National (Definition First) Flashcards
Reduce, decrease. Usually refers to decrease in assessed value of ad valorem tax
Abate
A summary in chronological order of the essential provision of every recorded document pertaining to a particular parcel of land, ex, liens, encumbrances, chain of title, transfers. An abstract of title does not disclose encroachments, forgeries, and the like and does not, therefore, guarantee clear title.
Abstract of Title
A general term including any method of depreciation that is greater than straight-line depreciation
Accelerated Depreciation
A provision of a promissory note or mortgage where, upon the happening of a certain event, ex, default in payment, the entire amount of the unpaid loan balance becomes due.
Acceleration Clause
The addition of soil, (known as alluvium) to property by the gradual operation of natural causes (common where properties have frontage on oceans or rivers). This added land becomes the property of the owner on whose land it is deposited.
Accreation
A written declaration by a person executing an instrument, given before an officer authorized to give an oath (usually a notary public), stating that the execution is of his own volition, ex, grantor of a deed
Acknowledgment
A measure of land which is 43,560 square feet
Acre
Things you know because of your own senses, eyes, ears, etc. You have actually seen someone living on the property. If you are buying the property, you need to find out why the occupants are living there.
Actual Notice
A type of financing available for real estate mortgages on property through which the Annual Percentage Rate charged will differ from year to year according to terms specified by the lender and authorized by the Federal Reserve banking system
ARM (adjustable rate mortgage)
Latin, “according to valuation.” A tax to be paid based upon a value set by the authorities, ex, real property tax
AD VALOREM TAX
The open, notorious, hostile, and uninterrupted possession of the property of another under a claim or color of title of 21 years after which time the adverse possessor may obtain title to the property
Adverse Possession
A sworn statement that title is good
Affidavit of Title
A relationship between one person (principal) and another (agent) where the agent is given the right to act on behalf of the principal in business dealings. Agency creates a fiduciary duty on the part of the agent to act in good faith and loyalty toward the principal
Agency
The disclosure of the relationship in which one party (agent) acts for or represents another (principal) under the authority of the latter
Agency Disclosure
One who acts, or has the power to act, for another
Agent
An english term referring to transfer of property from one person to another
Alienation
A clause used in a mortgage allowing the lender to call for the full payment of the mortgage (foreclosure) because the owner transferred ownership of the property. This is a type of acceleration clause because it accelerates the time when the entire loan amount is due. Very often refereed to as “due-on-sale” clause
Alienation Clause
Features, both tangible and intangible, that enhance the desirability of real estate. For example, a marble fireplace, desirable location, soaking tub, historicity of the location, preferred floor plan, or anything with sentimental value to the buyer may be considered an amenity.
Amenities
Payment of debt in regular, periodic installments of principal and interest, (as opposed to interest-only payments).
Amortization
A loan that is paid back in regular installment amounts of principal and interest over a specified period of time.
Amortized Loan
Net Income is income from a property after operating expenses ave been deducted, but before taxes and debt service are counted. Net income= gross income- operating expenses. This is a capitalization method that derives a value indication by using annual net income.
Annual Net Operating Income (NOI)
A defensible opinion or estimate of value of real property as of a certain date
Appraisal
An increase in the value of property due either to a positive improvement in the area of the elimination of negative factors. Commonly, and incorrectly, used to describe an increase in value through inflation.
Appreciation
“Runs with the lang.” Something that belongs to property and passes with it, but need not be attached to it, ex, outbuildings, easements.
Appurtenance
The method by which disputes between REALTOR brokers may be resolved. Disputes are heard by the Arbitration Committee of thee local Board of REALTORS, ex, a commission dispute.
Arbitration
The value of real property fixed for purposes of computing taxes. Assessed value x tax rate= real estate tax.
Assessed Valuation
A valuation placed upon real property as a basis to set the amount of tax to be levied. Also, the levy or rate to be paid to the government for services provided or constructed by it, ex, curbs, sewers, sidewalks.
Assessment
Transfer of any property, real or personal, or any rights therein to another. In real estate, it does not release the transferor from the obligations stated in the contract.
Assignment
An obligation and promise to be personally liable for conditions in a contract.
Assumption
An agreement by a buyer to assume the liability under an existing note secured by a mortgage. The lender usually must approve the new debtor (buyer) in order to release the existing debtor (usually from the seller) from liability.
Assumption of Mortgage
The seizing of property by court order usually, to furnish security for a debt or judgment.
Attatchment
A person specifically designated in an instrument, ex, power of attorney, to do something legally for another in his stead. An attorney-in-fact has a fiduciary relationship with his principal. An attorney-in-fact need not be an attorney-at-law.
Attorney-In-Fact
Partly amortized note where part of the principal is reduced by the time the final payment is closed. Thus, a lump sum payment of principal is due at thee end of the loan. Usually called partially amortized mortgage.
Balloon Paymeent
Bilateral or reciprocal contracts are those by which the parties expressly enter into mutual engagements, ex, real estate sales contract. Each party promises to perform some act.
Bilateral/RECIPROCAL Contract
An instrument in writing what transfers ownership of tangible personal property, ex, furniture.
Bill Of Sale
A single mortgage loan where two or more different parcels of property are offered as security for the loan.
Blanked Mortgage
An illegal act whereby owners are encouraged to sell their properties because minorities are moving into their neighborhood. Also known as panic selling/peddling
Blockbusting
The bringing together of persons desiring to make transactions in real estate.
