GLOSSARY Flashcards
A written summary of the chain of title.
ABSTRACT OF TITLE
Any clause in a loan requiring the loan to be paid off upon the occurrence of a certain event. An alienation clause is an example.
ACCELERATION CLAUSE
the acquisition of property by its being added to other property.
ACCESSION
the process of gradual or imperceptible additions to land bordering a river or stream.
ACCRETION
The declaration before a notary by a person who executed a document stating that he did
in fact sign the document. A deed must be {BLANK} to be recorded. Once {BLANK}ed, it is accepted as
prima facie evidence in court.
ACKNOWLEDGMENT
ACRE
43,560 square feet, or 4,840 square yards, or about 209 feet by 209 feet (if square)
the authority that a principal actually confers on the agent.
ACTUAL AUTHORITY
for income tax purposes, it is determined by subtracting the adjusted cost basis from the exchange value of a property.
ACTUAL GAIN (profit)
when a person actually knows something, such as when an agent knows someone has taken
possession of a property.
ACTUAL NOTICE
a property tax is an {BLANK} tax.
AD VALOREM (according to value)
for income tax purposes, it is the cost basis plus capital improvements, plus existing
assessment liens assumed by the buyer, minus depreciation, minus gain(s) deferred from prior transactions.
ADJUSTED COST BASIS
for income tax purposes, it is the selling price minus the expenses of the sale.
ADJUSTED SELLING PRICE
acquiring title by five years of exclusive, notorious, and open possession of a property (contrary to the best interests of the true owner) under a claim of right or color of title. When property is
acquired by adverse possession, a quiet title action would be used to perfect title.
ADVERSE POSSESSION
a person authorized to represent a principal in business dealings with other parties. Does not need to be paid consideration to be considered this.
AGENT
as of January 1, 1988, the California {BLANK} requires agents to disclose agency relationships as soon as their relationship with a buyer or seller becomes more than casual. This applies to transactions concerning the sale, or a lease (for more than one year), of four or less residential units.The three steps to agency disclosure are disclose, elect, and confirm.
AGENCY DISCLOSURE LAW
to sell, transfer or convey.
ALIENATE
requires the borrower to pay off the loan upon sale
ALIENATION (DUE ON SALE) CLAUSE
a junior lien which is subordinate to, yet includes, the liens to which it is subordinated. Commonly used with land contracts.
ALL INCLUSIVE TRUST DEED (AITD, wrap around trust deed, hold harmless trust deed, overriding trust deed)
the soil deposited by accretion.
ALLUVION (Alluvium)
requires the disclosure of earthquake fault lines on a map.
ALQUIST-PRIOLO ACT
a home. appraised by the Market Data Approach.
AMENITY PROPERTY
the federal law which requires equal access to public buildings for handicapped persons.
AMERICANS WITH DISABILITIES ACT (ADA)
the liquidation of a financial obligation, such as a loan.
AMORTIZATION
used to determine monthly payments.
AMORTIZATION TABLES
a promissory note which calls for periodic payments of both principal and
interest.
AMORTIZED INSTALLMENT NOTE
a change in geographic direction is often referred to by using an {BLANK} expressed in degrees, minutes and seconds; it is often described as “so many degrees from the North or South points of the compass.”
ANGLES
used in the Capitalization Approach to appraisal and determined by this formula: Gross
Income - Vacancies - Expenses = {BLANK}
ANNUAL NET INCOME
the relative cost of credit expressed in percentage terms and disclosed under the Truth-In-Lending Law (also called Reg. Z).
ANNUAL PERCENTAGE RATE (APR)
an opinion of the value of a specific property on a given date; it is valid for that date only.
APPRAISAL
occurs when the government gives permission to a non-riparian owner to take water from a
public waterway.
APPROPRIATION
things used with the land for its benefit. {BLANKS} are real property.
APPURTENANCES
benefits the land of a dominant tenement. The buyer of the dominant tenement
automatically receives the {BLANK}.
APPURTENANT EASEMENT
a clause in a contract in which the parties agree to arbitrate a dispute rather than go to court.
ARBITRATION CLAUSE
a lien which is recorded by a local government when a property owner fails to pay for street improvement within 30 days of receipt of the bill.
ASSESSMENT LIEN
establishes the tax base. Property is assessed every year at 100% of its taxable value
(100% of fair market value or 100% of full cash value). If sold, property is reassessed during the year.
ASSESSMENT ROLL
a contract is usually {BLANK}able. Leases can be {BLANK}ed; when a lease holder {BLANK}s a lease, the person who acquires the lease (the {BLANK}ee) becomes the tenant. Listings cannot be {BLANK}ed because a listing is a personal service contract calling for the personal performance of the broker.
ASSIGNMENT
a preexisting assessment lien which is assumed (taken over) by a buyer of real property.
ASSUMED ASSESSMENT LIEN
when a buyer assumes a loan, he or she becomes primarily liable. The seller is still liable, but is
in a secondary position.
ASSUMPTION
property is held by court order as security for a possible judgment in a pending lawsuit. An {BLANK} is valid for three years.
