General Glossary Flashcards
Abandonment
Non-payment of taxes
Abstract of Title
A history of the ownership of a parcel of land which lists transfers of title, rights, and liabilities.
Acceleration Clause
States that upon default, all of the principal installments come due immediately.
Accession
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.
Accretion
Refers to land which is accumulated by the gradual washing or motion of water.
Accrued
An accumulation.
Acknowledgment
A formal declaration made by the grantor conveying the property to the grantee – a necessary element for validity of a deed.
Acre
A measure of land equal to 43,560 square feet.
Action to Quiet Title
The lawsuit filed by a person to remove or clear the claims of others against property.
Actual Notice
The actual knowledge that a person has about the existence of a particular fact.
Ad Valorem
A prefix meaning “based on value”. Most local governments levy an ad valorem tax on property.
Adverse Possession
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.
Agency
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.
Agent
One who acts for and in place of a principal for the purpose of affecting the principal’s legal relations with third persons.
Air Rights
The right to use, control and occupy the space above a particular parcel of land.
Alienation Clause
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.
Allodial
The free and full ownership of rights in land by individuals, which is the basis of real property in the United States.
Amortization
The repayment of a financial obligation over a period of time in a series of periodic installments. In a level-payment mortgage, this is the portion of the debt service that reduces the principal.
Amortized Loan
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.
Annual Percentage Rate (APR)
The yearly cost of credit. Interest Rate plus finance charge.
Appraisal
An opinion or estimate of value performed by a person licensed to do so.
Appreciation
An increase in value.
Appurtenance
Any right or privilege which belongs to and passes with land.
Arms-length Transaction
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”.
Arrears
Not on time; late in making payments or completing work. Interest is paid in arrears.
As is
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.
Assemblage
Bringing two or more lots together under one ownership.
Assessed Value
The value placed on property, by the tax assessor, for the purpose of determining the property tax.
Assignment
(1) the means by which a person transfers contract rights;(2) occurs when the lessee parts with the entire estate, retaining no interest.
Attachment
The process of taking a person’s property into legal custody by a court order called a writ of attachment. Property is frozen.
Attestation
The act of witnessing a person’s signing of an instrument by a notary public.
Attorney in Fact
A person given the authority to act on behalf of another under a power of attorney.
Attorney’s Opinion of Title
A statement issued by an attorney after analyzing an abstract as to quality of title.
Avulsion
Occurs in cases where there is a sudden loss of land through nature.
Bad Title
Title with defects making it unmarketable.
Balloon Payment
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.
Bargain and Sale Deed
An instrument conveying title which recites a valuable consideration and commonly uses the words “bargain and sale” or words of similar import.
Bench mark
A bronze disk permanently placed and precisely identified by government survey teams.
Bilateral Contract
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).
Bill of Sale
A document used to transfer ownership of personal property.
Blanket Mortgage
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.
Block A
Means of subdividing large tracts of land into smaller sections, each of which is numbered. For example, Lot 4, Block 8.
Blockbusting
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”.
Bounds
Refers to boundaries; used with the word “metes” in the metes and bounds method of land description.
Breach of Contract
A failure to perform, as promised, at the time the performance was due.
Buffer Zone
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.
Building Code
Ordinances passed by local governments with special minimum standards of construction for new buildings. They also apply to major additions to old construction.
Bundle of Rights
The rights of an owner to possess, control, enjoy, sell, lease, mortgage, and dispose of the property.
Bylaws
Legal documentation in a condominium regime which provides the establishment of the home-owner’s association; provides the powers and authority given to the board of directors; and indicates various rights and responsibilities of the unit owners.
Capital Gains
The tax profit realized from the sale of property. (A “tax free” exchange is a deferment of capital gains).
Capitalization
Used in the income approach to value. To capitalize income means to convert future income into present (current) value.
Capitalization Rate
The rate of return considered to be a reasonable return on investment - given the risk.
Caveat Emptor
Means “Let the Buyer beware”.
Certificate
The first thing a veteran should request if attempting to purchase a property using VA eligibility.
Certificate of Eligibility Certificate
Given to veterans bearing evidence of their qualifications for a VA mortgage loan.
Certificate of Reasonable Value (CPR)
Issued by the Veterans Administration to certify the value of property secured by a VA mortgage. Appraisal.
