Flash Card Deck Terms A - H
This deck contains real terms for you to study that start with the letter A through the letter H.
Abstract of Title
The condensed history of a title to a particular parcel of real estate, consisting of a summary of the original grant and all subsequent conveyances and encumbrances affecting the property and a certification by the abstractor that the history is complete and accurate.
Acceleration Clause
The clause in a mortgage or deed of trust that can enforced to make the entire debt due immediately if the borrower defaults on an installment payment or other covenant.
Accession
Acquiring title to additions or improvements to real property as a result of the annexation of fixtures or the accretion of alluvial deposits along the banks of streams.
Accretion
The increase or addition of land by the deposit of sand or soil washed up naturally from a river, lake, or sea.
Accrued Depreciation
Loss in value resulting from the property’s physical deterioration, external depreciation, and functional obsolescence.
Accrued Items
On a closing statement, items of expense that are incurred but not yet payable, such as interest on a mortgage loan or taxes on real property.
Acknowledgment
A formal declaration made before a duly authorized officer, usually a notary public, by a person who has signed a document.
Acre
A measure of land equal to 43,560 square feet, 4,840 Square yards, 4,047 square meters, 160 square rods, or 0.4047 hectares.
Actual Eviction
The legal process that results in the tenant’s being physically removed from the leased premises.
Actual Notice
Express information or fact; that which is known; direct knowledge.
Ad Valorem Tax
A tax levied according to value, generally used to refer to real estate tax. Also called the general tax.
Addendum
Any provision added to an existing contract without altering the content of the original. Must be signed by all parties.
Adjustable-Rate Mortgage (ARM)
A loan characterized by a fluctuating interest rate, usually one tied to a bank or savings and loan association cost-of-funds index.
Administrator
A court-selected person who assists with the settlement of an estate of a person who died without leaving a will.
Adverse Possession
The actual, open, notorious, hostile, and continuous possession of another’s land under a claim of title. Possession for a statutory period may be a means of acquiring title.
Affidavit of Title
A written statement, made under oath by a seller or grantor of real property and acknowledged by a notary public, in which the grantor (1) identifies himself or herself and indicates marital status, (2) certifies that since the examination of the title, on the date of the contract no defects have occurred in the title, and (3) certifies that he or she is in possession of the property.
Agency
The relationship between a principal and an agent wherein the agent is authorized to represent the principal in certain transactions.
Agency by Ratification
An agency relationship created after the fact.
Agent
One who acts or has the power to act for another. A fiduciary relationship is created under the law of agency when a property owner, as the principal, executes a listing agreement or management contract authorizing a licensed real estate broker to be his or her agent.
Air Lots
Designated airspace over a piece of land. An air lot, like surface property, may be transferred.
Air rights
The right to use the open space above a property, usually allowing the surface to be used for another purpose.
Alienation
The act of transferring property to another. Alienation may be voluntary, such as by gift or sale, or involuntary, as through eminent domain or adverse possession.
Alienation Clause
The clause in a mortgage or deed of trust that states that the balance of the secured debt becomes immediately due and payable at the lender’s option if the property is sold by the borrower. In effect, this clause prevents the borrower from assigning the debt without the lender’s approval.
Allodial System
A system of land ownership in which land is held free and clear of any rent or service due to the government; commonly contrasted to the feudal system. Land is held under the allodial system in the United States.
Amendment
A change to the existing content of a contract. Must be initialed by all parties.
American Land Title Association (Alta) Policy
A title insurance policy that protects the interest in a collateral property of a mortgage lender who originates a new real estate loan.
Americans with Disabilities Act (ADA)
Act addresses rights of individuals with disabilities in employment and public accommodations.
Amortized Loan
A loan in which the principal as well as the interest is payable in monthly or other periodic installments over the term of the loan.
Annexation
Process of converting personal property into real property.
Annual Percentage Rate (APR)
The relationship of the total finance charges associated with a loan. This must be disclosed to borrowers by lenders under the Truth in Lending Act.
