Glossary terms Flashcards
Representing both parties to a transaction. This is unethical unless both parties agree to it, and it is illegal in some states.
Dual Agency
A place where goods can be bought and sold and a price established.
Market
An intermediary between a buyer and a seller, or a landlord and a tenant, who assists one or both parties with a transaction without representing either. Also known as a facilitator, transaction broker, transaction coordinator, and contract broker.
Nonagent
A clause allowing the tenant the opportunity to buy the property before the owner accepts an offer from another party.
Right Of First Refusal
A combination of people or firms formed to accomplish a business venture of mutual interest by pooling resources. In a real estate investment syndicate, the parties own and/or develop property, with the main profit generally arising from the sale of the property.
Syndicate
Having made and left a valid will.
Testate
A government agency that plays an important role in the secondary mortgage market. It guarantees mortgage-backed securities using FHA-insured and VA-guaranteed loans as collateral.
Ginnie Mae
An oral or written contract in which the parties state the contract’s terms and express their intentions in words.
Express Agreement
Charging interest at a higher rate than the maximum rate established by state law.
Usury
An evaluation of property to show that due care was exercised in the determination of environmental impairments.
Environmental Site Assessment (ESA)
Compares actual results with the original budget, often giving either percentages or a numerical variance of actual versus projected income and expenses.
Budget Comparison Statement
A life estate, usually a fractional interest, given by some states to the surviving husband in real estate owned by his deceased wife. Most states have recognized other marital property rights and abolished this
Curtesy
A legal process by which a court determines who will inherit a decedent’s property and what the estate’s assets are.
Probate
The Federal Agricultural Mortgage Corporation—a privately owned and publicly traded company established by Congress to create a secondary market for agricultural mortgage and rural utilities loans and the portions of agricultural and rural development loans guaranteed by the U.S. Department of Agriculture (USDA).
Farmer Mac
A method used to describe a parcel of land that begins at a well-marked point and follows the property’s boundaries, using directions and distances around the tract, back to the place of beginning.
Metes-and-bounds Method
One who acts or has the power to act for another. A fiduciary relationship is created under the law of agency when a property owner executes a listing agreement or management contract authorizing a licensed real estate broker to be his or her agent. A prospective property buyer may authorize a real estate broker to act as the buyer’s agent to find a suitable property.
Agent
The original tenant remains responsible for rent being paid by the new tenant and for any damage done to the rental during the lease term. The new tenant is responsible only to the original tenant to pay the rent due.
sublease
A one-sided contract wherein one party makes a promise so as to induce a second party to do something. The second party is not legally bound to perform; however, if the second party does comply, the first party is obligated to keep the promise.
Unilateral Contract
A statement of opinion on the status of the title to a parcel of real property based on an examination of specified public records.
Certificate Of Title
(1) The right to ownership or the ownership of land. (2) The evidence of ownership of land.
Title
Sets forth rules for entering into an enforceable contract using electronic means.
Uniform Electronic Transactions Act (UETA)
Depreciation taken periodically in equal amounts over an asset’s useful life.
Straight-line Depreciations
The most probable price that a property would bring in an arm’s-length transaction under normal conditions on the open market.
Market Value
The right given by a lease to the tenant to purchase the property at a predetermined price within a certain period, possibly the lease term.
Purchase Option
A personal judgment levied against the borrower when a foreclosure sale does not produce sufficient funds to pay the mortgage debt in full. In some states, it cannot be sought when the mortgage debt was used to purchase, and is secured by, the borrower’s principal residence.
Deficiency Judgment
The clause in a mortgage or deed of trust stating that the balance of the secured debt becomes immediately due and payable at the lender’s option if the property is sold by the borrower. In effect, this clause prevents the borrower from assigning the debt without the lender’s approval.
Alienation Clause
An entity or organization, created by operation of law, whose rights of doing business are essentially the same as those of an individual. The entity has continuous existence until it is dissolved according to legal procedures.
Corporation
A principal-agent relationship in which the real estate professional acts on behalf of the buyer, usually as an agent, with fiduciary responsibilities to the buyer.
Buyer Representation Agreement
Law that provides funds to assess and clean up brownfields, clarifies liability protections, and provides tax incentives toward enhancing state and tribal response programs (also known as Brownfields Law).
Small Business Liability Relief And Brownfields Revitalization Act
A right to use the land of another for a specific purpose, such as for a right-of-way or utilities; an incorporeal interest in land because it does not include a right of possession.
Easement
A contract that seems to be valid on the surface but may be rejected or disaffirmed by one or both of the parties.
Voidable Contract
One who attempts to put land to its most profitable use through the construction of improvements.
Developer
Real estate professionals conspiring to set fixed compensation rates.
Price-fixing
State legislation that confers zoning and other powers on municipal governments.
Enabling Acts
Chattel
personal property.
Information about an applicant’s gross income and total debt that lenders generally look at as a percentage to determine qualification for a loan.
Debt To Income (DTI)
Federal tax on a decedent’s real and personal property.
Estate Tax
(1) In appraisal, a loss of value in property due to any cause, including physical deterioration, functional obsolescence, and external obsolescence. (2) In real estate investment, a deduction for tax purposes taken over the period of ownership of income property, based on the property’s acquisition cost.
Depreciation
The interest or value that an owner has in property over and above any indebtedness.
Equity
A highly detailed plan that lays out the owner’s objectives for a property, as well as what the property manager wants to accomplish and how, including all budgetary information.
Management Plan
Incurable depreciation caused by factors not on the subject property, such as environmental or economic factors.
External Obsolescence
The process of estimating the value of a property by adding to the estimated land value the appraiser’s estimate of the reproduction or replacement cost of the building, less depreciation.
Cost Approach
A tax entity that issues multiple classes of investor interests (securities) backed by a pool of mortgages.
Real Estate Mortgage Investment Conduit (REMIC)
A new offer made in response to an offer received. It has the effect of rejecting the original offer, which cannot be accepted thereafter unless revived by the offeror.
Counteroffer
When individuals or businesses withhold their patronage to a business as a protest or to reduce competition.
Boycott
A mortgage loan that is expandable by increments up to a maximum dollar amount, with the full loan being secured by the same original mortgage.
Open-end Loan
The return of the rights of possession and quiet enjoyment to the lessor at the expiration of a lease.
Reversionary Right
Expansion of the Fair Housing Act to include families with children and those with physical or mental disabilities
Fair Housing Amendments Act Of 1988
The amount of money paid to a seller for the product sold.
Sales Price
An independent federal agency established by Congress to examine and supervise financial institutions, manage receiverships, and insure deposits (currently up to $250,000 per depositor per financial institution).
Federal Deposit Insurance Corporation (FDIC)
Sale of property in which the sales price is less than the remaining indebtedness.
Short Sale
A residential multiunit building whose title is held by a trust or corporation that is owned by and operated for the benefit of people living within the building who are the beneficial owners of the trust or shareholders of the corporation, each possessing a proprietary lease to a property unit.
Cooperative
A loan by which a homeowner receives a lump sum, monthly payments, or a line of credit based on the homeowner’s equity in the property secured by the mortgage. The loan must be repaid at a prearranged date, upon the death of the owner, or upon the sale of the property.
Reverse Mortgage
A mortgage clause stating that the mortgagee agrees not to terminate the tenancies of the lessees in the event the mortgagee forecloses on the mortgagor-lessor’s building.
Nondisturbance Clause
A charge made by a lender for the use of money.
Interest
A loan characterized by a fluctuating interest rate, usually one tied to a bank or savings and loan association cost-of-funds index.
Adjustable-rate Mortgage (ARM)
(1) Any structure, usually privately owned, erected on a site to enhance the value of the property (e.g., a building, fence, or driveway). (2) A publicly owned structure added to or benefiting land (e.g., a curb, sidewalk, street, or sewer).
Improvement
A hidden structural defect that could not be discovered by ordinary inspection and that threatens a property’s soundness or the safety of its inhabitants. Some states impose on property sellers and real estate professionals a duty to inspect for and disclose latent defects.
Latent Defect
The examination of public records relating to real estate to determine the current state of the ownership.
Title Search
State-imposed taxes on a decedent’s real and personal property.
Inheritance Taxes
The process of estimating the value of a property by examining and comparing sales and listings of comparable properties.
Sales Comparison Approach
A federal law administered by the Environmental Protection Agency that establishes a process for identifying parties responsible for creating hazardous waste sites, forcing liable parties to clean up toxic sites, bringing legal action against responsible parties, and funding the abatement of toxic sites. See also Superfund.
Comprehensive Environmental Response, Compensation, And Liability Act (CERCLA)
A contract under which the agreement of the parties is demonstrated by their acts and conduct.
