Vocabulary Flashcards
Learn the language of Real Estate terms
Abstract Judgement
Document stipulating the outcome of a legal action, which can be filed in any country where the judgment debtor has property.
Abandonment
Giving up possession or ownership of property by nonuse, usually accompanied by some affirmation act, such as removing ones belonging from an apartment.
Abstract of title
A summary or digest of all recorded transfers, conveyances, legal proceedings, and any other facts relied on as evidence of title to show continuity of ownership and indicate any possible impairment to title.
Acceleration clause
A provision in a real estate financing instrument that allows the lender to declare the remaining indebtedness due and payable on the happening of certain conditions, such as the sale of the property or the borrowers default in payment.
Acceptance
Indication by the person to whom an offer is made (the offer) of agreement to the terms of the offer. If the offer requires a writing, the acceptance must also be in writing.
Accession
The process of manufactured or natural improvement or addition to property.
Accretion
Accession by natural forces such as alluvion. (Alluvium; the increase of soil along the bank of a body of water by natural forces.)
Acknowledgment
A formal declaration made before an authorized person by person who has executed a written instrument stating that the execution of the instrument is the person’s own act.
Acquisition cost
For FHA- insured loans, the price to procure property, including purchase price and all nonrecurring closing costs, including discount points, FHA application fee, service charge and credit report, FHA appraisal, escrow, document preparation, title insurance, termite inspection and recording fees.
Acre
A measure of land equaling 160 square rods, 4,840 square yards, or 43,560 square feet, or a tract about 208.71 feet square.
Action for declaratory relief
Legal proceeding brought to determine the respective rights of the parties before a controversy arises
Action to quiet title
A court proceeding brought to establish title to real property.
Actual age
The number of years since completion of a building, also called historical or chronological age.
Actual authority
The authority an agent has because it is specified in the agency agreement, or that the agent believe he or she has because of an unintentional or a careless act of the principal.
Actual Fraud
A deliberate misrepresentation or representation made in reckless disregard of its truth or falsity; the suppression of truth; a promise made without the intention to perform it; or any other act intended to deceive.
Adjustable-rate mortgage (ARM)
Finance instrument whose interest rate will vary according to the change in an identified index or rate, such as the 11th District Cost of Funds.
Adjustable-rate note
Promissory note that serves as evidence of a debt that carries an interest rate that will vary according to the change in an identified index or rate, such as the 11th District Cost of Funds.
Adjusted cost basis
Purchase price of property plus cost of specified improvements, less any depreciation deductions taken on the property.
Adjusted gross income
Income from all sources less deductions for taxes, depreciation, and other allowable deductions.
Administrator
Personal representative of the estate of a decedent, appointed by the probate court.
See also executor; Personal representative of the estate of a decedent, named in the decedents will.
Ad Valorem
A latin phrase meaning “according to value” that is used to describe a tax charged in relation to the value of the property taxed.
Adverse possession
A method of acquiring title to real property by occupying the property against the interests of the true owner and fulfilling other statutory requirements.
After-acquired title
If title is acquired by a grantor only after a conveyance to a grantee the deed to the grantee becomes effective at the time the grantor actually receives title.
Agency
The relationship between a principal and the agent of the principal that arises out of a contract, whether express or implied, written or oral, by which the agent is employed by the principal to certain acts dealing with a third party.
Agency confirmation-form
Written statement required for a residential transaction involving property of one to four residential units, in the wording required by the California Civil Code, and signed by the property seller as well as the listing agent and selling agent (if different from the listing agent), that indicates the sellers understanding of the relationship of the seller to the listing and selling agent in the transaction.
Agent
One who acts for and with authority from another person, called the principal a special agent is appointed to carry out a particular act or transaction, and any other agent is a general agent.
Air rights
The real property right to the reasonable use of the airspace above the surface of the land.
Alienation
The transferring of property to another; an involuntary transfer of title.
Alienation Clause
An acceleration clause in a real estate financing instrument granting the lender the right to demand full payment of the remaining indebtedness on a sale of the property.
Alien Registration Receipt card
Identification card, referred to as the green card, that provides proof of the legal presence in the US of someone who is a citizen of another country.
All-inclusive trust deed (see wraparound mortgage or trust deed.)
Over riding or all-inclusive trust deed: a financing device in which a lender assumes payments on an existing debt and takes from the borrower a junior lien with a face value in an amount equal to the amount outstanding on the old instrument and the additional amount of money borrowed.
Amortized loan
The payment of a financial obligation in installments; recovery over a period of time of cost or value. A loan has negative amortization when the loan payments do not cover all of the interest due, which then is added to the remaining loan balance.
