Definitions Flashcards
Abandonment
Lessee leaves without consent of lessor before lease expires; does not break lease or relieve lessee of obligations
Abatement
Reduction of property taxes
Abstract of title
A condensed history of legal title, summarizing all instruments in chain of ownership
Abutting
Land with a common boundary (adjacent/adjoining)
Acceleration clause
A clause in note; upon default, balance of debt becomes due immediately instead of maturity date; prelude to foreclosure
Acceptance
Indication by signature of offeree that s/he is willing to be bound by terms of offer from offeror
Accretion
The gradual addition of land by action of water or wind
Accrued depreciation
Cumulative loss in value; difference between cost of replacing property new and present value
Acknowledgment
A notary public declares signing to be free and voluntary
Acre
43,560 square feet
Actual notice
actual, specific, and direct knowledge given to someone as opposed to constructive/public notice (information made available for public viewing such as in registry of deeds)
ADA
Americans with Disabilities Act of 1990 (federal law)
Adjustments
taxes, rents, fuel, etc. apportioned or prorated between buyer and seller at closing
Administrator
Appointed by court to settle estate of person leaving no will
Ad valorem
According to value, tax assessment based on actual value
Adverse posession
occupant’s right to acquire legal title to private property they hold land openly, notoriously, adversely and without permission for 20 years; also known as squatters rights
Aeolian soil
Sand dunes formed by the action of wind
Affidavit
A sworn statement written oath such as acknowledgment (affirmation is an oath)
Agency
a contract by which one party undertakes to represent another in certain business situations
Agent
a person (natural), corporation, society, association or partnership (legal persons) acting by authority of a principal in a realty transaction for compensation
Agreement of sale
also known as a purchase and sale agreement (p&s)
Air rights
ownership and use of air space over a specific parcel of realty which can be leased or sold to others
Alienation
voluntary transfer of realty
Alienation clause
clause in mortgage giving lender right to accept or reject new owner of take-over mortgage (also known as due-on-sale and assumption clause)
ALJ
Administrative Law Judge (a judge presiding over hearings for government agencies)
Alluvion (alluvium)
sand or mud carried by water and deposited on other land
Amenities
features of property making it desirable and thus adding value, such as scenic views, convenient shopping, etc.
Amortization
paying indebtedness by equal and periodic payments; each payment is equal but ratio of principal and interest changes
Annexation
property changes from personal to real
Anticipation
a forecast of expected benefits during ownership and resale
Apparent
it looks as if it exists (as in authority)
Appraisal
an estimate of value
Appreciation
increase in value resulting from market forces
Approaches to value
three methods used by appraiser to form an estimate of value: sales comparison (market data), income, and cost
Appurtenance
an intangible right belonging to and passing with a property such as having a right of way through adjoining property
Arm’s length transaction
sale without duress on either party; an open and willing sale
Assemblage
combining two or more lots under single ownership
Assessed valuation
value given to realty for property taxation purposes
Assets
all real and personal property one owns
Associate broker
a broker who chooses to work as a salesperson for another broker (the employing broker)
Assumption of Mortgage
taking of title to property by grantee who assumes existing loan; mortgagee can pursue grantor or new grantee or both
Attachment
court order issues during a lawsuit prohibiting sale of realty
Attest
affirm under oath something is true (Attestation)
Attorney-at-law
a lawyer employed by a party to manage a cause
Attorney-in-fact
anyone who is authorized in writing to perform certain acts for another; valid only during lifetime of party giving this power
Auction
public sale of property to highest bidder
Avulsion
the sudden loss of land by action of water
Balloon mortgage
principal loan amount paid off in lump sum at end of term
Benchmark
mark on stone or cement (monument) permanently fixed to ground; used as measuring point by surveyors
Bequeath
to give personal property by will; bequest
Betterments
improvements done by town/city and paid for by owner
Bilateral contract
mutual and simultaneous exchange of consideration
Bill of sale
a written instrument which is the evidence of transfer of one person’s right in personal property to another
Binder
deposit given by buyer to secure property until closing; in insurance, it is memorandum of temporary coverage at closing
Blanket mortgage
a single mortgage instrument securing more than one parcel of property as security for the loan