Anticipation
The appraisal principle that holds that value can increase or decrease based on the expectation of some future benefit or detriment produced by the property.
Antitrust Laws
Laws designed to preserve the free enterprise of the open marketplace by making illegal certain private conspiracies and combinations formed to minimize competition. Most violations of antitrust laws in the real estate business involve either price-fixing (brokers conspiring to set fixed compensation rates) or allocation of customers or markets (Brokers agreeing to limit their areas of trade or dealing to certain areas or properties).
Appraisal
An estimate of the quantity, quality, or value of something. The process through which conclusions of property value are obtained; also refers to the report that sets forth the process of estimation and conclusion of value.
Appraiser
An independent person trained to provide an unbiased estimate of value.
Appreciation
An increase in the worth or value of a property due to economic or related causes, which may prove to be either temporary or permanent; opposite of depreciation.
Appurtenance
A right, privilege, or improvement belonging to, and passing with, the land; “runs with the land.”
Appurtenant Easement
An easement that is annexed to the ownership of one parcel and allows the owner the use of the neighbor’s land.
Area
A level surface or piece of ground; the size of a surface; the amount of a two-dimensional object.
Area Preference
People’s desire for one area over another, based on a number of factors such as history, reputation, convenience, scenic beauty, and location.
Asbestos
A mineral once used in insulation and other materials that can cause respiratory diseases.
Assemblage
The combining of two or more adjoining lots into one larger tract to increase their total value.
Assessed Value
The value set on property for taxation purposes.
Assessment
The imposition of a tax, charge, or levy, usually according to established rates.
Assignment
The transfer in writing of interest in a bond, mortgage, lease, or other instrument.
Assume
A buyer is personally obligated for the payment of the entire debt of a seller; that is, the buyer assumes the debt. The original seller is not liable for the debt if the property is foreclosed on.
Assumption of Mortgage
Acquiring title to property on which there is an existing mortgage and agreeing to be personally liable for the terms and conditions of the mortgage, including payments.
Attachment
The act of taking a person’s property into legal custody by writ or other judicial order to hold it available for application to that person’s debt to a creditor.
Attorney’s Opinion of Value
An abstract of title that an attorney has examined and has certified to be, in his or her opinion, an accurate statement of the facts concerning the property’s ownership.
Automated Underwriting
Computer systems that permit lenders to expedite the loan approval process and reduce lending costs.
Automatic Extension
A listing agreement clause stating that the agreement will continue automatically for a certain period of time after its expiration date. In many states, use of this clause is discouraged or prohibited
Avulsion
The sudden tearing away of land, as by earthquake, flood, volcanic action, or the sudden change in the course of a stream.
Balance
The appraisal principle that states that the greatest value in a property will occur when the type and size of the improvements are proportional to each other as well as the land.
Balloon Payment
A final payment of a mortgage loan that is considerably larger than the required periodic payments because the loan amount was not fully amortized.
Bargain and Sale Deed
A deed that carries with it no warranties against liens or other encumbrances but that does imply that the grantor has the right to convey title. The grantor may add warranties to the deed at his or her discretion.
Base Line
The main imaginary line running east and west crossing a principal meridian at a definite point; used by surveyors for reference in locating and describing land under the rectangular (government) survey system of legal description.
Basis
The financial interest that the Internal Revenue Service attributes to an owner of an investment property for the purpose of determining annual depreciation and gain or loss on the sale of the asset. If a property was acquired by purchase, the owner’s basis is the cost of the property plus the value of any capital expenditures for improvements to the property, minus any depreciation allowable or actually taken. This new basis is called the adjusted basis.
Benchmarks
Permanent reference marks or points established for use by surveyors in measuring differences in elevation.
Beneficiary
(1) The person for whom a trust operates or in whose behalf the income from a trust estate is drawn. (2) A lender in a deed of trust loan transaction.
Bilateral Contract
In a contractual agreement; a promise for a promise.
