Glossary 2

Question 1

A public notice in a foreclosure proceeding that the mortgaged property may soon have a judgment issued against it. Enables other investors to join in the proceeding if they wish to collect their debts.

Answer 1

lis pendens

Question 2

A legal contract that establishes and controls the dynamics of the agency relationship between principal and agent. The principal to the listing may be buyer, seller, landlord, or tenant.

Answer 2

listing

Question 3

A set of water rights defined by state law relating to properties abutting navigable bodies of water such as lakes and bays. Generally, a property owner enjoys usage rights but owns land only to the high water mark. See riparian rights and prior appropriation.

Answer 3

littoral rights

Question 4

A trust established during one’s lifetime in which the trustor conveys legal title to property to a trustee and names another party as beneficiary. The trustee discharges management duties and the beneficiary receives all profit and gain net of the trustee’s fees.

Answer 4

living trust

Question 5

A lender’s written pledge to lend funds under specific terms. May contain deadlines and conditions.

Answer 5

loan commitment

Question 6

An underwriting ratio that relates the size of a loan to the market value of the collateral. The closer the loan value is to market value, the riskier the loan is for the lender , since the lender is less likely to recover the debt fully from the proceeds of a foreclosure sale.

Answer 6

loan-to-value ratio (LTV)

Question 7

A method for legally describing property in a subdivision where lots are identified by block and number. A recorded metes and bounds or rectangular survey description of the subdivision underlies the lot and block system.

Answer 7

lot and block system

Question 8

1. Buyers and sellers exchanging goods and services through the price mechanism. 2. The totality of interactions between supply and demand for a specific set of products or services in a particular geographic area.

Answer 8

market

Question 9

An opinion of the price at which a willing seller and buyer would trade a property at a given time, assuming a cash sale, reasonable exposure to the market, informed parties, marketable title, and no abnormal pressure to transact.

Answer 9

market value

Question 10

A condition of title to a property where there are no claims, liens, or encumbrances clouding title or impeding the property’s transferability.

Answer 10

marketable title

Question 11

An agent’s design for procuring a customer for a client, including selling and promotional activities.

Answer 11

marketing plan

Question 12

A deed used to convey land to a condominium developer.

Answer 12

master deed

Question 13

An amalgamated land use plan for a municipality, county, or region which incorporates community opinion, the results of intensive research, and the various land use guidelines and regulations of the state. Acts as a blueprint for subsequent zoning ordinances and rulings.

Answer 13

master plan

Question 14

mechanic’s lien A junior lien enabling property builders, suppliers, and contractors to secure debt arising from labor and materials expended on a property. Distinguished by its order or priority, which is based on when the work was performed rather than when the lien was recorded.

Answer 14

mechanic’s lien

materialman’s lien

Question 15

A north-south line used in the rectangular survey system of legal descriptions.

Answer 15

meridian

Question 16

A method of legally describing property which utilizes physical boundary markers and compass directions for describing the perimeter boundaries of a parcel.

Answer 16

metes and bounds

Question 17

The ad valorem tax rate of a taxing district, derived by dividing revenues required from taxpayers by the district’s tax base. If the millage rate is 30, the tax rate is 3%, or $3.00 per $100 of assessed valuation (net of exemptions).

Answer 17

millage rate

Question 18

One one-thousandth of a dollar ($.001). Used to quantify the ad valorem tax rate in dollars.

Answer 18

mill

Question 19

Separable subsurface rights to mineral deposits; transferrable by sale or lease to other parties.

Answer 19

mineral rights

Question 20

A statement or act, or failure to make a statement or act, that misleads a party in a transaction. May be intentional or unintentional. May warrant legal recourse or license revocation.

Answer 20

misrepresentation

Question 21

A fixed, artificial or natural landmark used as a reference point in a metes and bounds legal description.

Answer 21

monument

Question 22

A legal document wherein a mortgagor pledges ownership interests in a property to a lender, or mortgagee, as collateral against performance of the mortgage debt obligation.

Answer 22

mortgage

Question 23

Financing that uses mortgaged real property as security for borrowed funds.

Answer 23

mortgage financing

Question 24

An organization of brokers who agree to cooperate in marketing the pooled listings of all members.

Answer 24

multiple listing service

Question 25

Consent by all principals to a contract to all provisions of the contract. A requirement for validity.

Answer 25

mutual consent

Question 26

A situation in which the loan balance of an amortizing loan increases because periodic payments are insufficient to pay all interest owed for the period. Unpaid interest is added to the principal balance.

Answer 26

negative amortization

Question 27

A legal instrument that can be sold, traded, assigned, or otherwise transferred to another party, such as a promissory note.

Answer 27

negotiable instrument

Question 28

A lease which requires a tenant to pay rent as well as a share of the property's operating expenses to the extent provided for in the lease contract.

Answer 28

net lease

Question 29

A listing which states a minimum sale or lease price the owner will accept, with any excess going to the broker as a commission. Professionally discouraged, if not illegal.