Blockbusting
induces panic selling in a neighborhood based on a member of a protected class entering neighborhood
Bona fide
in good faith and without fraud
Bond
guarantee by third party that it will make good any loss, up to certain amount, incurred by a party dealing with a broker not acting in good faith; bonding company is Surety and obligor and State is obligee. Broker bond is made payable to state
Breach
default or violation of terms of contract
Broker of Record
the broker is responsible for what happens in the agency
Building Code
regulations setting forth minimum structural requirements
Building line
no building can be erected between building line and lot lines
Bundle of Rights
all rights that go with ownership of realty
Capital Expenditures
long term improvements to the property
Capitalization
computing current value from expected future income
Capitalization rate
profit stated as a percentage on a yearly basis
Carrying charges
expenses necessary for holding property such as vacant land pending development or zoning changes
Cash flow
profit after principal and interest are deducted from net operating income (NOI)
Cash on cash
the return on equity (divide cash flow by equity)
Caveat emptor
let the buyer beware - no longer applicable
Certificate of Reasonable Value
instrument issued by VA stating property value (CRV)
Certificate of title
opinion of attorney/title company certifying condition of title
Chain of Title
history of conveyances and encumbrances affecting a title
Change
real estate values always move up or down in a predictable cycle (growth, stability, decline, and renewal)
Clear Title
title free of encumbrances
Client
principal who hires an agent; CUSTOMER is the other party
Closing Costs
costs of seller and buyer at conveyance of realty
Closing Statement
accounting of funds at closing - settlement statement
Cloud on Title
claim or encumbrance impairing title and marketability
CMA
Competitive (comparable, comparative) market analysis, market value determined by a real estate agent
Collateral
a security, such as a mortgage, given to protect debt
Collusion
agreement between parties to defraud another
Color of title
deed appears to provide good title, but actually does not
Commingling
the mixing of funds held for the benefit of others with the broker’s personal or business funds
Commission
money or other valuable consideration given to broker by principal for services rendered; amount is by agreement
Competition
excess profits attract competition on supply side
Condemnation
the taking of private property by law of eminent domain
Condominium
multi-unit structure made up of individually owner units with separate deeds and shared ownership of common areas
Conformity
maximum value is created with homogenous property
Consideration
something exchanged between parties of a contract
Construction Loan
progressive payments to builder during stipulated stages in erection of building
Contract
a written agreement between two parties to do something
Contribution
added investment in a site is measured by adding value
Convey
to transfer and grant; to convey as a transfer of legal title in land by an instrument in writing such as deed
Cooperative
one corporation owns all real estate with stockholders occupying units through leases
Corporation
a legal person created by state law owned by one or more people; realty corporation must be licensed and bonded
Cost of reproduction
cost of exact duplication of property using similar materials
Counter Offer
voids firs offer and creates new offer
Covenant
a promise or guarantee usually found in a deed
Covert
hidden or concealed defect in the title
Cubage or Cubic Content
length x width x height of interior
Cul de sac
a road with one outlet, usually ending in a circle
Damages
estimated monetary damages for breach of contract
Debenture
an unsecured note as opposed to mortgage note
Decedent
deceased person
Dedication
to convey private property over to public use
Deed
instrument in writing, duly executed and delivered for the purpose of conveying title (ownership) to real property
Deed of Trust
in some states used instead of a mortgage (trust deed)
Deed Restriction
provision in deed controlling use of land
Default
non-performance of a duty under an instrument
Defeasance Clause
clause in mortgage which defeats mortagee interest if loan is repaid according to Note
Defendant
party sued. plaintiff: party initiating action
Deferred Payments
money payments to be made at future date
Deficiency Judgment
court award to lender if sale at auction does not equal debt
Delinquency
a loan in default or overdue
Delivery
irrevocable transfer such as with deed
Demand loan
lender may demand payment of the loan at any time
Demise
to lease
Density
number of dwellings and commercial units per acre
Depreciation
decrease in value for various reasons
Devise
a gift of realty by will; deceased is devisor