Binder
An agreement that may accompany an earnest money deposit for the purchase of real property as evidence of the purchaser’s good faith and intent to complete the transaction.
Blanket Loan
A mortgage covering more than one parcel of real estate, providing for each parcel’s partial release from the mortgage lien upon repayment of a definite portion of the debt.
Blockbusting
The illegal practice of inducing homeowners to sell their properties by making representations regarding the entry or prospective entry of persons of a particular race or national origin into the neighborhood.
Blue-Sky Laws
Common name for those state and federal laws that regulate the registration and sale of investment securities.
Boot
Money of property given to make up any difference in value or equity between two properties in an exchange.
Branch Office
A secondary place of business apart from the principal or main office from which real estate business is conducted. A branch office usually must be run by a licensed real estate broker working on behalf of the broker.
Breach of Contract
Violation of any terms or conditions in a contract without legal excuse; for example, failure to make a payment when it is due.
Broker
One who acts as an intermediary on behalf of others for a fee or commission.
Broker’s Price Opinion (BPO)
An opinion of real estate value commission by a bank or attorney and provided by a broker.
Brokerage
The bringing together of parties interested in making a real estate transaction.
Brownfields
Defunct, derelict, or abandoned commercial or industrial sites; many have toxic wastes.
Budget Comparison Statement
Compares actual results with the original budget, often giving either percentages or a numerical variance of actual versus projected income and expenses.
Buffer Zone
A strip of land, usually used as a park or designated for a similar use, separating land dedicated to one use from land dedicated to another use.
Building Code
An ordinance that specifies minimum standards of construction for buildings to protect public safety and health.
Building Permit
Written governmental permission for the construction, alteration, or demolition of an improvement, showing compliance with building codes and zoning ordinances.
Building-Related Illness (BRI)
An illness due to air quality problems, typically toxic substances or pathogens; a clinically diagnosed condition. Symptoms include asthma, allergies, and hypersensitivity.
Bundle of Legal Rights
The concept of land ownership that includes ownership of all legal rights to the land - possession, control within the law, enjoyment, exclusion, and disposition.
Buydown
A financing technique used to reduce the monthly payments for the first few years of a loan. Funds in the form of discount points are given to the lender by the builder or seller to buy down or lower the effective interest rate paid by the buyer, thus reducing the monthly payments for a set time.
Buyer Agency Agreement
A principal-agent relationship in which the broker is the agent for the buyer, with fiduciary responsibilities to the buyer. The broker represents the buyer under the law of agency.
Buyer’s Agent
A residential real estate broker or salesperson who represents the prospective purchaser in a transaction. The buyer’s agent owes the buyer-principal the common-law or statutory agency duties.
Buyer’s Broker
A residential real estate broker who represents prospective buyer exclusively. As the buyer’s agent, the broker owes the buyer-principal the common-law or statutory agency duties.
Capital Gain
Profit earned from the sale of an asset.
Capitalization
A mathematical process for estimating the value of a property using a proper rate of return on the investment and the annual net operating income expected to be produced by the property. The formula is expressed as follows: Income / Rate = Value.
Capitalization Rate
The rate of return a property will produce on the owner’s investment.
Capping
The process of laying two to four feet of soil over the top of a landfill site and then planting grass on it to enhance the aesthetic value and prevent erosion.
Carbon Monoxide (CO)
A colorless, odorless gas that occurs as a by-product of fuel combustion that may result in death in poorly ventilated areas.
Cash Flow
The net spendable income from an investment, determined by deducting all operating and fixed expenses from the gross income. When expenses exceed income, a negative cash flow results.
Cash Flow Report
A monthly statement that details the financial status of the property.
Caveat Emptor
A Latin phrase meaning, Let the buyer beware.
Certificate of Occupancy
Permission by the municipal inspector to occupy a completed building structure after being inspected and having complied with building codes.
Certificate of Reasonable Value (CRV)
A form indicating the appraised value of a property being financed with a VA loan.