Implied Agreement
A lien affecting or attaching only to a certain, identified parcel of land or piece of property.
Specific Lien
Practice of one company offering a package of services to consumers.
Affiliated Business Arrangement (ABA)
The main imaginary line running east and west and crossing a principal meridian at a definite point; used by surveyors for reference in locating and describing land under the rectangular (government) survey system of legal description.
Base Line
An estate carrying the limitation that, if it is no longer used for the purpose conveyed, it reverts to the original grantor by the right of reentry.
Fee Simple Subject To A Condition Subsequent
A factor (number) by which the assessed value of a property is multiplied to arrive at a value for the property that is in line with statewide tax assessments. The ad valorem tax would be based on this adjusted value. An equalization factor may be applied to raise or lower assessments in a particular district or county.
Assessment Equalization Factor
Express information or fact; that which is known; direct knowledge.
Actual Notice
An opinion of real estate value commissioned by a bank or an attorney and provided by a broker.
Broker’s Price Opinion (BPO)
Agency in which an affiliated licensee is appointed by the designated broker of the affiliated licensee’s real estate brokerage agency to act solely for a client of that brokerage agency to the exclusion of other affiliated licensees of that brokerage agency.
Appointed Agency
(or designated agency)
A listing based on the net price the seller will receive if the property is sold. Under a net listing, the real estate professional can offer the property for sale at the highest price obtainable to increase the commission. This type of listing is illegal in many states.
Net Listing
That portion of the loan payment directed toward the principal rather than the interest, plus any gain in property value due to appreciation.
Equity Buildup
The mutual exchange of privileges. Some states have reciprocal agreements for recognizing and granting licenses to licensees from other states.
Reciprocity
a qualified fee estate that is subject to the occurrence or nonoccurrence of some specified event.
Fee Simple Defeasible
Actions of a landlord that so materially disturb or impair a tenant’s enjoyment of the leased premises that the tenant is effectively forced to move out and terminate the lease without liability for any further rent.
Constructive Eviction
An easement acquired by open, notorious, continuous, hostile and adverse use of the property for the period of time prescribed by state law.
Easement By Prescription
A listing contract under which the owner appoints a real estate professional as her exclusive agent for a designated period of time to sell the specified property, on the owner’s stated terms, for a commission. The owner reserves the right to sell the property without paying anyone a commission if the sale is to a prospect who has not been introduced or claimed by the real estate professional.
Exclusive-agency Listing
Federal government regulates the lending practices of mortgage lenders through this act
Truth In Lending Act (TILA)
Substituting a new obligation for an old one or substituting new parties to an existing obligation.
Novation
The purchase of real property, the consummation of which is preceded by a lease, usually long term, that is typically done for tax or financing purposes.
Lease Purchase
Words in a deed of conveyance that state the grantor’s intention to convey the property at the present time. This clause is generally worded as “convey and warrant”; “grant”; “grant, bargain, and sell”; or the like.
Granting Clause
The government’s right to impose laws, statutes, and ordinances, including zoning ordinances and building codes, to protect the public health, safety, and welfare.
Police Power
Expenses, either prepaid or paid in arrears, that are divided or distributed between the buyer and the seller at the closing.
Prorations
An estate in land in which ownership is for an indeterminate length of time, in contrast to a leasehold estate.
Freehold Estate
A test of the soil to determine whether it will absorb and drain water adequately to use a septic system for sewage disposal.
Percolation Test
A loan insured by the Federal Housing Administration and made by an approved lender in accordance with FHA regulations.
FHA-insured Loan
A contract between an owner (as principal) and a real estate professional (as representative of the owner) by which the real estate professional is employed to find a buyer for the owner’s real estate on the owner’s terms, for which service the owner agrees to pay a commission or other form of compensation.
Listing Agreement
Common law rights held by owners of land adjacent to rivers, lakes, or oceans; includes restrictions on those rights and land ownership.
Water Rights
The highest interest in real estate recognized by the law; the holder is entitled to all rights to the property.
Fee Simple
To pledge property as security for an obligation or loan without giving up possession of it.
Hypothecation
An estimate of the quantity, quality, or value of something. The process through which conclusions of property value are obtained; also refers to the report that sets forth the process of estimation and conclusion of value.
Appraisal
A clause in a deed that limits the way the real estate ownership may be used.
Restrictive Covenant
A legally enforceable promise or set of promises that must be performed and for which, if a breach of the promise occurs, the law provides a remedy. A contract may be either unilateral, by which only one party is bound to act, or bilateral, by which all parties to the instrument are legally bound to act as prescribed.
Contract
A lien that belongs to a vendor for the unpaid purchase price of land, where the vendor has not taken any other lien or security beyond the personal obligation of the purchaser.
Vendor’s Lien
The appraisal principle stating that the value of any component of a property is what it gives to the value of the whole or what its absence detracts from that value.
Contribution
The income projected for an income-producing property after deducting anticipated vacancy and collection losses and operating expenses.
Net Operating Income (NOI)
An estate that gives the lessee the right to possession until the estate is terminated by either party; the term of this estate is indefinite.
Estate (tenancy) At Will
Ownership of real property by one person only; also called sole ownership.
Severalty
In real estate practice, a person who has the skills and knowledge to be licensed as a real estate broker or salesperson.
Real Estate Licensee
A national registry, managed by the Federal Trade Commission, which lists the phone numbers of consumers who have indicated their preference to limit the telemarketing calls they receive.
National Do Not Call Registry
The appraisal principle holding that value can increase or decrease based on the expectation of some future benefit or detriment produced by the property.
Anticipation
A loan in which only interest is paid during the term of the loan, with the entire principal amount due with the final interest payment.
Straight Loan
(or interest only loan, or term loan)
A system of property ownership based on the theory that each spouse has an equal interest in the property acquired by the efforts of either spouse during marriage. A holdover of Spanish law found predominantly in the western U.S. states; the system was unknown under English common law.
Community Property
A lien placed on property with the knowledge and consent of the property owner.
Voluntary Lien
A financing instrument that states the terms of the underlying obligation, is signed by its maker, and is negotiable (transferable to a third party). Also called a promissory note.
Note
One-tenth of one cent. Some states use a – rate to compute real estate taxes; for example, a rate of 52 – would indicate a tax of $0.052 for each dollar of assessed valuation of a property.
Mill
The concept of land ownership that includes ownership of all legal rights to the land—possession, control within the law, enjoyment, exclusion, and disposition.
Bundle Of Legal Rights
A set of standards developed by the Appraisal Foundation that details information required for a property appraisal.
Uniform Standards Of Professional Appraisal Practice (USPAP)
The interests, benefits, and rights inherent in real estate ownership; often used as a synonym for real estate.
Real Property
Growing crops, such as corn, that are produced annually through labor and industry; also called fructus industriales.
Emblements
Agreements to sell one product only if the buyer purchases another product as well. The sale of the first product is “tied” to the purchase of a second product.
Tying Agreement
A judicial or administrative proceeding to exercise the power of eminent domain, through which a government agency takes private property for public use and compensates the owner.
Condemnation
A written agreement between holders of liens on a property that changes the priority of mortgage, judgment, and other liens under certain circumstances.
Subordination Agreement
A method of controlling environmental contamination by sealing off a dangerous substance, such as asbestos.
Encapsulation
A policy insuring a property owner or mortgagee against loss by reason of defects in the title to a parcel of real estate, other than encumbrances, defects, and matters specifically excluded by the policy.
Title Insurance
Permission obtained from zoning authorities to build a structure or conduct a use that is expressly prohibited by the current zoning laws; an exception from the zoning ordinances.
Variance
An adverse fact that a party indicates is of such significance, or that is generally recognized by a competent licensee as being of such significance, to a reasonable party, that it affects or would affect the party’s decision to enter into a contract or agreement concerning a transaction, or affects or would affect the party’s decision about the terms of the contract or agreement.
Material Adverse Fact
A person who receives a transfer of real property from a grantor.
Grantee
A mortgage loan on approved property made to a qualified veteran by an authorized lender and guaranteed by the U.S. Department of Veterans Affairs in order to limit the lender’s possible loss.
VA-guaranteed Loan
Specific credit terms, such as down payment, monthly payment, and amount of finance charge or term of loan.
Triggering Terms
The remnant of an estate that the grantor holds after granting a life estate to another person.
Reversionary Interest
The succession of conveyances, from some accepted starting point, whereby the present holder of real property derives title.
Chain Of Title
Agency relationship in which the agent represents only one party to a transaction.
Single Agency
A marketing organization composed of member real estate professionals who agree to share their listing agreements with one another in the hope of procuring ready, willing, and able buyers for their properties more quickly than they could on their own. Most multiple listing services accept exclusive right-to-sell or exclusive agency listings from their member real estate professionals.