ATTACHMENT LIEN (WRIT OF ATTACHMENT)
acting for another with a duly executed and recorded power of attorney.
ATTORNEY-IN-FACT
sudden violent tearing away of land by water.
AVULSION
dirt used to fill in excavations or brace a foundation.
BACKFILL
partially amortized.
BALLOON NOTE
any payment which is significantly larger than the other payments.
BALLOON PAYMENT
based on a 30 day month and 360 day year, used for proration and loan calculations.
BANKER’S YEAR
a wall supporting any vertical load in addition to its own weight. It is normally left in place during remodeling and can be constructed at any angle to doorways. {BLANK} are real property.
BEARING WALL
the lender in a trust deed. A {BLANK} holds the promissory note and trust deed during the life
of the loan.
BENEFICIARY
statement by a lender disclosing the current loan balance.
BENEFICIARY STATEMENT
a contract in which the promise of one party is given in exchange for the promise of the other party (a promise for a promise). Both parties are bound to perform. These promises are often the basis for a contract (for example, exclusive listings, deposit receipts).
BILATERAL CONTRACT
a real estate loan which covers (blankets or secures) more than one parcel of land; it
is commonly used when building new homes.
BLANKET ENCUMBRANCE
does not disclose that an agent is representing the seller. When advertising, a licensee must disclose that he is an agent. Additionally, the ad must name the broker.
BLIND ADVERTISING
a unit of measurement of lumber which is one foot wide, one foot long, and one inch thick (any
combination of 144 cubic inches) .
BOARD FOOT
loan instruments
BONDS
in good faith, without fraud or deceit, genuine. A {BLANK} land contract or listing has all the ele-
ments required by law.
BONA FIDE
cash, other “unlike” property, or “mortgage relief” used to balance the equities of the properties in a 1031 tax deferred exchange.
BOOT
provides the lender with information used to determine the risk inherent in the
loan.
BORROWER’S CREDIT HISTORY
a person employed for a fee by another to perform a real estate act requiring a license. A {BLANK} is the employer of salespersons.
BROKR
a measurement of heat used in rating the capacity of heating systems.
BTU (British Thermal Unit)
an appraiser uses the building residual technique when the value of a building is an unknown factor. The technique determines how the building contributes to the value of the entire property.
BUILDING RESIDUAL TECHNIQUE
a set of California laws regulating business, such as the real estate industry.
BUSINESS AND PROFESSIONS CODE
these are personal property. The document used to transfer title to personal property is a bill of sale, not a deed.
BUSINESS OPPORTUNITIES
the state purchases homes and sells them to California veterans using land contracts
CALIFORNIA VETERANS FARM AND HOME PURCHASE PLAN (Cal-Vet)
everyone is capable of contracting, except minors and those who are mentally incompetent. It is one of the four essential elements of a contract.
CAPABLE PARTIES
investment of money in physical improvements of a property (for example, adding a wall, remodeling, or upgrading a heating system) . It is not deductible as an expense, but is added to the cost basis and depreciated over the life of the improvements.
CAPITAL IMPROVEMENT
establishes the current value of future benefits which may be obtainedfrom an income producing property (apartments, commercial buildings, restaurants, etc.) . The value of an asset is determined by dividing the annual net income by a desired rate of return called the capitalization rate (V = I/R) .
CAPITALIZATION (INCOME) APPROACH
the rate of interest which is considered a reasonable return on an investment. The greater the risk, the higher the capitalization rate demanded by an investor. {BLANK}s consider the quantity, quality, and durability of the rent. The three methods of calculating capitalization rate are (C.B.S.) Market Comparison, Band of Investment, and Summation.
CAPITALIZATION RATE
covenants, conditions, and restrictions usually placed in a “declaration of restrictions” which restricts land use in a subdivision.
CC&R’s
receipt from the State Board of Equalization showing that the seller of a business opportunity has paid all sales taxes.
CERTIFICATE OF CLEARANCE
government appraisal for a VA loan. The {BLANK} determines the amount of the down payment. Some VA loans do not require a down payment.
CERTIFICATE OF REASONABLE VALUE (CRV)
the record of prior transfers and encumbrances affecting the title of a parcel. It is usually
searched by a title company employee.
CHAIN OF TITLE
items effecting title which may prevent transfer. For example, if a woman purchased a home prior to marriage, but sold it during the marriage and signed her married name on the grant deed, it would create a {BLANK}.
CLOUD ON TITLE
that which appears to be good title but isn’t
COLOR OF TITLE
COMMERCIAL ACRE (Buildable Acre)
43,560 sq. ft. minus the space taken by streets, alleys, and sidewalks.
a single line of store buildings along a major route, also known as a strip commercial
development or a strip center.
COMMERCIAL AREA
occurs when an agent mixes a principal’s or client’s money with the agent’s own money.
COMMINGLING
a subdivision in which an owner sells apartment units to the tenants, with the tenants owning the parking area, halls, walks, etc., in common.
COMMUNITY APARTMENT PROJECT
each spouse owns 50%. {BLANK} is assumed when title says “husband and wife.” {BLANK} is also assumed whenever a husband and wife buy property, unless they specifically take title as joint tenants or tenants in common.
