Definitions Flashcards
21E Certificate
property free from contamination
203(b)
FHA financing
1031 exchange
way to defer capital gains tax by re-investing within 6 months
1099-s
report real estate sales to IRS
accretion
increase in property due to wind/water
accretion line
edge of water (high tide)
adverse possession
squatters rights
aeolian soil
deposited by wind (dunes)
air rights
80-500 ft above real estate
alienation clause
due on sale clause for lender
alluvion
increase land on shoreline by deposits or recession of water
alluvium
clay, silt, sand deposited by running water
annexation
when property that was personal becomes real property
appurtenance
a right belonging to and passing along with the property (like right of way)
assemblage
combining two or more lots
avulsion
sudden separtion of land from one lot and attachment to another by flood/river change
bargain and sale deed
certificate of sale; no warranties; ususally foreclosure
binder
deposit or earnest money
blockbusting
inducing panic to leave neighborhood
boot
unreplaced property value or reduced mortgage debt
bundle of rights
all of rights that come with home ownership: possession, exclusion, control, disposition, enjoyment
calling the note
first step of foreclosure
cash flow
profit leftover after debt service and capital expenses paid from NOI
cash on cash return
% of total investment received as cash flow
CERCLA
Comprehensive Environmental Response, compensation, liability act 1980 (superfund act)
estoppel certificate
(also called certificate of no defense) confirms if there is debt or lease when property sold
chapter 21E
(MA) superfund; creates office of brownfield revitalization
chapter 40A
(MA) creates zoning laws/master plan for towns
chattel
personal property
CFCs
non-toxic chemical (refrigeration)
chlordane
from pest treatments; must be disclosed
common area load
(commercial prop) % of rentable sq footage over usable sq footage (common areas)
comparative-unit method
price per sq foot for new construction
Comprehensive Loss Underwriting Exchange (CLUE)
records past consumer claims / homeowner’s insurance
condemnation
taking property by means of eminent domain
conditional sales contract
(usually land) buyer has equitable title until all conditions made/money paid
conditional use permit
like a variance but limited/special use
constructive eviction
when tenant leaves property bc landlord hasn’t fulfilled contract duties
constructive notice
public notice of something
cost approach
uses construction coasts to assess value of unusual property (church) where comps aren’t possible
covenant
promise, guarantee or limitation in deed
curtesy/dower rights
husband/wife can have property upon spouse’s death for thir lifetime
datum
point used to measure elevation in metes and bounds survey method
debt service
mortgage payments
dedication
giving land for public use
defeasance clause
clause on mortgage that releases it when last payment made
depreciation recapture tax
25% tax for any depreciation value made back at sale
devise
transfer real property through will
discount rate
rate the Fed lends at for banks
doctrine of capture
owner of land has rights to capture any liquid minerals under their land
doctrine of estoppel
once you cause someone to act in a certain way based on info given, you can’t go back on your word.
doctrine of laches
(time limit) you lose your rights if you do not assert them in reasonable time
doctrine of prior appropriation
(not colonies) rights to a river based on whoever uses the water first
Dodd Frank Act
changed RESPA requirements and processes for more transparency in lending
dominant tenement
property owner with right to easement appurtenant
Dower’s rights
(not in MA) surviving spouse granted life estate for property not willed to them and up to 1/3 interest in place of whatever was left in will
DTI
debt to income ratio
assumption clause
due on sale clause
easement appurtenant
involving two adjoining lots; gives one owner right of way access over other’s lot
easement in gross
a personal right to use another’s land
Elements of value
DUST: demand, utility, supply, transferability
emblements
crops that require annual or semi-annual harvesting considered personal property
entry-only listing
flat-fee listing – only enters on MLS
ECOA
Equal Credit Opportunity Act
Equity Right of Redemption
(MA) under Statutory Right of Redemption property owner has 6 months from date of tax foreclosure to regain ownership of property
equitable title
future right to obtain legal title
Escheat
power of government to take property left without will/heirs
Escrow account
Also known as trust acct
Exclusive agency
must be in writing with exp date. Seller can find own buyer
Exclusive right to sell
must be in writing with exp date. Seller must pay commission
Federal Funds Rate
rate for interbank lending
Freddie Mac/Fannie Mae
buys loans form lenders for them to be able to offer more mortgages
FHA
insures mortgage loans. as low as 3.5%
Federal Open Market Committee
buy/sell US debt to/from member banks
Federal Reserve Board (The Fed)
establishes/regulates monetary policy
Fee simple absolute
fee/feesimple/fee simple indefeasible – ownership without restrictions
fee simple defeasible
ownership dependent on specific condition in deed
Fee simple determinable
fee simple defeasible estate where limitation is violated and title automatically lost
fee simple subject to condition subsequent
fee simple defeasible estate where limitation is violated and grantor can request forfeiture of title via court action
fee simple subject to an executory limitation
fee simple defeasible estate where limitation is violated and property transfers to third party named by grantor
Title XI
Appraisers must have valid appraisal license
Foreign Investment in Real Property Tax Act
10% of sale price withheld and sent to IRS
Four stages of life cycle
growth, stability, decline, revitalization
Freehold
Ownership interest in realty
Fully amortized loans
also known as direct reduction loans – completely paid off with last payment
Garn St. Germain Act
Due on sale clause cannot be triggered in event of death, divorce, marriage, leasing, devising on property or transfer into family trust
General Warranty Deed
grantor accepts liability for past, present and future claims. Includes covenant of warranty forever.
