REA_Terms_A_M Flashcards
1
Q
20-day notice
A
notifies the owner, general contractor, and lender that if the subcontractor or materialman is not paid, a lien will be filed
2
Q
90-day clause
A
provides for the listing broker to be compensated if a buyer was procured during the period of the listing contract and subsequently agreed to purchase the property within the 90-day period
3
Q
100 percent brokerage
A
The salesperson receives all of the commission collected by the brokerage; however, the salesperson must pay a monthly fee to the brokerage and sometimes a transaction fee as well.
4
Q
Abstract of title
A
Summary of all conveyances and legal proceedings affecting title to a parcel of real estate
5
Q
Acceleration clause
A
enables the lender to call the loan due and payable in the event of a default
6
Q
Accord and satisfaction
A
Occurs when the parties voluntarily agree to complete the contract, even though all of the terms and conditions have not been met.
7
Q
Accountability
A
One of the broker agent’s fiduciary duties; the responsibility to account for any trust funds received by the broker.
8
Q
Accretion
A
Slow buildup of land by natural forces such as wind or water
9
Q
Accrual basis
A
A method of accounting whereby revenue is recognized when it is earned and expenses are recorded when they are due rather than when paid.
10
Q
Accurate legal description
A
a description recognized by law; a description by which property can be definitely located by reference to government surveys or approved recorded maps.
11
Q
Acknowledgement
A
The formal declaration by a person executing an instrument that he or she is freely signing it
12
Q
Acre-foot
A
Volume of water equal to an area of 1 acre with a depth of 1 foot (43,560 cubic feet) and equal to 325,850 gallons
13
Q
Active management area
A
Five Arizona areas (Prescott, Phoenix, Pinal County, Santa Cruz County, and Tucson) where withdrawal of groundwater is limited
14
Q
Active participation
A
a lower level of involvement than material participation
15
Q
Actual damages
A
the estimated money equivalent for loss or injury sustained
16
Q
Actual notice
A
knowledge one has gained based on what has been actually seen, heard, read, or observed
17
Q
Ad valorem tax
A
property tax, which means “according to value”; each piece of property is taxed according to its assessed value
18
Q
Adjustable rate mortgage (ARM)
A
borrower and lender share risks off a fluctuating interest rate economy
19
Q
Adjusted gross income
A
a federal income tax amount that is determined by subtracting amounts specifically authorized by the Internal Revenue Code from gross income
20
Q
Advance rentals
A
rents received in advance of the period for which they are paid
21
Q
Adverse possession
A
a method of acquiring property based on open and notorious possession, under a claim of right, color of title, continuous us for five year, and the payment of taxes
22
Q
Affidavit of completion of forfeiture
A
a written statement recorded by a vendor that terminates a buyer’s interest when the buyer defaults on a land contract
23
Q
Agency coupled with an interest
A
an irrevocable agency in which the agent has an interest in the property as part or all of his compensation
24
Q
Agent
A
one who represents another called a principal and has authority to act for the principal in dealing with third parties
25
Agricultural lease
a lease by owners of agricultural land with tenants who entered one of two types of agreements; cash rent or sharecropping
26
Air lots
air-specific elevation boundaries over a parcel of land
27
Air rights
allow the owner the right to reasonable use of the airspace for light and air
28
Alienation
the act of transferring real property from one person to another
29
Alienation by decent
the transfer of one’s property after death in accordance with the laws of descent when a person dies intestate
30
Alienation by will
the transfer of ones property after death pursuant to the terms of the decedent’s valid will
31
Alienation clause
in a deed of trust or mortgage, a provision that if the secured property is sold or transferred, the lender has the option of accelerating the loan and declaring the entire unpaid balance immediately due and payable; also called a “due on-sale” clause
32
All-inclusive deed of trust or Wrap-around mortgage
purchase money transaction subject to, but still including, encumbrances to which it is subordinate; legal title is actually conveyed and title insurance may also be obtained
33
Allodial system
establishes absolute ownership, which means there is no obligation to pay rent or services
34
Alluvion
surface land gained by accretion
35
Amenity
a condition of agreeable living or a beneficial influence resulting from the location
36
American Land Title Association (ALTA)
association of land title companies throughout the country
37
Americans with Disabilities Act (ADA)
the first comprehensive American civil rights law for people with disabilities, and affects every employer, business, and public service, including real estate
38
Amortized loan
the liquidation of a financial obligation on an installment basis, which includes both principal and interest
39
Annual net income
gross income less costs and expense for a 1-year period
40
Annual percentage rate (APR)
the cost of credit as determined in accordance with Regulation Z of the Federal Truth in Lending Act
41
Anticipation
value created by expectation of benefits to be collected in the future
42
Appraisal
an estimate or opinion of value as of a specified date based on analysis of factual data
43
Appraiser
May either be staff appraisers working for county assessors, banks, or the government, or they may work as independent fee appraisers
44
Appraising
An important division of the real estate business, Appraisals are necessary for many purposes, including determining insurance value, assessed value, condemnation value, and so on
45
Appreciation
an increase in property value
46
Appurtenances
rights, privileges, or improvements that belong to and pass with a property
47
Appurtenant easement
attached to the land and if the property is sold, the easement is transferred to the new owner
48
Arizona Corporation Commission
a state of Arizona agency that regulates corporations and limited liability companies
49
Arizona Real Estate Code
the section of Arizona Revised Statutes that regulates real estate licensees
50
Arizona Residential Landlord and Tenant Act
the Arizona Revised Statute based on the Uniform Residential Landlord and Tenant Act
51
Article XXVI
article in the Arizona constitution, which gives brokers and salespersons the right to draft, fill out, and complete any and all instruments relating to real estate
52
Articles of Incorporation
a document filed in the state in which a corporation is formed that establishes a corporate entity