Apparent Authority
Authority to act as an agent that someone appears to have but does not actually have, which will place no obligation on the party the agent claims to represent if that party is in no way responsible for the representation.
Appraisal
An estimate of a property’s monetary value on the open market, an estimate of a property’s type and condition, its utility for a given purpose, or its highest and best use.
Appropriation, right of (see right of appropriation)
Right of government to take, impound, or divert water flowing on the public domain from its natural course for some beneficial purpose.
Appurtenance
Anything affixed (attached) to or used with land for its benefit that is transferred with the land.
APR
Annual percentage Rate. The relative cost of credit as determined in accordance with regulations of the Board of Govenor of the Federal Reserve system for implementing the federal Truth-in-lending Act.
Area
Measure of the floor or ground space within the perimeter of a building or land parcel.
Arm’s-lenght transaction
A transaction in which neither party acts under duress and both have full knowledge of the property’s assets and defects, the property involved has been on the market a reasonable length of time, there are no unusual circumstances, and the price represents the normal consideration for the property sold, without unusual financing terms.
Asbestos
Naturally occurring fibrous silicate mineral linked with various forms of cancer if inhaled and which, until the mid-1970’s was used for its insulating properties in spray-on and batting applications in homes and commercial structures; remediation can be by containment or removable and requires following strict procedures.
Assessed Value
A valuation placed on a piece of property by a public authority as a basis for levying taxes on that property.
Assessor
The official responsible for determining assessed values.
Assignee
Party to whom an assignment of rights is made.
Assignment
Transfer of rights from one party to another, usually for compensation.
Assignor
Party making an assignment of rights to someone else.
Associate Licensee
A real estate salesperson who works as the the employee of a real estate broker.
Assumption
An undertaking or adoption of a debt or an obligation resting primarily on another person.
Attachment
The process by which real or personal property of a party to a lawsuit is seized and retained in the custody of the court.
Attorney-at-law
Someone licensed by the state to practice law.
Attorney-in-fact
An agent who has been granted a power of attorney by a principal.
Avulsion
The tearing or washing away of land along the bank of a body of water by natural forces.
Backfill
Dirt placed against the foundation of a structure after concrete used to create the foundation wall has cured and wood forms in which the concrete was poured have been removed.
Balance, principle of
The combination of land uses that results in the highest property values overall.
Balloon payment
An installment payment on a promissory note, usually the final payment, that is significant larger than the other installment payments.
Bankruptcy
A federal court proceeding in which the court takes possession of the assets of an insolvent debtor and sells the nonexempt assets to pay off creditors on a pro rata basis; title to the debtor’s assets is held by a trustee in bankruptcy.
Base Lines
Imaginary lines that run east-west and intersect meridians that run north-south to form the starting point for land measurement using the rectangular survey system of land description.
Base Value
For property tax assessment purposes, the full cash value of a parcel of real estate as of 2/28/75, or the date of subsequent sale or other reassessment event.
Basis
Cost basis is the dollar amount assigned to property at the time of acquisition under provisions of the Internal Revenue Code for the purpose of determining gains, loss and depreciation in calculating the income tax to be paid on the sale or exchange of the the property; adjusted cost basis is derived after the application of certain additions, such as for improvements, deductions and such as for depreciation.
Basis Point
For financing and investment purposes, 1/100 of 1 percent.
Beneficiary
One on whose behalf a trustee holds property conveyed by a truster; the lender under a deed of trust.
Beneficiary Statement
Document provided by the lender if the buyer of a property encumbered by an existing loan will take tittle to the property subject to that loan.
Benefit assessment
Amount owed by owners of property that is enhanced by the construction or renovation of improvements.
Anticipation, principle of
Expectation that property will offer future benefits, which tends to increase present value.
Bequest
Transfer of property, particularly personal property, called a legacy, by will. (see also device.)
Bilateral Contract
Agreement in which both parties make a promise to do something or to refrain from doing something and both are obligated to fulfill the promise.
Bill of Sale
Written instrument that conveys title to personal property.
Binding Contract
An agreement that can be enforced in a court of law if one of the parties to the agreement fails to fulfill to any of its terms.
Blind Ad
Ad in which the name of the person placing the ad is not mentioned.
Blockbusting
The practice on the part of unscrupulous speculators or real estate agents of inducing panic selling of homes at prices below market value, especially by exploring the prejudice of property owners in neighborhoods in which the racial make up is changing or appears to be on the verge of changing.
Bond
An obligation; a real estate bond is a written obligation issued on security of a mortgage or trust deeds.
Book Value
The current value for accounting purposes of an asset expressed as original cost plus capital additions minus accumulated depreciation.