Multiple Listing Service (MLS)
An obligation, such as a second mortgage, that is subordinate in right or lien priority to an existing lien on the same property.
Junior Lien
A deed used by a trustee under a deed of trust to return title to the trustor.
Reconveyance Deed
Exaggerated or superlative comments or opinions.
Puffing
A strip of land, usually used as a park or designated for a similar use, separating land dedicated to one use from land dedicated to another use (e.g., residential from commercial).
Buffer Zone
Insurance that covers a residential real estate owner against financial loss from fire, theft, public liability, and other common risks.
Homeowners Insurance
Point at which additional property improvements do not increase the property’s income or value.
Law Of Diminishing Returns
Transfer of property from one owner to another
Alienation
A financing technique used to reduce the monthly payments for the first few years of a loan. Funds in the form of discount points are given to the lender by the builder or the seller to buy down or lower the effective interest rate paid by the buyer, thus reducing the monthly payments for a set time.
Buydown
Occurs when the real estate professional should have known that a statement about a material fact was false.
Negligent Misrepresentation
A clause in a lease that grants the lessee the privilege of renewing the lease.
Renewal Option
Under the act, which was revised most recently in 2008, financial institutions are expected to meet the deposit and credit needs of their communities; participate and invest in local community development and rehabilitation projects; and participate in loan programs for housing, small businesses, and small farms.
Community Reinvestment Act Of 1977 (CRA)
The illegal practice of channeling home seekers to particular areas based on their race, national origin, religion, or other protected classification.
Steering
A method of describing real property that identifies a parcel of land by reference to lot and block numbers within a subdivision, as specified on a recorded subdivision plat.
Lot-and-block (recorded Plat) Method
A charge imposed on a borrower who pays off the loan principal early. This penalty compensates the lender for interest and other charges that would otherwise be lost.
Prepayment Penalty
A loan under which a property owner uses the property as collateral and can then draw funds up to a prearranged amount against the property. Also called a home equity line of credit, or HELOC.
Home Equity Loan
Private agreements that affect land use. They may be enforced by an owner of real estate that benefits from them and can be included in the seller’s deed to the buyer.
Covenants, Conditions, And Restrictions (CC&Rs)
A clause in a listing that entitles a broker to a commission for a set period of time after the listing has expired if the property is sold to a prospect that the broker introduced to the property during the listing period.
Extender Clause
(or protection clause, or safety clause)
The form that must be provided to a consumer on loan application, as specified by the Consumer Financial Protection Bureau.
Loan Estimate
A method of refinancing in which the new mortgage is placed in a secondary, or subordinate, position; the new mortgage includes both the unpaid principal balance of the first mortgage and whatever additional sums are advanced by the lender. In essence, it is an additional mortgage in which another lender refinances a borrower by lending an amount over the existing first mortgage amount without disturbing the existence of the first mortgage.
Wraparound Loan
A document, also known as a deed of reconveyance, that transfers all rights given a trustee under a deed of trust loan back to the grantor after the loan has been fully repaid.
Release Deed
Occurs when a disinterested third party is authorized to act as escrow agent (escrow holder) and to coordinate the closing activities on behalf of the buyer and the seller.
Escrow Closing
Written governmental permission allowing a use inconsistent with zoning but necessary for the common good, such as locating an emergency medical facility in a predominantly residential area.
Conditional-use Permit
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 mortgage document. The foreclosure procedure brings the rights of the parties to a conclusion and passes the title in the mortgaged property to either the holder of the mortgage or a third party who may purchase the realty at the foreclosure sale. Depending on the priority of the foreclosed mortgage, the property may be sold free of all other encumbrances incurred prior to the sale.
Foreclosure
A fee simple estate qualified by a special limitation. Language used to describe the limitation includes the words so long as, while, or during.
Fee Simple Determinable
An easement that follows along with the land.
Easement Appurtenant
An act that makes contracts (including signatures) and records legally enforceable regardless of the medium in which they are created.
Electronic Signatures In Global And National Commerce Act (E-Sign)
Implements the Truth in Lending Act, requiring credit institutions to inform borrowers of the true cost of obtaining credit.
Regulation Z
A lease requiring the tenant to pay not only rent but also costs incurred in maintaining the property, including taxes, insurance, utilities, and repairs.
Net Lease
A tenant’s right to occupy real estate during the term of a lease, generally considered a personal property interest, although a long-term lease may be eligible for treatment as real property for financing purposes.
Leasehold Estate
Any provision added to an existing contract without altering the content of the original. It must be signed by all parties.
Addendum
A right given by law to certain creditors to have their debts paid out of the property of a defaulting debtor, usually by means of a court sale.
Lien
A real estate professional authorized by a broker to act as the agent for a specific principal in a particular transaction; also may be called assigned agent or appointed agent.
Designated Agent
(appointed agent)
A property that has acquired an undesirable reputation due to an event that occurred on or near it, such as violent crime, gang-related activity, illness, or personal tragedy. Some states restrict the disclosure of information about stigmatized properties.
Stigmatized Property
Amended the Fair Housing Act to provide that housing intended for persons aged 55 or older no longer needs to have significant facilities and services designed for the elderly.
Housing For Older Persons Act Of 1995 (HOPA)
Regulations issued by Fannie Mae that must be followed by appraisers to ensure accurate and objective appraisals.
Appraiser Independence Requirements (AIR)
A fiduciary arrangement whereby property is conveyed to a person or an institution, called a trustee, to be held and administered on behalf of another person, called a beneficiary. The one who conveys the trust is called the trustor.
Trust
That part of a deed beginning with the words “to have and to hold,” following the granting clause and defining the extent of ownership the grantor is conveying.
Habendum Clause
Establishes the basic structure for regulating discharges of pollutants into United States waters and regulating standards for surface waters.
Clean Water Act
An advertisement that does not include the name and physical address of the person or firm placing the ad .
Blind Ad
A charge against property, created by operation of law. Tax liens and assessments take priority over all other liens.
Tax Lien
A loan that only requires the payment of interest for a stated period of time with the principal due at the end of the term.
Interest-only Loan
(or straight loan)
A real estate loan used to finance the purchase of both real property and personal property, such as in the purchase of a new home that includes carpeting, window coverings, and major appliances.
Package Loan
Laws designed to preserve the free enterprise of the open marketplace by making illegal certain private conspiracies and combinations formed to minimize competition. Most violations of antitrust laws in the real estate business involve either price-fixing (real estate professionals conspiring to set fixed compensation rates) or allocation of customers or markets (real estate professionals agreeing to limit their areas of trade or dealing to certain areas or properties).
Antitrust Laws
Items, called chattels, that do not fit into the definition of real property; movable objects.
Personal Property
An agreement to keep open for a set period an offer to sell or purchase property.
Option
A person empowered to do anything the principal could do personally.
Universal Agent
A person who performs real estate activities while employed by a licensed real estate broker.
Sales Associate
An appraisal principle that the maximum value of a property tends to be set by the cost of purchasing an equally desirable and valuable substitute property, assuming that no costly delay is encountered in making the substitution.
Substitution
The four unities of tenants in a joint tenancy:
PITT
possession, interest, time, and title.
The bringing together of parties interested in making a real estate transaction.
Brokerage
A lease of property according to which a landlord pays all property charges regularly incurred through ownership, such as repairs, taxes, insurance, and operating expenses. Most residential leases are this type
Gross Lease
The legally permitted and physically possible use of a property that would produce the greatest net income and, thereby, develop the highest value.
Highest And Best Use
The appraisal principle holding that the greater the similarity among properties in an area, the better they will hold their value.
Conformity
(1) The person for whom a trust operates or in whose behalf the income from a trust estate is drawn. (2) A lender in a deed of trust loan transaction
Beneficiary
A formal declaration made before a duly authorized officer, usually a notary public, by a person who has signed a document.
Acknowledgment
The process used to extract natural gas from the deep layers of rock in which it is embedded.
Hydraulic Fracturing (fracking)
Loss in a property’s value resulting from physical deterioration, external depreciation, and functional obsolescence.
Accrued Depreciation
A database of consumer claims history that allows insurance companies to access prior claims information in the underwriting and rating process.
Comprehensive Loss Underwriting Exchange (CLUE)
People’s desire for one area over another, based on a number of factors such as history, reputation, convenience, scenic beauty, and location.
Area Preference
A federal law that regulates the sale of certain real estate in interstate commerce
Interstate Land Sales Full Disclosure Act (ILSA)
A type of residential dwelling with two floors that is connected to one or more dwellings by a common wall or walls. Title to the unit and lot vest in the owner who shares a fractional interest with other owners in any common areas.