Brokerage
A parcel of land that separates two other parcels, ex, a parcel between a residential and a commercial strip of land.
Buffer Zone
Legal rights conferred to owners of real property, including rights to mortgage, sell, make improvements, enjoyment, lease, and use property.
Bundle of Rights
Govt regulations specifying minimum construction and building standards to safeguard the health, safety, and welfare of the public. Building codes are a valid exercise of the govts police power and can restrict an owner’s use and enjoyment of his property.
Building Codes
A method of determining the present value of income property by discounting the annual net income by a commonly used rate of return. Income/Rate=Value(IRV)
Capitalization
The percentage (acceptable to an average buyer) used to determine the value of income property through capitalization.
Capitalization Rate
In investment property, the actual cash the investor will receive after deduction of operating expenses and debt service (loan payments) from the gross income.
Cash Flow
Latin, “let the buyer beware”. The buyer must examine the goods or property and buy at his or her own risk
Caveat Emptor
A legal instrument used by a mortgagee to stop the mortgage on a certain date where the mortgagor agrees that the mortgagee balance is correct, after which date the mortgagee has no defense.
Certificate of no defense
Certificate issued to a buyer at a judicial sale (foreclosure action) that entitles the buyer to a deed upon confirmation of the sale by the court if the land is not redeemed during the redemption period.
Certificate of Sale
Also known in some states as an “opinion letter” by a lawyer who has examined an abstract, giving an opinion stating that title is vested in a particular individual.
Certificate of Title
Successive conveyances affecting a particular parcel of land, arranged consecutively, from the govt or original source of title down to the present holder.
Chain of Title
Personal property that is tangible. Goods or other items of property, moveable or immovable, which are not real property, show case firmly attached in a store. Rented property, such as a store, chattels are personal property of the renter and as such are also considered trade fixtures that may be removed when the lease expires.
Chattels
A mortgage deed that creates a lien on personal property
Chattel Mortgage
A valid encumbrance, ex. mortgagee, or judgement, affecting title to realty.
Cloud on Title
A broker in a commercial transaction has an automatic lien against a property that’s the subject of a contract, for the contracted commission amount, when the contract is fulfilled and the broker files a lien affidavit in the recorder’s office in the county where the property is located. (Residential real estate brokers must sue in court to enforce a commission payment)
Commercial Broker Lien Law
To mix funds held in trust with other funds. For example, A broker mixes deposits with his funds by putting the deposits in his general account.
Commingling
The broker’s professional fee. Usually a percentage of the sale price. The fee is an amount agreed upon between the principal and the broker. It is NOT set by law or organizations such as the Board of Realtors.
Commission
The area owned together by all the owners of a condominium project. A condominium owner will own their own particular unit in fee simple and the common area jointly with the other owners. The common area usually has liability insurance paid by the Condominium Owners Association.
Common Area
Property accumulated by husband and wife by the efforts of either during their marriage. Community property laws provide that each spouse has an equal interest in the property so acquired. Community property is not recognized in all states.
Community Property
A judicial or administrative procedure to exercise thee right of eminent domain to take private property for public use and justly compensate the owner.
Condemnation
The system of ownership in fee simple title to designated areas of air space plus a percentage of ownership of common elements in the property. The air space consists of the area between the walls, floor, and ceiling area.
Condominium
Something of value given to another to compensate them for entering into a contract. Consideration may be money, personal services, or forbearance from performing an act. An example of “good” consideration is love and affection. An example of “valuable” consideration would be money, real estate, etc.
Consideration
Interim financing used during construction of a building followed by long-term financing called a “take-out loan”. Loan proceeds are made in installment payments as completion of improvements occur.
Construction Loan
Notice given by publication in a newspaper, recording or other method. There need not be actual notice by such publication.
Constructive Notice
An agreement that the law will enforce. The elements of a contract area mutual assent (offer and acceptance), consideration, competent parties, legal subject matter, and sometimes that the contract be in writing if required by the Statue of Frauds.
Contract
A real estate installment sales contract commonly referred to as a land contract. See installment Land Contract.
Contract For Deed
A loan that is not guaranteed or insured by a government agency.
Conventional Loan
Transfer of title to land. Includes most instruments by which an interest in real estate is created, mortgaged, or assigned.
Conveyance
A state tax imposed on the transfer or conveyance of realty or any realty interest by means of a deed, lease, sublease, assignment, contract for deed or similar instrument.
Conveyance Tax (transfer tax/conveyance fee)
The right to occupy property is obtained through a proprietary lease by purchasing stock in a corporation that owns the property. Owners has interest in the entire building.
Cooperative
A method of appraisal based on replacement cost minus depreciation plus land value.
Cost Approach
A new and contrary offer made as a reply to an offer received from another. The counteroffer terminates the original offer. A counteroffer is a “change”
Counteroffer
A promise or agreement of possession under a legal right. One of the five warranties in a general warranty deed. (Also covenant of seizin)
Covenant of Seisin
The express promises of two or more parties in writing, the breach of which would entitle a person to damages.
Covenants
The fractional interest of a husband in the estate of his wife at the time of her death. This term not used in all states.
Courtesy
The amount of money owing on a note or a promise to pay.
Debt
The amount of money paid in regular intervals to reduce down the balance owned on a debt. The payment normally has to do with an amortized loan. Thus, it covers principal and interest.
