terminate.
Estate from Period to Period
The maximum possible estate one can possess in real property; also referred to as fee simple or fee simple absolute.
Estate in Fee
The owner employs only one broker but retains the right to personally sell the property, and thereby not pay a commission. However, if any other real estate company sells the property, the listing broker is still entitled to the commission stipulated.
Exclusive Agency Listing
Under this listing arrangement, the broker employed is entitled to a commission no matter who sells the property during the listing period. (Even the Seller)
Exclusive Right to Sell Listing
One in which the obligations have been performed on both sides of the contract and nothing is left to be completed. (Closed Deal)
Executed Contract
A person appointed in the will to carry out the instructions of the testator, pay the debts of the estate, and dispose of the property as instructed.
Executor
An agreement formed through the oral or written words of the parties.
Express Contract
The price negotiated for a parcel of real estate in a competitive market where both buyer and seller are free to act and under no undue pressure.
Fair Market Value
A federal agency established to insure the deposits in member commercial banks. They determine the maximum insurance amount per account.
Federal Deposit Insurance Corporation – (FDIC)
An act prohibiting discrimination in the sale or rental of housing on the basis of race, color, religion or national origin sex, handicap and familial status.
Federal Fair Housing Act of 1968
A federal agency which oversees and regulates all federally charted savings and loan association.
Federal Home Loan Bank System – (FHLBB)
“Freddie Mac” is a wholly owned subsidiary of the Federal Home Loan Bank System, which serves as a secondary mortgage market for savings and loan associations, who are members of the FHLBB; also referred to as The Mortgage Corporation.
Federal Home Loan Mortgage Corporation – (FHLMC)
A federal agency established in 1943 to increase home ownership by providing an insurance program to safeguard the lender against the risk of non-payment. Currently part of HUD.
Federal Housing Administration – (FHA)
Commonly known as “Fannie Mae”, this quasi–private corporation is the largest buyer of existing mortgages in the secondary mortgage market.
Federal National Mortgage Association – (FNMA)
A federal agency which oversees and regulates monetary policy, which in turn affects interest rates and the availability of credit. All federally chartered commercial banks must be members.
Federal Reserve System – (FRS)
The maximum possible estate one can possess in real property; also referred to as fee simple or fee.
Fee Simple Absolute
An estate which has been created to exist only until the occurrence or non-occurrence of a particular event. Returns automatically.
Fee Simple Determinable
An estate which is subject to a power in the original grantor, or the grantor’s heirs, to terminate the estate upon the happening of an event. Back to court.
Fee Simple Subject to a Condition Subsequent
A person who essentially holds the character of trustee. A fiduciary must carry out the duties in a manner which best serves the interest of the party for whom the fiduciary relationship is established. A real estate licensee has a fiduciary duty to his/her client. (Seller, landlord, buyer or tenant)
Fiduciary
Claim with highest priority against property; also known as a superior to the rights of subsequent lenders. (Recorded first)
First Lien
A mortgage on real estate in which the lender’s rights are superior to the rights of subsequent lenders. (Recorded first)
First Mortgage
Broadly defined as personal property which has become realty. Examples include built–in cabinets or bathtubs. Business (trade) fixtures can be removed if they leave no damage to the real estate, and they are removed before the end of a lease or by agreement with the landlord at a later time.
Fixture
A legal procedure whereby property used as security for a debt is sold to satisfy the debt in the event of default in payment of the mortgage note or default of other terms in the note.
Foreclosure
A misrepresentation of a material fact, which is made with knowledge of its falsity, and with intent to deceive a parry who in fact relies on the misrepresentation to his or her detriment and injury
Fraud
One which continues for an indefinite period of time. For as “least a lifetime or greater” (will)
Freehold Estate
A method of loan repayment in which the dollar amount of each payment is the same. The first part of each payment is interest and the remainder reduced the principal. Over the life of the mortgage, the outstanding balance is reduced to zero.
Fully Amortized Mortgage
A loss in value due to conditions within the structure which make the building outdated when compared with a new building. (4 bedrooms and 1 bath, insulation, narrow stairway, etc.)
Functional Obsolescence
One authorized to transact all of the principal’s affairs within the context of a broad commercial or other kind of endeavor. Property manager.
General Agent
A lien that attaches to all property owned by an individual. Real and personal.
General Lien
Contains covenants in which the grantor formally guarantees that good and marketable title is being conveyed. Highest deed – 5 covenants.
General Warranty Deed
One which is free from encumbrances such as liens, pending litigation and other such defects
Good Title
Commonly known as “Ginnie Mae,” this agency of HUD operates in the secondary mortgage market. It is involved with special government financing programs.
Commonly known as “Ginnie Mae,” this agency of HUD operates in the secondary mortgage market. It is involved with special government financing programs.
A method of land description based on townships and sections. (Rectangular survey system).
Government Survey
This lease provides for periodic step increases in the rental payments.
Graduated Payment Mortgage (GPM)
Creating an exemption from application of a new law due to previously existing circumstances; non- conforming use.
Grandfather Clause
Transferring real estate by means of a deed.
Grant
Purchaser or donee receiving title to property.
Grantee
Owner making conveyance of title or interest in property.
Grantor
The actual income received from property before the deduction for any expenses.
Gross Income
A method of appraising income–producing property based on a multiple of the annual gross income; also called a gross rent multiplier.