Certificate of Title
A document given by the title examiner stating the quality of title the seller possesses.
Chain of Title
A history of the ownership affecting title to a parcel of land.
Chattel Mortgage
One in which personal property is pledged to secure a note.
City Planning
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.
Civil Rights Act of 1866
A law which prohibits discrimination in all real estate transactions based on race - commercial and residential.
Closing Costs
The expenses incurred and paid at the time of settlement in the transferring of property.
Cloud on Title
Any claim affecting title to property.
Co-Insurance
Coinsurance is a common clause or provision in building insurance policies under which the insured agrees to maintain insurance on his or her property in an amount equal to at least 80% of the replacement cost. It the property is not insured to that amount and a loss is incurred the insurance company will make the insured share in the loss on a pro-rata basis.
Collateral
Property which has been pledged as security for a loan.
Color of Title
Adverse possession.
Commercial Banks
The largest financial intermediary directly involved in the financing of real estate. Their primary real estate activity involves short-term loans.
Commingling
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).
Common Elements
Property jointly owned on a pro-rata basis with other unit owners in a condominium regime.
Common Law
(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.
Community Property
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.
Comparable
Comparable property recently sold which is used in the market data approach.
Comparative Analysis
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.
Competent Parties
Those who are legally capable of entering into contracts.
Condemnation
The process of exercising eminent domain through court action.
Consideration
Anything of value offered to induce someone to enter into a contractual agreement. For example, sale price, earnest money, a promise for a promise.
Constructive Eviction
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 Notice
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).
Contract
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 for a Deed
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).
Conveyance
The transfer of title to land from one party to another.
Cooperative
A form of property ownership in which a corporation is established to hold title in property and to lease the property to shareholders in the corporation. Own stock.
Corporation
A legal entity organized to have perpetual legal existence and to have legal power to carry on certain activities such as owning real estate.
Cost Approach
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.
Counteroffer
A rejection of an offer to buy or sell, by a seller or buyer, with a simultaneous substitute offer.
Covenant
Included in a deed; a guarantee.
Covenant Against Encumbrances
The assurance that no encumbrances other than those specified in the deed exist.
Covenant of Further Assurance
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 Quiet Enjoyment
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 Seisin
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.”
Curable Depreciation
Depreciation is considered curable if the cost of the repair is less than what the repair adds to the value of property.
Curtesy
The rights that a husband acquires in the wife’s property upon her death.
Debit
Money owed. (Debt) The opposite of a credit.
Decree
Court order
Deed
A written instrument, usually under seal, which contains an agreement to transfer some property interest from a grantor to a grantee.
Deed in Lieu of Foreclosure
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 of Release
Given by lien holders, remainder-men or mortgages to relinquish their claims on the property.
Deed of Trust
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)
Defeasance Clause
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.
Defeasible Fee Simple
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.
Defect in Title
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.
Deficiency Judgment
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.
Depreciation
A decrease in value due to physical deterioration, functional or economic obsolescence.
Descent
Refers to any passage of title to property, upon intestacy to those heirs, related by blood or marriage, whom the law designates.
Devise
Transferring title to real property by means of a will.
Discount Points
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.
Dominant Estate
The tract of land in an easement appurtenant which benefits from the easement.
Dower
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.
Due-on-Sale Clause
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.
Duress
Involves the use of force or improper actions, against a person or property, in order to induce a party to enter into a contract.
Earnest Money
A sum of money given to bind an offer or agreement.
Easement
A right to limited use or enjoyment by one or more persons in the land of another.
Easement Appurtenant
An easement created to benefit adjacent land.
Easement by Implication
Occurs because of necessity, such as the conveyance of a land-locked property.
Easement in Gross
A personal right to use the land of another.
Economic Life
The time period over which an improvement to land earns more income than the cost incurred in generating the income. Profitability.
Economic Obsolescence
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 Rent
The amount of rental which a building would receive, if set by the market, as opposed to contract rent set by the lease.
Effective Age
The difference between the theoretical economic life of a structure and its actual remaining economic life. Maintaining the property.
Effective Gross Income
The anticipated income resulting from the estimated potential gross income from a rental property less an allowance for vacancy and bad debts.
Emblements
Refers to crops which require annual planting.
Eminent Domain
The right of government to acquire property, for a public purpose, after paying just compensation.