Debt Service
The transferring of real property by a private owner to a public agency (usually occurs from a builder to a city for construction of new streets in a subdivision).
Dedication
A written instrument transferring thee grantor’s ownership of or interest in real property, if any. (ex, warranty deed, quitclaim deed)
Deed
When the deed to a property is given by a borrower to the lender to satisfy the debt and avoid foreclosure. (also called voluntary conveyance)
Deed in Lieu of Foreclosure
An instrument used to transfer title from a trustee to the equitable owner of real estate when title is held as collateral security for a debt, most commonly used upon payment in full of a deed of trust.
Deed or reconveyance
Limitations upon the use of property contained in the deed as a means of controlling the quality or character of a subdivision or specific piece of property.
Deed Restrictions
An instrument used in many states place of a mortgage. Property is transferred to a trustee by the borrower (trustor) in favor of the lender (beneficiary) and reconveyance upon payment in full. (NOT used in all states but still may appear on test.)
Deed of Trust
A clause used to defeat or cancel a certain right upon the happening of a specific event, (ex, upon final payment, words of grant in a mortgage are void and the mortgage is thereby canceled and title is re-vested to the mortgagor). A defeasance clause is often used in mortgages in thee title theory states whereby the mortgagee agree to deed property to the mortgagor after all terms of the contract have been performed satisfactorily. A defeasance clause also may be used to give a borrower the right to redeem real estate after default on a note, by paying the full amount due, plus fees and court costs.
Defeasance Clause
The mortgage debt that remains due and payable by the borrower after a sheriff’s sale of property. The judgment is actually for the full amount of the unpaid mortgage debt, but the foreclosure sale proceeds are deducted from the amount due.
Deficiency Judgement
Act of transferring ownership in real property by documents recognized by law. Grantor delivers a deed to the grantee with the intention of giving up all rights to the property.
Delivery
- The decrease in value to real property improvements caused by deterioration or obsolesce; 2. A loss in value as an accounting procedure for use as a tax deduction for income tax purposes. Investors use depreciation as a tax shelter.
Depreciation
Administrative process where civil rights complaints are heard immediately by the Real Estate Commission, instead of using a hearing examiner.
Direct Complaint Procedures
The document commonly referred to under the truth and lending laws (reg z) required to be given to a loan applicant to disclosure all of the terms of his loans. Note that other documents also may be referred to as “disclosure statements,” ex, Agency Disclosure Statement or Lead-Based Paint Disclosure Statement.
Disclosure Statement
An added loan fee charged by a lender to make the yield on a lower-than-market interest rate loan competitive with other higher interest conventional loans.
Discount Points
Treating persons differently. See thee various Civil Rights laws.
Discrimination
The movement of money out of savings accounts into higher yield investments such as corporate and govt instruments.
Disintermediation
In some states, a life estate that is a one-third estate in real property which the spouse is entitled to claim upon the death of thee other spouse on land which the late spouse sold during their marriage.
Dower
Representing both parties to a transaction.
Dual Agency
Money given by a buyer upon signing a sale contract showing the buyer’s intention to carry out the terms of the sales contract. Earnest money is an inducement and a show of good faith, but it is NOT necessary for a valid contract to exist.
Earnest Money Deposit
Right acquired by one person to use the land of another for a specific purpose.
Easement
The right acquired by the owner of one parcel of land to use the adjacent land of another for a specific purpose. There must be two tracts of land. One tract is called the dominant tenant (the tract that benefits from the easement). The other tract is called the servient tenant (the tract that is burdened by the easement).
Easement Appurtenant
An easement created by operation of law (not express grant or reservation) when land is divided, if there is a long-standing, apparent use that is reasonably necessary for enjoyment of dominant tenement. Also called implied easement.
Easement by Implication
An easement given to a landlocked owner by the court system to provide a way of ingress and egress for the landlocked land. Remember: ingress vs egress, and also landlocked land example.
Easement by Necessity
A means of acquiring title by long-continued use.
Easement by Prescription
An easement created by law for the good of the public, ie, utility easement. Remember there is no dominant tenement in an easement in gross.
Easement in Gross
A loss of value due to a change in external factors of a piece of real property, eg, a steel mill is being built next to your home.
Economic Obsolescence
Farm Crops. Tenant farmers’ crops may be removed if owner sells the land.
Emblements
The power or right of govt. bodies to take private real estate for public use upon payment of an equitable compensation.
Eminent Domain
The unauthorized intrusion of a fixture or real property improvement onto the property of another, eg, the roof of a building that extends over the property line into a neighbor’s property.
Encroachmeent
Any claim, lien, charge or liability that affects or limits the fee simple title to real property, ie, easement, liens, etc.
Encombrance
Any interest in real property other than legal title, that a court will enforce and protect, eg, the interest held by a vendee under a land contract, a lease, an easement, etc.
Equitable Title
The amount of an owner’s interest in a parcel of real estate which is the fair market value of the real estate in excess of the mortgaged indebtedness.
Equity
Mortgage or lease clause allowing a holder to vary the interest rate.
Escalation Clause
Where real property passes to the state when the owner of such property dies without a will and with no heirs.
Esceat
The process by which money or legal documents are deposited with a third, disinterested party for future delivery so that several acts can occur at the same time and so that all parties to a transaction will have their interests protected.
Escrow
An estate or interest in land for a definite number of years, months, etc., or expiring on a certain date.
