RE V Flashcards
1031 Exchange
IRS Code Section allowing a taxpayer to sell investment property and purchase another without paying capital gains on proceeds.
Abandonment
Non-payment of taxes.
Absolute Auction
An auction selling the property to the highest qualified bidder without any minimum bids.
Abstract of Title
Brief, chronological summary of recorded documents affecting title to a particular parcel.
Acceleration Clause
Contract clause giving a lender the right to declare all outstanding payments immediately due upon borrower default.
Acceptance
When a party agrees to terms on offer, entering binding contract.
Accession
Acquisition of title to land by its addition to RE owned
Accounting
In an agency relationship, the agent’s fiduciary duty to the principal to strictly account for all money received.
Accretion
Gradual addition to dry land by forces of nature.
Accrued
An accumulation.
Accrued Expense
Item on settlement statement for cost incurred but not paid. (Paid in arrears)
Acknolwedgment
Recognition of validity; document signer’s declaration of willing signing.
Acre
Measure of land area = 43,560 square feet.
One Sq Mile = 640 Acres.
Actionable Fraud
Fraud a victim can sue on. Victim must prove defendant concealed material facts or made false statements with intent on inducing transaction.
Actual Fraud
Intentional misrepresentation or concealment of material fact.
Actual Notice
Actual ack of fact.
Ad Valorem
Latin “According to value,” taxes assessed on property value.
Adequate Consideration
Consideration that is comparable in value to consideration the other party is giving.
Adjustable Rate Mortgage
Loan structure permitting lender to periodically change/vary interest rates charged based on a standardized index.
Administrator
Person appointed by probate court to manage estate of deceased with no executor in will/no will.
Adverse Possession
Open, notorious, hostile possession of another person’s property for a statutory number of years allowing adverse possessor to obtain title.
Advertisement
Public notification featuring property for sale/rent, marketing brokerage services; must follow guidelines of fed/state/local housing laws.
Affidavit of Title
Statement sworn in front of notary by seller/grantor stating no changes or defects to title since last examination and proves ownership of property.
Affiliated Business Arrangement
AfBA. Situation where a person has affiliate relationship or beneficial ownership of more than 1% in a provider of settlement services, referring business to providers.
Agency
A relationship of trust when Principal gives Agent right to represent in dealings with third parties.
Agency Coupled with an Interest
Situation where agent has personal interest in subject of the agency.
Agent
Licensed broker who represents principal in RE transaction.
Aggregate Rent
Total rent for full term of the lease
Air Rights
Right to undisturbed use and control of airspace over a parcel of land. Transferrable separate from land.
Alienation
Transfer of ownership or interest in property from one to another.
Alienation Cause
Mortgage clause allowing lender to demand full/immediate payment of mortgage because owner transfer. Due on Sale Clause.
Allodial System
System of land ownership that allows anyone to own land.
Alluvion
Solid material deposited along shore by accretion.
Amenity
Tangible or intangible feature that adds value to real estate.
Amenity Purchaser
Person who values a property based on its ability to fulfill his specific business needs or use. (Unlike investor, expecting ROI)
American Land Title Association (ATLA)
National Association of Title Companies, Abstractors and Attorneys. Members promote uniformity, quality and professional standards in title insurance policies.
Americans with Disabilities Act (ADA)
Federal Civil Rights law signing in 1990 that prohibits discrimination based on disability.
Amortization
Occurs when a loan balance decreased because of periodic installments paid on principal and interest.
Amortization Loan
Financial debt paid off over a period of time by a series of periodic payments. Loan can be fully/partially amortized requiring balloon payment to satisfy debt at end of the term.
Amperage
Amount of electricity going through electrical wires.
Anchor Tenant
Major Dept/Chain Store strategically located at shopping centers to give maximum exposure to smaller stores. Magnet Stores.
Annexation
Attaching personal property to land so it becomes a fixture and law views it as real property.
Annexation, Actual
Process of physically attaching personal property to land, causing it to be a fixture.
Annexation, Constructive
Personal prop treated by law as a fixture despite it being not a fixture.
Annexer
Person who owns item turning into real property
Annual Percentage Rate (APR)
Relationship between total cost of borrowing and amount financed, represented as a percentage.
Anticipation
Economic principle of value being created by expectation of future benefits (profit on resale, pleasure, tax shelter, production, income..) Foundation of income approach.