53
Articles of Organization
a document filed with the Arizona Corporation Commission to form an Arizona Limited Liability Company
54
Asbestos
mineral fiver found in rocks, which is fire resistant and extremely durable
55
Assemblage
the process of combining two or more parcels into one
56
Assessed value
the value put on the property by the county assessor for the purpose of computing ad valorem property taxes
57
Asset
something of value, a useful item of property, owned by a person
58
Assignee
third party to the contract
59
Assignment
a transfer to another of any property or tight; the transfer of one’s entire interest in property
60
Assignor
the original party to the contract
61
Associate broker
Has the same privileges and responsibilities as licensed sales agents
62
Assured water supply
a certificate issued by the director of water resources that is required before an Arizona subdivision located within a groundwater active management area can be approved
63
Avulsion
a sudden loss of land, which may occur as a result of a sudden shift in a riverbed, volcanic action, and earthquake, or another cause
64
Back-end ratio
a loan qualifying ration based on total living expenses
65
Balance
the principle that implies a balance between net return on investment and expenses of labor capital, management, and land
66
Balloon payment
a not’s final installment payment, which is greater than the preceding payments and pays the note in full
67
Bankruptcy
insolvency; a legal process wherein one is declared bankrupt and the estate of the bankrupt is managed under court supervision for the creditor’s benefit
68
Bare legal title
the trustee has the power of sale if the borrower defaults
69
Bargain and sale deed
a deed that contains no covenants, but does imply that the grantor owns the property being conveyed
70
Base lines
imaginary lines that are east-west lines parallel to the latitudinal lines
71
Bench mark
Brass marker embedded in a road or permanently attached to a tree or iron post to give the elevation based on the official datum
72
Beneficiary
One for whose benefit a trust is created; the lender in a deed of trust arrangement
73
Bequest
The transfer of personal property through a will
74
Bilateral contract
Two-sided contract, with each side making a promise of performance that is binding upon both parties. Most real estate contracts are bilateral contracts
75
Blanket mortgage
Mortgagor pledges more than one property to secure the note
76
Blind ad
Advertising property in a manner that implies that no salesperson or broker is taking part in the offer for sale, lease, or exchange
77
Blind trust
a trust in which the beneficiary is not disclosed
78
Blockbusting
Illegal practice of inducing panic selling in a neighborhood for profit, based on the introduction of minority homeowners into a neighborhood
79
Book value
an accounting term for the cost of real estate less depreciation recorded for accounting and tax purposes
80
Breach of contract
occurs when either party defaults on the contract. Rescission, damages, liquidated damages, or suits for specific performance are actions that may result from, a breach of contract
81
Broker Management Clinic
A required 3-hour continuing education course that new Arizona broker licensees must complete prior to license issuance and that designated brokers must complete every 2 years
82
Brokerage
The business of bringing buyers and sellers together in the marketplace for a fee called a commission
83
Brown v. Board of Education
U.S. Supreme Court decision in this case outlawed segregation in schools and marked the beginning of the end of the era of legalized segregation
84
Brownfields
a property, the expansion, redevelopment, or reuse of which may be complicated by the presence or potential presence of a hazardous substance, pollutant, or contaminant
85
Budget loan
when the borrower is forced to put away money in trust for the payment of the property taxes and insurance
86
Budget mortgage
Features loan payments that include principal, interest, taxes, and insurance (often called PITI)
87
Buffer zone
Strip of land that separates one land use from another
88
Bundle of rights
Property rights that include the rights of control, possession, quiet and peaceful enjoyment, disposition, and encumbrance
89
Caissons
Small parcels of land that serve as support foundations
90
Capacity
Competent party; a person considered legally capable of entering into a binding contract
91
Capacity
Ability to pay a debt or loan being contemplated
92
Capital asset
Generally includes all assets owned as an investment or for personal purposes, e.g., stocks, bonds, a personal residence, household furnishings, cars precious metals, and assets used in a trade or business
93
Capital gain or loss
Gain or loss on the sale of a capital asset
94
Capital improvements
Includes carpeting, window coverings, new roof, new plumbing or electrical systems, building additions, and major repairs such as a new driveway, refurbishing stucco, or new landscaping
95
Capitalization rate
The percentage rate or rate of interest considered a reasonable return on the investment
96
Cash basis
A method of accounting whereby revenue and expenses are recognized when cash is received or disbursed
97
Cash rent
A lease between an agricultural landowner and a tenant, whereby the tenant pays the landowner a specified amount of money in advance in exchange for the right of the tenant to use the agricultural land to plant, maintain, and harvest a crop upon the land
98
Caveat emptor
A Latin phrase meaning “let the buyer beware”; the legal maxim stating that the buyer must examine the goods or property and buy at his or her own risk
99
Caveat venditor
A Latin phrase meaning “let the seller beware”
100
Cease and desist order
An order issued by a legal authority to discontinue a certain action
101
Central Arizona Project
Federal Bureau of Reclamation project to build the Grand Canal that delivers water from the Colorado River to central Arizona
102
Certificate of Eligibility
Determines a veteran borrower’s maximum entitlement
103
Certificate of Occupancy
A government-issued document that states a structure meets local zoning and building code requirements and is ready for use
104
Certificate of Purchase
Document issued to the successful bidder at a sale held by the county treasurer for delinquent property taxes
105
Certificate of Sale
Document issued to the highest bidder at a judicial foreclosure sale
106
Chain of title
A series of conveyances, encumbrances, and other instruments affecting the title from the time original patent was granted, or as far back as records are available; a history of the recorded ownership o real estate and claims against title to real estate.