Town House
On a closing statement, items that have been paid in advance by the seller, such as fuel costs and some real estate taxes, for which the seller must be reimbursed by the buyer.
Prepaid Items
A written document, properly witnessed, providing for the transfer of title to property owned by the deceased, called the testator.
Will
Buyer takes title of property and makes payments on the existing loan but is not personally obligated to pay the debt in full. Original seller might continue to be liable for debt.
Subject To
A horizontal plane from which heights and depths are measured.
Datum
A form filed with the county recorder for the county in which a property is located that provides information about specific types of known hazards on the property.
Groundwater Hazard Statement
A person’s present right to an interest in real property that will not result in possession or enjoyment until sometime in the future, such as a reversion or right of reentry.
Future Interest
A conveyance that transfers whatever interest the grantor has in the specified real estate, without warranties or obligations.
Quitclaim Deed
An interest in real or personal property that is limited in duration to the lifetime of its owner or some other designated person or persons.
Life Estate
A kind of grace period provided by law or by contract in which a party to a contract can legally back out of it.
Cooling-off Period
Trust ownership of real estate by a group of individuals who purchase certificates of ownership in the trust, which in turn invests the money in real property and distributes the profits back to the investors free of corporate income tax.
Real Estate Investment Trust (REIT)
An easement allowed by law as necessary for the full enjoyment of a parcel of real estate (e.g., a right of ingress and egress over a grantor’s land).
Easement By Necessity
The gradual and sometimes imperceptible wearing away of the land by natural forces, such as wind, rain, and flowing water.
Erosion
A tax or levy customarily imposed against only those specific parcels of real estate that will benefit from a proposed public improvement like a street or sewer.
Special Assessment
The legal right or interest, recognized in some states, that a wife acquires in the property her husband held or acquired during their marriage. During the husband’s lifetime, the right is only a possibility of an interest; upon his death, it can become an interest in land.
Dower
The relationship between the amount of the mortgage loan and the value of the real estate being pledged as collateral.
Loan-to-value (LTV) Ratio
The federal law that prohibits discrimination in the extension of credit because of race, color, religion, national origin, sex, age, marital status, or receipt of public assistance.
Equal Credit Opportunity Act (ECOA)
A monthly statement that details the financial status of the property.
Cash Flow Report
A unit of measurement used for various loan charges; one point equals 1% of the amount of the loan.
Discount Point
The the real estate professional who is responsible for supervision of the real estate professionals who act on behalf of the brokerage; may also be called a supervising broker.
Managing Broker
Form required by the Consumer Financial Protection Bureau in specified real estate transactions.
Closing Disclosure Form
Agreement in which the buyer works with only one broker, although the broker is free to represent other buyer clients.
Exclusive Buyer Representation Agreement
Tax stamps required to be affixed to a deed by state and/or local law.
Transfer Tax
The clause in a mortgage or deed of trust that can be enforced to make the entire debt due immediately if the borrower defaults on an installment payment or other obligation.
Acceleration Clause
A form of alternative dispute resolution in which a conciliator meets with each of the parties separately to help them settle their differences voluntarily, without the formality of a hearing or trial.
Conciliation
Process of converting personal property into real property.
Annexation
Federal agency that has established rules and regulations that further interpret the practices affected by federal law; for example, -distributes an equal housing opportunity poster.
Department Of Housing And Urban Development (HUD)
An article installed by a tenant under the terms of a lease that is removable by the tenant before the lease expires.
Trade Fixture
A contract between the owner of income property and a management firm or individual property manager that outlines the scope of the manager’s authority.
Management Agreement
A form of business organization that combines the most attractive features of limited partnerships and corporations.
Limited Liability Company (LLC)
A comparison of the prices of recently sold homes that are similar to a listing seller’s home in terms of location, style, and amenities.
Comparative Market Analysis (CMA)
A concept of water ownership in which the landowner’s right to use available water is based on a government-administered permit system.
Prior Appropriation
A colorless, odorless gas that occurs as a by-product of fuel combustion that may result in death in poorly ventilated areas.
Carbon Monoxide (CO)
An interest in leased property that continues from period to period—week to week, month to month, or year to year.
Estate (tenancy) From Period To Period
(periodic tenancy)
Ownership rights in a parcel of real estate that are limited to the surface of the property and do not include the space above it (air rights) or the substances below the surface (subsurface rights).
Surface Rights
Commonly found on sites where petroleum products are used or where gas stations and auto repair shops are located, and subject to federal and state regulations. In residential areas, tanks are used to store heating oil. Over time, neglected tanks may leak hazardous substances into the environment.
Underground Storage Tanks (USTs)
An agreement by an insurance or bonding company to be responsible for certain possible defaults, debts, or obligations incurred by an insured party; in essence, a policy insuring one’s personal and/or financial integrity. In the real estate business, a surety bond is generally used to ensure that a particular project will be completed at a certain date or that a contract will be performed as stated.
Surety Bonds
Insurance provided by a private carrier that protects a lender against a loss in the event of a foreclosure and deficiency.
Private Mortgage Insurance (PMI)
A fixed, periodic payment made by a tenant of a property to the owner for possession and use, usually by prior agreement of the parties.
Rent
Acquiring title to property on which there is an existing mortgage and agreeing to be personally liable for the terms and conditions of the mortgage, including payments.
Assumption Of Mortgage
The reversion of property to the state or county, as provided by state law, in cases in which a decedent dies intestate without heirs capable of inheriting, or when the property is abandoned.
Escheat
Informational booklet provided to mortgage applicants with general information about closing and a detailed description of the Loan Disclosure form.
Your Home Loan Toolkit
A phrase in a contract that requires the performance of a certain act within a stated period of time.
“time Is Of The Essence”
The order of position or time.
The priority of liens is generally determined by the chronological order in which the lien documents are recorded; tax liens, however, have priority even over previously recorded liens.
Priority
A form required by the Department of Revenue that declares the total amount paid for the property, the financial details if it is an individual contract sale, and a checklist of all the sales conditions applicable to the sale.
Declaration Of Value
On a closing statement, an amount charged; that is, an amount that the debited party must pay.
Debit
a typical form of joint venture in which each general partner shares in the administration, profits, and losses of the operation.
general partnership
Act addresses rights of individuals with disabilities in employment and public accommodations.
Americans With Disabilities Act (ADA)
The right acquired by the title company to any remedy or damages available to the insured when a title company makes a payment to settle a claim covered by a policy.
Subrogation
A court-ordered sale of real property to raise money to cover delinquent taxes.
Tax Sale
Ownership rights in a parcel of real estate to the water, minerals, gas, oil, and so forth that lie beneath the surface of the property.
Subsurface Rights
The right of a creditor to have all of a debtor’s property—both real and personal—sold to satisfy a debt.
General Lien
A transaction in which the sales price is paid in two or more installments over two or more years. If the sale meets certain requirements, a taxpayer can postpone reporting such income until future years by paying tax each year only on the proceeds received that year. Also called an installment sale.
Land Contract
The right of a government or municipal quasi-public body to acquire property for public use through a court action called condemnation, in which the court decides that the use is a public use and determines the compensation to be paid to the owner.
Eminent Domain
Process of land being taken from a property owner for public use through eminent domain with the requirement that the owner be compensated fairly.
Taking
Permanent reference marks or points established for use by surveyors in measuring differences in elevation.
Benchmarks
Dwellings that are built off site and trucked to a building lot where they are installed or assembled.
Manufactured Housing
A periodic tenancy under which the tenant rents for one month at a time. In the absence of a rental agreement (oral or written), a tenancy is generally considered to be month to month.
Month-to-month Tenancy
A form of fungus that can be found almost anywhere and can grow on almost any organic substance, so long as moisture and oxygen are present. – growth can gradually destroy what it is growing on, as well as cause serious health problems.
Mold
Clauses in a deed limiting the future uses of the property. - may impose a vast variety of limitations and conditions—for example, they may limit the density of buildings, dictate the types of structures that can be erected, or prevent buildings from being used for specific purposes or even from being used at all.
Deed Restrictions
Upon the death of a joint tenant, the deceased’s interest transfers directly to the surviving joint tenant or tenants
Right Of Survivorship
Helps both the buyer and the seller with paperwork and formalities in transferring ownership of real property, but who is not an agent of either party.
Transaction Broker
An action to compel the performance of a contract, when money damages for breach would not be satisfactory
Specific Performance
The maximum possible estate or right of ownership of real property, continuing forever.
Fee Simple Absolute
A note secured by a mortgage or deed of trust given by a buyer, as borrower, to a seller, as lender, as part of the purchase price of the real estate.
Purchase Money Mortgage (PMM)
The increase in value or utility resulting from the consolidation (assemblage) of two or more adjacent lots into one larger lot.