Direct Reduction Mortgage
debt repaid by amortization
Domicile
place where one has permanent residence
Duplex
a home with two living units, a physical description that does not define ownership of the building
Duress
unlawfully forcing someone to do something against their will
Dust
acronym for elements of value (effective demand, utility, scarcity, and transferability)
Earnest Money
deposit or binder given with signing of P&S
Easement
a right which one person has in lands of another (easement in gross is a personal contract right to use another’s land)
ECOA
Equal Credit Opportunity Act, federal law prohibiting discrimination in credit/lending
EEOC
Equal Employment Opportunity Commission, federal body that makes policy/approves employment discrimination suits
Effective Demand
the ability to act on the desire to buy
Elements of Value
that which is necessary to achieve value
Emblements
crops; deemed personal and belonging to tenant or reserved by seller as removable prior to or after sale of land
Eminent Domain
right to take private property for public use for fair value
Encroachment
physical stationary trespass of a property on that of another
Encumbrance
anything which burdens (limits) the fee title to property
Equity
value or interest an owner of realty has above any debt on property; difference between value and mortgage debt
Equity Participation
a further return on investment for lender in addition to interest; part ownership with lender
Erosion
the gradual loss of land by action of water or wind
Escheat
power of state to take abandoned property or if no will/heirs
Escrow
the holding of something of value by a person (escrowee or escrow agent) for the benefit of other parties
Et al
a term meaning “and others” (Et Ux. means “and white” Et Con. means “and husband)
Eviction
the depriving of a person’s possession of realty (also forcible entry and ejectment)
Exclusive Agency
principal agrees to work with one agency for a stated period of time (no commission earned if client does own deal)
Exclusive Right to
to sell or represent, agency earns commission even if client does own deal
Executor
person named in will to execute or probate the will
Express
directly stated to exists (as in authority)
External Obsolescence
loss in value due to outside forces, aka economic obsolescence
Federal home loan mortgage corp (FHLMC)
also known as “Freddie Mac” it is the secondary market loan buyer
Federal Housing Administration (FHA)
part of HUD; insured mortgage loans originated by lenders with the home buyer paying loan insurance premium
Federal National Mortgage Association (FNMA)
known as “Fannie Mae” it is a secondary market loan buyer
Federal Reserve Board
establishes and regulates monetary policy
Fee Simple
also known as fee and fee simple absolute, largest possible estate or interest person can have in a parcel of realty; least limited estate, defining characteristic is inheritability
Fee Simple Defeasible
granting of title (fee simple subject to a condition subsequent) or duration of title (fee simple determinable) is dependent on a specific condition named in the title
FHEO
Office of Fair Housing and Equal Opportunity (part of HUD)
Fiduciary
a position of trust (e.g. broker to principal)
Fiduciary Duties
duties (obedience, undivided loyalty, full disclosure, confidentiality, full account, reasonable care) owed by agents to clients
Finder’s Fee
fee for locating a property, client or customer - commission
Fixture
article that was once personalty but is now realty because it is permanently attached
Foreclosure
collateral is sold to pay debt because of default
Forfeiture
loss of deposit for failure to perform terms of contract
Fraud
intentional deception in which injured party has loss
Freehold
an ownership interest in realty of not less than a life estate
Friable
crumbling/brittle such as asbestos
Front foot
number of feet or frontage abutting a street
Functional Obsolescence
loss in value due to utility problems
General lien
a lien against more than one piece of property of debtor
Government National Mortgage Association (GNMA)
known as “Ginnie Mae” a government secondary market government buyer focused on low-cost housing
Graduated loan
lower payments leading to negative amortization (unpaid interest is added on to the principal owed)
Grantee
one receiving title to real estate from grantor
Grantor
one who transfers title of real estate to the grantee
Gross Lease
owner receives rent and pays out expenses. NET LEASE: owner receives rent and tenant also pays out expenses
Gross Living Area
square foot of living space, measured from outside the building, above ground, enclosed, heated, habitable space
Habendum Clause
“to have and to hold” clause in deed for life estate
Hereditaments
inheritable property, real and personal
Highest and Best Use
use of a property that produces greatest net income
Homestead Laws
protects home from forced sale to satisfy unsecured debts