107
Change
A principle in valuation that considers economic, social, and physical changes
108
Character
Desire or willingness to pay a debt or loan being contemplated
109
Chattel real
Leasehold estate
110
Civil Rights Act of 1866
An act that guarantees property rights to all citizens regardless of race
111
Civil Rights Act of 1964
An act that prohibited discrimination in programs receiving federal financial assistance, but had little impact in the housing market
112
Clandestine drug laboratory
A facility that utilizes chemicals and equipment in the manufacture of illegal substances; meth labs
113
Client
A person (principal) represented in the purchase or sale of real property by a broker
114
Closing costs
Expenses paid by the buyer and seller to complete the transaction
115
Clouds on title
A claim or document that affects title to real estate; the actual cloud may ultimately; prove invalid, but its existence mars the title
116
CLUE report
An insurance industry report based on a national database of claims and inquiries
117
Cluster zoning
Zoning that changes street patterns and reduces the size of individual lots, but provides for the same number of residences with more open recreational space and less traffic congestion than on a regular grid pattern of subdivision
118
Code of Ethics
Articles that pertain to the REALTOR’s relation to clients, other real estate agents, and the public
119
Coinsurance clause
The insurer and the insured share the insurance risk; calculated on the policy amount and the percent of the actual insured values
120
Collateral
Security pledged for payment of a loan
121
Color of title
That which appears to be a good title but, in fact, isn’t; for example, a forged deed
122
Colorado River water
Category of surface water that is governed by federal law and administered by the department of Interior through the Bureau of Reclamation
123
Commercial bank
A bank specializing in checking and savings accounts and short-term loans
124
Commercial facilities
Facilities “that are intended for nonresidential use” by a private entity and “whose operations affect commerce”
125
Commercial landlord/tenant statutes
Arizona statutes that apply to landlord and tenant issues for commercial rental properties
126
Commercial property insurance
Covers most types of commercial buildings
127
Commingled
The mixing of clients’ or customers’ funds with an agent’s personal funds
128
Commission
An agent’s compensation for performing the duties of his or her agency agreement
129
Commission sharing brokerage
Percentage of the commission amount collected by the brokerage is paid to the salesperson; commission sharing percentages generally range from 50 to 70 percent, depending on the experience and volume of production by the licensed salesperson
130
Commissioner
Refers to the Commissioner of the Arizona Department of Real Estate
131
Commissioner’s Public Report (CPR)
After examining a subdivision the Commissioner issues a public report (unless there are grounds for denial) authorizing the sale or lease of the lots, parcels, or fractional interest within the subdivision
132
Commissioner’s Rules
Real estate licensees are subject to the Commissioner’s Rules of the Arizona Administrative Code, which are authorized by statutes and allow the Commissioner to interpret and clarify the real estate code through the development of rules and regulations
133
Common elements
All portions of a condominium other than units
134
Common law
Is based on tradition, customs, and usage and is generally unwritten in statute or code; common law was developed in England and transferred to the United States with the early colonists
135
Common promotional plan
A person or group of persons acting in concert to offer lots for sale or lease
136
Community property
Property co-ownership wherein husband and wife are treated as equal partners with each owning a one-half interest
137
Community property with rights of survivorship
Allow a married couple to receive benefits under the federal tax code for community property while avoiding probate
138
Community Reinvestment Act
An act by Congress to help prevent redlining and discrimination by lenders
139
Competition
The appraisal principle that states that excess profits generate competition; if too much competition is attracted to an area losses in profits will result
140
Competitive market analysis
A comparison of prices of recently sold homes that are similar to a seller’s home
141
Comprehensive development plan
Provides housing, recreation, and commercial development in one self-contained development or in urban high-rise facilities where individuals can live, work, and play within the same area
142
Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA)
The law that was enacted by congress in 1980 in response to the environmental and public health hazards imposed by improper disposition of hazardous waste
143
Concurrent ownership or co-ownership
Ownership by two or more persons at the same time
144
Condemnation
The act of taking private property for public use by a political subdivision through the exercise of the power of eminent domain
145
Condominiums
A system of individual ownership of units in a multifamily structure, combined with an undivided interest in the common areas of the structure and the land
146
Confidentiality
The part of the agent’s fiduciary duty to treat information form the client with confidence
147
Confiscation
Right of government to seize property without compensation in the interest of national security
148
Conforming loan
A conventional loan that follows Fannie Mae and Freddie Mac residential loan uniform documentation and qualification parameters
149
Conformity
Appraisal principle stating that a property achieves maximum value when the property reasonably conforms to the neighborhood
150
Consent order
An order that reflects the terms of an agreement between the Department and the licensee
151
Consideration
The inducement to contract; is something of value, such as money, property, personal services, or the promise to perform a specific action; consideration makes a contract enforceable
152
Construction loan
An open-end mortgage loan that finances the cost of materials and labor for a building; short-term loan that must be replaces with permanent financing
153
Constructive eviction
Termination of a rental agreement by the landlord’s noncompliance
154
Constructive notice
Notice given by a recorded document because a person could have discovered certain facts upon reasonable investigation and a “reasonable man” in the same situation would have conducted such an investigation
155
Contract
Legally enforceable agreement between competent parties who agree to perform or refrain form performing certain acts for a consideration
156
Contract for deed
Also called an agreement for sale or land contract, enables the seller to finance a buyer by permitting the buyer to make a down payment followed by monthly payments
157
Contract for sale
A real estate installment sales arrangement whereby the buyer may use, occupy, and enjoy the property; however, no deed is delivered by the seller until the entire contract price has been paid
158
Contract rent
The rental price stated on the lease agreement
159
Contract rescission
The canceling of a contract by either mutual consent of the parties or legal action
160
Contract Writing Course
A 6-hour continuing education course that is required to be completed prior to the insurance of an initial Arizona real estate salesperson license
161
Contribution
The same principle as increasing and decreasing returns, except that it applies to only a portion of the property
162
Conventional (formal) will
A will that is normally prepared by an attorney and properly witnessed according to statute
163
Conventional life estate
A fee simple estate granted for the life of an individual
164
Conventional loan
A loan that is made that is not federally insured or guaranteed.