Estate for Years
A statement that prevents its issuer from later asserting different facts. An estoppel certificate is required when a mortgage is sold by the mortgagee. Estoppel is the legal action to seek an estoppel certificate.
Estoppel Certificate
A court action where a tenant loses possession of leased premises by act of landlord because of a wrongful act by the tenant.
Eviction
A listing agreement where the broker is given the exclusive right to sell property but reserves to the owner the right to sell the property himself without payment of any commission.
Exclusive Agency Listing
A listing agreement where the broker is entitled to collect a sales commission regardless of who sells the property including the owner of the property himself.
Exclusive Right-to-Sell Listing
A contract that has been performed by the parties. In the vernacular, people use “executed” to mean “signed” but this is not the legal definition
Executed
A person appointed by a person in his will to carry out the terms of the will and to dispose of is property pursuant to thee will provisions. Executors are exempt from real estate licensing laws.
Executor
A valid contract which has not been fully performed. Most real estate contracts are good examples.
Executaory Contract
Federal Housing Administration, an agency of the federal govt. created in 1934 to improve housing standards, provide a home financing system to insure home mortgages and credit, and stabilize the mortgage market.
FHA
Loans insured by an agency of the federal govt.
FHA Loan
Federal National Mortgage Association, an association created under Title III of the National Housing Act to buy Title V loans to keep the market sound. Part of the secondary market (along with Freddie Mac and Ginnie Mae) that purchases first mortgages.
Fannie Mae (FNMA)
Pertaining to real estate: inaccurate advertising of the terms of a loan, under Reg Z (TILA) thee intent of which is to protect residential buyers.
False Advertising
Title VIII of the Civil Rights Act of 1968 that declared a national policy of providing fair housing in the US. The law makes it illegal to discriminate in the sale or rental based upon race, color, sex, religion, national origin, handicap, or familial status.
Federal Fair Housing Law
An estate where the owner as thee highest possible estate: absolute control of a parcel of real estate. Also called a fee or fee simple absolute.
Fee Simple Estate
A relationship of trust and confidence between a principal and an agent. Fiduciary duties owned by an agent acting as a Fiduciary are (ACCOLD):1. Duty of Accounting,2. Duty of Confidentiality3. Duty of Care (reasonable care and skill)4. Duty of Obedience5. Duty of Loyalty6. Duty of Disclosure
Fiduciary
A commonly used term to describe legal documents, such as mortgages and notes, which are used for borrowing money in real estate.
Financing Instruments
Personal property attached to the land or improvements that cannot be removed without agreement since they attach to and become real property (eg, mailbox, chandelier)
Fixtures
A legal process by which property serving as security for an obligation is sold when a default occurs. The debtor can be the successful bidder and be awarded the title.
Foreclosure Sale
An intentional perversion of the truth for the purpose of inducing another in reliance upon it to part with something of value belonging to him or to surrender a legal right. The elements of fraud are (a) intentional misstatement of fact; (b) the misstatement of fact must be material; and (c) the defrauded party must have been entitled to rely on the statement.
Fraud
An estate in fee or for life. A freeholder is an owner of land.
Freehold
A loss of value due to a decrease in the design usefulness of the property. Ex: having to walk through one bedroom to get to another bedroom, an only bath on the first floor with the bedroom on the second.
Functional Obsolescence
A type of principal agent relationship where the agent is empowered to represent the principal in a narrow area of activities. A general agent has the legal right to bind the principal in any contract within the scope of her responsibility, e.g., a property manager.
General Agency
The right of a creditor to claim all of a debtor’s property, bot real and personal, seized and sold at public auction, e.g., judgements and IRS taxes.
General Lien
A partnership in which each member has an equal right to manage the business and share in the profits, as well as equal responsibility for the partnership’s debt. All of the partners are considered general partners.
General Partnership
A deed that includes five warranties, two of which are: 1. Grantor (seller) warrants he has the right and title to convey to the new buyer; 2. Grantor warrants that all previous owners in thee chain of title had the right to convey.
General Warranty Deed
A document conveying or transferring real property.
Grant Deed
See WORDS OF CONVEYANCE
Granting Clause
One to whom a grant is made, generally the buyer.
Grantee
A person who conveys his or her interest in real property, generally the seller.
Grantor
A lease of property where the lease pays a fixed rent and the lessor pays taxes, insurance, and other charges incident to ownership.
Gross Lease
The results obtained by dividing the value by the Gross Annual Income, or the Sales price divided by Gross Rents.
Gross Monthly Rent Multiplier (GMRM)
A method of determining the value of income producing residential properties. Gross Rent x Multiplier= Sales Price
Gross Rent Multiplier
Clause induced after granting clause in many deed (begins “to have and to hold”), describing the type of estate granted.
Habendum Clause
An expression describing the use of land that, at the time the property is appraised, results in the highest net income attributable to the land. There can bee only one highest and best use at one time.
Highest And Best Use
A person’s land used as their residence that is usually exempt from attachment by creditors to a statutorily present amount, is, in some states, one can exempt up to $5,000 per owner from attachment by unsecured creditors upon foreclosure.
Homesteead
A real estate tax reduction on a homestead owned by a person 65 years of age or older or permanently disabled.
Homestead Exemption Law
Department of Housing and Urban Development, a cabinet department of the federal govt. that administers fair housing laws, and administers FHA programs, eg., RESPA
HUD
Some agency relationships can be implied because of the circumstances surrounding a relationship. Implied agencies do not normally occur in real estate transactions.
