Flash Card Deck Terms I - Z
This deck contains real terms for you to study that start with the letter I through the letter Z.
Implied Agency
Based on the actions of the parties that imply that they have mutually consented to an agency relationship, an implied agency relationship is formed.
Implied Agreement
A contract under which the agreement of the parties is demonstrated by their acts and conduct.
Implied Warranty of Habitability
A theory in landlord/tenant law in which the landlord renting residential property implies that the property is habitable and fit for its intended use.
Impound Account
An account that most mortgage lenders require borrowers to have for funds to pay future real estate taxes and insurance premiums.
Improvement
1) Any structure, usually privately owned, erected on a site to enhance the value of the property. 2) a publicly owned structure added to or benefiting land.
Income Approach
The process of estimating the value of an income-producing property through capitalization of the annual net income expected to be produced by the property during its remaining useful life.
Incorporeal Right
A nonpossessory right in real estate.
Independent Contractor
Someone who is retained to perform a certain act but who is subject to the control and direction of another only as to the end result and not as to the way in which the act is performed. Unlike an employee, an independent contractor pays for all expenses and Social Security and income taxes and receives no employee benefits. Most real estate salespeople are independent contractors.
Index
An objective economic indicator to which the interest rate for an adjustable-rate mortgage is tied.
Inflation
The gradual reduction of the purchasing power of the dollar, usually related directly to the increases in the money supply by the federal government.
Inheritance Taxes
State-imposed taxes on a decedent’s real and personal property.
Installment Sale
A transaction in which the sales price is paid in two or more installments over two or more years. If the sale meets certain requirement, a taxpayer can postpone reporting such income until future years by paying tax each year only on the proceeds received that year.
Interest
A charge made by a lender for the use of money.
Interest-only Mortgage
A mortgage that only requires the payment of interest for a stated period of time with the principal due at the end of the term.
Interim Financing
A short-term loan usually made during the construction phase of a building project. AKA a construction loan.
Internal Revenue Service Tax Lien
A lied charged by the Internal Revenue Service for nonpayment of income taxes.
Internet Advertising
A powerful computer tool for providing information about properties, relocation services, and particular communities; however, state laws do apply.
Internet Listing Display Policy
A policy from the National Association of Realtors that allows all MLS members to have equal rights to display MLS data, and respects the rights of property owners and their listing brokers to market a property as they wish.
Interstate Land Sales Full Disclosure Act
A federal law that regulates the sale of certain real estate in interstate commerce.
Intestate
The condition of a property owner who dies without leaving a valid will. Title to the property will pass to the decedent’s heirs as provided in the state law of descent.
Intrinsic Value
An appraisal term referring to the value created by a person’s personal preferences for a particular type of property.
Inverse Condemnation
An action brought by a property owner seeking just compensation for land taken for public use when the taker of the property does not intend to bring eminent domain proceedings. Property is condemned because its use and value have been diminished due to an adjacent property’s public use.
Investment
Money directed toward the purchase, improvement, and development of an asset in expectation of income or profits.
Involuntary Lien
A lien placed on property without the consent of the property owner.
Joint Tenancy
Ownership of real estate between two or more parties who have been named in one conveyance as joint tenants. Upon the death of a join tenant, the decedent’s interest passes to the surviving joint tenant or tenants by the right of survivorship.
Judgment
The formal decision of a court upon the respective rights and claims of the parties to an action or suit. After a judgment has been entered and recorded with the county recorder, it usually becomes a general lien on the property of the defendant.
Judicial Precedent
In law, the requirements esablished by prior court decisions.
Junior Lien
An obligation, such as a second mortgage, that is subordinate in right or lien priority to an existing lien on the same realty.
Laches
An equitable doctrine used by courts to bar a legal claim or prevent the assertion of a right because of undue delay or failure to assert the claim or right.
Land
The earth’s surface, extending downward to the center of the earth and upward infinitely into space, including things permanently attached by nature, such as trees and water.
Latent Defect
A hidden structural defect that could not be discovered by ordinary inspection and that threatens the property’s soundness or the safety of its inhabitants. Some states impose on sellers and licensees a duty to inspect for and disclose latent defects.
Law of Diminishing Returns
Law that applies as long as money being spent on improvements produces an increase in income or value.
Law of Increasing Returns
Law that applies as long as money being spent on improvements produces an increase in income or value.
Lead
Used as a pigment and drying agent in alkyd oil-based paint in about 75 percent of housing built before 1978. An elevated level of lead in the body can cause serious damage to the brain, kidneys, nervous system, and red blood cells. Children under the age of six are most vulnerable.