165
Conversion
Use of funds by the broker for other than their stated purpose is illegal
166
Cooperating broker
The selling broker, who almost always represents the buyer
167
Cooperatives
Generally organized as corporations with the tenants owning the stock
168
Corporation
A legal entity formed and authorized by law to act as an individual person with rights and liabilities distinct from those of the persons compromising it
169
Corrective deed
A document used to correct an error in a previously recorded deed
170
Cost
The historical expenditure for the purchase, construction, or improvement of a property
171
Cost approach
Also called appraisal by summation, estimates today’s cost of all improvements, minus all factors of depreciation, plus the valuation of the land using the market data approach
172
Cost recovery
The recovery of cost through depreciation for accounting and tax purchases
173
Covenants
Agreements written into deeds and other instruments promising performance or non-performance of certain acts
174
Covenants, Conditions, and Restrictions (CC&Rs)
Document that itemizes deed restrictions that uniformly affect all of the subdivision; also called the Uniform Declaration of Restrictions
175
Credit
The reputation of a person or firm for the paying of bills when due
176
Credit report
A report reflecting the credit-worthiness of a borrower by showing past credit history
177
Credit unions
Similar to the original savings and loans—they are operated primarily for the benefit of their members or depositors
178
Cubic area formula
To compute multiply the width x length x depth or height.
179
Courtesy
The legal right of a widower to a portion of his deceased wife’s real property
180
Customer
Third party to whom the seller sells or agrees to sell
181
Damages
The estimated money equivalent for loss or injury sustained
182
Datum
Point of reference to which heights and depths are referred
183
Deal fairly
One of the duties of a licensee set forth in the Commissioner’s Rules, wherein a licensee must be honest and truthful with al parties to a transaction
184
Debit
To charge as a debt
185
Debit and credit statement
Type of settlement statement used for commercial transaction settlements and residential settlements not covered by RESPA
186
Deed
A written instrument that when properly executed by the grantor and delivered to the grantee conveys title for the real estate described
187
Deed in lieu of foreclosure
Mutual agreement in which the borrower is released from liability under the terms of the loan in exchange for a quitclaim deed or a regular grant deed
188
Deed of reconveyance
Instrument used to reconvey title to a trustor under a trust deed once the debt has been satisfied
189
Deed of trust
A security instrument transferring title to property to a third person (trustee) as security for a debt or other obligation owed by the borrower (trustor) to the lender (beneficiary)
190
Deed restriction
Clauses in a deed restricting or limiting future uses of the property
191
Default
Breach of one or more of the terms and conditions that the borrower agreed to in the loan and security agreements
192
Defeasance clause
A mortgage clause that states the mortgage is defeated if the accompanying note is repaid on time
193
Defensible
Qualified fees that can be terminated if certain conditions are met or not met
194
Deficiency judgment
A judgment against the defaulting mortgagor for the difference between the indebtedness and the sale price through a foreclosure sale
195
Delinquency
Past due payment
196
Demand
The need or desire to possess something and having the money to fulfill that need
197
Demise
The transfer of a leasehold interest
198
Denominator
The bottom number of a fraction
199
Department of Housing and Urban Development (HUD)
provides assistance for housing and community development; insures mortgages and promotes and enforces equal housing opportunity
200
Depreciation
decrease in value
201
Depreciation (cost recovery)
The annual deduction allowed for recovering the taxpayer’s cost of the investment property
202
Derivative title
All ownership belonging to individuals or legal entities and derived form the government’s original title
203
designated broker
Defined in the Arizona statutes as a licensed broker who is either: (a) designated to at on behalf of an employing real estate entity, or (b) doing business as a sole proprietor
204
Devise
The transfer of real property by will
205
Devisee
One who receives real property under a will
206
Devisor
The person who wills the property
207
Direct reduction loan
A constant principal reduction plus the interest due on the unpaid balance
208
Discharge of contract
When performance of the agreed upon actions has been completed, the contract is discharged
209
Disclaimer deed
A deed executed by one spouse that denies any interest in the property of the other spouse
210
Disclosure
The agent’s duty to keep the principal informed of all facts or information that could materially affect a transaction
211
Discount
A charge made by lenders to increase the effective rate of interest (yield) from the stated interest rate on the note
212
Discount point
Charges made by lenders to adjust the effective rate of interest on a loan; one point is equal to 1 percent
213
Distrait
Forcing the tenant to pay rent or other financial obligations by seizing the leased premises and/or personal property inside the leased premises
214
Dominant tenement
Landowner who benefits from the easement
215
Dower
Old English law, wherein any property bought during marriage belongs to the husband, but husband and wife share the use of the property
216
Down zoning
Occurs when a property zoned for higher-density uses is rezoned for lower-density uses
217
Dual agency
The representation of opposing principals (buyer and seller) by an agent at the same time
218
Dwelling insurance
Covers losses from fire, lightening, and internal explosion for residential properties
219
Dwelling unit
A structure or the part of a structure that is used as a home, residence, or sleeping place by one person who maintains a household or by two or more persons who maintain a common household
220
Earned income
Includes wages, salaries, income from a business or profession, and other earned income
221
Easement
Interest that entitles one party to some limited use of another party’s land
222
Easement in gross
Right to use the land of another
223
Economic characteristics of real estate
The four main categories that describe real estate in economic terms: scarcity, improvements, fixed investments and situs
224
Economic obsolescence
Caused by an influence outside the property over which the property owner has no control
225
Economic rent
The amount that a property would bring at current market if it were not under prior contract
226
Effective annual gross income
Total income after deductions for vacancies and bad debts
227
Effective rate
The average tax rate on all of the individual’s taxable income
228
Engress
Exit
229
Electromagnetic field
The area created by the movement of electrical current
230
Eminent domain
Government’s right to take private property for public use without the owner’s consent, after paying the owner fair compensation
231
Eminent domain
Taking property for the public welfare by paying fair market value for it
232
Employee Retirement Income Security Act (ERISA)
Federal law that provides for the protection of assets set aside for pension and retirement plans through the establishment of the Pension Benefits Guaranty Corporation
233
Encroachment
Intrusion upon another person’s property without a right to use it
234
Encumbrance