Implied Agency
A guaranty where the law derives it by implication or inference from the nature of the transaction or relative situation, or circumstances of the parties.
Implied Warranty
Incomplete, such as an interest in the real property during the spouse’s life, as in dower rights.
Inchoate
A person retained by another accomplish a particular result by methods completely up to the independent contractor, eg., real estate salesperson.
Independent Contractor
Entering and exiting; usually refers to a road or other means of access to a piece of property. An easement for ingress and egress is one that gives the dominant tenant access to the dominant tenement.
Ingress and Egress
A person who dies without making a will thus his estate is passed on by thee laws of descent and distribution.
Intestate
An interest held by two or more persons in property where each person olds an equal share of interest in the undivided whole and shares equal liability for payment. If one joint tenant dies, his interest automatically passes to the surviving joint tenant(s) by the right of survivorship. Acronym=(PITT)-Possession, Interest, Time, and Title.
Joint Tenancy
A recorded claim against another for a wrongful act ordered by a court. Result of a judgment lien can be the forced public sale of realty.
Judgment Lien
A method of selling real estate by which the purchaser takes possession and pays for property in regular installments, while the seller retains legal title until the property is paid for in full. Also known as an installment contract or contract for deed.
Land Contract
A system whereby title to property passes by operation of law to the heirs of one who dies owning property without a will.
Law of Descent and Distribution
A written contract between the owner, lessor of property, and a tenant, lessee, where the possession of land and/or building(s) is granted by the owner to the tenant for a specified period of time for a specified amount of rent.
Lease
The interest of a lessee to use and enjoy real estate for a specified period of time and upon certain conditions, e.g., the payment of rent. The four typical leasehold estates are estate for years, periodic tenancy, tenancy at will, and tenancy at sufferance.
Leasehold Estate
A permission, either express or implied, that can bee revoked at any time and cannot be assigned, e.g., permission to hunt.
License
A claim against title that one party has upon thee property of another as security for payment of a debt or obligation, e.g., mortgage.
Lien
A state in which real estate mortgages are regarded as a lien; title remains with the mortgagor absent default; and foreclosure proceedings can be commenced upon default.
Lien Theory State
An interest in real or personal property, thee duration of which is limited by the life of its owner or the life of another designated person.
Life Estate
An asset, either cash, stocks, or bonds, that can be quickly (within a 24-48 hour period) converted to cash.
Liquid Asset
The cash position of an individual or business measured by cash on hand or securities that can quickly be converted to cash.
Liquidity
That portion in a condominium project owned by all the owners but can only be used by one of the owners, i.e., a designated parking space, the manager’s apartment, the balcony off a particular unit
Limited Common Element
A partnership made up of one or more general partners and one or more limited partners
Limited Partnership
A notice filed in the public records for the purpose of serving constructive notice that title or some matter involving a particular parcel of real property is in litigation. Any person who acquires property under a notice of lis pendens will take it subject to any adverse judgment that may result
Lis Pendens
A contract whereby a real estate broker has the right to sell someone’s property. It must have a definite beginning and ending date on the contract, e.g., June 1, 2005 to October 30, 2005. A copy must be given to the client upon signing.
Listing Agreement
A one-time set up fee charged by the lender
Loan origination fee
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, must include county and state.
Lot-and-block description
Latin, “we command.” A writ issued by a court ordering someone to do something or refrain from doing something
Mandamus
A method of appraising property where factors considered are neighborhood economic standards, cost of comparable properties, and demand
Market data comparison approach to valuation
The price that a piece of real estate actually sold for. Commonly used interchangeably with market value, but not truly the same (compare with market value)
Market price
The theoretical price that a piece of real estate is most likely to bring in a typical transaction. The highest price a willing buy would pay and a willing seller would accept, both being fully informed, with the property being exposed for a reasonable period of time. The market value may be different from the market price a property can actually be sold for at a given time. Market value may be different from market price at a given point in time.
Market value
A title to real estate that is reasonably free of defects and encumbrances so there is no reasonable doubt as to its validity or reasonable apprehension of danger or litigation with respect to it, and the owners are insured peaceful enjoyment
Marketable title
A statutory lien to secure priority of payment for the value of work performed and material provided for improvements to land. The lien attaches to the land and its improvements
Mechanic’s lien
Description of land by boundary lines, terminal points, and angles. The description must begin and end at the same point, POB (Point of Beginning)
Metes-and-bounds
Equal to one-tenth of a cent. Used in expressing tax rates. For example, ten mills would be the same as $10 per thousand dollars of value. 1 mill = 0.001 = 1/100th of $1.00
Mill
A statement or conduct by a person that represents to another a fact that is not true. A seller, broken, or builder may have a duty to disclose certain defects in property to a buyer or tenant. Failure to disclose is also misrepresentation. The misrepresentation may be deliberate (known to be wrong), negligent (should have known), or innocent (reasonably believed to be true). Depending on the facts and extent of misrepresentation, there may be a suit for damages, rescission of a contract, or punitive action against the broker (loss of license, etc.)
Misrepresentation
An entity that provides its owns funds for mortgage financing
Mortgage Banker
The lender who receives and holds a mortgage as security for a debt
Mortgagee
The document, promising to pay back money according to specific terms. The note may not be recorded, but the mortgage deed is recorded. The note is the promise to pay; the mortgage deed is the security for that promise.