HUD
Department of Housing and Urban Development
Hypothecate
to give something as security without giving up possession such as to mortgage a property
Implied
people act as if it exists (As in authority)
Impounds
reserves such as tax and insurance payments made to and held by mortgagee
Infrastructure
network of public facilities of an area
Ingress/Egress
entering and leaving
Injunction
court order to stop a party to a contract from doing something
Irrevocable
unchangeable
Installment sales contract
conditional sales contract, land contract, or contract for deed/land, buyer acquires “equitable title” until final payment; after delivery of deed, buyer has “legal title”
Instrument
a formal written document
Insurable value
the value of property for insurance purposes (cost)
Interim financing
development loan such as construction money
Intestate
no will or a defective will by the deceased
Investment
total value of property: down payment and loan
Investment value
the value of property to a particular investor
Joint Tenancy
two or more owners with rights of survivorship; not inheritable, must be specifically chosen
Judgment
the final determination of a court of a matter presented to it
Junior Mortage
any mortgage after a previous mortgage
Laches
unreasonable delay in asserting one’s rights
Lease
rental contract for possession of realty for specified period
Leaseback
the purchase of property and the leasing of it back to seller
Leasehold
the interest which a lessee has in realty
Legal Description
method of describing property ascertained by survey
Leverage
maximum use of borrowed money and minimum use of cash in the purchase of realty (loan to value ratio)
License to Sell
court order to sell property out of probate
Lien
a money claim against property for payment of some debt
Life Estate
estate or interest held during a certain person’s life; non-inheritable; lost of freehold estates
Limited Liability Company
a legal person created by state law owned by one or more members; same licensing rules apply as with corporation
Liquidation value
value of property in a forced sale such as foreclosure
Liquidity
a person’s cash assets
Lis pendens
a recorded notice by plaintiff of pending litigation affecting title to property; not a lien, but a “cloud on title”; ceases when action is dismissed or wen judgment is final and recorded
Listing
an agreement between principal and agent to provide services
Litigation
a contest in court of law between two parties
Littoral
use and ownership of shoreline of large body of water
Lot line
legal line separating a lot from another lot
Market Price
the price property actually sells for
Market Value
price for which realty can be sold on open market if there is a willing seller and buyer and a reasonable time to make sale negotiated at arms length
Marketable title
a title which buyer would accept and a lender would accept as collateral
Master Deed
basic title document in creation of condominium; it defines individual fee units and common interests
MCAD
Massachusetts Commission Against Discrimination (state commission hearing discrimination cases)
Mechanic’s Lien
statutory lien for labor/material for improvement of realty
Meeting of minds
an offer and acceptance; mutual assent, an agreement/contract
Metes and Bounds
boundaries of land described in directions and distances
Moratorium
action by government temporarily halting construction
Mortgage
a legal instrument conveying conditional title to lender in order to secure the repayment of the debt described in note
Mortgage broker
a party who, for a fee, brings together lender and borrower
Mortgage commitment
a written notice from lender promising a future loan under certain conditions and terms
Mortageee
the lender
Mortagee-in-posession
lender takes possession of property from defaulted party and collects income from lessees pending foreclosure
Mortgagor
the borrower
Municipal lien certificate
document confirming status of taxes, water, sewerage, betterments etc; a required document at closing of title
National Association of Realtors (NAR)
a national private trade association with state and local chapters whose members are called realtors
Necessaries
essentials of existence: food, clothing, shelter
Net listing
a fixed, specified price below which owner will not sell and at which broker receives no commission’ broker receives everything over fixed price; illegal
Net Operating Income (NOI)
effective gross income minus operating expenses
Net Worth
value left after liabilities are deducted from assets
Nominal Consideration
something of value bearing no relation to real value
Nonconforming Use
grandfathered use in existence prior to current zoning
Note
promissory instrument given by borrower to lender as evidence of debt; IOU
Novation
substitution of old obligation with a new one
Obsolescence
loss of value from any source other than wear and tear
Offer