A claim upon real property; any impediment to a clear title
235
Enforceable
A valid contract, with all of the essential elements present, that is binding on all parties and can be enforced through a court of law
236
Entitlement
The maximum amount the DVA will guarantee a lender in the event of default
237
Entity taxation
Basic difference between a corporation and a partnership
238
Environmental Impact Statement
Document that gathers information that will demonstrate a positive or negative impact of a proposed project on the physical, economic, and social environment of the area
239
Equal Credit Opportunity Act (ECOA)
Federal law prohibiting discrimination in the extension of credit
240
Equal Hosing Opportunity poster
A poster required to be displayed in brokerages, mortgage companies, and new home sites; failure to display the poster may be considered as evidence of discriminatory practices
241
Equitable period of redemption
The period of time form the filing of the notice of default to the date of the sale
242
Equitable title
The vendee has the right to occupy the property and has all the right sand obligations of ownership
243
Equity of redemption period
The right to redeem property during the foreclosure period
244
Erosion
Gradual wearing away of land through processes of nature
245
Escheat
Reversion of property to the state upon the death of an owner who has no will or heirs able to inherit
246
Escrow Company
Orders loan payoffs, prepares escrow instructions, takes signatures, disburses funds, and arranges for the recording of documents
247
Escrow instructions
Documents in which buyers and sellers hire escrow companies to work on their behalf
248
Estate
The degree, quantity, nature, and extent of the interest that a person has in real property
249
Estate at sufferance t
The lowest type of estate a person can hold
250
Estate at will
Use of the property at the will of the landlord; either party can terminate the lease at any time since there is no set termination date
251
Estate for years
A lease that extends for a definite term
252
Estate in remainder
The interest that takes effect after the termination of a prior estate, such as a life estate
253
Estate in reversion
The interest that reverts to the grantor after the termination of a prior estate such as the expiration of a lease or the death of a life tenant
254
Estate pur autre vie
A life estate pur autre vie grants a life estate to one person that expires on the death of another person
255
Estoppel agency
An agency that cannot be denied when a broker allows a seller or buyer to create the illusion that the broker is his or her agent
256
Eviction
The act of depriving a person of a possession of land that he has held pursuant to the judgment of the court of competent jurisdiction
257
Exceptions
Limitations on the title, such as easements, mineral rights or deed restrictions, or other encumbrances on the property
258
Exclusive agency listing
a written agreement giving one agent the exclusive right to sell property for a specified period of time, but reserving the right of the owner to sell the property himself or herself without liability for the payment of a commission
259
Exclusive retainer agreement or exclusive right to locate property
Listing used to locate properties on behalf of the buyer, buyer brokerage agreement
260
Exclusive right to sell listing
A written agreement giving one agent the exclusive right to sell property for a specified period of time the agent may collect a commission if the property is sold by anyone, including the owner, during the term of the listing agreement
261
Executed contract
A contract in which all of the terms and conditions have been fulfilled
262
Executory contract
Contract that is not yet finished (unperformed) and therefore incomplete
263
Exempt domestic well
Wells not requiring special permits, which may pump up to 35 gallons per minute
264
Exempt sales
Lot sales that are exempt from the Commissioner’s Public Report requirements of the Arizona Real Estate Code
265
Express contract
An oral or written contract in which the parties state the contract’s terms and express their intentions in words
266
Extended coverage
Policy that includes all of the coverage of a standard policy, plus additional insurance against anything an inspection o the property might disclose, discrepancies or conflicts in boundaries, unrecorded liens, encumbrances, leases, and not having legal access
267
Fair Credit Reporting Act
Act that regulates the action of credit bureaus and the use of consumer credit
268
Fair Housing Act of 1968
Bans discrimination on the basis of race, color, religion, and national origin in most types of housing transactions; in 1974, the 1968 Act was amended to include the ban on discrimination on the basis of sex
269
Fair Housing Act of 1988
Added the protected classes of handicap and familial status
270
Familial status
One or more individuals (under the age of 18) living with either a parent or legal guardian, or a designee holding written permission of a parent or legal guardian for the child or children to live with him or her
271
Fannie Mae or Federal National Mortgage Association (FNMA)
Commonly known as Fannie Mae, it was established in 1938 as a government corporation to create a secondary market for FHA loans
272
Federal Deposit Insurance Corporation (FDIC)
A federal insurance program that insures deposits in banking institutions up to $100,000
273
Federal flood insurance
Insurance coverage for losses to real and personal property resulting from the inundation of normally dry areas
274
Federal Home Loan Bank System (FHLB)
Now known as the Office of Thrift Supervision, it is the regulatory and supervisory agency for federally chartered savings and thrift institutions
275
Federal Home Loan Mortgage Corporation (FHLMC)
Second major player in the secondary mortgage market is the Federal Home Loan Mortgage Corporation (FHLMC), known as Freddie Mac; the Emergency Home Finance Act of 1970 gave Fannie Mae the power to purchase conventional loans, authorized the establishment of a new player in the secondary market
276
Federal National Mortgage Association (FNMA) or Fannie Mae
Commonly known as Fannie Mae, it was established in 1938 as a government corporation to create a secondary market for FHA loans
277
Federal Reserve System (FED)
The federal central banking system of the United States under the control of a central board of governors (Federal Reserve Board); responsible for controlling and regulating the nation’s monetary policy and money supply
278
Fee simple conditional
Also known as fee tail, is a fee simple with a restriction to the right of inheritance such as limiting the right of inheritance to a fixed line of succession, such as “to the first-born son in each generation”; fee simple conditional is not legal in Arizona
279
Fee simple determinable
A fee simple estate in which the property automatically reverts to the grantor upon the occurrence of a specified event or condition
280
Fee simple estate
Also known as fee, or fee simple absolute, it gives the owner the greatest interest possible and is of indefinite duration
281
Fee simple on condition subsequent
A qualified fee estate subject to conditions on the grantee, often recognized by the negative restriction or the words “but if”
282
Feudal system
All the land belongs to the sovereign king (or queen) and everyone owes rent or services to a superior
283
FHA loan
One that is insured by the Federal Housing Administration
284
Fiduciary relationship
Relationship created between the principal (client) and the agent and is one of trust and confidence