Mortgage note
One who gives a mortgage on his property to a lender, or mortgagee, as security for a loan or performance of an obligation; a borrower
Mortgagor
A method of marketing real estate whereby other brokers in an organization are permitted to show and sell property listed with another broker
Multiple listing
A service provided by a local board of REALTORS that puts homes for sale into a listing book where all members can show the property
Multiple listing service (MLS)
Also known as “alternative MLS”
MLS Plus
A lease agreement that requires the lessee (tenant) to pay taxes, insurance, repairs, operating expenses, and other costs of property
Net lease
A listing contract where the seller receives a sum he specifies from the full proceeds of the sale. The broker receives the amount remaining as her commission.
Net listing
The use of a structure that, while once lawful, no longer complies with zoning limitations
Non-conforming uses
An executed document acknowledging debt by the person(s) signing it. In real estate, a mortgage deed is usually executed at the same time as security for the note
Note
Substituting a new obligation for an old one or substituting a new contract for an existing contract, thus relieving the original obligor from any further liabilities
Novation
A loss of value due to a decrease in the usefulness of property caused by decay, changes in technology, people’s behavior patterns and tastes, or environmental changes, e.g., economic (external) obscolescence, functional obsolescence
Obsolescence
A mortgage that serves the dual purpose of being security for both the original loan and other future loans. Most mortgages are open-ended today
Open-ended mortgage
The prevention or elimination of discrimination in housing based on upon race, sex, color, religion, national origin, handicap, or familial status
Open housing
A listing agreement where one or more brokers are permitted to show a listed property. Only the broker who sells the property is entitled to a commission.
Open listing
An agreement for which payment is made granting the exclusive right to buy or lease property at a given price within a stated period of time and binding the seller to hold an offer open for a stated period fo time. A Unilateral Contract.
Option (Contract)
Payment made after it is due. Interest is said to be paid in arrears since it is paid the day of payment rather than in advance, as is rent. Property taxes are also usually paid in arrears
Paid in arrears
Another word for blockbusting
Panic peddling
Another word for blockbusting
Panic selling
A rule of law that limits the terms of a contract to those that are written within it. No oral evidence is permitted at time of trial concerning terms not in the written agreement.
Parole evidence rule
The Part Performance Doctrine states that if one of the parties substantially performs his part of the agreement, then the other party may not avoid the contract just because it was not in writing
Partial performance
A lawsuit in which unlawful discrimination is sought to be proven by evidence of patterns of racial discrimination and the practices of individuals charged with violations. Suits are investigated by the Justice Department.
Pattern and practice suit
The person to whom a debt instrument (e.g., check or promissory note) is made payable to; also known as the receiver
Payee
The payment-in-full of an existing loan or other lien
Payoff
The sender of the payment
Payor
Latin, “by heads.” One who inherits property under a will, or pursuant to law, does so as an individual, as opposed to inheriting a divided share as one of the several representatives of one in whose stead they take
Per capita
Latin, “by lineage.” A distribution under a will, or pursuant to law, where children share what their deceased parent would have inherited if the parent had lived
Per stirpes
A lease where the tenant’s rent is based upon the monthly or yearly gross receipts made on the premises, e.g., retail lease
Percentage lease
A leasehold interest that continues from period to period, e.g., month to month, year to year
Periodic tenancy
Property that is not real property, but is tangible and moveable; personal chattels, e.g., clothes, furniture, portable dishwashers, microwave ovens, lightbulbs
Personal property
Aka plat map; a map recorded at the county recorder’s office showing how a parcel of land is divided into lots. A map used to show a new subdivision
Plat
A term for a percentage of the loan amount that the lender charges as a fee for making the loan, lowering the interest rate, or other reason. One point is equal to one percent of the principal loan amount
Point
Right of the government to pass legislation protecting the safety and welfare of the public
Police power
A legal instrument giving a person the authority to act for another, as attorney-in-fact, not necessarily an attorney-at-law
Power of attorney
An easement created by statute or court action because someone used another’s property openly and continuously over a period of time. Thus, even though not a written easement, one was created. Do not confuse with adverse possession.
Prescription easement
Two or more brokers agreeing to set commission rates. This is illegal and is in violation of the Sherman Antitrust Act
Price fixing
- The person who gives authority to an agent or attorney, thereby creating a fiduciary relationship; 2. The amount of a debt, excluding interest due
Principal
The effort that brings about the desired result. An unbroken chain of events that results in the sale of property. Under an open listing, the broker who is the procuring cause of the sale receives the commission
Procuring cause
The division of ongoing expenses and income items between the buyer and seller proportionately to the time of use, or the date of closing
Proration
Exaggerated or superlative comments or opinions, e.g., “This is the most beautiful home in the neighborhood!”
Puffing
A mortgage given by the buyer to the seller as a portion of, or the entire purchase price, of the property. Here the seller is acting as the lender
Purchase money mortgage
A deed that grants any interest in property which the grantor may have. The grantee takes the property “as is” because the deed contains the operative words “release, remiss, or forever quit” and does not warrant title or possession. “I will quit claiming all interest in the property, if I have any.” Used to release dower or clear clouds on title
Quitclaim deed
Action by a court to remove a cloud or claim that has been placed on title to property
Quiet title action
Land and anything permanently affixed to the land. synonymous with “real property”
Real estate
Established in lieu of a security bond covering each licensee. In Ohio, the maximum amount an injured claimant way recover is $40,000 per licensee involved in a transaction
Real estate recovery special account
The land and anything permanently attached, such as buildings, fences, and fixtures, including wall-to-wall carpeting, dishwasher, sump pump
Real property
A trade name for a member of the National Association of REALTORS and its state and local affiliates. All brokers and salespersons are not REALTORS any more than all copiers are Xerox.