Plottage
The gradual reduction of the purchasing power of the dollar, usually related directly to increases in the money supply by the federal government.
Inflation
The right of a defaulted property owner to recover the property before its sale by paying the appropriate fees and charges.
Equitable Right Of Redemption
Profit earned from the sale of an asset.
Capital Gain
A clause used in leases and mortgages that cancels a specified right upon the occurrence of a certain condition, such as cancellation of a mortgage upon repayment of the mortgage loan.
Defeasance Clause
A system of recordkeeping that provides a means of monthly reconciliation through the use of a general ledger account and an individual ledger account.
Two-journal Recordkeeping System
The principal in an agency relationship or other form of representation.
Client
A lack of uniformity; dissimilarity. Because no two parcels of land are exactly alike, real estate is said to be nonhomogeneous.
Nonhomogeneity
A description of a specific parcel of real estate complete enough for an independent surveyor to locate and identify it.
Legal Description
The principal unit of the rectangular (government) survey system. A township is a 6-mile square of 36 square miles.
Township
A premium added to the index rate representing the lender’s cost of doing business.
Margin
An intermediary between a buyer and seller in a highly organized market.
Broker
A detailed cash accounting of a real estate transaction showing all cash received, all charges and credits made, and all cash paid out in the transaction.
Closing Statement
A listing contract under which the owner appoints a real estate professional as his exclusive agent for a designated period of time to sell the specified property on the owner’s stated terms and agrees to pay the real estate professional a commission when the property is sold, whether by the real estate professional, the owner, or another real estate professional.
Exclusive Right-to-sell Listing
States which party (or parties) a licensee represents in a real estate transaction, the licensee’s duties to clients, and any additional information the licensees determines is necessary to clarify the licensee’s relationship to the client or customer.
Agency Disclosure
The actual, open, notorious, hostile, and continuous possession of another’s land under a claim of title. Possession for a statutory period may be a means of acquiring title.
NACHO
“Nacho house any more..”
Adverse Possession
Permission by the municipal inspector to occupy a completed building structure after being inspected and having complied with building codes.
Certificate Of Occupancy
Correction of problems after they have occurred.
Corrective Maintenance
Deception intended to cause a person to give up property or a lawful right.
Fraud
Popular name of the hazardous-waste cleanup fund established by the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA).
Superfund
A hearing conducted by the IREC as a result of a complaint made about a licensee.
Commission-conducted Hearing
A deed in which the grantor fully warrants good, clear title to the premises. Used in most real estate deed transfers, offers the greatest protection of any deed.
General Warranty Deed
A contract that has all the elements of a valid contract, yet neither party can sue the other to force performance of it. For example, an unsigned contract is generally unenforceable.
Unenforceable Contract
Two essential components of a valid contract; a “meeting of the minds.” An offer is a promise made by the offeror, requesting something in exchange for that promise. Acceptance is a promise by the offeree to be bound by the exact terms proposed by the offeror.
Offer And Acceptance
An instrument that grants a trustee under a land trust full power to sell, mortgage, and subdivide a parcel of real estate. The beneficiary controls the trustee’s use of these powers under the provisions of the trust agreement.
Deed In Trust
An appraisal principle that the value of a better-quality property is affected adversely by the presence of a lesser-quality property.
Regression
Land that is owned and occupied as the family home. In many states, a portion of the area or value of this land is protected or exempt from judgments for debts other than those secured by the property.
Homestead
The use of borrowed money to finance an investment.
Leverage
A lien or charge on the property of a mortgagor that secures the underlying debt obligation.
Mortgage Lien
A market for the purchase and sale of existing mortgages, designed to provide greater liquidity for mortgages. Mortgages are first originated in the primary mortgage market.
Secondary Mortgage Market
An appraisal principle that the value of a lesser-quality property is favorably affected by the presence of a better-quality property.
Progression
The effort that brings about the desired result. Under an open listing, the real estate professional who is the procuring cause of the sale receives the commission.
Procuring Cause
Disclosure required by the lender if the lender intends to sell or assign the right to service the loan to another loan servicer. The loan servicer must notify the borrower 15 days before the effective date of the loan transfer, including in the notice the name and address of the new servicer, toll-free telephone numbers, and the date the new servicer will begin accepting payments.
Mortgage Servicing Transfer Statement
Person who is prepared to buy property on the seller’s terms and is ready to take positive steps to consummate the transaction.
Ready, Willing, And Able Buyer
The appraisal principle that follows the interrelationship of the supply of and demand for real estate. Because appraising is based on economic concepts, this principle recognizes that real property is subject to the influences of the marketplace as with any other commodity.
Supply And Demand
A tenancy in which a lessee retains possession of leased property after the lease has expired and the landlord, by continuing to accept rent, agrees to the tenant’s continued occupancy as defined by state law.
Holdover Tenancy
A financing instrument that states the terms of the underlying obligation, is signed by its maker, and is negotiable (transferable to a third party).
Promissory Note
A payment by a tenant, held by the landlord during the lease term, and kept (wholly or partially) on default or on destruction of the premises by the tenant.
Security Deposit
A contract that has no legal force or effect because it does not meet the essential elements of a contract.
Void Contract
Method for claiming tax deductions for certain property purchased before 1987 in which it was possible to claim greater deductions in the early years of ownership, gradually reducing the amount deducted in each year of useful life.
Accelerated Cost Recovery System (ACRS)
A lien imposed on property by statute—a tax lien, for example—in contrast to an equitable lien, which arises out of common law.
Statutory Lien
The tenancy of a lessee who lawfully comes into possession of a landlord’s real estate but who continues to occupy the premises improperly after the lease rights have expired.
Estate (tenancy) At Sufferance
An Internal Revenue Service term for depreciation.
Cost Recovery
State laws that require an employer to obtain insurance coverage to protect employees who are injured in the course of their employment.
Workers’ Compensation Acts
A fee charged to the borrower by the lender for making a mortgage loan. The fee is usually computed as a percentage of the loan amount.
Loan Origination Fee
Money or property given to make up any difference in value or equity between two properties in an exchange.
Boot
(1) That received by the grantor in exchange for the deed. (2) Something of value that induces a person to enter into a contract.
Consideration
As since amended, the Fair Housing Act prohibits discrimination in housing based on race, color, religion, national origin, sex, familial status, or disability.
Title VIII Of Civil Rights Act Of 1968 (Fair Housing Act)
A lien that arrises out of common law
Equitable Lien
A main party to a transaction—the person for whom an agent works.
Principal
A transaction in which the owner sells improved property and, as part of the same transaction, signs a long-term lease to remain in possession of the premises.
Sale-and-leaseback
The financial interest that the Internal Revenue Service attributes to an owner of an investment property for the purpose of determining annual depreciation and gain or loss on the sale of the asset. If a property was acquired by purchase, the owner’s basis is the cost of the property plus the value of any capital expenditures for improvements to the property, minus any depreciation allowable or actually taken. This new basis is called theadjusted basis.
Basis
An instrument used to create a mortgage lien by which the borrower conveys title to a trustee, who holds it as security for the benefit of the note holder (the lender); also called a trust deed.
Deed Of Trust
A building or some portion of it—a wall or fence, for instance—that extends beyond the land of the owner and illegally intrudes on the land of an adjoining owner or a public street or alley.
Encroachment
A government-supervised enterprise established to purchase any kind of mortgage loans in the secondary mortgage market from the primary lenders.
Fannie Mae
The relationship between a principal and an agent wherein the agent is authorized to represent the principal in certain transactions.
Agency
A written system of standards for ethical conduct.
Code Of Ethics
A license status under which the licensee may not conduct any real estate business.
Inactive Status
An abstract of title that an attorney has examined and has certified to be, in the attorney’s opinion, an accurate statement of the facts concerning the property’s ownership.
Attorney’s Opinion Of Title
Changing an item of real estate to personal property by detaching it from the land (e.g., cutting down a tree).
Severance
An association of two or more individuals who carry on a continuing business for profit as co-owners. Under the law, is regarded as a group of individuals rather than as a single entity separate from the individual owners.
Partnership
The joint ownership, recognized in some states, of property acquired by husband and wife during marriage. Upon the death of one spouse, the survivor becomes the owner of the property.
(Iowa does not recognize)
Tenancy By The Entirety
Provisions in a contract that require a certain act to be done or a certain event to occur before the contract becomes binding.
Contingencies
A loan in which the principal, as well as the interest, is payable in monthly or other periodic installments over the term of the loan.
Amortized Loan
A contract in which all parties have fulfilled their promises and thus performed the contract.
Executed Contract
Small repairs that help prevent bigger problems and expenses.
Preventive Maintenance
Applies as long as money being spent on property improvements produces an increase in the property’s income or value.