285
Fief
An estate held as a condition of service to another
286
Finder’s fee
Fee paid to a person for introducing or arranging an introduction between the parties to a transaction involving the rental of an apartment unit
287
Fixtures
An item that was once tangible, personal property that has been attached to and made a part of the land or improvements
288
Forbearance
An arrangement that effectively forestalls or delays foreclosure action
289
Forcible detainer action
Expedites eviction of the borrower
290
Foreclosure
Procedure that removes an owner’s property rights; when real property is pledged as security for a loan, the process of selling that property as a result of the borrower’s default is called foreclosure
291
Forfeiture clause
The loss of money or anything of value due to failure to perform under a contract
292
Foundation
The substructure for a superstructure; includes footings, foundation walls, columns, and pedestals
293
Fractional interest
An undivided interest in improved or unimproved land and lots or parcels of any size created for sale or lease
294
Fractional section
the sections where township corrections are made are confined to sections 1,2,3,4,5,6,7,18,19,30,and 31; there are 11 fractional sections in a township
295
Fraudulent misrepresentation
Deceitful practice or material misstatement known to be false and done with intent to deceive
296
Freddie Mac or Federal Home Loan Mortgage Corporation (FHLMC)
Second major player in the secondary mortgage market is the Federal Home Loan Mortgage Corporation (FHLMC), known as Freddie Mac; the Emergency Home Finance Act of 1970 gave Fannie Mae the power to purchase conventional loans, authorized the establishment of a new player in the secondary market
297
Freehold
An estate of ownership of real property of uncertain duration
298
Freehold estate
Real property ownership estate of uncertain duration
299
Fructus industrials
Annual crops; these crops are considered personal property
300
Fructus naturals
Perennial crops; these crops are considered real property
301
Functional obsolescence
Loss of value from all causes within the property, except those due to physical deterioration
302
General agent
One who represents the principal in a specific range of matters, such as all real estate
303
General partnership
An association of two or more persons (natural or legal) who share in the management and operation of the business, as well as the profits and losses
304
General warranty deed
A deed with covenants whereby the grantor agrees to protect the grantee against any claimant
305
Gila and Salt River Base Line and Meridian
Intersection of the Arizona Base Line and Principal Meridian; establishes the initial point of the government survey
306
Ginnie Mae or Government National Mortgage Association (GNMA)
Government Corporation under the control of the Department of Housing and Urban Development (HUD), also called Ginnie Mae, it administers special assistance programs in secondary market activities
307
Government checks
24-mile squares established by Guide Meridians and Standard Parallels, and each containing 16 townships
308
Government National Mortgage Association (GNMA) or Ginnie Mae
Government Corporation under the control of the Department of Housing and Urban Development (HUD), also called Ginnie Mae, it administers special assistance programs in secondary market activities
309
Government rights
Include police power, taxation, eminent domain, and escheat
310
Government-backed loan
Residential mortgage loans that are insured or guaranteed by federal agencies
311
Graduated lease
A lease that provides for agreed-upon rent increases
312
Graduated payment mortgage (GPM)
Begins with low payments but increases at regular intervals for a set number of years and then levels out for the balance of the term
313
Grandfathered rights
Written into the 1980 Groundwater Management Act to protect the rights of historic users while prohibiting new uses
314
Grantee
The person named in a deed who acquires ownership
315
Granting clause
Transfers the property rights along with the grantor’s covenants (promises); the wording related to the covenants caries depending upon the type of deed
316
Grantor
The seller or giver in the sale or gift of real property
317
Gross income
Includes earned income, portfolio income, passive income, and capital gains and losses
318
Gross lease
A simple lease used in most houses and apartment complexes
319
Gross rent multiplier (GRM)
used as a rule of thumb for a quick estimate of value based on the relationship of comparable sales prices to the comparables’ monthly rental income; it is not an approach to value
320
Ground lease
A long-term lease for the use of land
321
Groundwater
All water under the surface of the Earth except water flowing in underground streams with definite and ascertainable beds and banks
322
Growing Smarter/Growing Smarter Plus
Arizona legislation adopted in 1998 and 2000 establishing general plan requirements for Arizona municipalities and countries
323
Guide meridians
Survey line running north and south that corrects for the Earth’s curvature
324
Habendum clause
The “to have and to hold” clause that defines or limits the quantity of the estate granted in the deed
325
Handicapped person
One who has “A physical or mental impairment which substantially limits one or more of such person’s major life activities,” and has a record of having such an impairment or being regarded as having such an impairment
326
Hard money loan
Mortgage given for money received
327
Hereditament
Anything capable of being inherited, both real and personal property
328
Highest and best use
The most profitable use for which land can be used at the time of appraisal: the use that will bring the greatest return
329
Hold harmless clause
A clause in commercial leases that transfers all liability for the leased premises to the tenant
330
Holder in due course
Third party purchaser of a note; has all the rights of the original holder
331
Holographic will
A handwritten will that is signed and dated by it maker; a holographic will cannot be typed, but it can be a preprinted form that was filled in by hand; a holographic will requires no witness
332
Home mortgage interest deduction
Itemized interest expense deduction allowed on an individual taxpayer’s return
333
Home warranty contract
A warranty on resale homes that covers mechanical items
334
Homeowners’ association (HOA)
Manages the common elements of the condominium development and ensures compliance with the HOA rules and the development’s deed restrictions
335
Homeowners’ insurance
Multi-line policies that they combine property and casualty coverage in the same policy
336
Homestead exemption
Law that automatically exempts the homestead of any person 18 years of age or over, married or single, who resides in the state and is the head of the household
337
HUD-1 statement
Closing statement required by RESPA to be used for most residential real estate closings
338
Hypothecation
To pledge property as security without giving up possession
339
Impairment
A substantial limitation of one of more major life activities to be covered by the Americans with Disabilities Act
340
Implied agency
When the buyer assumes by an agent’s actions that the agent is working for the buyer
341
Implied contract
Agreement of the parties is demonstrated by their acts or conduct
342
Improper fraction
A fraction that equals a whole number or more
343
Improved lot or parcel
A lot or parcel featuring a residential, commercial, or industrial building
344
Improvements
Additions to raw land such as buildings, streets, sewers, etc.
