Glossary Flashcards
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The consumption of available vacant property in a building or market
absorption
A written, chronological record of the title records affecting rights and interests in a parcel of real property.
abstract of title
A right granted through a loan clause enabling the lender to call all sums immediately due and payable on a loan should the borrower violate certain provisions of the loan agreement.
acceleration
An increase in land caused by natural phenomena, for example a deposit of sand on a beachfront property due to a tropical storm.
accretion
Knowledge given or received directly through demonstrable evidence. Actual notice of ownership: reading a bill of sale, inspecting a deed, searching title records. See also constructive notice.
actual notice
A mortgage loan having an interest rate that can be periodically raised or lowered in accordance with the movement of a financial index.
adjustable rate mortgage
The beginning basis, or cost, of a property plus the costs of capital improvements, minus all depreciation expense.
adjusted basis
A real property’s annual tax levied by taxing entities according to the property’s assessed value.
ad valorem tax
The entry, occupation, and use of another’s property without the consent of the owner or where the owner took no action to evict the adverse possessor. May lead to loss of legal title if the adverse possessor fulfills certain requirements.
adverse possession
A fiduciary relationship between an agent and a principal where respective rights and duties are prescribed by laws of agency and by the agency agreement executed by the two parties. See universal agency, limited agency, and fiduciary.
agency
The party in an agency relationship who is hired by the principal to perform certain duties. In so doing, the agent must also uphold fiduciary duties owed the principal.
agent
Rights in real property as they apply to the property’s airspace, or all space above the surface within the parcel’s legal boundaries
air rights
The air portion of real property. In a condominium unit, the freehold space enclosed by the unit’s outer walls, floor, and ceiling.
air space
A transfer of title to real property by voluntary or involuntary means.
alienation
An act of collusion where two or more competitors agree to limit competitive activity in portions of the market in exchange for reciprocal restrictions from the others.
allocation of markets
A partial or complete reduction of a loan’s principal balance over the loan term, achieved by periodic payments which include principal as well as interest. See negative amortization.
amortization
The total cost of credit to a borrower inclusive of finance charges and the stated interest rate, expressed as an annual rate of interest.
annual percentage rate (APR)
Legislation aimed at preventing unfair trade practices and monopoly, including collusion, price fixing, and allocation of markets.
antitrust laws
An opinion of value of a property developed by a professional and disinterested third party and supported by data and evidence.
appraisal
A duly trained and licensed professional authorized to perform appraisals for other parties.
appraiser
An increase in the value of a property generally owing to economic forces beyond the control of the owner
appreciation
A right, interest, or improvement that attaches to and transfers with a parcel of real property, such as an easement or a riparian right.
appurtenance
Payment that occurs at the end of a payment term rather than at the beginning. Examples of items paid in arrears include taxes and interest.
arrears
A combining of contiguous parcels of real estate into a single tract, performed with the expectation that increased value will result.
assemblage
The value of a property as established by assessors for the purpose of ad valorem taxation.
assessed value
A periodic charge payable by condominium owners for the maintenance of the property’s common elements.
assessment
A tangible or intangible item of value.
asset
A sale of a business involving the transfer of assets as opposed to the liabilities or stock.
asset sale
A transfer of one’s entire interest in an item of real or personal property. The assignor transfers the interest to the assignee.
assignment
In a sale of real property, the transfer of the seller’s mortgage loan obligations to the buyer. Requires, in most cases, the approval of the lender.
assumption
A lump sum payment on any loan which retires the remaining loan balance in full.
balloon payment
An imaginary latitude line within the rectangular survey system that is designated in relation to a principal meridian for purposes of identifying townships.
base line
The original cost or market value of an acquired asset.
beginning basis
A registered marker denoting an official elevation above sea level; used by surveyors to identify other elevations in the area.
benchmark
A party named to benefit from the yield or disposition of an asset identified in a trust, insurance policy, or will.