Anticipatory Repudiation
When one party to a contract informs other before set time of performance that they no longer intend to perform. Other party may immediately file lawsuit for breach of contract.
Antitrust
Area of fed law concerned with maintaining competition in private markets by prohibiting unlawful restraint on trade.
Appraisal
Professional estimate or opinion of value of piece of prop as of a certain date.
Appraisal Foundation
Nonprofit org recognized as authority for professional appraisal standards.
Appraisal Management Company (AMC)
Entity that, for compensation, acts as a third party by contracting with independent RE appraisers for lenders.
Appraiser
Person who estimates value of prop qualified by education and experience.
Appreciation
Increase in value of an asset over time.
Appropriative Rights
Water rights allocated by gov permit, according to an appropriation system. Not necessary to own residing land.
Appurtenance
Right goes along with ownership of Real property, usually transferred but may be sold separately.
Arbitration
Alternative to a court proceeding where parties agree to submit facts and evidence to impartial third party for decision.
Area Variance
Entitles landowners to use land in a way not typically allowed by dimensional or physical requirements of zoning law.
Arm’s Length Transaction
Occured under typical conditions in marketplace with each party acting in his or her own best interest.
Arrears
Owning payment on things for which one has but not yet paid for, prop tax or mort int.
Not on time.
As of Right Zoning
Landowner’s bundle of rights associated with property/
Asbestos
Fibrous material once very common, can cause breathing issues and illness.
Ascending Bid
Auction where bidding starts low, sold to highest bidder.
Assemblage
Act of combining two or more parcels of land
Assessed Value
Value placed on prop by a taxing authority, usually fraction of true value.
Asset
Item of economic value
Assigment
Transfer of rights or interests of contract to another party.
Valuation service provided by appraiser by agreement with client.
Association Fees
Monthly fees paid for by cooperative owner of common area expenses.
Attachment Lien
Lien intended to prevent property transfer pending litigation.
Attestation
Act of witnessing persons signing of an instrument by Notary.
Attorney-In-Fact
Person designated in instrument to do something legally for another, need not be attorney-at-law
Attorney’s Opinion of Title
Statement issued by an attorney after analyzing abstract as to quality of title.
Auctioneer
Person licensed to conduct public auction, in some states must be licensed as an RE Broker.
Avulsion
Natural process of land removal from property by natural forces and deposited into another.
Bad Title
Title with defects making it unmarketable.
Bait and Switch
Deceptive sales technique advertising to consumer with particular product/service then persuading them to accept something more costly. Illegal in some states.
Balance Sheet
Property management report that shows snapshot of specific property at moment in time. (Cash on hand, liabilities, outstanding loan)
Balloon Framing
Framing long studs in a continuous piece from foundation to roofline.
Balloon Payment
Lump-sum at end of term to cover remaining balance.
Bankruptcy
Court process canceling debt & providing relief for creditors. Chapter 7 (Straight Bankruptcy) is a liquidation proceeding. Chapter 13 (Reorganization Proceeding) is filed by individuals who want to pay off their debts over 3-5 years.
Bargain and Sale Deed
Implies grantor owns prop and has right to convey it, with no warranties.
Base Rent
Minimum amount of rent indicated in lease.
Base Year
Period for determining property’s actual operating expenses, typically over first year of lease then used as point of reference against increases in future for new tenants.
Baseline
Main east-west line designated throughout country for use with rectangular survey system of legal land description.
Beam
Long timber/metal spans an opening or part of building giving support to roof or floor above.
Benchmark
Bronze disk permanently placed by government survey teams.
Beneficiary
Person designated to receive benefits
Bilateral Contract
Both parties make a binding promise.
Bill of Sale
Doc used to transfer personal property ownership.
Binder
Agreement that might accompany earnest money deposit for purchase of real property. Used by attorneys as blueprint for sales contract.
Biweekly Payment Plan
Fixed rate mort setup with biweekly payments.
Blanket Mortgage
Covers more than one parcel of real estate.
Blind Advertisement
Any real estate ad used be licensee without including brokers name or business. Prohibited in most states.
Blockbusting
Illegal practice of inducing owners to sell home by suggesting neighborhood has been changing racially implying property decline. Panic Peddling.
Blueprint
Detailed diagram used to evaluate design, determine feasibility and guide construction.
Boilerplate
Standardized language for efficiency and completeness in contracts.