Lease
A written or oral contract between a landlord and a tenant that transfers the right to exclusive possession and use of the landlord’s real property to the lessee for a specified period of time and for a stated consideration. By state law, leases for longer than a certain period of time (generally one year) must be in writing to be enforceable.
Lease Option
A lease under which the tenant has the right to purchase the property either during the lease term or at its end.
Lease Purchase
The purchase of real property, the consummation of which is preceded by a lease, usually long-term, that is typically done for tax or financing purposes.
Leasehold Estate
A tenant’s right to occupy real estate during the term of a lease, generally considered to be a personal property interest.
Legacy
A disposition of money or personal property by will.
Legal Description
A description of a specific parcel of real estate complete enough for an independent surveyor to locate and identify it.
Legal Life Estate
A form of life estate established by state law, rather than created voluntarily by an owner. It becomes effective when certain events occur.
Legally Competent Parties
People who are recognized by law as being able to contract with other; those of legal age and sound mind.
Leverage
The use of borrowed money to finance an investment.
Levy
To assess; to seize or collect. To levy a tax is to assess a property and set the rate of taxation. To levy an execution is to officially seize the property of a person in order to satisfy an obligation.
Liability Coverage
Insurance that covers injuries or losses sustained within the home.
License
1) A privilege or right granted to a person by a state to operate as a real estate broker or salesperson. 2)The revocable permission for a temporary use of land - a personal right that cannot be sold.
Licensee
A person who has the skills and knowledge to be licensed in real estate.
Lien
A right given by law to certain creditors to have their debts paid out of the property of a defaulting debtor, usually by means of a court sale.
Lien Theory
Some states interpret a mortgage as being purely a lien on real property. The mortgagee thus has no right of possession but must foreclose the lien and sell the property if the mortgagor defaults.
Life Cycle Costing
In property management, comparing one type of equipment with another based on both purchase cost and operating cost over its expected useful lifetime.
Life Estate
An interest in real or personal property that is limited in duration to the lifetime of its owner or some other designated person or persons.
Life Tenant
A person in possession of a life estate.
Limited Liability Company (LLC)
A form of business organization that combines the most attractive features of limited partnerships and corporations.
Linear Measurement
Measurement in a straight line.
Liquidated Damages
An amount predetermined by the parties to a contract as the total compensation to an injured party should the other party breach the contract.
Liquidity
The ability to sell an asset and convert it into cash, at a price close to its true value, in a short period of time.
Lis Pendens
A recorded legal document giving constructive notice that an action affecting a particular property has been filed in either a state or a federal court.
Listing Agreement
A contract between an owner and a real estate broker by which the broker is employed as agent to find a buyer for the owner’s real estate on the owner’s terms for which service the owner agrees to pay a commission.
Listing Broker
The broker in a multiple-listing situation from whose office a listing agreement is initiated, as opposed to the cooperating broker, from whose office negotiations leading up to a sale are initiated. The listing broker and the cooperating broker may be the same person.
Littoral Rights
1) A landowner’s claim to use water in large navigable lakes and oceans adjacent to his or her property. 2) The ownership rights to land bordering these bodies of water up to the high-water mark.
Living Trust
A trust that is created during one’s lifetime.
Loan Origination Fee
A fee charged to the borrower by the lender for making a mortgage loan. The fee is usually computed as a percentage of the loan amount.
Loan-to-Value Ratio
The relationship between the amount of the mortgage loan and the value of the real estate being pledged as collateral.
Lot-and-Block System (Recorded Plat)
A method of describing real property that identifies a parcel of land by reference to lot and block numbers within a subdivision, as specified on a recorded subdivision plat.
Management Agreement
A contract between the owner of income property and a management firm or individual property manager that outlines the score of the manager’s authority.
Management Plan
A highly detailed plan that lays out the owner’s objectives with the property, as well as what the property manager wants to accomplish and how, including all budgetary information.
Manufactured Housing
Dwellings that are build off-site and trucked to a building lot where they are installed or assembled.
Margin
A premium added to the index rate representing the lender’s cost of doing business.
Market
A place where goods can be bought and sold and a price established.
Marketable Title
Good or clear title, reasonably free from the risk of litigation over possible defects.
Market Data Approach
Also known as the sales comparison approach. An estimate of value obtained by comparing property being appraised with recently sold comparable properties.
Market Value
The most probable price property would bring in an arm’s-length transaction under normal conditions on the open market.
Master Plan
A comprehensive plan to guide the long-term physical development of a particular area.