345
Income approach
An appraisal technique used on income-producing properties; assumes that income from property establishes value
346
Income ratio
A ratio used to qualify borrowers for a mortgage loan that is computed by dividing the monthly mortgage payments by monthly gross income
347
Increasing and decreasing returns
Principle of value; if funds spent on improving a property increase return, the law of increasing return applies; if they do not produce a positive return, the law of decreasing return applies
348
Indefeasible fee
Fee simple estate; cannot be annulled forfeited, or terminated without the action of the owner, as long as the owner is not doing anything to interfere with the rights of others or the government
349
Index lease
A lease that allows for periodic increases in base rental fees based on a predetermined guideline
350
Ingress
entrance to landlocked property
351
In-house sale
Brokerage transaction in which one sales associate obtains the listing and also finds the buyer, or a second associate with the same brokerage procures the buyer
352
Innocent-purchaser defense
A defense to owner liability under CERCLA when a landowner can demonstrate that at the time of acquisition there was “no reason to know” that the property was contaminated
353
Inquiry
Any call to the insurance agent about an actual or potential loss that would be covered by a homeowner’s policy
354
Inquiry notice
The expected examination of public records and visual inspection for claims and the extent of those claims by anyone acquiring a property right or interest
355
Installment loan
A loan that allows payment over an extended period of time
356
Insulation
Material placed in walls ceilings that is rated by R-factor for its ability to resist heat transfer
357
Insurable value
Used to determine the amount of insurance needed to meet co-insurance clause requirements
358
Insurance underwriting
Process used by the insurance company to ascertain the types of risks it will accept through the issuance of an insurance policy
359
Intangible assets
Incorporeal or invisible assets – with out a body
360
Integration, equilibrium, and disintegration
Integration is the development stage, when the value of a property is increasing; equilibrium is the static period, when the property reaches its maximum value; disintegration is the period during which the neighborhood declines and the value goes down
361
Interest
The charge or cost for the use of money
362
Interest rate buy-down
A reduction of the interest rate stated on the note by payment of
363
Interest-only loan
Loan that requires periodic payment of the interest only; often referred to as a straight loan
364
Interstate Land Sales full Disclosure Act
Regulates the sale or lease when developers of 25 or more unimproved lots in a subdivision sell or lease to citizens of another state as part of a Common Promotional Plan
365
Intestate
Dying without a will
366
Intestate succession
The transfer of property to the surviving heirs of an individual who dies intestate
367
Investor
One who acquires property to obtain a profit
368
Involuntary alienation
Transfer of property ownership without the consent of the owner; accomplished by operation of the law
369
Irrigation grandfathered rights
Grandfathered water rights established in 1980 applicable to farming for cash crops
370
Itemized deductions
Personal expenses that can be deducted on an income tax return when computing taxable income
371
Joint and several liability
Enforceable on the makers as a group and upon each maker individually
372
Joint tenancy
Type of ownership in which, in the case of death, the survivor automatically acquires ownership of the property
373
Jones v. Mayer
1968 landmark case banning discrimination based on race in the sale of housing
374
Judgment
A court of competent jurisdiction’s final determination of a matter presented to it; the final decision by a court in a lawsuit, motion, or other matter
375
Judicial foreclosure
Foreclosure action taken through the filing of a lawsuit
376
Laches
Delay in asserting one’s rights
377
Land
Land includes the surface of the Earth plus everything attached to the Earth by nature, space above the Earth (air rights), and below the surface (mineral rights)
378
Land contract
Also known as an agreement for sale or a contract for deed, it is an executory contract, in as much as the terms have not been fulfilled
379
Land developers
Improve lots by adding buildings and then sell the developed lots
380
Land trust
A real estate trust wherein the person who creates the trust, the tustor, is also its beneficiary; a trust created solely for the ownership, operation, and management of real estate interests
381
Landlord
The owner of the property, who subordinates the rights of possession
382
Latent defects
A hidden or concealed defect that cannot be discovered by ordinary observation or inspection
383
Lawful purpose
One of the four requirements for a valid contract
384
Lead-based paint
Paint that has a lead component and that is extremely harmful and may be deadly to children
385
Lead-based paint disclosure
Required disclosure by sellers or lessors of residential properties built before 1978
386
Leasehold
An estate that is less than freehold and lasts a certain duration of time
387
Leasehold policy
Provides protection to a tenant or a lender to the tenant against defects in the lessor’s title
388
Lease-purchase
A simple lease for a specified period of time, after which or during which the lessor agrees to sell and the lessee has the option to purchase at an agreed price and terms
389
Legal life estate
The life estate created by state laws; the only legal life estate applicable to Arizona is the homestead exemption
390
Legal rate
The rate of interest allowed by law when a obligation or court-ordered judgment does not state a rate of interest on the obligation due; the legal rate of interest in Arizona is 10 percent
391
Lender’s policy
Provides protection against defects in the title pledged as a security in a mortgage or trust deed note and insures the lender of his or her security position
392
Lessee
A tenant; the person who is entitled to possession of property under a lease
393
Lessor
A landlord; the property owner who executes a lease
394
Leveraging
Borrowing money from another source to supplement your own funds in completing the acquisition of a piece of property
395
License
Personal, non-assignable authorization to enter and perform certain acts on another’s land
396
Lien
Claim or charge against a property ads security for the payment of a debt or obligation
397
Life insurance companies
A source for large loans on commercial properties