Boot
Extra property included in exchange to make up for price difference
Bounds
Boundaries
Boycott
Concerted refusal by two or more people to deal with a particular person or company.
Breach
Violation of an obligation, duty or law.
Breach of Contract
Failure, without legal excuse, to commit to contract.
Breach of Trust
Failure by someone entrusted with care of property imposed under terms of agreement.
Bridge Mortgage
Occurs between termination of one and commencement of another.
British Thermal Unit (BTU)
Amount of heat needed to raise temp of one pound of eater by one degree F. Used for furnaces and AC
Broker
Person who for a fee, sells, lists, leases, exchanges, negotiates or deals in RE.
Broker-Dealer
Person/Org trading securities for own account or on behalf of customers.
Broker Price Opinion (BPO)
Estimated value of property determined by RE Licensee, requested by lender for non-fed prop.
Broker Protection Clause
An optional clause that brokers may include in a listing obligating seller to compensate broker even if listing is sold after listing agreement expires under certain circumstances. Carryover Provision/Extender Clause
Brokerage
Business that serves as middle man between buyers and sellers and/or lessees and lessors of real estate.
Brownfield
Any real property where redevelopment or reuse may be complicated by the presence of contaminant or pollutant.
Budget Morgage
Mortgage agreement where payments include principal and interest on loan plus 1/12 of the year’s ad valorem taxes and hazard insurance premiums.
Buffer Zone
Means by which planners use space to separate two adjoining districts which have incompatible uses.
Building Code
Setting construction standards, requiring builders to use particular methods and materials.
Building Department
Group of people responsible for issuing building permits and seeing that building codes are followed and done by licensed professionals.
Building Efficiency
Ratio of usable square footage to rentable square footage.
Building Inspection
Process where local gov officials ensure compliance with state and local building codes
Building Permits
Official doc from local gov/authority that will allow beginning of a construction or remodeling project.
Bundle of Rights
All real property rights that are conferred with ownership, right of possession, right of quiet enjoyment, right of disposition, right of exclusion, right of control. Bundle of Sticks.
Buyer Agency Agreement
A contract between buyer and broker that grants broker right to represent buyer in purchase/lease of property, making buyer responsible for paying commission to the broker.
Buyer’s Agent
Licensed agent representing interests of buyer.
Buyer’s Market
Situation where housing market has saturated homes and lack of buyers.
Bylaws
Rules and regulations that govern activities of condo and coop associations, including purpose of building, rules for elections and voting, and frequency of board of directors/shareholders meetings.
Cancellation
Termination of contract without undoing acts performed under it.
Cap
Maximum increase of interest rate lender can charge on ARM
Capital Expense
Expense incurred to improve property, Reserves for Replacement
Capital Gain
Taxable profit derived from sale of capital asset; difference of sales price and adjusted basis of property.
Capitalization
Convert future income into present value.
Capitalization Rate
Rate of return considered to be a reasonable return on investment given the risk.
Carbon Monoxide
Colorless, odorless gas, natural byproduct of fuel combustion and dangerous when inhaled.
Cash Flow
Measure of cash inflow and outflow from investment. Positive means more cash comes in than leaves.
Cash-on-Cash Return
Ration of income generated by property to cash investment in property. (Down payment and settlement costs are part investment)
Caveat Emptor
Latin phrase meaning “Let the buyer beware”
CC&Rs
Declaration of covenants, conditions and restrictions; usually recorded by developer to create a general plan of private restrictions for subdivision. Deed of Restrictions.
Cease and Desist Order
Administrative agency directive to stop an offending activity.
Ceiling Height
Height in feet from floor to steel girders. Feet Under Steel.
Ceiling
Maximum increase or decrease in periodic payment allowable over life of an ARM. Lifetime Cap.
Certificate of Eligibility (COE)
Certificate issued by Dept of Veteran’s Affairs to establish status and amount of Veteran’s eligibility to qualify for a loan guarantee.
Certificate of Purchase
Doc given to winning bidder of real estate tax or foreclosure sale. Once confirmed, deed issued to convey title.
Certificate of Reasonable Value (CRV)
Certificate establishing current market value of prop based on approved VA appraisal. Issued by VA, places limit on VA-guaranteed loan.
Certificate of Title
Document prepared by attorney stating attorney’s opinion of status of title to piece of property, after performing title search and reviewing public records.