Boot
Cash received in an exchange of property in addition to the property.
Bracing
Use of one or more construction methods, such as plywood wall sheathing, to enable a structure to withstand the pressures caused by high winds and earth movement. Information on bracing systems can be found at the web site of the engineered wood association. www.wallbracing.org
Breach of contract
The failure of a duty imposed by law or by contract, either by omission or commission.
Broker-Officer
A licensed broker who is an officer of a brokerage that is set up as a corporation and who is designated as the broker responsible for supervision of licensed employees of the brokerage.
Brokers price opinion (BPO)
An estimate of property value that is not an appraisal but is developed by a real estate broker based on comparable sales in the area.
Brownfield
A site identified by the Environmental Protection Agency as containing hazardous substances pollutants, or contaminants. Information on brown fields can be found at www.epa.gov/brownfields.
Building Code
Standards for building, planning, and construction established by state law and local ordinance.
Building Permit
Approval granted by the appropriate municipal, country, or other governing authority to begin construction of an improvement to real estate following review of the building plan submitted by the permit applicant and revision of the plan as required.
Bulk transfer of goods
Any transfer of a substantial part of the materials, supplies, merchandise, equipment, or other inventory of a business that is not in the ordinary course of the business’s activities.
Bundle of rights
The legal rights of ownership of real property, including the rights of possession, use, disposition, and exclusion of others from the property.
Business and Professions Code
California code that contains the Real Estate Law, which includes real estate licensing, transaction requirements, and the subdivided lands law.
Business Opportunity
The assets of an existing business enterprise, including its goodwill.
California Department of Insurance
California agency that regulates insurers; found at www.insurance.ca.gov
California Department of Public Health
California agency that regulates construction activities affecting the water supply and other public health issues; formerly part of the CA. Dept. of Health srvcs. www.dhs.ca.gov
Anchor Bolts
Bolts that fasten the sill plate of a wood-frame house to the house’s foundation, required in California since 1931 for all new construction as an earthquake safety measure.
Capital Assets
Assets of a permanent nature used in the production of income such as land, buildings, machinery and equipment; usually.
California Finance Lender
Licensee under the California finance lenders law who is in the business of making consumer loans or commercial loans in which personal property may be used as collateral. More info. www.corp.ca.gov/fsd/lender.asp
California Finance Lenders Law
see California Finance Lender
California Franchise Tax Board
California department that collects state personal income taxes and banks and corporation taxes.
California Residential Mortgage Lending Act
Part of the Calif. financial code that regulates mortgage bankers. Info. can be found at www.corp.ca.gov/fsd/mortgage.asp
California Solar Initiative
State law effective Jan 1, 2008 that requires municipal utilities to offer a solar incentive program to customers.
CalVet Loan
Home or farm loan procured through the Calif. Veterans Farm and Home purchase program.
Capital Assets
Assets of a permanent nature used in the production of income such as buildings machinery and equipment usually distinguishable under income tax law from inventory assets held for sale to customers in the ordinary course of the taxpayer’s trade or business.
Capital Gain
The amount by which the net resale proceeds of a capital item exceed the adjusted cost basis of the item.
Capitalization Rate
The rate of interest that is considered a reasonable return on investment used in the process of determining value based on net operating income; the yield necessary to attract investment.
Capitalization recapture
The return of an investment an amortization rate based on the right of the investor to get back the purchase price at the end of the term of ownership or over the productive life of the improvements.
Cash flow
The net income generated by a property before depreciation and other non-cash expenses.
Caveat emptor
Latin phrase meaning “Let the buyer beware.”
CC&Rs
Covenants, conditions, and restrictions; limitations on land use imposed by deed, usually when land is subdivided, as a means of regulating building construction, density, and use for the benefit of other property owners; may be referred to simply as restrictions.
Certificate of discharge
Document that is recorded by a mortgagee as evidence of the release of the mortgagee’s lien rights.
Certificate of eligibility
Issued by the Department of Veterans Affairs (VA) to a veteran who qualifies for a loan guaranteed by the the VA. Information on how to apply can be obtained at www.homeloans.va.gov.
Certificate of occupancy (CO)
Issued by the applicable building dept. of the municipal, county, or other jurisdiction in which the property is located when a structure has met all requirements and can be placed into service.
Certificate of Reasonable Value
Property appraisal required for a VA guaranteed loan.
Certificate of Redemption
Issued by the county tax collector when all past due amounts have been paid.
Certificate of Sale
Document received by the buyer at an execution or judicial foreclosure sale; replaced by a sheriff’s deed if the debtor fails to redeem the property during the statutory redemption period.