Encroachment
The extension of some improvement or object across the boundary of an adjoining tract. (Off sides).
Encumbrance
Any interest in or claim on, the land of another, which in some manner burdens or diminishes the value of the property.
Equal Credit Opportunity Act. (ECOA)
A federal act, which prohibits discrimination by lenders on the basis of sex or marital status in any aspect of a credit transaction.
Equitable Lien
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.
Equity
value of real estate less any liens against it.
Escalation Clause
(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.
Escheat
The right of government to ownership of property, which is left by a deceased property owner who leaves no will, and dies without descendants.
Escrow
The deposit of funds with a neutral third party who is instructed to carry out the provisions of an agreement.
Estate
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 at Sufferance
Retention of possession without the consent of the landlord after the lease has expired; also referred to as tenancy at sufferance.
Estate at Will
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 for Years
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 from Period to Period
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 in Fee
The maximum possible estate one can possess in real property; also referred to as fee simple or fee simple absolute.
Exclusive Agency Listing
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 Right to Sell 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)
Executed Contract
One in which the obligations have been performed on both sides of the contract and nothing is left to be completed. (Closed Deal)
Executor
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.
Express Contract
An agreement formed through the oral or written words of the parties.
Fair Market Value
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.
Federal Deposit Insurance Corporation (FDIC)
A federal agency established to insure the deposits in member commercial banks. The current maximum insurance per account is $100,000.00.
Federal Fair Housing Act of 1968
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 Home Loan Bank System - FHLBB
A federal agency which oversees and regulates all federally charted savings and loan association.
Federal Home Loan Mortgage Corporation (FHLMC)
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 Housing Administration- (FHA)
A federal agency established in 1943 to increase home ownership by providing an insurance program to safeguard the lender against the risk of nonpayment. Currently part of HUD.
Federal National Mortgage Association (FNMA)
Commonly known as “Fannie Mae”, this quasi-private corporation is the largest buyer of existing mortgages in the secondary mortgage market.
Federal Reserve System (FRS)
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.
Fee Simple Absolute
The maximum possible estate one can possess in real property; also referred to as fee simple or fee.
Fee Simple Determinable
An estate which has been created to exist only until the occurrence or nonoccurrence of a particular event. Returns automatically.
Fee Simple Subject to a Condition Subsequent
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.
Fiduciary
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)
First Lien
Claim with highest priority against property; also known as a superior to the rights of subsequent lenders. (Recorded first)
First Mortgage
A mortgage on real estate in which the lender’s rights are superior to the rights of subsequent lenders. (Recorded first)
Fixture
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.
Foreclosure
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.
Fraud
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.
Freehold Estate
One which continues for an indefinite period of time. For as “least a lifetime or greater” (will)
Fully Amortized Mortgage
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.
Functional Obsolescence
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.)
General Agent
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 Lien
A lien that attaches to all property owned by an individual. Real and personal.
General Warranty Deed
Contains covenants in which the grantor formally guarantees that good and marketable title is being conveyed. Highest deed - 5 covenants.
Good Title
One which is free from encumbrances such as liens, pending litigation and other such defects.
Government National Mortgage Association (GNMA):
Commonly known as “Ginnie Mae,” this agency of HUD operates in the secondary mortgage market. It is involved with special government financing programs.
Government Survey
A method of land description based on townships and sections. (Rectangular survey system).
Graduated Lease Provisions
This lease provides for periodic step increases in the rental payments.
Graduated Payment Mortgage (GPM):
A financing technique for residential real estate in which monthly payments start at a lower rate and increase periodically over the life of the mortgage; FHA 245.
Grandfather Clause
Creating an exemption from application of a new law due to previously existing circumstances; non-conforming use.
Grant
Transferring real estate by means of a deed.
Grantee
Purchaser or donee receiving title to property.
Grantor
Owner making conveyance of title or interest in property.
Gross Income
The actual income received from property before the deduction for any expenses.
Gross Income Multiplier (GIM):
A method of appraising income-producing property based on a multiple of the annual gross income; also called a gross rent multiplier.
Gross Rent Multiplier (GRM):
A method of appraising single family or duplexes based on the monthly gross income.
Habendum clause
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 estata or easement: “To have and to hold unto said Sally Smith, grantee, a life estate in the following property”.
Highest and Best Use
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.