Answer 29

net listing

Question 30

The amount of pre-tax revenue generated from an income property after accounting for operating expenses and before accounting for any debt service.

Answer 30

net operating income

Question 31

use A land use that is not consistent with the current zoning ordinance. May be legal or illegal.

Answer 31

non-conforming

Question 32

A forced sale of mortgaged property without a formal foreclosure suit or court proceeding. Authorized through a "power of sale" clause in a mortgage or trust deed document.

Answer 32

non-judicial foreclosure

Question 33

An expense incurred by buyer or seller in closing a real estate transaction that is not shared with the other party. Examples include attorney fees, documentary tax stamps, and lender fees.

Answer 33

non-prorated expense

Question 34

An agreement to repay a loan of an indicated amount under certain terms.

Answer 34

note

Question 35

Actual or recorded public evidence of real property ownership. See actual notice and constructive notice.

Answer 35

notice of title

Question 36

Without legal force or effect. See void.

Answer 36

null and void

Question 37

A loss of property value because of functional or economic (external) factors. See functional obsolescence and economic obsolescence.

Answer 37

obsolescence

Question 38

A proposal to enter into a binding contract under certain terms, submitted by an offeror to an offeree. If accepted without amendment, an offer becomes a contract.

Answer 38

offer

Question 39

A process that creates a contract. Acceptance is the offeree's unequivocal, manifest agreement to the terms of an offer. The offer becomes a contract when the acceptance has been communicated to the offeror.

Answer 39

offer and acceptance

Question 40

A non-exclusive listing which pays an agent a commission only if the agent is procuring cause of a ready, willing, and able customer.

Answer 40

open listing

Question 41

A recurring or periodic expense necessary for the operation of an income property. Examples include utilities, management, and ad valorem tax expenses. Excluded are debt service and the property's income tax liability.

Answer 41

operating expense

Question 42

An attorney's or title officer's opinion of the condition and marketability of title to a parcel of property based on a recent search of title records by a competent party.

Answer 42

opinion of title

Question 43

A unilateral contract in which an owner, or optionor, grants a buyer or tenant, the optionee, a future right to be exercised before a deadline, in exchange for valuable consideration. The terms of the right, such as a right to purchase or lease, must be clearly stated and cannot be changed during the option period.

Answer 43

option

Question 44

A lender's charge for funding a loan.

Answer 44

origination fee

Question 45

An oral agreement. Potentially enforceable if validly created.

Answer 45

parol contract

Question 46

A lawsuit requesting the court to alter or cancel the interests of a co-owner in a parcel of real property. Initiated when co-owners do not agree to make the change voluntarily.

Answer 46

partition suit

Question 47

An easement appurtenant where owners of two adjacent properties share an improvement along the property boundary. The parties agree not to perform acts that would adversely affect the other party's interest in the shared improvement.

Answer 47

party wall easement

Question 48

A retail property lease which requires a tenant to pay a minimum amount of rent plus an additional increment that reflects the sales achieved by the tenant.

Answer 48

percentage lease

Question 49

Fulfillment of the terms of a contract.

Answer 49

performance

Question 50

A leasehold interest for a lease term where, in the absence of default, the term automatically renews itself until proper notice of termination is provided by either party.

Answer 50

periodic tenancy

Question 51

All property that is not considered real property; all property that is not land or permanently attached to land, excepting trade fixtures and emblements.

Answer 51

personal property

Question 52

A loss of value to property because of decay or natural wear and tear. Exacerbated by deferred maintenance, or the failure to repair or maintain property on a regular basis.

Answer 52

physical deterioration

Question 53

A multi-use development project requiring special zoning and involving deed restrictions.

Answer 53

planned unit development (PUD)

Question 54

A map of one or more properties indicating each parcel's lot and block number, boundaries, and dimensions.

Answer 54

plat

Question 55

An increment of value added by the assemblage of contiguous properties.

Answer 55

plottage

Question 56

One-percent of a loan amount, a lender's finance charge.

Answer 56

point

Question 57

The origination and termination point in a metes and bounds legal description.

Answer 57

point of beginning (POB)

Question 58

A state's or local government's legal authority to create, regulate, tax, and condemn real property in the interest of the public's health, safety, and welfare.

Answer 58

police power

Question 59

The maximum amount of revenue a property could generate before accounting for vacancy, collection loss, and expenses. Consists of total rent with full occupancy at established rent rates, plus other income from any source.

Answer 59

potential gross income

Question 60

An authorization granting a fiduciary the power to perform specified acts on the principal's behalf. Used to establish a universal agency relationship.

Answer 60

power of attorney

Question 61

The discounted value of an amount of money to be received in the future that accounts for the interest that would have been earned if the money had been received in the present.

Answer 61

present value

Question 62

An act of collusion where competitors agree to establish prices at certain levels to the detriment of customers or other competitors.

Answer 62

price fixing

Question 63

An interaction of supply and demand that determines a price a buyer and seller agree is the value of a good or service to be exchanged. A quantification of value in a transaction.