Mechanic’s Lien
A statutory lien created in favor of contractors, laborers, and materialmen who have performed work or furnished materials in the erection or repair of a building.
Megan’s Law
Federal legislation that promotes the establishment of state registration systems to maintain residential information on every person who kidnaps children, commits sexual crimes against children, or commits sexual crimes against children, or commits sexually violent crimes.
Meridian
One of a set of imaginary lines running north and south and crossing a base line at a definite point, used in the rectangular (government) survey system of property description.
Metes-and-Bounds Description
A legal description of a parcel of land that begins at a well-marked point and follows the boundaries, using directions and distances around the tract, back to the place of beginning.
Mill
One-tenth of one cent. Some states use a mill rate to compute real estate taxes; for exampled, a rate of 52 mills would be $0.052 tax for each dollar of assessed valuation of a property.
Minimum Level of Service
Some states are requiring that licensees perform some minimum level of service to clients.
Minor
A person who has not reached the age of majority and, therefore, does not have a legal capacity to transfer title to real property.
Mixed Use
Property that accommodates more than one use, such as commercial use and residential use.
Model Real Estate Time-Share Act
An act that governs the management, use, and termination of time-share units.
Mold
A form of fungus that can be found almost anywhere and can grow on almost any organic substance, so long as moisture, oxygen, and an organic food source are present. Mold growth can gradually destroy what it is growing on as well as cause serious health problems.
Monetary Policy
Governmental regulation of the amount of money in circulation through such institutions as the Federal Reserve Board.
Month-to-Month Tenancy
A periodic tenancy under which the tenant rents for one month at a time. In absence of a rental agreement, a tenancy is generally considered to be month to month.
Monument
A fixed natural or artificial object used to establish real estate boundaries for a metes-and-bounds description.
Mortgage
A conditional transfer or pledge of real estate as security for the payment of a debt. Also, the document creating a mortgage lien.
Mortgage Banker
Mortgage loan companies that originate, service, and sell loans to investors.
Mortgage Broker
An agent of a lender who brings the lender and the borrower together. The broker receives a fee for this service.
Mortgage Disclosure Improvement Act (MDIA)
The timeliness of certain disclosures affects the date of closings. Lenders and licensees need to keep three numbers in mind: 3-7-3, 3 business days to provide a truth-in-lending statement and good-faith estimate; seven business days before signing loan documents after the borrower receives final TIL and GFE; three business days for closing if the APR has changed more than 0.125 percent from the original or most recent TIL and GFE; and three business days before closing to provide consumer with a copy of appraisal.
Mortgage Insurance Premium (MIP)
The FHA insurance that the borrower is charged with a percentage of the loan as a premium.
Mortgage Lien
A lien or charge on the property of a mortgagor that secures the underlying debt obligations.
Mortgagee
A lender in a mortgage loan transaction.
Mortgagor
A borrower in a mortgage loan transaction.
Multiperil Policies
Insurance policies that offer protection from a range of potential perils, such as those of a fire, hazard, public liability, and casualty.
Multiple-Listing Clause
A provision in an exclusive listing for the authority and obligation on the part of the listing broker to distribute the listing to other brokers in the multiple-listing organization.
Multiple Listing Service (MLS)
A marketing organization composed of member brokers who agree to share their listing agreements with one another in the hope of procuring ready, willing, and able buyers for their properties more quickly than they could on their own. Most multiple listing services accept exclusive-right-to-sell or exclusive agency listings from their member brokers.
National Association of Realtors (NAR)
The largest real estate organization in the world; NAR members subscribe to a strict code of ethics. Active brokers are allowed to use the trademarked designations, Realtor.
Negligent Misrepresentation
Occurs when the broker should have known that a statement about a material fact was false.
Negotiable Instrument
A written promise or order to pay a specific sum of money that may be transferred by endorsement or delivery. The transferee the has the original payee’s right to payment.
Net Lease
A lease requiring the tenant to pay not only rent but also costs incurred in maintaining the property, including taxes, insurance, utilities, and repairs.
Net Listing
A listing based on the net price the seller will receive if the property is sold. Under a net listing, the broker can offer the property for sale at the highest price obtainable to increase the commission. This type of listing is illegal in many states.
Net Operating Income (NOI)
The income projected for an income-producing property are deducting losses for vacancy and collection and operating expenses.
Nonagent
An intermediary between a buyer and a seller, or a landlord and a tenant, who assists one or both parties with a transaction without representing either. Also known as a facilitator, transaction broker, transaction coordinator, and contract broker.