beneficiary
A contract where both parties promise to perform in exchange for performance by the other party. See unilateral contract.
bilateral contract
A temporary agreement to buy a property evidenced by a valuable deposit. Receipt of the deposit binds a seller to a good-faith agreement to sell a property, provided a complete sale contract is executed within a certain period.
binder
An advertisement that does not contain the identity of the advertiser.
blind ad
Inducing property owners to sell or rent their holdings due to an impending downturn in their property values, often owing to a change in the area’s ethnic or social composition.
blockbusting
A direct agent of the principal who is hired for compensation to perform a stated service such as procuring a customer.
broker
An estimate of a property’s value rendered by a party who is not necessarily licensed, objective, or qualified. The estimate may not be a complete appraisal.
broker’s opinion of value
The business of procuring customers on behalf of clients for the purpose of completing a real estate transaction.
brokerage
The brokerage of a business enterprise in addition to any real property it may own or lease.
business brokerage
A specific standard of construction or maintenance of any aspect of an improved property established by local government officials.
building code
A set of rights associated with ownership of property, including the rights to possess, use, transfer, encumber and exclude.
bundle of rights
See syndication *
business trust
A loan arrangement where the borrower pays extra interest in advance for the future benefit of a lower interest rate over the loan term.
buydown
A broker’s listing with a buyer to locate a suitable property for purchase or lease.
buyer representation agreement
A market characterized by an excess of sellers over buyers.
buyer’s market
The difference between the net sales proceeds of an asset and its adjusted basis.
capital gain (or loss)
An upgrading of improved property having sufficient magnitude to constitute an addition to the property’s basis. Contrasts with repair and maintenance.
capital improvement
The rate of return on capital an investor will demand from the investment property, or the rate of return that the property will actually produce.
capitalization rate
The remaining positive or negative amount of income an investment produces after subtracting all operating expenses and debt service from gross income
cash flow
A document confirming that a newly constructed or renovated property has fully complied with all building codes and is ready for occupancy and use.
certificate of occupancy
A document expressing the opinion of a title officer or attorney that a property seller is in fact the owner of good title based on a review of title records.
certificate of title
An item of personal property.
chattel
A meeting of principal parties where a seller transfers title and a buyer pays monies owed the seller and lender.
closing
A financial summary and settlement of a property transaction indicating sums due and payable by the buyer and seller.
closing statement
An encumbrance or claim on title to property impeding or diminishing its marketability.
cloud
A brokerage practice where agents and brokers outside of the listing broker’s agency assist as subagents in procuring a customer in exchange for portions of the commission.
co-brokerage
Property liened by a lender as security for a loan.
collateral
An unlawful agreement between competitors to monopolize a market, disadvantage other competitors, or otherwise undertake activities in violation of fair trade laws.
collusion
A defective title transfer or the transfer of a defective title where the new owner is originally unaware of the defect. Color of title may be used as a grounds for adverse possession, which, if successful, would nullify the original defect.
color of title
An unlawful practice of mixing escrow funds with the agency’s operating funds
commingling
- Portions of a condominium property that are owned by all unit owners, for example the grounds, parking facilities, lobby, and elevators. 2. Portions of a commercial property used by all occupants as well as the public, for which the tenants may have to share in the repair and maintenance costs.
common elements
A body of law developed by court judgments, decrees, and case decisions.
common law
A system of property ownership established by law which generally defines rights of property ownership of spouses; community property is co-owned by spouses, and separate property is owned by a single spouse. Generally, property acquired during the marriage with jointly held funds is community property.
community property
A property having similar characteristics to a subject property in an appraisal. The value or sale price of the comparable is used to estimate the value of the subject.
comparable
A method of appraising property that relies on the principle that a property is generally worth what other, similar properties are worth.
comparable sales approach
A method used by brokers and salespeople for estimating the current value of a property using sale price data from similar properties. Not to be confused with a bona fide appraisal performed by a licensed appraiser.