statement of intent by offeror; ACCEPTANCE: statement of intent to accept offer by offeree
Open-end-mortage
a line of credit
Open Listing
any hired broker can sell property for a commission but if owner sells, no commission payable
Open Mortgage
a mortgage that has matured or is overdue and subject to foreclosure
Option
a contract between owner and potential buyer or lessee to buy or lease in future at specified terms
Ordinance
law by local government body
Overabundance
too much supply given the demand
Overt
openly known
Ownership
title; an estate in realty to the exclusion of others
Package Mortgage
a loan secured by both real and personal property
Parol
oral, as distinguished from written
Partition
a legal action to divide realty co-owned
Party Wall
wall or fence on common boundary for benefit of both parties’ both parties are responsible for maintenance
Percentage Lease
a lease in which rental is based on a percentage of gross sales
Percolation Test
a soil test designed to measure rate of water absorption and drainage such as for septic systems
Personal Property
moveable items not fixed to a particular location; personalty, chattel
Personal Representative
in MA, the term used to replace executor/administrator
Physical Depreciation
loss in value resulting from wear and tear, deterioration
Planned Unit Development
high density of dwellings with maximum open spaces
Plottage Value
increase in the value of land by assemblage of smaller lots into one ownership; known as plottage increment
Points
one-time charge by lender to increase yield on investment; paid at passing; one point equals 1% of loan amount
Plat
a plan or map of a parcel, such as one showing the various lots of a proposed subdivision (arrows point north)
Plat Book
public record of recorded plans or maps
Plot Plan
a diagram showing the existing or proposed use of parcel of land. This will show improvements on land
Point of Beginning (POB)
starting and ending point in metes and bounds description
Police Power
building codes and zoning ordinances
Power of Attorney
written instrument authorizing another to act in his/her place; person given power is attorney-in-fact
Prepayment Penalty
penalty for full pay-off of loan before maturity date
Prescription
a method of obtaining an easement by adverse use for a period of years (20), hostile to owner’s wishes
Prima Facie
on first view; on the face of it; an obvious fact
Primary Mortgage Market
market where loans are made directly to borrowers
Prime Rate
lowest interest rate charged by commercial bans to most credit-worthy customers; the DISCOUNT RATE is a rate charged to these banks by Federal Reserve
Private Restriction
restriction placed on realty in deed by grantor
Probate
processing assets after death
Procuring Cause
the one who brought about the sale of the property
Promulgate
to publish or make known such as license law
Prorate
term used to describe proportional adjustment of monies between seller/buyer at closing such as taxes, fuel, rents
Prospectus
an advertisement and invitation to buy securities (reviewed by the Securities and Exchange Commissions (SEC))
Public Restriction
government law or regulation restricting the use of realty
Purchase and Sale Agreement
binding written agreement whereby buyer promises to buy and seller promises to sell; agreement of purchase, P&S
Purchase Money Mortgage (PMM)
as part of purchase price, buyer gives no and mortgage to seller
Quiet enjoyment
right of owner or tenant to possession without interference
Quieting Title
court action to establish true owner and title
Quitclaim Deed
instrument releasing interest of grantor without liability
Real Property
land and everything that is directly or indirectly permanently attached or affixed to the land; real estate, realty
Reality of Consent
agreement to a contract must be free from misrepresentation, fraud, undue influence, and duress
Reciprocity
mutual exchange of privileges
Reconciliation
final step in appraising
Redlining
presenting different terms or conditions to prospective borrower based on people residing where collateral is located
Reliction
gradual withdrawal of water exposing land
Rescission of contract
annulling or abrogation of contract by mutual consent
RESPA
Real Estate Settlement Procedures Act. A law requiring full disclosure of closing costs to buyer and seller
Revocation
a recall or cancellation
Right of way
right of one person to pass over estate of another; easement rights belonging to or relating to banks of a waterway
Riparian
rights belonging to or relating to banks of a waterway
Sales Comparison Approach
approach to value by which valuation of a property is based on comparison with previously sold properties with similar characteristics; also known as market data
Satisfaction Piece
also known as discharge, recorded instrument which satisfies debt of mortgagor; it releases, discharges and pays in full
Scarcity
insufficient supply to meet demand