Law Of Increasing Returns
Alterations to the interior of a building to meet the functional demands of the tenant. Also known as build-outs.
Tenant Improvements
the legal term for the transfer of title during the property owner’s lifetime
Voluntary Alienation
On a closing statement, items of expense that are incurred but not yet payable, such as interest on a mortgage loan or taxes on real property.
Accrued Items
A property’s anticipated financial performance in the present and future. It gives the owner a sense of expected profit.
Operating Budget
An amendatory statute that contains stronger cleanup standards for contaminated sites, increased funding for Superfund, and clarifications of lender liability and innocent landowner immunity. See Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA).
Superfund Amendments And Reauthorization Act (SARA)
The combining of two or more adjoining lots into one larger tract to increase their total value.
Assemblage
The natural level at which the ground is saturated. The water table may be several hundred feet underground or near the surface.
Water Table
The imposition of a tax, charge, or levy, usually according to established rates.
Assessment
The third party or nonrepresented consumer for whom some level of service is provided.
Customer
A document acknowledging the payment of a mortgage debt.
Satisfaction Of Mortgage
An ordinance that specifies minimum standards of construction for buildings to protect public safety and health.
Building Code
The condition of a property owner who dies without leaving a valid will. Title to the property will pass to the decedent’s heirs, as provided in the state law of descent.
Intestate
A form of co-ownership by which each owner holds an undivided interest in real property as if each were sole owner. Each individual owner has the right to partition. Unlike joint tenants, tenants in common have the right of inheritance.
Tenancy In Common (TIC)
transfer of title to property is usually by operation of law
Involuntary alienation
A statement that details the impact a project will have on the environment.
Environmental Impact Statement (EIS)
The official who presides over a hearing involving a government agency and someone affected by a decision of that agency. The ALJ hears evidence, including the testimony of witnesses, and renders a decision.
Administrative Law Judge (ALJ)
All the lines in a rectangular survey system that run east and west, parallel to the base line and six miles apart.
Township Lines
Used as an insulating material in dielectric oil. It can linger in the environment for long periods of time and can cause health problems
Polychlorinated Biphenyls (PCBs)
The figure used as a multiplier of the gross monthly income of a property to produce an estimate of the property’s value; usually used for single-family residential property.
Gross Rent Multiplier (GRM)
Violation of any terms or conditions in a contract without legal excuse; for example, failure to make a payment when it is due.
Breach Of Contract
The process of acquiring additional property by refinancing property already owned and investing the loan proceeds in additional properties.
Pyramiding
The act of entering or recording documents affecting or conveying interests in real estate in the recorder’s office established in each county. Until it is recorded, a deed or a mortgage ordinarily is not effective against subsequent purchasers or mortgagees.
Recording
The ability to sell an asset and convert it into cash, at a price close to its true value, in a short period of time.
Liquidity
A form indicating the appraised value of a property being financed with a VA loan.
Certificate Of Reasonable Value (CRV)
Payment to a real estate professional for services rendered, such as in the sale or purchase of real property; usually a percentage of the selling price of the property.
Commission
(1) A landowner’s claim to use water in large navigable lakes and oceans adjacent to her property. (2) The ownership rights to land bordering these bodies of water up to the high-water mark.
Littoral Rights
The main imaginary line running north and south and crossing a base line at a definite point; used by surveyors for reference in locating and describing land under the rectangular (government) survey system of legal description.
Principal Meridian
A use of property that is permitted to continue after a zoning ordinance prohibiting it has been established for the area.
Nonconforming Use
Anything—such as a mortgage, tax, or judgment lien; an easement; a restriction on the use of the land; or an outstanding dower right—that may diminish the value or use and enjoyment of a property.
Encumbrance
On a closing statement, an amount entered in a person’s favor—either an amount the party has paid or an amount for which the party must be reimbursed.
Credit
Any communication beyond casual conversation concerning the facts and features of a property, which occurs before the point of discussing price range or any specific, financial qualifications of the buyer or tenant, or selling or buying motives or objectives of seller or buyer, or tenant or landlord, or eliciting or accepting information involving a proposed or preliminary offer associated with a specific property, in which the person may unknowingly divulge any confidential personal or financial information, which, if disclosed to the other party, could harm the party’s bargaining position.
Specific Assistance
A deed that carries with it no warranties against liens or other encumbrances but that does imply that the grantor has the right to convey title. The grantor may add warranties to the deed.
Bargain And Sale Deed
The practice of one party canceling or terminating a contract, which has the effect of returning the parties to their original positions before the contract was made.
Rescission
Enacted in July 2008 as an amendment to the Truth in Lending Act (TILA) to require mortgage loan cost disclosures to consumers.
Mortgage Disclosure Improvement Act (MDIA)
Someone who is retained to perform a certain act but who is subject to the control and direction of another only as to the end result and not as to the way in which the act is performed. Unlike an employee, an independent contractor pays for all expenses and Social Security and income taxes and receives no employee benefits. Most real estate sales associates are –, meeting the Internal Revenue Service definition for a qualified real estate agent.
Independent Contractor
The location of land for legal purposes; the jurisdiction in which land is located.
“Location location location…”
Situs
A form of life estate established by state law, rather than created voluntarily by an owner. It becomes effective when certain events occur. See dower, curtesy, and homestead for — used in some states.
Legal Life Estate
A deed in which the grantor warrants, or guarantees, the title only against defects arising during the period of the grantor’s tenure and ownership of the property and not against defects existing before that time, generally using the language, “by, through, or under the grantor but not otherwise.”
Special Warranty Deed
The final step in the appraisal process, in which the appraiser considers the estimates of value received from the sales comparison, cost, and income approaches to arrive at a final opinion of market value for the subject property.
Reconciliation
The degree, quantity, nature, and extent of interest a person has in real property.
Estate In Land
The services that real estate professionals must provide to clients, as prescribed differently by certain states; for example, assisting clients in negotiation and answering questions from clients about offers, counteroffers, and contingencies.
Minimum Level Of Services
One who is authorized by a principal to perform a single act or transaction; a real estate professional is usually a special agent authorized to find a ready, willing, and able buyer for a particular property, when representing a seller, or a special agent authorized to find a suitable property, when representing a buyer.
Special Agent
Principle in which the mortgagor retains both legal and equitable title to property that serves as security for a debt. The mortgagee has a lien on the property, but the mortgage is nothing more than collateral for the loan.
Lien Theory
Defunct, derelict, or abandoned commercial or industrial sites; many have toxic wastes.
Brownfields
The rate of return a property will produce on the owner’s investment.
Capitalization Rate
Relevant information or facts that are known or should have been known.
Disclosure
The process by which a government body raises monies to fund its operation.
Taxation
Government agency which sets standards and regulations for fiduciary lenders.
Office Of The Comptroller Of The Currency (OCC)
A general financial picture based on the monthly cash flow reports; does not include itemized information.
Profit And Loss Statement
An agreement between the property owner and the sponsoring broker that sets forth the nature of the relationship between the two parties. The agreement covers such items as time period, property manager’s responsibilities, extent of property manager’s authority, compensation, and reporting, to name a few.
Property Management Agreement
A person who has made a valid will. A woman might be referred to as a testatrix, although testator can be used for either a man or a woman.
Testator
The mortgage market in which loans are originated, consisting of lenders such as commercial banks, savings associations, and mutual savings banks.
Primary Mortgage Market
The appraisal principle stating that excess profits generate competition.
Competition
A law that complements and complies with federal antitrust laws in an effort to help achieve uniform application of state and federal laws.
Iowa Competition Law
Process by which the amount of the loan increases. The mortgagor sets a payment cap, or maximum amount for payments, but the difference between the payment made and the full payment amount is added to the remaining mortgage balance.
Negative Amortization
Notice given to the world by recorded documents. All persons are charged with knowledge of such documents and their contents, whether or not they have actually examined them. Possession of property is also considered constructive notice that the person in possession has an interest in the property.
Constructive Notice
The formal decision of a court upon the respective rights and claims of the parties to an action or suit. After a – has been entered and recorded with the county recorder, it usually becomes a general lien on the property of the defendant.
Judgment
A planned combination of diverse land uses, such as housing, recreation, and shopping, in one contained development or subdivision.
Planned Unit Development (PUD)
The earth’s surface, extending downward to the center of the earth and upward infinitely into space, including things permanently attached by nature, such as trees.
Land
An action brought by a property owner seeking just compensation for diminished use and value of land because of an adjacent property’s public use.
Inverse Condemnation
The net spendable income from an investment, determined by deducting all operating and fixed expenses from the gross income. When expenses exceed income, a negative cash flow results.
Cash Flow
An objective economic indicator to which the interest rate for an adjustable-rate mortgage is tied.