comparative market analysis (CMA)
A local, county, or regional planning policy that requires developers to correct foreseen negative impacts of a development during the construction period of the project itself rather than afterwards; for example, widening a road during construction to accommodate a future increase in traffic.
concurrency
- A decree by a court or municipal authority that a parcel of private property is to be taken for public use under the power of eminent domain. 2. A government order that a particular property is no longer fit for use and must be demolished.
condemnation
An estate distinguished by fee simple ownership of the airspace of a unit plus an undivided interest with the other unit owners in the overall property’s common elements.
condominium estate
An item of tangible or intangible value, or one’s promise to do or not do some act which is used as an inducement to another party to enter into a contract.
consideration
Knowledge one could or should have, according to the presumption of law; a demonstration to the public of property ownership through title recordation, “for all to see.” See actual notice.
constructive notice
A condition that must be satisfied for a contract to be binding and enforceable.
contingency
A potentially enforceable agreement between two or more parties who agree to perform or not perform some act. If valid, the contract is enforceable, with limited exceptions.
contract
A financial contract where a seller retains legal title to a property and gives the buyer equitable title and possession over a period of time. During the contract period, the seller finances all or part of the purchase price. If the buyer makes timely payments and abides by all contract provisions, the seller conveys legal title at the end of the contract period.
contract for deed
The increment of market value added to a property through the addition of a component or improvement to the property. Not to be confused with the cost of the component.
contribution
A permanent long-term loan that is not FHA-insured or VA-guaranteed.
conventional loan
- Changing real property to personal property, and vice versa. 2. An illegal act of appropriating escrow funds for payment of an agency’s operating expenses.
conversion
A voluntary transfer of real property interests.
conveyance
Ownership of shares in a cooperative association which acquires a multi-unit dwelling as its primary asset. Shareholders also receive a proprietary lease on a unit for the duration of their share ownership.
cooperative estate
A method for determining value that takes into account the cost of the land and the replacement or reproduction cost of the improvements net of estimated depreciation.
cost approach
see depreciation 1. A non-cash expense taken against the income of investment property that allows the owner to recover the cost of the investment through tax savings. 2. A loss of value to improved property.
cost recovery
Any new offer or amended offer made in response to an offer. See offer.
counter offer
A written warrant or promise set forth in a contract or other legal document by one or both of the parties to the contract.
covenant
- An accounting entry on a closing statement indicating an amount a party has paid or is to receive. 2. Loan funds advanced to a borrower.
credit
A lender’s opinion of a borrower’s ability to repay a loan in view of financial capabilities and past repayment patterns.
credit evaluation
A widower’s life estate claim to portions of his deceased spouse’s real property. See also dower
curtesy
In agency law, a party outside of the fiduciary relationship of client and agent. If an agent treats a customer as a client, an implied agency may result.
customer
A standard elevation reference point used by surveyors to measure elevations of property in an area.
datum
An accounting entry on a closing statement
debit
An underwriting equation reflecting how much debt service an investment property can reasonably afford to pay out of its net operating income; used to identify how large a loan the property can afford given an interest rate and loan term.
debt coverage ratio
An underwriting equation that is used to determine how much debt an individual can reasonably afford in view of the party’s or household’s income.
debt ratio
Periodic payments of interest and/or principal on a mortgage loan.
debt service
An instrument used to convey mortgaged property back to the lender rather than have the lender foreclose on the property.
deed in lieu of foreclosure
An instrument used to convey real property to the trustee of a land trust. The trustor is also the beneficiary. See land trust.
deed in trust
An instrument used by a borrower to convey title to mortgaged property to a trustee to be held as security for the lender, who is the beneficiary of the trust.
deed of trust
A provision in a deed that limits or places rules on how the deeded property may be used or improved.