Certificate of Status
Document issued by California Secretary of State, showing a corporation’s place of domicile, date of incorporation, corporate number, name and address of agent for service of process, and other information.
Certificate of Title
Statement of a property’s owner of record, as well as any existing encumbrances.
Chain of Title
The history of the conveyances and encumbrances affecting the present owner’s title to property as far back as records are available.
Change, Principle of
Effect on property value of constantly varying physical, economic, social, and political forces.
Change in Ownership Statement
Document indicating former and present owner of real estate that must be filed by the County Recorder or Assessor within 45 days of the date that the transfer is recorded.
Chattel Mortgage
Use of personal property to secure or guarantee a promissory note.
Chattel Real
An estate related to real estate, such as a lease of real property.
Chattels
Personal property; any property that is not real property.
City Planning
Land use recommendations adopted by local jurisdiction, determined by use of demographic, geographic, economic, and other data.
Civil Law
Legal system based on laws and regulations without the influence of judicial influence as in the common-law system.
Civil Rights House Act of 2006
As of January 1, 2007 extends protected classifications of the Fair Employment and Housing Act (FEHA.) To all California laws prohibiting discrimination in housing and housing related areas, including real estate, licensure, and mortgage lending, and automatically includes any protected classes that are added to FEHA.
Closed of Escrow
Date on which all requirements of a real estate transaction have been fulfilled, documents are transmitted, and funds are transferred.
Closing
The completion of a real estate transaction, at which point required documents are transmitted and funds are transferred.
Cloud on the Title
Any claim, condition, or incumbrance that impairs title to real property.
Coastal Zone
An area of about 1800 square miles that runs the length of the state, from the sea inland from about 1000 yards with wider spots in coastal estuariane, habitat, and recreational areas; any development or improvement of land within the coastal zone must meet local requirements for coastal conservation and preservation of resources, as authorized by the California Coastal Act and subsequent legislation.
Codes
Bound volumes of laws and regulations
Codicil
Written amendment to a will, made with the same legal formalities.
Color of Title
A claim of possession to real property based on a document erroneously appearing to convey title to the claimant.
Commercial Acre
That portion of an acre of newly sub-divided land remaining after dedication for streets, sidewalks, parks, and so on.
Commercial Frustration
Excuse for failure to perform contract obligation because of changed circumstances that make a purchase uneconomic; also called “Impracticability of Performance.”
Commingling
Placing funds in an inappropriate financial account, such as depositing a deposit check in a broker’s business account instead of a trust account.
Commission
An agent’s compensation for performing the duties of the agency; in a real estate practice, typically a percentage of the selling price of property, rentals, or other property value.
Common interest subdivision
An area of land divided into separate parcels but with some of the land set aside for shared ownership by all of the owners of the separate parcels.
Common law
The body of law from England based on custom, usage, and court decisions.
Common law dedication
Transfer of private land to public use or ownership, such as a roadway through a subdivision, by permitting such use or referencing the use in deeds to adjoining parcels.
Community apartment project
A form of subdivision in which the owner has an individual interest in the land and exclusive right of occupancy of an apartment of the land.
Community property
All property acquired by husband and wife during marriage except that qualifying as separate property.
Community property with right of survivorship
Method of property ownership by a married couple that specifically provides for transfer of the interest of the first to die to the spouse, instead of the interest being willed or passed by interstate succession.
Community redevelopment agency (CRA)
An agency authorized by state law but formed by a local governing body to provide low and moderate income housing and employ low-income persons by rehabilitating existing structures and/or bringing new development.
Compensation
Money, goods, or other thing of value transferred in exchange for performance of a contract obligation.
Competition, principle of
Business profits encourage competition, which ultimately may reduce profits for any one business.
Competitive market analysis
Informal estimate of market value performed by a real estate agent for either seller or buyer, utilizing the sales history of nearby properties; usually expressed as a range of values that includes the probable market value of the subject property.
Compound interest
Interest paid on original principal and also on the accrued and unpaid interest that has accumulated as the debt matures.
Comps
Comparable properties that are used in an appraisal to determine the value of the property that is the subject of the appraisal.
Computerized loan origination (CLO) system
Use of computer technology to assist consumers in finding a lender, selecting a mortgage product, originating a mortgage, or choosing among other settlement service providers and products.
Concurrent ownership
Ownership of property by more than one person, not necessarily in equal shares.
Condemnation (see eminent domain.)
The right of the government to acquire title to property for public use by condemnation; the property owner receives compensation-generally fair market value. (See also inverse condemnation.)
Condition
A qualification of an estate granted that can be imposed only in a conveyance; it can be a condition precedent or a condition subsequent. See also CC&Rs.