Secondary Financing
junior mortgages, not to be confused with secondary mortgage market
Secondary Mortgage Market
marketplace for the sale and purchase of existing mortgages which originated in primary market
Security Deposit
money of tenant deposited with landlord to offset damages beyond reasonable wear ant tear done by tenant
Seisin
possession of realty with ability to convey, in warranty deeds
Separate Property
property owned by married person in own right
Setback
distance from curb/street to where building may be erected
Severalty
sole ownership; owned by one person only
Severance
property changes from real to personal
Shared Equity Loan
in addition to making a loan, lender pays a portion of the down payment and gets a split of the equity on resale
Sheriff’s Deed
conveys title to property sold to satisfy a judgment
Sinking Fund
money set aside to pay for replacement of improvements
Special Agent
broker working directly for the client
Specific lien
a lien on a particular piece of property
Specific Performance
court decision ordering one party to comply with terms of contract
Square foot
the front foot measurement multiplied by the depth
Statute
act of legislature
Statute of Frauds
law requiring all realty purchase agreements to be in writing in order to be enforceable in a court of law
Steering
choosing property to show prospective buyers/renters based on protected classes
Stigmatized Property
psychologically impacted property due to death-related event, murder, suicide, haunted house
Subagent
agent working indirectly for client (salesperson/co-broker)
Subdivision
act of land legally divided into two or more separate lots
Subordination
willingness of lien holder such as a junior mortgage, to accept a position behind another later lien holder
Subprime
riskier loan due to borrower’s poor credit
Substitution
when two or more like properties are for sale, the one with the lowest price attracts the greatest demand
Surety
one who guarantees performance of another
Survey
act of establishing legal description of property
Swing loan
short term loan so buyer can purchase new property based on equity in property buyer is selling; aka bridge loan
Syndication
joining of mutually interested parties to accomplish a joint venture by pooling their money
Taking
a tax lien recorded when property taxes are delinquent
Tax Rate
rate multiplied by assessment to produce annual taxes
Tax Sale
sale of property by public auction for overdue property taxes
Tax Title
title or ownership acquired at tax sale
Tenancy At Sufferance
tenant remains in possession after lease expires and without owner’s permission
Tenancy At Will
rental subject to termination at will of either landlord or tenant
Tenancy By The Entirety
form of joint tenancy reserved for married couples - a choice
Tenancy in Common
holding of title by two or more people, the lease restrictive, most flexible form of co-ownership, automatic
Testator
one who makes will of last testament
Time is of Essence
exact and punctual performance of contract
Time Share
vacation property made more affordable by limiting possessory rights
Title Insurance
insurance against loss resulting from default in title
Title Reference
book/page number, method of cataloging at registry of deeds
Title Search
examination of registry records to determine chain of title
Topography
nature or contour of land surface
Torrens System
procedure of registering titles in land court
Trade Fixtures
personal property used in business and affixed to realty; necessary for trade and are removed by tenant
Transferability
a seller has to be able to transfer title
UCC
Uniform Commercial Code - laws governing commercial transactions and establishing claims for collateral
Unearned Increment
increase in value, not anticipated by owner, due primarily to outside forces. Example: population growth and inflation
Unilateral contract
one party promises to act upon the completed act of the other
Unimproved Property
land without buildings or other improvements, raw land
URAR
Uniform Residential Appraisal Report. method of reporting a residential appraisal; required by Fannie Mae
USPAP
Uniform Standards of Professional Appraisal Practice - a code of conduct in performing appraisals
Utility
the ability to satisfy desires and expectations
Usury
charging higher rate of interest than law allows
Variable Interest
loan originates at one rate but fluctuates according to an agreed index; known as adjustable rate mortgage
Variance
permission from local government to develop land in a manner contrary to existing zoning laws due to hardship
Warranty Deed
grantor has liability for third-party claims
Weighted Averaging
math technique where one or more numbers has greater impact than others on final numbers
Wraparound Mortgage
a mortgage that includes a first and second mortgage instead of having two different ones
Zoning
local government regulations relating to the use of land