Certificate of Sale
The document generally given to the purchaser at a tax foreclosure sale. A certificate of sale does not convey title; normally, it is an instrument certifying that the holder received title to the property after the redemption period passed and that the holder paid the property taxes for that interim period.
Chain of Title
The succession of conveyances, from some accepted starting point, whereby the present holder of real property derives title.
Change
The appraisal principle that holds that no physical or economical condition remains constant.
Chlorofluorocarbons (CFCs)
Nontoxic, nonflammable chemicals containing atoms of carbon, chlorine, and fluorine, such as air conditioners and refrigerators. CFCs are safe in application but cause ozone depletion.
Civil Rights Act of 1866
An act that prohibits racial discrimination in the sale of rental or housing.
Client
The principal.
Closing
An event where promises made in a sales contract are fulfilled and mortgage loan funds (if any) are distributed to the buyer.
Closing Statement
A detailed cash accounting of a real estate transaction showing all cash received, all charges and credits made, and all cash paid out in the transaction.
Cloud on Title
Any document, claim, unreleased lien, or encumbrance that may impair the title to real property or make the title doubtful; usually revealed by a title search and removed by either a quitclaim deed or suit to quiet title.
Code of Ethics
A written system of standards for ethical conduct.
Codicil
A supplement or an addition to a will, executed with the same formalities as a will, which normally does not revoke the entire will.
Coinsurance Clause
A clause in insurance policies covering real property that requires the policyholder to maintain fire insurance coverage generally equal to at least 80 percent of the property’s actual replacement cost.
Collateral
Something having value that is given to secure repayment of a debt.
Commingling
The illegal act by a real estate broker of placing client or customer funds with personal funds. By law, brokers are required to maintain a separate trust or escrow account for other parties’ funds held temporarily by the broker.
Commission
Payment to a broker for services rendered, such as in the sale or purchase of real property; usually a percentage of the selling price of the property.
Common Elements
Parts of a property that are necessary or convenient to the existence, maintenance, and safety of a condominium or are normally in common use by all of the condominium residents. Each condominium owner has an undivided ownership interest in the common elements.
Common Law
The body of law based on custom, usage, and court decision.
Community Association Management
Provides a team of property managers, accounting staff, office staff, and property consultants to manage property.
Community Property
A system of property ownership based on the theory that each spouse has an equal interest in the property acquired by the efforts of either spouse during marriage. A holdover of Spanish law found predominantly in the western U.S. states; the system was unknown under English common law.
Community Reinvestment Act of 1977 (CRA)
Under the act, financial institutions are expected to meet the deposit and credit needs of their communities; participate and invest in local community development and rehabilitation projects; and participate in loan programs for housing, small businesses, and small farms.
Comparables
Properties used in an appraisal report that are substantially equivalent to the subject property.
Competent Party
A person who has the capacity to be engaged in a legal contract; being of sound mind and body.
Competition
The appraisal principle that states that excess profits generate competition.
Competitive Market Analysis (CMA)
A comparison of the prices of recently sold homes that are similar to a listing seller’s home in terms of location, style, and amenities.
Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA)
A federal law administered by the Environmental Protection Agency that established a process for identifying parties responsible for creating hazardous waste sites, forcing liable parties to clean up toxic sites, bringing legal action against responsible parties, and funding the abatement of toxic sites.
Computerized Loan Origination (CLO)
An electronic network for handling loan applications through remote computer terminals linked to various lenders’ computers.
Condemnation
A judicial or administrative proceeding to exercise the power of eminent domain, through which a government agency takes private property for public use and compensates the owner.
Conditional Use Permit
Written governmental permission allowing a use inconsistent with zoning but necessary for the common good, such as locating an emergency medical facility in a predominantly residential area.
Condominium
The absolute ownership of a unit in a multi-unit building based on a legal description of the air space the unit actually occupies, plus an undivided interest in the ownership of the common elements, which are owned jointly with the other condominium unit owners.
Confession of Judgement Clause
Permits judgement to be entered against a debtor without the creditor’s having to institute legal proceedings.