Certificate of Occupancy
Issued to builders after all inspections have been made and property is deemed fit for occupancy, meeting appropriate standards for health and safety.
Chain of Title
Chain of deeds and other documents transferring title to a piece of property from one owner to next, as disclosed in public record.
Chattel
Piece of personal property.
Chattel Mortgage
Loan uses personal property as security.
City Planning
Effort on part of the city to coordinate, direct and control type of dev taking place to ensure max benefits to populace.
Civil Rights
Fundamental rights guaranteed to all persons by the law. Term primarily refers to constitutional and statutory protections against discrimination based on race, religion, sex or national origin.
Clearspan
Open distance between inside faces of support members.
Client
Person being represented by licensee, also called Principal
Closing
Transfer of real property ownership from seller to byer, according to terms and conditions in sales contract or escrow agreement; final state in RE trans. Loan Consummation/Settlement.
Closing Costs
Expenses incurred and paid at time of settlement in transferring of property.
Closing Disclosure
Standardized document that presents final, detailed accounting for RE trans, listing each party’s debits and credits received or required to pay at closing. Req by all RESPA-related trans. Settlement Statement.
Cloud on the Title
Claim, encumbrance, or defect that could make title to real property unmarketaable.
Cluster Zoning
Allows developers to provide varied selection of lot sizes and housing choices in a single area.
Co-Insurance
Common clause/provision in building insurance polices under which insured agrees to maintain insurance on prop in amount equal to 80% of replacement cost. If not insured to this amount and loss incurred, insurance company will make insured share in the loss on pro-rate basis.
Code of Ethics
Set principals and standards based on core values by which group of professionals are expected to conduct themselves.
Collateral
Property pledged as security for a debt
Collusion
Secret agreement or cooperation among people, for deceitful or fraud purposes.
Combined Loan-to-Value (CLTV)
Relationship between unpaid principal balances of ALL mort loans and appraised value of property.
Commercial Banks
Largest financial intermediary directly involved in financing of RE. Primary RE Activity involves short-term loans.
Commercial Property
Prop zoned and used for bus purposes, warehouses, restaurants, and offices.
Commingling
Illegally mixing personal or business funds with money held in trust or on behalf of client.
Commission
Compensation paid to broker for services in RE Trans; usually percentage of sales price. Negotiable and should be clearly spelled out in written agreement.
Common Area Maintenance (CAM)
All costs incurred in maintaining common areas of commercial property, including parking lot sweeping and repair, snow removal, common utilities, landscaping and other maintenance task. Usually prorated among all tenants.
Common Areas
Land and improvements in condo/coop that all residents use and own as tenants in common such as parking lot, hallways and recreational facilities.
Common Law
Law developed over many years through court decisions and other precedents.
Community Property
In some states, prop acquired during marriage that is jointly owned by married couple.
Comparables
Recently sold properties with similar characteristics. (Size, rooms, design, utilities)
Comparative Market Analysis (CMA)
Method of determining approximate market value of home by comparing subject property to similar homes that have sold, presently for sale or did not sell in a given area.
Compensation
Valuable consideration on person or entity gives to another person or entity in exchange for performance of activity or service.
Compensatory Damages
Damages award intended to compensate plaintiff for harm caused by defendant’s act or failure to act, including personal injuries, prop damage and financial loss.
Competency
Ability to do something successfully or efficiently.
Competent Parties
Those who are legally capable of entering into contracts
Complaint
Formal allegation, generally in writing, accusing someone of misdeeds
Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA)
Fed law enacted by Congress whos primary emphasis is cleanup of inactive hazardous waste sites and liability for cleanup costs. Superfund.
Comprehensive Loss Underwriting Exchange (CLUE) Report
Report available from Lexis/Nexis tracking insurance claim history on real property and automobiles
Comprehensive Plan
Written doc prepared by local planning board that identifies goals, objectives, principles, guidelines, policies, standards and strategies for growth and development of community including housing needs. Master Plan.
Concealment
Occurs when licensee fails to disclose information that is material to decision to a party to whom licensee has such a duty.
Condemnation
1.) Taking private property for public use, thru gov Eminent Domain. Appropriation. 2.) Declaration that structure is unfit for occupancy, must be closed/demolished.
Condition
Provision in deed or other doc making parties rights and obligations dependent on occurrence or non-occurrence of some event.