Conditional delivery
Transfer of documents and funds to escrow agent or settlement officer to be held until the transaction is closed, at which time they are transferred to the designated party.
Conditional license
License that is issued to a salesperson who has not completed all of required education courses, contingent on all education requirements being met.
Conditional use permit
Authorization for a land use that would otherwise not be permitted by zoning ordinances.
Condition subsequent
A stipulation in a contract or transfer of property that already has taken effect that will extinguish the contract or defeat the property transfer.
Condominium
A subdivision providing an exclusive ownership (fee) interest in the airspace of a particular portion of real property, as well as an interest in common in a portion of that property.
Conflict of interest
Anything that benefits an agent’s self-interest or that of someone related to the agent, which would interfere with the objective fulfillment of an agent’s obligations to a principal.
Conforming loan
A loan that meets the requirements established for purchase by Fannie Mae.
Conformity, principle of
Holds that property values are maximized when buildings are similar in design, construction, and age, particularly in residential neighborhoods.
Consideration
Anything of value given or promised by a party to induce another to enter into a contract; may be a benefit conferred on one party or a detriment suffered by the other.
Construction loan
See interim loan./ A short-term temporary loan used until permanent financing is available, typically during building construction.
Constructive eviction
Interference by the landlord in a tenant’s legitimate use of leased property, such as by making unwarranted alteration to the property.
Constructive fraud
Any representation made without a deliberate intent to deceive.
Contract
A written or an oral agreement to do or not to do certain things. There may be an express agreement of the parties or a contract may be implied by their conduct. A unilateral contract imposes an obligation on only one of the parties, whereas both parties to a bilateral contract have an obligation to perform. A contract is executory when a contract obligation is to be performed in the future, and executed when all obligation have been performed and the contract transaction has been completed. A real estate contract must be a signed writing made by competent parties, for valuable consideration, with an offer by one party that is accepted by the other.
Contractor’s State License Board
State agency that licenses and regulated building contractors. Can be found at www.cslb.ca.gov
Contract rent
The rent agreed to by lessor and lessee.
Contractual obligation
The agreed-on performance by one of the parties to a contract.
Contribution, principle of
A component part of a property is valued in proportion to its contribution to the value of the entire property, regardless of its separate actual cost.
Conventional loan
A loan secured by a mortgage or trust deed that is made without governmental underwriting (FHA-insured or VA-guaranteed.)
Cooperating broker
The broker who finds a buyer for property listed for sale by another broker.
Cooperating split
Sharing of the compensation (usually a commission) received by the listing brother with the broker who brings the buyer to the transaction.
Cooperative apartment (See stock cooperative)
A form of subdivision, typically of an apartment building, in which each owner in the stock cooperative is a shareholder in a cooperation that holds title to the property, each shareholder being entitled to use, rent, or sell a specific apartment unit. See also limited equity housing cooperative .
Corporation
A legal entity that acts through its board of directors and officers, generally without liability on the part of the person or persons owning it. A domestic corporation is one chartered in California-any other corporation is foreign corporation in California.
Correction lines
Guide meridians running every 24 miles east and west of a meridian and standard parallels running every 24 miles north and south of a base line, used to correct inaccuracies in the rectangular survey system of land description caused by the earth’s curvature.
Correlative use
Doctrine that states that property owners may use a reasonable amount of water from an underground source, but not to the detriment of adjoining property owners. Information about California water rights can be found at the Web site of the Bureau of Land Management, www.blm.gov/nstc/Water Laws/california.html.
Costa-Hawkins Rental Housing Act
California law that preempts rent control for new construction, single-family residences, and multiunit buildings in jurisdictions with vacant control ordinances.
Cost approach
Appraisal method in which site value is added to the present reproduction or replacement cost of all property improvement, less depreciation, to determine market value.
Counteroff
Any change to the terms of an offer, made in response to it.
County assessor
Official responsible for determining property values for and valorem taxation purpose.
Covenant
An agreement or a promise to do or not to do a particular act, usually imposed by deed. See also CC&Rs.
Covenant of quiet enjoyment
Promise of a landlord, implied by law, not to interfere in the possession or use of leased property by the tenant.
Covenant to repair
Express or legally implied obligation of the landlord to make necessary repairs to leased premises.
Crawl space
Area beneath lowest level of structure, usually unpaved, that is less than the height requirement to qualify as a basement.
Creative financing
Alternative (non-institutional) financing that makes use of a seller carry back or other loan; useful when interest rates on institutional loans are relatively high or when borrower cannot qualify for a loan from a depository institution based on income or credit rating.
Credit bid
Bid by lender at a foreclosure sale represented by the amount of the outstanding indebtedness owed to the lender by the defaulting borrower.