COMMUNITY PROPERTY
comes from the Treaty of Guadalupe Hidalgo between the United States and
Mexico.
COMMUNITY PROPERTY LAW
funded through the issuance of tax allocation bonds and secured by anticipated property tax revenues.
COMMUNITY REDEVELOPMENT AGENCY (CRA)
compressing fill dirt to bear the weight of a building. A report on soil stability should be obtained from a registered civil engineer if a building~s foundation is cracked, and the doors and windows do not close
properly.
COMPACTION
calculated by subtracting commissions paid to sales agents from the gross income of the
brokerage.
COMPANY DOLLAR
a provision in a loan requiring the borrower to keep a certain amount of money on deposit with the lender in return for the loan.
COMPENSATING BALANCE
occurs when all terms of the escrow instructions have been met.
COMPLETION OF ESCROW
ownership by two or more persons, with title held jointly and severally.
CONCURRENT ESTATES
something which must happen or be performed before an estate is vested in the grantee.
CONDITION PRECEDENT
something which will cause an estate to be lost should a certain event happens.
CONDITION SUBSEQUENT
a metal pipe in which electrical wiring is installed.
CONDUIT
the selling price minus any existing loans assumed by the buyer.
CONSIDERATION (Documentary Transfer Tax)
may be anything of value; it does not have to be money. It is one of the four essential elements of a contract.
CONSIDERATION (contract law)
any disturbance of a tenant’s use or possession of a leased premises which is caused by the landlord. The property must be rendered wholly or substantially unsuitable for the use for which it
was leased.
CONSTRUCTIVE EVICTION
events which by law put people on notice. Recording a document gives {BLANK}. The act of taking possession of land, while holding an unrecorded deed, gives {BLANK}.
CONSTRUCTIVE (LEGAL) NOTICE
a statistical measure of changes in the prices of goods and services over time.
CONSUMER PRICE INDEX (CPI)
the date the contract was formed. A contract is formed when the final acceptance is communicated to the offeror.
CONTRACT DATE
loans made by lenders without governmental guarantees.
CONVENTIONAL LOAN
stealing client’s money.
CONVERSION
an apartment building, owned by a corporation, in which tenancy in an apartment unit is obtained by purchase of shares of the stock of the corporation. The owner of the shares (a tenant or lessee) is entitled to occupy a specific apartment in the building.
COOPERATIVE APARTMENT (stock cooperative, co-op, stock co-op)
a {BLANK} on a deed implies that the person signing the deed is authorized to sign for the corporation.
CORPORATE SEAL
used by an appraiser when other approaches are inappropriate (special purpose buildings, new subdivision homes) . The cost approach is the least appropriate for appraising older buildings because as a building gets older, depreciation becomes difficult to calculate.
COST APPROACH
for tax purposes, it is the purchase price.
COST BASIS
an agreement or promise to do or not do a particular thing, such as an agreement to build a house of a particular architectural style or to use (or not use) property in a certain way.
COVENANT
measures the cost of living.
CPI (Consumer Price Index)
the distance between the ground and the first floor of a building. Most building codes require
them to be at least 18 inches high.
CRAWL SPACE
prepaid taxes appear as a credit to the seller in the escrow closing statement. A {BLANK} increases the account balance.
CREDIT (in Escrow Closing Statement)
used to determine the replacement cost of improvements in multistory structures when
the height between floors vary (for example, the replacement cost of a warehouse would be calculated by cost per {BLANK}) .
CUBIC FOOT METHOD
economically and physically possible to correct.
CURABLE DEPRECIATION
the date of the final writing or delivery of an appraisal report.
DATE OF THE APPRAISAL
the date a property is inspected is generally used as the date of {BLANK}.
DATE OF VALUE
the fictitious business statement filed by a broker. It must be approved by the Real Estate Commissioner. Good for five years.
DBA (Doing Business As)
the selling price appears as a {BLANK} on the buyer’s closing statement. A {BLANK} decreases the account balance.
Debit
used by lenders as a loan qualifying tool.
DEBT-INCOME RATIO
plants that lose their leaves in autumn and winter. It is not a type of soil.
DECIDUOUS
the written instrument which, when properly executed, delivered, and accepted, conveys title to real property from one person (the grantor) to another (the grantee) . {BLANKS} are indexed by the names of the parties (grantor and grantee) .
DEED
a borrower voluntarily deeds property back to a lender to stop foreclosure. Junior liens against the property remain in place.
DEED-IN-LIEU OF FORECLOSURE
- usually requires court foreclosure. After a court foreclosure sale on a mortgage, the mortgagor (borrower) can redeem the property by paying the loan in full (statutory right of redemption) . The
mortgagor retains possession of the property until the right of redemption expires.
DEFAULT ON A MORTGAGE
is possible only when there is a court foreclosure on a non-purchase money loan and the fair market value is less than the loan amount (this rarely occurs).
DEFICIENCY JUDGMENT
prices decrease. A decrease in prices causes an increase in the value of money.
DEFLATION