deed restriction
A fee estate where ownership is perpetual, provided that usage restrictions or other conditions stated in the deed are upheld. If not, the fee reverts to the grantor either automatically (determinable fee) or by the grantor’s actions (condition subsequent).
defeasible fee
A court order enabling a damaged lender to attach a lien on the defaulted borrower’s property for an amount equal to the difference between the debt and the proceeds of a foreclosure sale.
deficiency judgment
A quantity of a product or service that is desired for purchase, lease, or trade at any given time.
demand
A measure of the degree of residential land use within a given area for purposes of residential zoning and land use control.
density
Valuable consideration accompanying an offer to purchase real estate that signifies the offeror’s good faith intention to complete a sale or lease contract.
deposit
The portion of a property’s total basis that may be depreciated, generally the basis of the improvements, since land cannot be depreciated.
depreciable basis
- A non-cash expense taken against the income of investment property that allows the owner to recover the cost of the investment through tax savings. 2. A loss of value to improved property.
depreciation
A body of state-level laws that stipulates how an estate will be passed on to heirs in the absence of a valid will.
descent and distribution, laws of
A defeasible fee estate where title automatically reverts to the grantor if usage conditions stated in the deed are violated
determinable fee
A transfer of real or personal property from the devisor to the devisee(s) by means of a will.
devise
A financial practice of reducing the value of dollars received in the future by an amount that reflects the interest that would have been earned if the dollars had been received today. Performed to measure the present value of an investment’s future income.
discounting
A financial analysis to identify the discounted value of the cash flow of an investment over a given number of years. See discounting and cash flow.
discounted cash flow analysis
A failure to provide equal opportunity for persons to acquire or finance housing based on race, color, religion, national origin, sex, handicapped status, marital status, or family status.
discrimination in housing
Direct investment without the intermediation of a bank or other depository institution to make loans and other investments.
disintermediation
A tax stamp affixed to a property document or record as evidence that the owner has paid taxes related to the financing or transfer of real property.
documentary stamp
The property that benefits from the existence of an easement appurtenant. The holder of the easement is the dominant tenant. See servient tenement.
dominant tenement
A widow’s life estate interest in portions of her deceased spouse’s real property.
dower
Representing both principal parties to a transaction
dual agency
A loan provision defining the lender’s right to accelerate a note upon the transfer of collateralized property.
due on sale
An impound account used for the safekeeping of a buyer’s earnest money deposit; accompanied by specific instructions to the escrow agent for holding and disbursing the funds.
earnest money escrow
An interest in real property giving the interest holder the right to use defined portions of another’s property. May or may not attach to the estate.
easement
The period during which an improvement is expected to remain useful in its original use. Establishes the improvement’s annual depreciation amounts in appraisal. Depreciation in tax accounting is determined by a property’s cost recovery class, which is related to economic life.
economic life
A loss of value in a property because of external factors generally beyond the control of the owner, for example, a municipality’s lack of funds to improve deteriorated roadways. Also called external obsolescence.
economic obsolescence
The actual income of an investment property before expenses, expressed as total potential income minus vacancy and collection losses.
effective gross income
A right of a surviving spouse to claim a prescribed portion of the decedent’s real and personal property in place of the provisions of the decedent’s will.
elective share
Plants and crops considered personal property, since human labor is required for planting, growing and harvesting.
emblements
A power of a government entity to force the sale of private property for subsequent public use.
eminent domain
An unauthorized physical intrusion of one’s real property into the real property of another.
encroachment
An interest, right or intrusion that limits the freehold interest of an owner of real property or otherwise adversely effects the marketability of title.
encumbrance
Legal status of a valid contract or otherdocument that a court of law will force to be performed.
enforceability
An averaging of assessed valuations in an area to compensate for ad valorem tax inequities.
equalization
A theoretical market state in which the forces of supply and demand are in balance.
equilibrium
An interest that gives a lienholder or buyer the right to acquire legal title to a property if certain contractual conditions occur.