Decedent
Person who has died.
Declaration of default
Notice, accompanied by original note and trust deed, provided by lender (beneficiary) to trustee on default of truster (borrower), stating the reason for the default.
Declaration of homestead (See homestead)
**Homestead exemption: A statutory exemption or real property used as a home from the claims of certain creditors and judgments up to a specified amount.
Decline
Period in which property loses value due to lacy of maintenance.
Dedication
The giving of land by its owner for a public use, and the acceptance of the land for such use by the appropriate government officials.
Deductions
Amounts on which income tax need not be paid; the home mortgage interest deduction from taxable income benefits homeowners.
Deed
Written instrument that, when properly executed and delivered, conveys title to real property from a grantor to grantee.
Deed in lieu of foreclosure
A deed to real property accepted by a lender from a defaulting borrower to avoid the necessity of foreclosure proceedings by the lender.
Deed of reconveyance
Deed from trustee to truster, at the request of beneficiary of trust (lender) , that returns title to the truster on payment of the indebtedness secured by the deed of trust.
Deed of trust
See trust deed.
Deed restriction
Provision placed in a deed by the grantor that limits the property’s use or requires the grantee to fulfill requirements of subdivision covenants, conditions, and restrictions (CC&Rs).
Default
Failure by one of the parties to a contract to fulfill one or more of the obligations imposed by the contract.
Defendant
A person against whom legal action is initiated for the purpose of obtaining criminal sanctions (in a case involving violation of a penal statute) or damages or other appropriate judicial relief ( in a civil case)
Deficiency judgment
A judgment given by a court when the value of security pledged for a loan is insufficient to pay off the debt of the defaulting borrower.
Demand for payoff
Lender’s statement of remaining indebtedness that will be paid at closing on transfer of the property securing the debt.
Department of Fair Employment and Housing
California agency that enforces anti discrimination laws; found www.dfeh.ca.gov
Department of Housing and Community Development
State agency that carries out CA State Housing Law by adopting building standards and administrative regulations that ensure safe and durable housing while safeguarding affordability; found at www.hed.ca.gov
Department of Housing and Urban Development (HUD)
Federal agency that carries out the purposes of the National Housing Act by, among other things, enforcing fair housing laws and supervising the activities of the Federal Housing Administration (FHA), which insure home mortgage loans; found at www.hud.gov
Department of Real Estate (DRE)
CA agency that administers the Real Estate Law, including the licensing of real estate brokers and salesperson.
Depreciation
Decrease in value of an asset that is allowed in computing property value for tax purposes; in appraising, a loss in the value of a property improvement from any cause; depreciation is curable when it can be remedied by a repair or an addition to the property, and it is curable when it can be remedied by a repair or an addition to the property, and it is incurable when there is no easy economic way to cure the loss. See also physical deterioration, functional obsolescence, and external obsolescence.
Devise
Transfer of title to property by will. See also bequest.
Devisee
Person receiving title to property by will. See also legatee.
Devisor
One who wills property to another.
Direct Endorsement Plan
Program that allows lenders to qualify to make FHA-insured loans without prior HUD review, except for construction projects.
Discharged contract
An agreement that has been terminated, whether by performance of its terms; recession of the parties; release by one party at the request of the other party; formation of a new contract to a new party; or breach by one of the parties by failure to fulfill the terms of the agreement.
Discount points.
See points.
Discount rate
Interest rate charged member banks by Federal Reserve bank.
Documentary transfer tax
A tax applied on all transfers of real property located in a country that the county is authorized by the state to collect; notice of payment is entered on the face of the deed or on a separate paper filed with the deed.
Dominant tenement
See easement.
Donee
One who receives a gift.
Donor
One who makes a gift.
Downspout
Part of the rainwater drainage system that conducts water from a gutter that runs along a roof eave to ground level.
Drywall
Plasterboard, also called wallboard, used for interior finishing.
Dual Agency
An agency relationship in which the agent represents two principals in their dealings with each other.
Due Diligence
Acting with the appropriate degree of skill and care in fulfilling one’s responsibilities under an agency or other contractual relationship.
Due-on-sale Clause
An acceleration clause in a real estate financing instrument granting the lender the right to demand full payment off the remaining indebtedness on a sale of the property.
Duty of care
The obligation of principal to agent that the principal will not interfere with the agent’s prospective economic advantage - the agent’s business activities.
Earthquake fault zone
As defined by the state geologist, the area in such close proximity to an earthquake fault that movement of the fault presents a property hazard; location within an earthquake fault zone must be disclosed to a prospective purchaser by the seller (or seller’s agent, if there is one.)