Gross Income Multiplier (GIM)
A method of appraising single family or duplexes based on the monthly gross income.
Gross Rent Multiplier (GRM)
That part of a deed beginning with the words, “To have and to hold”, followed by the granting clause and reaffirming the extent of ownership that the grantor is transferring. The habendum clause defines or limits the extent of ownership in the estate granted as, for example, a fee simple, life estate or easement: “To have and to hold unto said Sally Smith, grantee, a life estate in the following property”.
Habendum clause
The legal use of a parcel of land, which when capitalized, will generate the greatest net present value of income. The first thing an appraiser should determine.
Highest and Best Use
An agency of the federal government which oversees many federal housing programs.
Housing and Urban Development (HUD)
Process of pledging something (house) as security, but retaining possession of it.
Hypothecate
Incapable of being moved; fixed in location, such as land.
Immobility
Contract formed through the acts or conduct of the parties involved.
Implied Contract
Agency is created by implication (implied) when, from the behavior of the client (customer) and the behavior of the agent (sales person/associate) that they act as if the agency exists by performing in such areas where an agency would exist.
Implied Agency
A traditional means of appraising property based on the assumption that value is equal to the present worth of future rights to income.
Income Approach
This economic principle states that 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.
Increasing and Decreasing Returns
Elements of a structure which are neither physically possible nor economically feasible to correct.
Incurable Depreciation
One whose time and effort are regulated by the individual and are not under the direction or control of others.
Independent Contractor
The rental is tied to some commonly agreed to price index such as the Consumer Price Index or the Wholesale Price Index.
Index Lease
An interest in land which can be passed to a relative upon the death of the owner.
Inheritable
(1) the sum paid for the use of money (2) the degree of rights in the ownership of land.
Interest
The cost of using money expressed as a percent per period.
Interest Rate
Dying without a will.
Intestate
Without legal force.
Invalid
Not capable of being changed or terminated.
Irrevocable
A form of concurrent ownership, which occurs when two or more persons own a single estate in land, with right of survivorship. Must have equal shares, right to partition.
Joint Tenancy
An agreement by two or more individuals or entities to engage in a single project or undertaking.
Joint Venture
The charge upon the land of a debtor, resulting from the decree of a court, entered in the judgment docket. Lawsuit
Judgment Lien
An encumbrance, second in priority, to a previously recorded lien or to a lien to which the encumbrance has been subordinated.
Junior Lien
The seller accepts a down payment on a parcel of land but title to the property does not pass until the last principal payment has been received. This is referred to as an installment sales contract or a contract for a deed.
Land Contract
Completely shut in by adjoining parcels of land with no access to public roads.
Landlocked
A defect which cannot be discovered by ordinary inspection.
Latent Defect
An agreement by which a landlord gives the right to a tenant to use, and to have exclusive possession, but not ownership of realty, for a specified period of time, in consideration for the payment of rent.
Lease
An arrangement whereby part of the rent payment is applied to the purchase price, and when the prearranged total amount has been paid, title is transferred.
Lease Purchase Agreement
The interest that the tenant has created by a lease.
Leasehold
A written description of a parcel of land which locates it precisely and will hold up in court. (Does not include address.)
Legal Description
Estates in possession generally referred to as leaseholds. Considered to exist for a definite period of time, or successive periods, of time until terminated by notice; also known as nonfreehold estates.
Less than Freehold Estate
A legally recognized right to enforce a claim or charge on the property of another for payment of some debt, duty or obligation.
Lien
The mortgage merely creates a lien right on the mortgagee with the mortgagor retaining the title.
Lien Theory State
An interest which only lasts for the term of a life, or lives, of one or more persons. Death terminates.
Life Estate
A life estate in one person with another person serving as the measuring life.
Life Estate Pur Autre Vie
The holder of a life estate.
Life Tenant
An entity with one or more general partners and one or more passive investors, called limited partners.
Limited Partnership
A notice filed for the purpose of serving constructive notice that title, or some matter involving particular real property, is in litigation.
Lis Pendens
An employment agreement between an owner and broker defining the duties and rights of both parties. (Unilateral contract)
Listing Contract
A method of land description frequently used after land has been subdivided into building lots; also referred to as the recorded plat method. (Must have a plat map to find the property)
Lot and Block
The duty owed by an agent, to avoid conflicts of interest or any activity which is detrimental to a principal.
Loyalty
An employment contract between the owner of real estate and a property management firm that agrees to oversee the management of the property.
Management Agreement
Economic function of bringing buyers and sellers together through the price mechanism.
Market
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.
Market Data Approach
The price at which a willing buyer and a willing seller will agree upon, where neither is under any undue pressure, and both are negotiating at arm’s length with complete knowledge of the market.
Market Value
One which is free from reasonable doubts or objections, and which the courts would compel a purchaser to accept under the terms of a sales contract.
Marketable Title
A program for the future development of a community which serves as the guideline for capital expenditures.
Master Plan
A statutory lien levied on property by a person who is wrongfully not compensated after providing labor (mechanic) or material (material–man) for the improvement to land. (Only on the specific property where the work was complete.) Not on personal property.
Mechanic’s Lien
A method of land description which involves identifying distances and directions and makes use of both the physical boundaries and measurements of the land.
Metes and Bounds
An innocent or negligent misstatement of a material fact, detrimentally relied upon by the other party.
Misrepresentation