equitable title
That portion of a property’s value owned by the legal owner, expressed as the difference between the property’s market value and all loan balances outstanding on the property.
equity
A mortgagor’s right to pay off a defaulted mortgage and reclaim the property, provided the redemption occurs before the completion of the foreclosure sale.
equity of redemption
A lease clause providing for an increase in rent.
escalator clause
A reversionary transfer of real property to the state or county when the legal owner dies without a will and without heirs.
escheat
- A trust or impound account used for the proper handling of funds and documents in the closing of a real property transaction. 2. An account that a lender requires a borrower to establish to ensure that adequate funds will be available for payment of taxes and insurance on a mortgaged property.
escrow
- A set of rights to real property that includes the right of possession. 2. The totality of one’s personal and real property ownership.
estate
A legal restraint to prevent a person from claiming a right or interest that is inconsistent with the person’s previous statements or acts. An estoppel certificate documents the party’s initial position or act, which cannot be contradicted later.
estoppel
Standards governing proper and professional business practices.
ethics
Removal of a tenant from a property because of a lease default.
eviction
Actual or constructive notice of real property ownership, including opinion of title, certificate of title, and title insurance.
evidence of title
One of the bundle of legal rights to real property enabling the owner to prevent others from entry or use.
exclusion
A listing agreement which pays the listing broker a commission if anyone other than the property owner procures a customer..
exclusive agency
A listing agreement which pays the listing broker a commission if anyone at all procures a customer.
exclusive right to sell
A completed agreement which enjoins one or both principal parties to perform certain actions in order for the contract to become fully executed.
executory contract
A transaction broker who assists principal parties in completing a transaction without acting as a fiduciary agent of either party.
facilitator
Anti-discrimination legislation designed to ensure that all parties have equal access to mortgage financing.
fair financing laws
Anti-discrimination legislation designed to ensure equal opportunity in housing to all home buyers.
fair housing laws
A quasigovernmental agency that insures deposits of depository institutions and otherwise develops regulations for the banking industry.
Federal Deposit Insurance Corporation
A major secondary mortgage market organization which buys conventional, FHA, and VA loans and sells mortgage-backed securities.
Federal Home Loan Mortgage Corporation (Freddie Mac)
An agency of the Department of Housing and Urban Development which insures permanent long-term loans that meet certain qualifications.
Federal Housing Administration
A government-sponsored agency in the secondary mortgage market which buys conventional, FHA, and VA loans, sells mortgage-backed securities, and guarantees payment of principal and interest on the securities.
Federal National Mortgage Association (Fannie Mae)
The principal regulator of the money supply as well as of the American banking system.
Federal Reserve System
An estate representing the highest form of legal ownership of real property, particularly the fee simple absolute estate.
fee simple
The agent in an agency relationship; receives the trust and confidence of the principal and owes fiduciary duties to the principal.
fiduciary
Duties of an agent to the principal in an agency relationship, including skill, care, diligence, loyalty, obedience, confidentiality, disclosure, and accounting.
fiduciary duties
An item permanently attached to land so as to be defined as real property.
fixture
A procedure for forcing sale of a secured property to satisfy a lienholder’s claim.
foreclosure
An ownership estate of indeterminable duration; contrasts with a leasehold estate.
freehold estate
A lease requiring the landlord to pay all of a property’s operating expenses, including those that pertain to an individual tenant.
full-service lease
A loss of value in an improved property because of design flaws or failure of the property to meet current standards. May be curable or incurable.
functional obsolescence
A fiduciary relationship which authorizes the agent to conduct a broad range of activities for the principal in a particular business enterprise. May or may not include authority to enter into contracts.
general agency
A lien against any and all property owned by a lienee.
general lien
A for-profit business where two or more co-owners agree to share management responsibilities and profits. Does not involve silent partners, as in a limited partnership.
general partnership
A bargain and sale deed containing the assurance that the grantor will defend against any and all claims to the title.
general warranty deed
An intangible business asset valued at the difference between the sale price and the value of all other assets of the business.
goodwill
A division of HUD which guarantees FNMA mortgages and securities backed by pools of VAguaranteed and FHA-insured mortgages.