Government rectangular survey
public land survey system – not in original 13 states – uses meridians and base lines
graduated lease
rent increases on an agreed upon schedule. Escalator clause increases or decreases rent
graduated loan
lower payments early on in loan cause nagative amortization
graduated payment mortgage (GPM)
payments on loan gradually increase with pred. of rising income (doctors)
Ground lease
tenant rents land, builds improvements, at end of lease, improvements belong to landlord. up to 99 years. Common for fast food chains
Growing equity mortgage (GEM)
extra payments to loan go to principal in order to pay off faster
Habendum Clause
seen in life estate deeds – defines or limits estate being granted
holographic
handwritten wills
homestead laws
protect homeowners from forced sale of house due to unsecured debts
Homeowners Protection Act of 1998
When hoeowner’s LTV dips below 78%, PMI will automatically discharge
Holdover tenant
squatter
hypothecate
pledge something as a secuirty for debt without giving up possession (mortgage)
implied easement
implied through sale but not legally created/documented
implied warranty of habitability
(MA) automatic warranty on new construction – 3 yrs
impounds
reserves held in escrow by lender (property taxes)
inactive licensees
may make referrals, but still need cont ed and member fees
installment sales contract
basically a rent to own – also called contract for deed , land contract, conditional sales contract
intestate
no will or defective will left by deceased
inverse condemnation
if government takes land and causes depreciation for leighbors, they can claim compensation
joint tenancy
has right of survivorship
Land and surface rights
extends usually 30’ below surface
leaseback
frees capital and creates tax relief
LEED certification
green building rating system
legatee
heirs to PERSONAL property
license
personal, revocable permission to enter property (sporting event)
Lien theory state
borrower holds legal title to property that is financed
life estate
ownership held for life; non-inheritable
littoral
shoreline of large body of water
lot and block survey method
uses metes and bounds (monuments/benchmarks)
ltv
loan to value ratio
93A
(MA) consumer protection act. 30-day demand letter.
metes
distances
MI
mortgage insurance for FHA loans
modified gross lease
tenant pays fixed amount in first year (base year) and then more based on owner’s operating expenses
mortgage interest deduction
can deduct interest up to 750,000 debt
municipal lien certificate
required at closing to prove status of payment of property taxes, water, etc
Net operating income (NOI)
effective gross income minus operating expenses
net lease
tenant pays building expenses in addition to rent. Debt service not part of operating expenses.
net listing
illegal commision arrangement with unspecified comission over certain sale amount
non-designated agency
common/default rep. Client represented by all agents at brokerage.
non-freehold
all uses of property but ownership (rent)
non-recourse loan
borrower not personally liable in event of foreclosure
novation
cancellation of contract and replaced with new one
noncupative will
verbal. not enforceable in most states
ONCHA
(squatter) 20+ years, claim easement by prescription or claim ownership of land
open mortgage
mortgage matured or overdue and subject to foreclosure
open end mortgage
HELOC
package mortgage
covers real and personal property
parol
oral/verbal
partial release clause
used with blanket mortgages
participation mortgage
lender participates as an investor in development
PCBs
200 chemical compunds not found in nature
percentage lease
lease amount based on percentage of gross sales (department store)
PITI payment
principle, interest, prop tax, insurance
pledged account mortgage
borrower pay to subsidize interest rate on loan to have lower payments during times of high interest rates.
plottage value
increased value from assemblage (bundling plots)
points
origination fee charged by lenders at closing. 1%=point
power of sale clause
Allows lender to sell property if owner defaults on terms
letter of comitment
pre-approval letter from mortgage co; non-binding
prescription
method of obtaining an easement by adverse use of someone’s property
principal
the client or person paying you
private restriction
like a covenant runs with the land
privity of contract
right to sue under a contract
privity of estate
legal relationship between two entities with common interest in same property
procuring cause
the effort of a broker to produce a ready, willing and able buyer
professional liability insurance
errors & omissions ins
proprietary lease
what cooperation gives unit owners (coop)
puffing
exaggeration made by salesperson; can be cause for 93a claim
pur autre vie
life estate not based on grantee’s life, but a third-party life.