Easement
The right to a specific use of or the right to travel over the land of another. The land being used or traveled over is the the servient tenement; the land that is benefited by the use is the dominant tenement. An easement appurtenant is a property interest that belongs to the owner of the dominant tenement and is transferred with the land; an easement in gross is a personal right that usually is not transferable by its owner.
Easement Appurtenant
An easement right that is transferred along with the title to the land that benefits from the easement.
Easement by condemnation
Taking of an easement right by a public entity.
Easement by implication of law
An easement that will be created by law to provide access to a parcel of land that is otherwise landlocked.
Easement by necessity
An easement right over the land of the grantor of adjacent property that would otherwise be landlocked.
Easement by prescription
Acquiring a specific use of or the right to travel over the land of another by statutory requirements similar to those for adverse possession.
Easement in gross
An easement right with no accompanying property ownership right.
Eave
Portion of the roof that extends over the exterior wall.
Economic life
The period of time over which an improved property will yield a return on investment over and above the return attributable solely to the land.
Economic obsolescence
See External Obsolescence.
Economic Stimulus Act of 2008
Legislation passed by Congress to bolster the economy by making payments of up to $1200 to over 130 million households. More information is available at (see book.)
Effective Gross Income
Property income from all sources, less allowance for vacancy and collection losses.
Electronic Signatures in Global and National Commerce Act
Enacted by Congress in 1000 to facilitate the use of electronic records and signatures in interstate and foreign commerce by ensuring the validity and legal effect of contracts entered into electronically.
Emancipated minor
A person under the age of 18 who is married, in the military service, or determined by a court to be legally able to enter into a contract as an adult.
Emblements
Crops produced annually by labor and industry as distinguished from crops that grow naturally on the land.
Eminent domain
The right of the government to acquire title to property for public use by condemnation; the proper owner receives compensation - generally fair market value. (see also inverse condemnation.)
Employee
Person who is hired by someone else to perform work; for purposes of the Real Estate Law, a real estate salesperson is always considered an employee under the supervision of the employing broker; for tax purposes, a real estate salesperson working for a real estate broker can be hired as an employee or as an independent contractor.
Employer
Person who hires someone else to perform work.
Encroachment
The unlawful intrusion of a property improvement onto adjacent property.
Encumbrance
Anything that affects or limits the fee simple title to or affects the condition or use of real estate.
Energy-efficient ratio (EER)
Measure of an electrical appliance’s energy consumption found by dividing its capacity measured in British Thermal Units (BTUs)
Environmental impact report (EIR)
Evaluation of effects on the environment of a proposed development; may be required by local government.
Environmental obsolescence
See external obsolescence.
Equal Credit Opportunity Act
Federal law intended to ensure that all consumers are given an equal chance to obtain credit. Information is available at www.ftc.gov/bcp/edu/pubs/consumer/credit/cre15.shtm.
Equal dignities rule
Requires a writing if an (such as a listing agreement_ involves a transaction (such as the sale of real estate) that requires writing.
Equilibrium
Period of stability in the life cycle of a building or neighborhood in which little change is evident.
Equitable estoppel
Common law doctrine that require transfer of title to property if seller acquires title only after a purported sale of the property to someone else; intended to prevent unjust enrichment.
Equity
Difference between current market value and the remaining indebtedness on a property; free-and-clear property value.
Equity of redemption
The right to redeem property during the foreclosure period, or during a statutorily prescribed time following a foreclosure sale.
Erosion
Process of wearing away of the surface of the land by the action of the elements, most conspicuously at a time of heavy rainfall.
Escalator clause
Provision in a lease agreement for an increase in payments based on an increase in an index such as the consumer price index.
Escheat
The reverting of property to the state when there are no heirs capable of inheriting.
Escrow
The deposit of instruments and/or funds (with instructions) with a neutral third party to carry out the provisions of an agreement or a contract.
Escrow agent
See escrow holder.
Escrow holder
Escrow agent or escrow officer; neutral third party who holds in trust the funds and documents necessary to complete a transaction until all of the terms of the underlying agreement agreement have been fulfilled, at which time the funds are disbursed and documents transferred as required.
Escrow instructions
Written instructions to the escrow holder specifying the terms under which the escrow is to be conducted, including the contract or other requirements that are to be fulfilled as part of the escrow proceeding; change in the escrow instructions requires agreement of both parties to the underlying contract.
Escrow officer
See escrow holder.
Estate
The interest held by the owner of property.
Estate at sufferance
The occupancy of a tenant after the lease term expires.
Estate at Will
A tenancy in which the tenants time of possession is indefinite.
Estate for years
A tenancy in which the tenants time of possession is indefinite.