Government National Mortgage Association (Ginnie Mae)
A method of legally describing real property which uses longitude and latitude lines to identify ranges, tiers, and townships.
government survey system See rectangular survey system.
A party who receives a right, interest, or title to real property from another.
grantee
A party who transfers a right, interest, or title to real property to another.
grantor
A personal right to use another’s property, granted by the owner; does not attach to the estate, and there are no dominant or servient tenements.
gross easement
A shortcut method for estimating the value of an income property. The procedure involves multiplying the property’s gross annual income times a multiplier that reflects the ratio between gross annual income and sale price that is typical for similar properties in the area.
gross income multiplier
A shortcut method for estimating the value of an income property. The procedure involves multiplying the property’s gross monthly rent times a multiplier that reflects the ratio between gross monthly rent and sale price that is typical for similar properties in the area.
gross rent multiplier
A lease requiring the landlord to pay all of a property’s operating expenses, including those that pertain to an individual tenant.
gross lease See full service lease.
A lease of the land-only portion of a parcel of real property
ground lease
Insurance against loss or damage to real property improvements; required by most mortgage lenders to protect the collateral.
hazard insurance
A theoretical use of a property that is legally permissible, physically possible, financially feasible, and maximally productive, usually in terms of net income generation.
highest and best use
A will prepared entirely in the testator’s handwriting, complete with date and signature.
holographic will
A junior mortgage loan on a residence, secured by portions of the owner’s equity in the home.
home equity loan
Laws that protect a homeowner against loss of the homeowner’s principle residence to a sale forced by creditors to collect debts. Homestead laws also protect the interests of individual spouses by requiring both spouses to sign any conveyance of the homestead property.
homestead laws
An exemption of a portion of the assessed value of a homeowner’s principal residence from ad valorem taxation.
homestead tax exemption
Use of real property as collateral for a mortgage loan.
hypothecation
An agency relationship that arises by implication from the actions and representations of either agent or principal.
implied agency
An unstated or unintentional agreement that may be deemed to exist by implication because of acts or statements by any of the parties to the agreement.
implied contract
An agency relationship that arises by implication from the actions and representations of either agent or principal.
implied listing See implied agency.
Any man made structure or item affixed to land.
improvement
A method of appraising the value of a property by applying a rate of return to the property’s net income.
income capitalization
An underwriting ratio that relates a borrower’s gross or net income and the debt service of a loan; used to determine how large a loan a borrower can reasonably afford.
income ratio
A sales agent who works for a broker but is not legally an employee. The employer exerts only limited control over the contractor’s actions, does not provide employee benefits, and does not withhold taxes from the contractors’s pay.
independent contractor
A lien whose priority is subordinate to that of a superior (tax) lien. Priority among inferior liens is established according to the time of recordation, with the exception of the mechanic’s lien. Also called junior lien.
inferior lien
See contract for deed. interest 1. A right to real property. 2. A lender’s charge for the use of the principal amount of a loan.
installment contract
The percentage of a loan amount that a borrower must pay a lender annually as interest on a loan amount.
interest rate
Investment by a depository institution on behalf of depositors
intermediation
The rate at which inflows from an income property investment must be discounted in order for the total inflows over time to equal the initial outlay, expressed as a percent; may include projected proceeds from the future sale of the property as an inflow.
internal rate of return
Legal condition of a person who dies without leaving a will.
interstate
Expenditure to purchase an asset with the expectation of deriving a future profit or benefit from the asset.
investment
A transfer of title to real property without the consent or against the will of the owner, for example, eminent domain, foreclosure, and adverse possession.
involuntary alienation
A lien imposed by legal process irrespective of the owner’s wishes or consent.