Realtor
The return of monies invested in property, through reduction of the loan amount, and/or appreciation. Recapture rate is equal to the rate of depreciation that is allowed for one year.
Recapture
Filing or entering a legal instrument into the county recorder’s office, which causes it to become a public record giving constructive notice of its existence to the world
Recording
Federal government system of accurate land survey and description using base lines and principal meridians. There are 36 sections in a township.
Rectangular survey
The right of a landowner to reclaim property after foreclosure
Right of redemption
A right of a borrower who has defaulted on a mortgage note to redeem his title by paying entire debt before the foreclosure sale
Equitable right of redemption
A certificate used to reclaim a piece of real estate by paying off the debt owed on the property along with any court fees. This procedure is done after a foreclosure sale has been conducted and during the redemption period
Redemption certificate
A right of a borrower who has defaulted on a mortgage note to redeem his title by paying entire debt AFTER the foreclosure sale. statutory period can be as long as 1 year. Not used in all states.
Statutory right of redemption
Real Estate Investment Trusts; Joint ventures, usually in the form of a limited partnership, through which real estate is purchased. A person must have a securities license to secure REITs. REITs avoid double taxation as they are taxed to the beneficiary
REITs
Real Estate Settlement Procedures Act; a federal statute requiring disclosure of certain costs and prohibits certain acts in the sale of residential (one- to four-family) improved property which is to be financed by a federally insured lender
RESPA
The illegal process of a lender denying loans in certain areas of a community because of race, color, creed, etc. An analogous situation exists whenever insurance companies refuse to sell insurance to someone for reasons based on race. Any decision made that is not based on buyers’ qualifications.
Redlining
The implementing provision of the Consumer Sales Practices Act enacted in 1969, which requires disclosure of the cost of credit and various terms available for credit to borrowers and consumers seeking credit. This is a Federal Statute, regulated by HUD, which is not part of any other sections of HUD. Requires disclosure of interest rates as an annual percentage rate (APR) for all consumer loans
Regulation Z
The discharge or relinquishment of a right, claim, or privilege
Release
A document signed (and usually recorded) by the lending institution when a mortgage has been satisfied in full
Release of mortgage
An interest in land whereby a person receives an interest in real estate upon the death of another, e.g., dad conveys a life estate to son “A,” and states that upon the son’s death, the estate will go to daughter “B.” Daughter “B” has received a remainder
Remainder
The one entitled to the remainder
Remainderman
The annulment of a contract so that the parties to it are put in a position as though the contract never existed, i.e., earnest money is returned to the buyer
Rescission
The interest in a life estate that reverts to a grantor or grantor’s heirs if no remainderman is named
Reversionary interest
The characteristic of a joint tenancy by which the surviving joint tenant (owner) automatically takes all rights, title, and interest of the deceased joint tenant
Right of survivorship
A method for a seller to free capital for his business expansion by selling his property to a buyer who has agreed to lease it back to him
Sale and leaseback
A measure of land equal to one square mile, 640 acres, 1/36th of a township
Section
Federal agency that regulates the sale of interstate real estate securities
Securities and Exchange Commission (SEC)
The taking of custody of one’s personal or real property to compel compliance with a court rder
Sequestration
A term used in local zoning ordinances that represents the distance between lot lines and improvements
Setback
The individual, normally working for the title company, who closes real estate loans. The settlement agent is required by FHA guidelines to sign the closing documents along with the seller and the buyer.
Settlement Agent
Property held by one person or entity (corporation). Also called sole ownership
Severalty
Name of the federal antitrust law that makes it illegal for brokers to set uniform commission rates (price fixing), and prohibits other oacts of collusion
Sherman Antitrust Act
Place where something exists; the personal preference of persons for one area over another, not necessarily based on objective facts of knowledge. Refers to the economic attributes (value, area of preference, etc.) that location gives to a particular parcel of land
Situs
A special agency authorizes the agent to represent the principal in a specific activity of transaction, e.g., a real estate broker acting as an agent for a seller
Special agency
A deed by which the grantor covenants or guarantees the title from the time he received it until it is conveyed to the grantee. The operative words of such a deed are “by, through, or under the grantor, but not otherwise.” This deed does not have all of the five warranties of a general warranty deed.