398
Life tenant
A person who holds a freehold interest (life estate) in property for his/her lifetime or for the lifetime of another designated person
399
Limited liability Company (LLC)
A form of business organization, combining the most favorable attributes of a partnership and a corporation and consisting of members or managers that are governed by its operating agreement
400
Limited partnership
A group of passive investors who, as a class of limited partners, join with a general partner who manages the investment or business enterprise
401
Lis pendens
Recorded legal document that gives constructive notice that an action affecting a particular piece of property has been filed in a state or federal court
402
Listing broker
The real estate broker who procured the listing
403
Listing
A written employment contract between principal and agent, authorizing agent to perform services for the principal involving real estate
404
Littoral rights
the lawful claim of a landowner to use and enjoy the water of a lake or sea bordering the land, but fan only own the land to the water’s edge of the nearest high water mark
405
Livery of seisin
A mid-seventeenth century ceremony for the transfer of real property ownership
406
Living trust
Also known as an intervivos trust, it is created and takes effect during the trustor’s lifetime; a living trust relieves the trustor of the responsibility of handling the estate
407
Loan originator
Individuals or entities in the primary mortgage market who lend directly to the qualified borrower
408
Loan servicing
Collecting payments from the borrower and passing them along to the investor for a fee; may be separated from the sale of the loan or it may be included
409
Loan value
Value used for establishing the amount of mortgage or trust deed loan to be made
410
Loan-to-value ratio
The collateral risk the lender takes and, conversely, the equity the borrower risks losing
411
Lot reservation
An expression of interest by a prospective purchaser in buying a subdivided or unsubdivided lot, unit, or parcel at some point in the future; a subsequent affirmative action must be mad by the prospective purchaser to create a contractual obligation to purchase
412
Loyalty
A requirement that an agent place his principal’s interest above his or her own
413
Maintenance clause
Charges the mortgagor with the responsibility to maintain and preserve the property to protect the mortgagee’s interest in the property; failure to maintain the property is called waste
414
Major life activities
To be covered under the Americans with Disabilities Act there must be an impairment that substantially limits a person’s life activities such as walking, speaking, breathing, seeing, hearing, learning, working, or independently caring for oneself
415
Map and plat description or lot and block description
A system of describing land in urban areas
416
Marginal rate
The rate of tax on the next dollar of income
417
MARIA
An acronym for testing whether an item is a fixture or personal property
418
Market data approach
Similar to the approach used by licensees or investors when listing residences
419
Market value
An unemotional, objective price at which a seller would sell and a willing buyer would purchase, with neither party under abnormal pressure to act
420
Marketable title
Title that is reasonably free from risk of legal dispute over possible defects
421
Master planned community
Development consisting of two or more separately plated subdivisions and is subject to either: (1) a master declaration of covenants, conditions, or restrictions; (2) restrictive covenants that clearly indicate a general scheme for improvement or development of real property; or (3) a master owner’s association that governs or administers the development
422
Material facts
A fact that would be likely to affect a person’s decision in determining whether to enter into a particular transaction; any information that will influence the judgment or decision of the customer
423
Material participation
A measure of a taxpayer’s involvement in a business or investment activity related to the federal income tax passive loss limitations
424
Mechanic’s lien or materialmen’s lien
A lien created by state law in favor of person who have performed work or furnished material in the erection or repair of a building
425
Meeting of the minds
A complete understanding between the interested parties
426
Membership camping
A campground for which a membership (license) is sold; in Arizona memberships cannot be sold until the Commissioner has approved the site
427
Meridians
Imaginary lines that are north-south lines parallel to the longitudinal lines
428
Metes and bounds description
Oldest form of legal descriptions used in the United States
429
Mill
Money equal to 1/10 cent
430
Misrepresentation
False statement or concealment of a material fact made to someone entitled to the information, by which that person responds with action and thereby suffers damage
431
Mobile Home Act
Applies to the rental of mobile home lots (not the mobile homes themselves)
432
Mold
A growth produced on damp or decaying organic matter or on living organisms; a fungus; certain molds have been identified as major contributors to illness
433
Monetary encumbrance
A lien; a claim or charge against a property as security for the payment of a debt or obligation
434
Monuments
Natural and man-made landmarks
435
Mortgage
A written instrument by which real property is pledged to secure a debt or obligation: a lien on real property
436
Mortgage banker
A person who makes loans with his own funds, then sells the loans to investors
437
Mortgage broker
Processes loans but usually has no funds to loan: someone who brings borrowers and lenders together
438
Mortgage correspondent
Mortgage banker who represents loan originators, such as banks, life insurance companies, and pension funds
439
Mortgage insurance premium (MIP)
The premium charged for insuring an FHA loan
440
Mortgage participation certificate (PC)
Guaranteed mortgage securities are sold to the public through securities dealers
441
Mortgages
One to whom a mortgagor gives a mortgage to secure a loan or performance of an obligation; the lender under a mortgage
442
Mortgagor
One who gives a mortgage on his or her property to secure a loan or assure performance of an obligation; the borrower under a mortgage
443
MLS
Multiple Listing Service (MLS)
444
Mutual assent
Or meeting of the minds, a complete understanding between the interested parties
445
Mutual savings banks
Organized as mutual companies, share profits are distributed to the depositors through interest or dividends