Nonconforming Use
A use of property that is permitted to continue after a zoning ordinance prohibiting it has been established for the area.
Nondisturbance Clause
A mortgage clause stating that the mortgagee agrees not to terminate the tenancies of the lessees in the event the mortgagee forecloses on the mortgagor-lessor’s building.
Nonhomogeneity
A lack of uniformity; dissimilarity. Because no two parcels of land are exactly alike, real estate is said to be nonhomogeneous.
Notarization
To certify the validity of a signature on a document.
Novation
Substituting a new obligation for an old one or substituting new parties to an existing obligation.
Numerator
The number written above the line of a fraction representing the number to be divided by the denominator.
Nuncupative Will
An oral will declared by the testator in his or her final illness, made before witnesses and afterward reduced to writing.
Obsolescence
The loss of value due to factors that are outmoded or less useful. Obsolescence may be functional or external.
Occupancy Permit
A permit issued by the appropriate local governing body to establish that the property is suitable for habitation by meeting certain safety and health standards.
Offer and Acceptance
Two essential components of a valid contract; a “meeting of the minds”.
Offeror/Offeree
The person who makes the offer is the offeror. The person to whom the offer is made is the offeree.
Open-End Loan
A mortgage loan that is expandable by increments up to a maximum dollar amount, the full loan being secured by the same original mortgage.
Open Listing
A listing contract under which the broker’s commission is contingent on the broker’s producing a ready, willing, and able buyer before the property is sold by the seller or another broker.
Operating Budget
A guide for the property’s financial performance in the present and future. It gives the owner a sense of expected profit.
Option
An agreement to keep open for a set period an offer to sell or purchase property.
Ostensible Agency
A form of implied agency relationship created by the actions of the parties involved rather than by written agreement or document.
Owelty Lien
A lien created by the order of the court to make an equitable partition of property when otherwise an agreeable partition is impossible or impractical.
Owner Financing
The seller is the primary lender securing his or her interest with the use of a deed, note and mortgage, deed of trust, or contract for deed. The buyer takes possession of the property, but the seller retains legal title until paid in full.
Package Loan
A real estate loan used to finance the purchase of both real property and personal property, such as in the purchase of a new home that includes carpeting, window coverings, and major appliances.
Panic Peddling
The illegal practice of soliciting people in a neighborhood to sell their homes because of fear or alarm; also referred to as blockbusting.
Parol Evidence
Oral or verbal evidence.
Parol Evidence Rules
A rule of evidence providing that a written agreement is the final expression of the agreement of the parties, not to be varied or contradicted by prior or contemporaneous oral or written negotiations.
Participation Mortgage
A mortgage loan wherein the lender has a partial equity interest in the property or receives a portion of the income from the property.
Partition
The division of cotenants’ interests in real property when the parties do not all voluntarily agree to terminate the co-ownership; takes place through court procedures.
Partnership
An association of two or more individuals who carry on a continuing business for profit as co-owners. Under the law, a partnership is regarded as a group of individuals rather than as a single entity. A general partnership is a typical form of join venture in which each general partner shares in the administration, profits, and losses of the operation. A limited partnership is a business arrangement whereby the operation is administered by one or more general partners and funded, by and large, by limited or silent partners, who are by law responsible for losses only to the extent of their investment.
Patent
A grant or franchise of land from the U.S. government.
Payment Cap
The limit on the amount the monthly payment can be increased on an adjustable-rate mortgage when the interest rate is adjusted.
Percent
One part in a hundred.
Percentage Lease
A lease, commonly used for commercial property, whose rental is based on the tenant’s gross sales at the premises; it usually stipulates a base monthly rental plus a percentage of any gross sales above a certain amount.
Percolation Test
A test of the soil to determine if it will absorb and drain water adequately to use a septic system for sewage disposal.
Personal Property
Items, called chattels, that do not fit into the definition of real property; movable objects.
Personalty
Personal property.
Physical Deterioration
A reduction in a property’s value resulting from a decline in physical condition; can be caused by action of the elements or by ordinary wear and tear.
PITI
The basic costs of owning a home - mortgage Principal and Interest, real estate Taxes, and hazard Insurance.
PITT
Joint tenancy, where tenants enjoy the four unities: possession, interest, time, and title.
Planned Unit Development (PUD)
A planned combination of diverse land uses, such as housing, recreation, and shopping, in one contained development or subdivision.
Plat
A detailed map that illustrates the geographic boundaries of individual lots.
Plat Map
A map of a town, section, or subdivision indicating the location and boundaries of individual properties.
