Real Estate Terms

Question 1

Abandonment

Answer 1

Failure to occupy and use property. May result in loss of rights.

Question 2

Abatement of Nuisance

Answer 2

The act of ending or terminating a nuisance, legal action brought to end nuisance.

Question 3

Absentee Owner

Answer 3

A property holder who does not reside on the property and who usually relies on a property manager to supervise the investment.

Question 4

Abstract

Answer 4

A brief summary.

Question 5

Abstractors

Answer 5

A person who, historically, searches out anything affecting the title to real property and
summarizes the information in the findings.

Question 6

Abstract of Judgement

Answer 6

A summary of money
judgment. The summary is usually prepared so that it
may be recorded, thereby creating a (judgement) lien on
real estate owned by the judgment debtor.

Question 7

Abstract of Title

Answer 7

A summary of the instruments
affecting title to a parcel of real property as shown by the
public records.

Question 8

Abstraction

Answer 8

A method of valuing land. The indicated value of the improvement is deducted from the saleprice.

Question 9

Abstraction Method/Allocation Method

Answer 9

Method of appraising
vacant land; allocation of the appraised total value or
sale price of the property between land and building
either on a ratio basis or by subtracting a figure
representing building value or price from the total
appraised value or price of the property.

Question 10

Accelerate

Answer 10

To make a note all due and payable at one time.

Question 11

Accredited Management Organization (AMO)

Answer 11

A professional designation awarded to qualified property management firms by the institute of Real Estate Management.

Question 12

Accredited Resident Manager (ARM)

Answer 12

An individual who has completed IREMs educational program for resident
managers of residential property.

Question 13

Accelerated Cost Recovery System (ACRS)

Answer 13

The system for figuring depreciation (cost recovery) for depreciable real property acquired and placed into service after January 1, 1981.

Question 14

Accelerated Depreciation

Answer 14

A method of cost w rite-off in
which depreciation allowances are greater in the first few years
of ownership than in subsequent years. This permits an earlier recovery of capital and a faster tax write-o ff of an as set.

Question 15

Acceleration Clause

Answer 15

A clause in a deed of trust or
mortgage giving the lender the right to call all sums owing him
or her to be immediately due and payable upon the occurrence of a certain event. It is also a clause that permits a debtor to pay off a loan before the due date.

Question 16

Acceptance

Answer 16

1. Agreeing to the terms of an offer to enter into a contract, thereby creating a binding contract.
2. Taking delivery of a deed. The act of agreeing or consenting to an offer.

Question 17

Acceptance of An Offer

Answer 17

After acceptance of an offer, a
broker may not return the buyer’s deposit without authorization
from the seller. An essential element of every contract, it is the consent to be bound by the offer. In deeds, it is the consent to accept a grant of real property.

Question 18

Accession

Answer 18

The acquisition of title to additional property by
its annexation to real estate already owned. An addition to
property through the efforts of man or by natural forces.

Question 19

Accommodation Party

Answer 19

A person who, without

receiving value, signs a promissory note to help another person borrow money or get credit.

Question 20

Accommodator

Answer 20

An intermediary who holds funds in a delayed exchange.

Question 21

Accord and Satisfaction

Answer 21

An agreement to accept
something different than (and usually less than) what the original contract called for. The discharge of an existing
contract by accepting the performance under a substitute
contract. Generally, consideration under the new
contract is different from and of lesser value than under
the original contract, and satisfaction is the performance
of that contract; the combination discharges the original contract.

Question 22

Accretion

Answer 22

A gradual addition to land from natural causes; for example, from gradual action of ocean or river waters.

Question 23

Accrue

Answer 23

To increase or accumulate. Interest on loans is said to accrue daily.

Question 24

Accrued Depreciation

Answer 24

The difference between
the cost of replacement of a new building, as of the date
of the appraisal and the present appraised value. Depreciation that has accumulated over a period of time.
(1) The difference between the cost of replacement new
as of the date of the appraisal and the present appraised
value. (2) The accumulated losses in value that has
affected the improvements on real property.

Question 25

Accrued Items of Expense

Answer 25

Those incurred expenses which are not yet payable. The seller’s accrued expenses are credited to the purchaser in a
closing statement.