involuntary lien
A form of real property ownership in which co-owners share all rights and interests equally and indivisibly; entails right of survivorship. Parties must establish tenancy at the same time and with a single deed.
joint tenancy
A partnership created for a specific, predetermined business endeavor, after which the joint venture is usually dissolved
joint venture
A court decision resulting from a lawsuit. If a creditor sues to collect a debt, a favorable ruling is followed by a judgment lien against the defaulting borrower’s property.
judgment
A court proceeding triggered by a foreclosure suit. Involves notice, debt acceleration, the termination of the owner’s interests in the property, and a public sale where proceeds are applied to the debt.
judicial foreclosure
The surface area of the earth, all natural things permanently attached to the earth, and everything beneath the surface to the earth’s center and above the surface extending upward to infinity.
land
A trust in which a trustor conveys a fee estate to a trustee and names himself or herself as beneficiary. The beneficiary in turn controls the property and the actions of the trustee.
land trust
Regulation of how individual owners use property in a municipality or planning district. Control patterns are generally in accordance with a master plan.
land use control
A parcel of property lacking legal access to a public thoroughfare; requires a court-ordered easement by necessity to relieve the condition.
landlocked
A body of law defining roles, duties and responsibilities of an agent and a principal. Laws also set forth standards of conduct agent and principal owe to a customer.
law of agency
A legal contract and instrument of conveyance which transfers to the tenant, or lessee, a leasehold fee for a certain duration. The lease contract sets forth all tenant and landlord covenants, financial terms, and grounds for default. The landlord is referred to as the lessor.
lease
A life estate established by operation of law rather than by the actions or wishes of the property owners. Examples are homestead law, dower, curtesy, and elective share.
legal life estate
Full legal ownership of property and the bundle of rights as they apply to it. Contrasts with equitable title.
legal title
An estate that entails temporary rights of use, possession, and to an extent, exclusion, but not legal ownership. Compare freehold estate.
leasehold estate
A description of a parcel of property which accurately locates and identifies the boundaries of the subject parcel to a degree acceptable by local courts of law.
legal description
The relationship between the yield rate of an investment and the interest rate of funds borrowed to finance the investment. If the yield rate is greater than the loan rate, positive leverage results. If the yield rate is less than the loan rate, negative leverage results.
leverage
- An accounting entry representing a claim against the assets of a business by a creditor. 2. A condition of vulnerability to lawsuits seeking redress for potentially wrongful acts or statements.
liability
- Legal authorization to conduct business. 2. An individual’s personal right to use the property of another for a specific purpose. Revocable at any time at the owner’s discretion. Does not attach to the property and terminates upon the death of either party.
license
A creditor’s claim against real or personal property as security for a property owner’s debt. A lien enables a creditor to force the sale of the property and collect proceeds as payment toward the debt.
lien
The order in which liens against a property are satisfied; the highest priority lien receives sale proceeds from a foreclosure before any other lien.
lien priority
A state whose laws give a lender on a mortgaged property equitable title rather than legal title. The mortgagor in a lien theory state retains legal title. See title theory state.
lien theory state
A freehold estate that is limited in duration to the life of the owner or other named person. On the death of this person, legal title passes to the grantor or other named party.
life estate
An agency relationship which restricts the agent’s authorizations to a specific set of duties. The relationship usually terminates on performance of these duties, as in a real estate broker’s listing agreement. Also called special agency.
limited agency
A business enterprise consisting of general and limited partners: general partners manage the affairs of the business while limited partners are silent investors.
limited partnership
In a contract, a clause that expressly provides for compensation a defaulting party owes the damaged party. In the absence of such a clause, a damaged party may sue for unliquidated damages.
liquidated damages
The degree to which an investment is readily marketable, or convertible to another form of asset. If immediately salable, an investment is liquid; the longer it takes to sell, the more illiquid the investment. Real property is relatively illiquid in comparison with other types of investment.
liquidity