Condition Approval
Situation where lender approves loan under certain stated conditions.
Conditional Use
Land use that does not comply with general zoning rules for located zone, but permitted because it benefits public. For ex, hospital in residential neighborhood. Special Exception. Special Use
Condominium
Property developed for co-ownership, with each co-owner having separate interest in individual unit, combined with an undivided interest in common areas and air space between walls, floor and ceiling.
Confidentiality
Protection of clients info
Conforming Loan
Meets qualifying standards of Fannie Mae or Freddie Mac, can be sold on secondary market.
Conformity
Principle says particular prop achieves its max value when surrounded by properties in similar style, function and utility. Homogeneity.
Consent Decree
Binding agreement reached before judgement in court case by which accused party consents to change behavior without admitting wrongdoing.
Consideration
Anything of value given to induce another person to enter contract. Valuable Consideration
Construction Loan
Temporary loan used to finance construction of improvements and buildings on loand
Constructive Eviction
Occurs when tenants use of premises is substantially disturbed or interfered with by landlord’s actions or failure to act. Tenant is effectively forced to move out and terminate lease without further liability for further rent.
Constructive Fraud
Negligent misrepresentation or concealment of material fact.
Constructive Notice
Knowledge of fact imputed to a person by law. Person is held to have constructive notice of something when he/she should have known it, even if they didn’t. Everyone is expected to protect interests by searching public record.
Consumer
Person/entity seeking/receiving licensed activites
Consumer Financial Protection Bureau (CFPB)
Agency funded by Fed Reserve with rulemaking and enforcement authority over many consumer financial laws. Established under Dodd-Frank Act
Consumer Price Index (CPI)
Index published monthly by United States Bureau of Labor Standards (BLS) considered by many to be basic indicator of inflation in US.
Contingency Clause
Provision in contract, deed, law, regulation, guideline making parties rights and obligations depend on occurrence/non-occurrence of specific event.
Contunuance
Title search performed just prior to settlement to bring a preliminary title report up to date and ensure no intervening rights to prop have come up. Bring-Down
Contract
Agreement between two or more parties to do or not do something. Legally enforceable promises, with law providing remedies for breach.
Contract for Deed
Installment contract in which seller passes possession but retains title to property until total or substantial portion of purchase price is paid. Land Contract.
Contract Rent
What tenants are actually paying in rent, stated in terms of lease.
Contractual Capacity
Legal ability to enter into a contract
Contribution
Principle that specific item or feature of property is worth only what is actually contributes in value to that parcel of RE.
Conventional Loan
Loan made by an institutional lender or private party with RE as security for loan that gov neither guarantees nor insures.
Conversion
Illegal use of another’s funds or other property for one’s own personal/business purposes.
Conveyance
Act of transferring interest in property from one person to another
Cooperating Agent
Agent who works with listening agent to sell property in a real estate transaction; selling agent who finds buyer for listed property.
Cooperative
Prop ownership which residents have right to occupy unit by purchasing stock shares in corporation that owns property.
Co-Ownership
Any form of ownership in which two or more people share title to a piece of prop, holding undivided interests. Co-Tenancy
Corporation
Association organized according to strict regulations, individuals purchase ownership shares; regarded by law as an artificial person separate from shareholders.
Correction Deed
Deed used to correct minor mistakes in earlier deed.
Correction Line
Gov survey system, lines established 24 mile intervals (four township lines) north and south of a baseline, re-establishing six mile width between range lines to account for curvature of earth.
Corrective Maintenance
Repairing or restoring broken/failed equipment to specified condition
Cosmetic Maintenance
Maintenance that increases property’s appeal.
Cost
Amount needed to develop, produce or build
Cost Approach
Appraisal method that estimates value of RE by establishing cost of replacing/reproducing improvements, minus depreciation, plus value of site.
Cost Manuals
Books, electronic media, online sources giving estimated construction costs
Cost of Money
Interest rate that people or businesses pay to use another’s money for their own purposes
Counteroffer
Response to offer to enter into a contract, changing some terms. Rejection & correction or original offer. Must be accepted to be binding.
Counterofferee
Person who receives counteroffer or to whom a counteroffer is made
Counterofferer
Person who makes counteroffer
Covenant
Contract, promise, guarantee in a doc such as deed/lease
Covenant Against Encumbrances
Assurance that no encumbrances other than those specified in deed exists