Answer 63

price mechanism

Question 64

Lenders and mortgage brokers who originate mortgage loans directly to borrowers.

Answer 64

primary mortgage market

Question 65

1. The employer in an agency relationship, to whom the agent owes fiduciary duties. 2. The loan balance to which interest charges are applied.

Answer 65

principal

Question 66

A designated meridian in the rectangular survey system that is used in conjunction with a base line to identify ranges, tiers, and townships.

Answer 66

principal meridian

Question 67

A legal doctrine granting a state the power to control and regulate the use of water resources within state boundaries

Answer 67

prior appropriation

Question 68

A voluntary conveyance of property by a private party.

Answer 68

private grant

Question 69

An insurance policy, purchased by a borrower, that protects a lender against loss of that portion of a mortgage loan which exceeds the acceptable loan-to-value ratio.

Answer 69

private mortgage insurance (PMI)

Question 70

A court proceeding to validate and distribute a decedent's estate to creditors, tax authorities, and heirs.

Answer 70

probate

Question 71

A party who was first to obtain a ready, willing, and able customer, or a party who expended the effort to induce the customer to complete the transaction.

Answer 71

procuring cause

Question 72

An item that has a legal owner, along with the attendant rights to legal ownership.

Answer 72

property

Question 73

The business of managing the physical and financial condition of an investment property for an owner.

Answer 73

property management

Question 74

A cooperative owner's lease on a unit in the cooperative building. The lease runs concurrently with the owner's ownership interest in the cooperative.

Answer 74

proprietary lease

Question 75

Apportionment of expense and income items at closing. Examples of items prorated between buyer and seller include interest, insurance, taxes, and rent.

Answer 75

proration

Question 76

A voluntary conveyance of property by a government entity to a private party.

Answer 76

public grant

Question 77

A life estate where the grantee's interest endures over the lifetime of another party named by the grantor.

Answer 77

pur autre vie

Question 78

A mortgage loan where a seller lends a buyer some or all of the purchase price of a property.

Answer 78

purchase money mortgage

Question 79

1. A mortgage underwriting procedure to determine the financial capabilities and credit history of a prospective borrower. 2. A listing and marketing procedure to determine the needs and urgency of a client or customer.

Answer 79

qualification

Question 80

A right of an owner or tenant to use a property without interference from others.

Answer 80

quiet enjoyment

Question 81

A court proceeding to clear a property's title of defects, claims, and encumbrances.

Answer 81

quiet title suit

Question 82

A deed which conveys one's possible ownership interests to another party. The grantor does not claim to own any interest and makes no warrants.

Answer 82

quit claim deed

Question 83

A north-south area bounded by consecutive meridians.

Answer 83

range

Question 84

Land and all manmade structures permanently attached to it.

Answer 84

real estate

Question 85

An investment in which owners purchase shares in a trust which owns or acquires real property. Investors receive income and gain on a per-share basis.

Answer 85

real estate investment trust (REIT)

Question 86

Real estate and the bundle of rights associated with ownership of real estate.

Answer 86

real property

Question 87

An appraiser's weighted blending of the results of different approaches to value into a final value estimate.

Answer 87

reconciliation

Question 88

An act of entering into public title records any document or transaction affecting title to real estate. Recording gives constructive notice of one's rights and interests in a property and establishes the priority of inferior liens.

Answer 88

recording

Question 89

A method of legally describing real property which uses longitude and latitude lines to identify ranges, tiers, and township. Also called government survey systems.

Answer 89

rectangular survey system

Question 90

A statutory period after a foreclosure sale during which the foreclosed owner may buy back the property by paying all sums due the lender. See also equity of redemption.

Answer 90

redemption period

Question 91

The illegal lending practice of restricting loans by geographical area.

Answer 91

redlining

Question 92

Obtaining a new loan to replace an existing loan, usually to take advantage of lower interest rates, to obtain a longer-term loan, or to liquidate equity.

Answer 92

refinancing

Question 93

A fair financing law applying to residential loans; lenders must disclose financing costs and relevant terms of the loan to the borrower.

Answer 93

Regulation Z

Question 94

A future freehold interest in a life estate held by a third party remainderman named by the grantor. When the life tenant dies, the estate passes to the remainderman. See also reversion.

Answer 94

remainder

Question 95

The cost of constructing a functional equivalent of a property at current labor and materials costs using current construction methods.

Answer 95

replacement cost

Question 96

The cost of constructing a precise duplicate of a property, at current labor and materials prices.

Answer 96

reproduction cost

Question 97

An amount of money allocated from a property's income to cover future repair and maintenance costs.

Answer 97

reserve allowance

Question 98

A limitation on the use of a property imposed by deed, zoning, state statute, or public regulation.

Answer 98

restriction

Question 99

1. A transfer of title from a life estate tenant back to the grantor. 2. Proceeds from the sale of a property at the end of a holding period in a cash flow analysis.

Answer 99

reversion

Question 100

1. Cancellation of a contract. 2. Cancellation of a real estate license.

Answer 100

revocation