Index
A contract under which something remains to be done by one or more of the parties.
Executory Contract
Water that exists under the earth’s surface within the tiny spaces or crevices in geological formations.
Groundwater
An agency relationship based on a formal agreement between the parties.
Express Agency
Federal legislation requiring disclosure of the presence of any known lead-based paint hazards to potential buyers or renters. The law does not require that anyone test for the presence of lead-based paint, however.
Lead-Based Paint Hazard Reduction Act (LBPHRA)
The trust account established by a real estate professional under the provisions of the license law for the purpose of holding funds on behalf of the real estate professional’s principal or some other person until the consummation or termination of a transaction; trust account established by an escrow agent to hold funds pending distribution at the closing of a transaction.
Escrow Account
A loss of value to an improvement to real estate arising from problems of design or utility.
Functional Obsolescence
The remnant of an estate that has been conveyed to take effect and be enjoyed after the termination of a prior estate, such as when an owner conveys a life estate to one party and the remainder to another.
Remainder Interest
The seller is the primary lender, securing the property by means of a deed, note and mortgage, deed of trust, or contract for deed. In its traditional form, the buyer takes possession of the property and the seller retains legal title until paid in full, but some states have softened this outcome to provide that the buyer is entitled to legal title after a specified period of successful loan payments.
Owner Financing
One who buys undeveloped land, divides it into smaller, usable lots and sells the lots to potential users.
Subdivider
A document that a trustee uses to transfer the title back to the trustor (borrower) when the note is repaid.
Deed Of Reconveyance
A court action that establishes ownership when ownership cannot be traced through an unbroken chain of title.
Action To Quiet Title
A transfer of real property by will. The decedent is the devisor, and the recipient is the devisee.
Devise
A naturally occurring gas that is suspected of causing lung cancer.
Radon
An item of personal property that has been converted to real property by being permanently affixed to the realty.
Fixture
Evaluation and selection of appropriate property and other insurance.
Risk Management
“For the life of another.” A life estate pur autre vie is a life estate that is measured by the life of a person or persons other than the grantee.
Pur Autre Vie
Organizations created by the federal government (Fannie Mae, Freddie Mac, Farmer Mac, Ginnie Mae) to help increase loan opportunities for homebuyers.
Government-sponsored Enterprises (GSEs)
An owner’s rights in land that borders on or includes a stream, river, or lake. These rights include access to and use of the water.
Riparian Rights
Strips of land that are six miles wide, extending east and west and numbered north and south according to their distance from the base line in the rectangular (government) survey system of legal description.
Tiers
A conditional transfer or pledge of real estate as security for the payment of a debt. Also, the document creating a mortgage lien.
Mortgage
One in whom trust and confidence is placed; a reference to a real estate professional employed under the terms of a listing contract or buyer representation agreement.
Fiduciary
An appraisal term referring to the value of a property unaffected by a person’s personal preferences.
Intrinsic Value
The appraisal principle that holds that no physical or economic condition remains constant.
Change
An event where promises made in a sales contract are fulfilled and mortgage loan funds (if any) are distributed to the buyer.
Closing
Parts of a property that are necessary or convenient to the existence, maintenance, and safety of a condominium or are normally in common use by all the condominium residents. Each condominium owner has an undivided ownership interest in the common elements.
Common Elements
An easement that is not created for the benefit of any land owned by the owner of the easement but that attaches personally to the easement owner. For example, a right granted by a property owner to a friend to use a portion of the property for the rest of the friend’s life, or if a power company or railroad needed a portion of the property
Easement In Gross
Ownership of real estate between two or more parties who have been named in one conveyance as joint tenants. Upon the death of a joint tenant, the decedent’s interest usually passes to the surviving joint tenant or tenants by the right of survivorship.
Joint Tenancy
Money deposited by a buyer under the terms of a contract, to be forfeited if the buyer defaults but to be applied to the purchase price if the sale is closed.
Earnest Money
A licensed real estate salesperson who is employed by or associated with the broker to perform brokerage activities on behalf of or for the broker.
Associate Licensee
A loan that requires no federally sponsored insurance or guarantee.
Conventional Loan
A lender in a mortgage loan transaction.
Mortgagee
A form of ownership interest that may include an estate interest in property and that allows use of the property for a fixed or variable time period.
Time-share
A deed given by the mortgagor to the mortgagee when the mortgagor is in default under the terms of the mortgage. If accepted by the mortgagee, this is a way for the mortgagor to avoid foreclosure.
Deed In Lieu Of Foreclosure
A fixed natural or artificial object used to establish real estate boundaries for a metes-and-bounds description
Monument
A deed executed by a trustee conveying land held in a trust.
Trustee’s Deed
The federal law that requires certain disclosures to consumers about mortgage loan settlements. The law also prohibits the payment or receipt of kickbacks and certain kinds of referral fees.
Real Estate Settlement Procedures Act (RESPA)
A change to the existing content of a contract (i.e., if words or provisions are added to or deleted from the body of the contract). It must be initialed by all parties.
Amendment
Someone who manages real estate for another person for compensation. Duties include collecting rents, maintaining the property, and keeping up all accounting.
Property Manager
Policy that allows all multiple listing service (MLS) members to restrict internet access to MLS property listings.
Internet Data Exchange (IDX) Policy
Title to property may be transferred without the owner’s consent by
involuntary alienation
A form of insurance that covers liabilities for errors, mistakes, and negligence in the usual listing and selling activities of a real estate office or escrow company.
Errors And Omissions (E&O) Insurance
A mortgage covering more than one parcel of real estate, providing for each parcel’s partial release from the mortgage lien upon repayment of a definite portion of the debt.
Blanket Loan
A listing contract under which the real estate professional’s compensation is contingent on the real estate professional producing a ready, willing, and able buyer before the property is sold by the seller or another real estate professional.
Open Listing
The sudden tearing away of land, as by earthquake, flood, volcanic action, or the sudden change in the course of a stream.
Avulsion
Insurance policies that offer protection from a range of potential perils, such as fire, hazard, public liability, and casualty.
Multiperil Policies
A contract that meets all the elements of a valid contract, including compliance with any applicable statute of frauds or other law that requires it to be in writing and signed by the parties.
Enforceable Contract
An insurance policy premium used in FHA loans that the borrower is charged. The premium depends on the length of the loan and the loan-to-value (LTV) ratio.
Mortgage Insurance Premium (MIP)
The federal law that prohibits discrimination in housing based on race, color, religion, sex, disability, familial status, and national origin.
Fair Housing Act
The increase or addition of land by the deposit of sand or soil washed up naturally from a river, lake, or sea.
Accretion
An account established for the purpose of holding funds on behalf of the broker’s principal or some other person until the consummation or termination of a transaction.
Trust Account
Principle in which the mortgagor conveys legal title to the mortgagee (or some other designated individual) and retains equitable title and the right of possession. In effect, because the lender holds legal title, the lender has the right to immediate possession of the real estate and rents from the mortgaged property if the mortgagor defaults.
Title Theory
An act that prohibits racial discrimination in the sale and rental of housing.
Civil Rights Act Of 1866
A portion of a township under the rectangular (government) survey system. A township is divided into 36 –, numbered 1 through 36. A section is a square with mile-long sides and an area of one square mile, or 640 acres
Section
A written instrument that, when executed and delivered, conveys title to or an interest in real estate.
Deed
Nontoxic, nonflammable chemicals containing atoms of carbon, chlorine, and fluorine, such as air conditioners and refrigerators. CFCs are safe in application but cause ozone depletion.
Chlorofluorocarbons (CFCs)
The process of estimating the value of an income-producing property through capitalization of the annual net income expected to be produced by the property during its remaining useful life.
Income Approach
The division of cotenants’ interests in real property when the parties do not all voluntarily agree to terminate the co-ownership; takes place through a court procedure.
Partition
An amount predetermined by the parties to a contract as the total compensation to an injured party should the other party breach the contract.
Liquidated Damages
If the actions of the parties imply that they have mutually consented to an agency relationship, an implied agency relationship is formed.
Implied Agency
That part of a state law that requires certain instruments, such as deeds, real estate sales contracts, and certain leases, to be in writing to be legally enforceable.
Statute Of Frauds
a partnership, where all partners participate in operation and management, and partners share full liability for business losses and obligations.
general partnership,
A lease of land only, on which the tenant usually owns a building or is required to build as specified in the lease. Such leases are usually long-term net leases; the tenant’s rights and obligations continue until the lease expires or is terminated through default.
Ground Lease
Day-to-day duties such as cleaning common areas, performing minor carpentry and plumbing adjustments, and providing regularly scheduled upkeep of heating, air-conditioning, and landscaping.