Special warranty deed
A lien affecting or attaching only to a certain specific parcel of land or piece of property, e.g., mortgage, mechanic’s, and ad valorem taxes
Specific lien
A legal action available to a buyer to compel the performance of the terms of an agreement, such as the sale of a home
Specific performance
A law requiring that certain instruments be in writing to be enforceable, e.g., deed, lease, option, but not a listing agreement. A listing agreement must be in writing according to another tenant
Statute of frauds
The illegal practice of trying to influence a buyer’s choice of housing by racial, religious, ethnic, national origin, ancestry factors, etc. This includes showing only certain neighborhoods, “slanting” property descriptions, and downgrading non-integrated neighborhoods in an effort to influence minority buyers. This may also include a sales associate steering prospective clients to a broker or sales associate of their race, color, or national origin
Steering
A loan where each payment is different, consisting of a fixed amount plus interest on the remaining balance
Straight line amortized loan
A method of replacing the capital investment of income property by reducing the value of the property by a set amount annually from the income, over the economic life of the property
Straight-line depreciation
An agent of an agent; a person that an agent has delegated authority to, so that the subagent can assist in carrying out the principal’s order
Subagent
A written agreement between holders of liens on a property that changes the priority of mortgages, judgments, and other liens
Subordination agreement
The substitution of one creditor for another, with the substituted person succeeding to the legal rights and claims of the origianal claimant
Subrogation
The transfer of real property by will or the law of descent and distribution, as compared to transfer by a grant of the deed or any other form of purchase or transfer
Succession
The procedure that determines the shape, area, and position of a parcel of land by locating its boundaries, and by which a buyer may be sure a property has no encroachment
Survey
One of the four powers of the government, used as a means to collect revenue and implement policies. The power of government to tax, among other things, real property
Taxation
Joint tenancy with right of survivorship between a husband and wife
Tenancy by the entirety
The interest in real property held by a tenant or mortgagor who remains in possession of leased premises after his right of possession has expired and the landlord has declared he does not want the tenant to remain
Tenancy at sufferance
The interest in real property held by a tenant or mortgagor in possession with the permission of the owner for a term that is not specified
Tenancy at will
The interest held by two or more persons in property who hold an undivided interest and whose interests need not be equal. There’s no right of survivorship between tenants in common
Tenants in common
A loan whereby interest only is paid in each installment and, at the end of the loan period, the principal is due in full
Term loan
One who makes a will; one who dies leaving a will
Testator
Legal phrase meaning that the amount of time stated in a contract must be strictly adhered to in order not to breach the contract. The parties specifically contemplate a punctual performance and precise time for completion of the contract.
Time is of the essence
An undivided interest in real estate for a period of time. A relatively new type of ownership of real estate used in resort areas. Purchasers buy the use of a property for a certain period of time each year. Expenses are shared equally among the owners.
Timeshare
Evidence of legal ownership in real estate. Title is a concept, not a document.
Title
A contract whereby a title insurance company indemnifies the owner that title is free of defects and hidden risks such as forgeries. This does not guarantee you will not lose ownership, only that you would be compensated under terms of the policy
Title insurance
A legal system of land registration, using signature cards, to verify land ownership and determine title status, instead of being recorded (not used in all states)
Torrens system
Items of personal property annexed to leased property, which are necessary to the carrying on of a trade or business and which are removable by the tenant prior to expiration of the lease, e.g., pizza ovens, bowling lanes
Trade fixture
A non-interest bearing bank account, separate from a real estate broker’s personal and business accounts, used to segregate funds from the broker’s own funds
Trust account
An instrument that conveys title to a trustee who holds it
Trust deed
A deed executed by a trustee conveying land held in a trust by anyone other than the trustor
Trustee’s deed
Federal law requires disclosure of the terms of credit by a creditor to a prospective debtor. Regulation Z implements Truth-in-Lending.
Truth-in-lending
A contract (e.g., Open listing, Option) under which one party makes an express promise or undertakes performance without receiving in return any express promise or performance from other party. No contract occurs until someone performs.
Unilateral contract
- In appraisal for sale purposes, the true economic value of a building in terms of years of use to the owner2. For tax purposes, the life set for depreciation. At any time during that period, a new life could begin for a new owner.
Useful life
Charging an illegal rate or amount of interest on a loan. In Ohio, the maximum allowable rate is 8% above the Federal Reserve discount rate. Ohio usury law does not regulate all government-affected mortgage corporations. Non-exempted loans have a ceiling of 3% above the Federal Reserve discount rate.
Usury
A mortgage loan secured through an approved lending institution and guaranteed by the Veteran’s Administration
VA Loan
Binding and enforceable contract; one party can legally force the other party to perform
Valid contract
Allows lender to increase or decrease the interest rate within parameters set down in mortgage note. See also - Adjustable Rate Mortgage
Variable rate mortgage
A change in part of a zoning requirement without actually changing the zoning.
Variance
A purchaser in a land contract; the purchaser of real estate
Vendee
The seller in a land contract; the seller of real estate
Vendor
A contract lacking the essential elements necessary for formation; a contract of no legal force and effect, e.g., a contract for an illegal purpose
Void contract
A contract that can be terminated even though it appears valid; e.g., a contract with a minor can be rescinded by the minor and thus is a voidable contract
Voidable contract
A deed in which the grantor fully warrants good and clear title to the property and agrees to defend the premises against the lawful claims of third persons. See also - General Warranty Deed
Warranty deed
Improper use of property, which hurts its value by a possessor who holds less than fee ownerships, such as a life tenant, tenant, etc.
Waste
A deed clause stating a grantor’s intent to transfer an interest in real property. Also called a granting clause.
Words of conveyance
A form of junior mortgage that may be used when it is not feasible to retire the first mortgage, land contract, or lease-purchase agreement. Title to the real estate does not pass until subsequent payments occur.
Wraparound loan
A court order directing an official to sell property to satisfy a judgment against the owner of the property
Writ of execution
Rate of return on an investment, generally shown as a percentage. the yearly income divided by the value of the building equals the percentage of return. IRV-income, rate, value
Yield
The regulation over the use of land within a specific municipality
Zoning
