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)