Routine Maintenance
A process that accommodates an in-house sale in which two different agents are involved. The broker designates one agent to represent the seller and one agent to represent the buyer.
Designated Agency
A loan in which the monthly payments increase annually, with the increased amount being used to directly reduce the principal balance outstanding and thus shorten the overall term of the loan.
Growing-equity Mortgage
A figure used as a multiplier of the gross annual income of a property to produce an estimate of the property’s value; usually used for commercial property.
Gross Income Multiplier (GIM)
A lease given by the corporation that owns a cooperative apartment building to a shareholder who has the right as a tenant to an individual unit.
Proprietary Lease
A legally enforceable promise or set of promises that must be performed and for which, if a breach of the promise occurs, the law provides a remedy. A contract may be either unilateral, by which only one party is bound to act, or bilateral, by which all parties to the instrument are legally bound to act as prescribed.
Bilateral Contract
Federal legislation that promotes the establishment of state registration systems to maintain residential information on every person who kidnaps children, commits sexual crimes against children, or commits sexually violent crimes.
Megan’s Law
A document ordered by the court to have a sheriff enter a leased property to give possession back to the owner.
Writ Of Attachment
A borrower in a deed of trust loan transaction; one who places property in a trust. Also called a grantor or settler.
Trustor
A statement indicating no legal responsibility for information; no warranties or representations have been made.
Disclaimer
A map of a town, section, or subdivision indicating the location and boundaries of individual properties.
Plat Map
A process of integrating information electronically in a real estate transaction between clients, lender, and title and closing agents.
Electronic Contracting
A written promise or order to pay a specific sum of money that may be transferred by endorsement or delivery. The transferee then has the original payee’s right to payment.
Negotiable Instrument
A lien placed on property without the consent of the property owner.
Involuntary Lien
A written or oral contract between a landlord (the lessor) and a tenant (the lessee) that transfers the right to exclusive possession and use of the landlord’s real property to the lessee for a specified period of time and for a stated consideration (rent). By state law, leases for longer than a certain period of time (generally one year) must be in writing to be enforceable.
Lease
Title ownership held by two or more persons.
Co-ownership
Good or clear title, reasonably free from the risk of litigation over possible defects.
Marketable Title
One who is authorized by a principal to represent the principal in a specific range of matters.
General Agent
The basic costs of owning a home—mortgage principal and interest, real estate taxes, and hazard insurance.
PITI
An account that the mortgage lender may require a borrower to have to accumulate funds to pay future real estate taxes and insurance premiums.
Impound Accounts
In a metes-and-bounds legal description, the starting point of the survey, situated in one corner of the parcel; all metes-and-bounds descriptions must follow the boundaries of the parcel back to the —
Point Of Beginning (POB)
The number of years during which an improvement will add value to land.
Economic Life
A mineral once used in insulation and other materials that can cause respiratory diseases.
Asbestos
A tax that is made up of the taxes levied on the real estate by government agencies and municipalities.
General Real Estate Tax
A tract of land divided by the owner, known as the subdivider, into blocks, building lots, and streets according to a recorded subdivision plat, which must comply with local ordinances and regulations.
Subdivision
An exercise of police power by a municipality to regulate and control the character and use of property.
Zoning Ordinance
For tax purposes, someone who works as a direct employee of an employer and has employee status. The employer is obligated to withhold income taxes and Social Security taxes from the compensation of employees. See also independent contractor.
Employee
The illegal act by a real estate professional of placing client or customer funds with personal funds. By law, real estate professionals are required to maintain a separate trust or escrow account for other parties’ funds held temporarily by the real estate professional.
Commingling
A system established in 1785 by the federal government, providing for surveying and describing land by reference to principal meridians and base lines.
Rectangular (government) Survey System
Used as a pigment and drying agent in alkyd oil-based paint in about 75% of housing built before 1978. An elevated level of lead in the body can cause serious damage to the brain, kidneys, nervous system, and red blood cells. Children younger than six are most vulnerable.
Lead
(1) In real estate practice, the privilege or right granted to a person by a state to operate as a real estate broker or salesperson. (2) The revocable permission for a temporary use of land—a personal right that cannot be sold.
License
Zoning ordinances that restrict the maximum average number of housing units per acre that may be built within a particular area, generally a subdivision.
Density Zoning
The power of a good or service to command other goods in exchange for the present worth of future rights to its income or amenities.
Value
A real estate professional who is under contract to locate property for a buyer and represent the buyer’s interests in a transaction.
Buyer’s Agent
A right, privilege, or improvement belonging to, and passing with, the land; “runs with the land.”
Appurtenance
The right of a defaulted property owner to recover the property after its sale by paying the appropriate fees and charges.
Statutory Right Of Redemption
A contract that complies with all the essentials of a contract and is binding and enforceable on all parties to it.
Valid Contract
Under community property law, property owned solely by either spouse before the marriage, acquired by gift or inheritance during the marriage, or purchased with separate funds after the marriage.
Separate Property
An interest for a certain, exact period of time in property leased for a specified consideration.
Estate (tenancy) For Years
An air pollutant that is a colorless chemical used to manufacture building materials and many household products, such as particleboard, hardwood plywood paneling, and urea-formaldehyde foam insulation.
Formaldehyde
Any person, other than an associate broker, who acts on behalf of a real estate broker in performing any act authorized to be performed by the broker in this unit.
Salesperson
The process by which boundaries are measured and land areas are determined; the on-site measurement of lot lines, dimensions, and position of a house on a lot, including the determination of any existing encroachments or easements.
Survey
Law requiring new forms developed by the CFPB to disclose the costs of lending in an easy-to-understand format.
TILA-RESPA Integrated Disclosure Rule
The illegal practice by a lending institution of denying loans or restricting their number for certain areas of a community.
Redlining
The absolute ownership of a unit in a multiunit building based on a legal description of the airspace the unit actually occupies, or a separate dwelling unit in a multiunit development, plus an undivided interest in the ownership of the common elements in the building or development, which are owned jointly with the other condominium unit owners.
Condominium
The country’s central banking system, which establishes the nation’s monetary policy by regulating the supply of money and interest rates.
Federal Reserve System (Fed)
The transfer in writing of interest in a bond, mortgage, lease, or other instrument.
Assignment
A borrower in a mortgage loan transaction.
Mortgagor
a business arrangement whereby the operation is administered by one or more general partners and funded, by and large, by limited or silent partners, who are by law responsible for losses only to the extent of their investments.
limited partnership
Also known as the sales comparison approach. An estimate of value obtained by comparing property being appraised with recently sold comparable properties.
Market Data Approach
A statutory lien created in favor of contractors, laborers, material suppliers, and others who have performed work or furnished materials in the erection or repair of a building
Mechanic’s Lien
A transaction in which all or part of the consideration is the transfer of like-kind property (e.g., real estate for real estate).
Exchange
A method of evidencing title by registration with the proper public authority, generally called the registrar; named for its founder, Sir Robert Torrens.
Torrens System
A tax levied according to value, generally used to refer to real estate tax. Also called the general tax.
Ad Valorem Tax
A relationship of trust and confidence, as between trustee and beneficiary, attorney and client, or principal and agent.
Fiduciary Relationship
A strip of land six miles wide, extending north and south and numbered east and west according to its distance from the principal meridian in the rectangular (government) survey system of legal description.
Range
The policy-making body tasked with protecting the public through the examination, licensing, and regulation of real estate brokers, salespersons, and firms. It has the authority to promulgate rules for the regulation of the industry consistent with all applicable statutes.
Iowa Real Estate Commission (IREC)
Acquiring title to additions or improvements to real property as a result of the annexation of fixtures or the accretion of alluvial deposits along the banks of streams.
Accession
A licensed or unlicensed person who has been hired for the purpose of aiding or assisting a sponsored licensee in the performance of the sponsored licensee’s job.
Personal Assistant
Land; a portion of the earth’s surface extending downward to the center of the earth and upward infinitely into space, including all things permanently attached to it, whether naturally or artificially.
Real Estate
Insulating foam that can release harmful formaldehyde gases. Formaldehyde causes some individuals to suffer respiratory problems, as well as eye and skin irritations.
Urea-formaldehyde Foam Insulation (UFFI)
Property held for current income as well as a potential profit upon its sale.
Income Property
A lease, commonly used for commercial property, whose rental is based on the tenant’s gross sales at the premises; it usually stipulates a base monthly rental plus a percentage of any gross sales above a certain amount.
Percentage Lease
The owner transferring title to or an interest in real property to a grantee.
Grantor
A reduction in a property’s value resulting from a decline in physical condition; can be caused by action of the elements or by ordinary wear and tear.
Physical Deterioration
A government-supervised enterprise established to purchase primarily conventional mortgage loans in the secondary mortgage market.
Freddie Mac