purchase money mortgage (PMM)
seller financing
quantity survey method
determines cost of rebuilding property exactly as is using local construction costs
quieting title
land court action to determine owner of property
quitclaim deed
also known as non-warranty deed; often used for fixing mistakes on deed or in foreclosure
Reverse annuity mortgage (RAM)
bank makes payments to borrower against equity; 62+
reappraisal lease
an appraiser opines on rent value rather than landlord/tenant
Recording/conveyance stamps
(MA) 2.28/500 or 3.24/500 Barnstable
redlining
credit discrimination
reliction
increase of land due to withdrawal of water
rentable sq footage
includes common area
REO
real estate owned = bank owned foreclosure property
RESPA
real estate settlement procedures act; full disclosure of closing costs
reversionary interest
when a grantor or landlord have right to regain possession of property in the future
right of first refusal
first dibs; right to match other offers
riparian
rights to or along a running body of water
riparianism
(MA) used for rivers; prop bordering navigable waterways have rights up to accretion line and properties on non-nav waterways have rights to mid-point of waterway.
riverfront area
land between mid-point high mark and 200 ft out (or 25 ft if densely populated)
SARA – superfund amendments and reathorization act
provides for innocent landowner status
satisfaction piece
mortgage discharge (recorded evidence of payment of debt)
Seisin/seizin
possession of real property with freehold claim
separate property state
(MA) married persons may own property separately and in their own name
servient tenement
the property owner encumbered by the right of an easement appurtenant
severability clause
allows for cancellation of part of clause without cancelling whole contract
severalty
ownership by one person (cooperative)
severance
property that was real becomes personal
severance damage
property owner may receive if government only takes part of land in eminent domain
shared appreciation mortgage (SAM)
a loan where an investor makes the down payment for property in exchange for share in equity of property
shared equity loan
lender provides financing and pays portion of down payment
sheriff’s deed
deed used to convey title to property sold to satisfy court judgment
simple interest mortgage
non-compounding mortgage; interest calculated daily
special warranty deed
also known as limited warranty deed; grantor guarantees they did not cause any issues with title
stachybotrys
black mold; must be disclosed
statute of frauds
only written RE contracts are enforceable
straight line depreciation
method of calculating depreciation which calculates annual loss based on IRS economic life years: 27.5 residential / 39 commercial
straight mortgage
interest only mortgages; principle paid on last payment
strict foreclosure
foreclosure auction not required bc lender can sue borrower for amount owed in court; if borrower doesn’t pay, lender automatically receives title.
subject to
a method for taking over a mortgage, but seller is still liable.
surety
someone who guarantees and becomes legally responsible for another
swing loan
type of bridge loan for people purchasing new home before selling old one
take over mortgage
when a buyer takes over the debt of seller at sale
taxpayer relief act
shelter from capital gains 250k single, 500k married
tax sale
sale of property at public auction to satisfy deliquent taxes
tax title
ownership acquired at tax sale
tenancy at sufferance
squatter
tenancy by the entirety
co-ownership for married couples only
tenancy in common
co-owners may have equal or unequal interests. INHERITABLE
testator
person leaving will
title theory state
a state where bank holds title on property with mortgage; borrower holds equitable title
Title V
pass inspection within 2 years of sale (3 if pumped yearly) or 6 mo after sale.
torrens system
US system of land registration
TRID forms
TILA-RESPA disclosure forms
trustee’s deeds
deeds executed by trustee to convey real estate to anyone besides trustor
UCC – uniform commercial code
regulates business and financial transactions
UFFI
banned in 1979
USTs – underground storage tanks
buried underground by 10% or more; banned in MA under 21 E
Uniform settlement statement
used to be HUD-1; lists all cost of RE transaction
unimproved property
raw land
unit in place method
calculates systems in property for reproduction or replacment
URAR
uniform residential appraisal report; required by Fannie and Freddie
usable sq footage
does not include common area
Utilization pooling
property owner does not have right to capture all liquid minerals under their land, but is entitled to a fraction of them
value in use
the value to a particular user (farmer vs. homeowner)
adjustable rate mortgage (ARM)
variable interest rate
wetland protection act (DEP)
buffer zone of 100ft from wetland; 50 ft for minor changes
wraparound mortgage
seller financing that wraps around seller’s existing mortgage