Question 26

Accusation

Answer 26

A written statement of rules violated, used in a property right hearing.

Question 27

Acknowledgement

Answer 27

When a person who has signed a document formally declares to an authorized
public official (usually a notary public) that he or she signed voluntarily. The official attests that the signature is
voluntary and genuine. A formal declaration before a
notary public or qualified officer that the person signing
the document is doing so voluntarily and using his or her
legal name and signature; called notarizing .

Question 28

Acoustic Tile

Answer 28

Blocks of fiber, mineral, or metal with small holes or a rough-textured surface to absorb sound, used as covering for interior walls and ceilings.

Question 29

Acquisition Cost

Answer 29

Under FHA. A loan is based
on acquisition cost, which is sale price or FHA value,
whichever is lesser, plus nonrecurring closing costs the
buyer is paying per FHA rules.

Question 30

Acre

Answer 30

A measure of land equaling 160 square rods, 4,840 square yards, 43,560 square feet, or a tract about 208.71
feet square.

Question 31

Adjudication

Answer 31

A judicial or court decision.

Question 32

Adjusted Cost Basis

Answer 32

The income tax cost basis of the
property with certain additions, such as acquisition costs and
the cost of improvements, and certain subtractions, such as
depreciation in value.

Question 33

Adjustment Interval

Answer 33

The time between permitted
changes in the interest rate or monthly payments, typically six
months to one year, depending on the index used.

Question 34

Adjustments

Answer 34

In appraising, a means by which characteristics of a residential property are regulated by dollar amount of percentage to conform to similar characteristics of another residential property.

Question 35

Adjustable Rate Note

Answer 35

A note whose interest rate is tied to a flexible index.

Question 36

Adjudicative Methods

Answer 36

The resolution of a dispute by mirroring the judicial process in that a third party decides the controversy much as a judge does in court.

Question 37

Adjusted Basis

Answer 37

The adjusted basis is equal to the original cost reduced by depreciation deductions and increased by capital expenditures.

Question 38

Adjustable Rate Mortgage (ARM)

Answer 38

A mortgage loan which bears interest at a rate subject to change during the term of the loan, predetermined or otherwise.

A mortgage or deed of trust with a variable interest rate (an interest rate that changes
periodically. This mortgage tends to attract more people into the mortgage market.

Question 39

Administrator

Answer 39

A person appointed by the probate
court to manage and distribute the estate of a deceased person when no executor is named in the will or there is no will.

Question 40

Ad Valorem

Answer 40

According to Value

Question 41

Adverse Posessession

Answer 41

A method of acquiring property based on open and notorious possession, under a
claim of right, color of title, continuous use for five years, and the payment of taxes. A method of acquiring property through continuous use of that property while paying taxes on it.

Question 42

Affiant

Answer 42

One who makes an affidavit or gives evidence.

Question 43

Agency

Answer 43

A special relationship of trust by which
one person (agent) is authorized to conduct business, sign papers, or otherwise act on behalf of another person (principal).

Question 44

Agents of Production

Answer 44

Four factors combined to produce income: labor, coordination, capital, and land.

Question 45

Ambulatory

Answer 45

Capable of being changed or
revoked. In wills, it refers to the concept that a will may be revoked or modified at any time up to the testator’s death.

Question 46

Amortization

Answer 46

The liquidation of a financial obligation on an installment basis, which includes both principal and interest. (2) Recovery of cost or value over a period of time. The method or plan for the payment of a debt, bond, deed of trust, etc., by installments or sinking fund.

Question 47

Amortize

Answer 47

Pay off a debt in installments.

Question 48

Amortized Loan (Mortgage)

Answer 48

A loan to be repaid, interest and principal, by a series of regular payments that are equal or nearly equal, without any special balloon payment prior to maturity. Also called a Level Payment Loan.

Question 49

Annexation

Answer 49

Attaching personal property to land so that the law views it as part of the real property (a fixture). Annexation can be actual or constructive.

Question 50

Annual Debt Service

Answer 50

The amount of money required each year for the payment of all mortgage interest and principal.

Question 51

Annuity

Answer 51

A sum of money received or paid yearly or at other fixed periods.