Estate from period to period
Periodic tenancy; a tenancy for a fixed term, automatically renewed for the same term unless owner or tenant gives the other written notice of intention to terminate the tenancy.
Estates of tenancy
See leasehold estate.
Estate tax
Federal or state tax on the value of property owned by a decedent at the time of death.
Estoppel
A bar against future conduct. By acting as if an agency relationship exists, a principal is prevented by estoppel denying it in future.
Eviction
Dispossession by process of law.
Exchange
A means of trading equities in two or more real properties, treated as a single transaction through a single escrow.
Exclusive agency listing
A listing agreement employing a broker as sole agent for a seller of real property under the terms of which the broker is entitled to compensation if the property is sold through any other broker, but not if a sale is negotiated by the owner without the services of an agent.
Exclusive authorization and right-to-sell listing
A listing agreement employing a broker as agent for a seller of real property under the terms of which the broker is entitled to compensation if the listed property is sold during the duration of the listing, whether by the listing agent, another agent, or the owner acting without the services of an agent.
Executed contract
Written agreement that has been signed by all parties; agreement that has been completed according to its terms.
Executor
Personal representative of the estate of a decedent, named in the decedent’s will. See also administrator.
Executory contract
Agreement with terms that have not yet been completed.
Express agent
Agent identified in written or oral agency agreement.
Express agreement
An agreement established by written or oral communication of the parties that both parties acknowledge as their intention.
Express Contract
See express agreement.
Express reservation
Property interest identified in deed as retained by grantor.
Extended-coverage policy
Policy of title insurance, primarily intended for the benefit of lenders, that includes coverage of times that would ordinarily be discovered by a property inspection, such as rights of parties in possession of the property.
External obsolescence
Economic or environmental obsolescence; loss in value due to outside causes, such as changes in nearby land use.
Fair and Accurate Credit Transactions Act of 2003 (FACTA)
Federal law that amended the Fair Credit Reporting Act (FCRA) to create procedures to assist consumers who are victims of identity theft; found at www.ftc.gov/os/statutes/fcrajump.shtm.
Fair Credit Reporting Act (FCRA)
Federal law detailing consumer rights in loan transactions involving credit reports; found at www.ftc.gov/os/statues/fcrajump.shtm.
Fair Employment and Housing Act (FEHA)
California law that provides protection from harassment or discrimination in employment or housing on the basis of age (40 and over), ancestry, color, religious creed, denial of family and medical care leave, disability (mental and physical) including HIV and AIDS, marital status, medical condition (cancer and genetic characteristics), national origin, race, religion, sex, and sexual orientation. The text of the law and enforcement procedures can be seen at www.dgeh.ca.gov/about/fehaDescription.aspx
Fair Housing Act
Federal law that prohibits discrimination in provision of housing on the basis of race, color, religion, sex, national origin, ancestry, disability, or familial states; Title V111 of the Civil Rights Act of 1968. Full text of the Fair Housing Act can be found at www.usdoj.gov/crt/housing/title8.htm.
Fair Housing Amendments Act of 1988
Expanded federal protections against discrimination in provision of housing to include families with children and persons with disabilities.
Fannie Mae
Formerly the Federal National Mortgage Association; created in 1938 to provide a secondary mortgage market for federally related mortgage loans; now also purchases conventional mortgage loans. Information can be found at www.fanniemae.com and www.efanniemae.com.
Farmer Mac
Farmers Home Administration; provides financing of agricultural real estate and rural housing loans and liquidity to agricultural and rural housing lenders; found at www.farmermac.com.
Federal Depository Insurance Corporation (FDIC)
Insures savings, checking, and other deposit accounts in insured institutions, up to $100,000 per depositor; retirement accounts can be insured up to $250,000 per depositor; found at www.fdic.gov.
Federal Funds rate
The interest rate at which depository institutions lend balances at the Federal Reserve to other depository institutions overnight. Discussion and historical rates can be found at www.federalreserve.gov/monetarypolicy/fomc.htm.
Federal Housing Administration (FHA)
Created in 1934 to provide mortgage insurance on loans made by FHA-approved lenders throughout the US; part of the Dept. of Housing and Urban Development; found at www.fha.com and www.hud.gov/offices/hsg.
Federally related transaction
Transaction that involves a federally chartered or insured lender.
Federal Reserve System (the Fed)
Central banking system of the US; found at www.federalreserve.gov.
Fee simple absolute
A fee simple estate with no restrictions on its use.
Fee simple defeasible
An interest in land, such as a fee simple conditional or fee simple with special limitation, that may result in the estate of ownership being defeated.
Fee simple estate
The greatest interest in real property one can own, including the right to use the property at present and for an indeterminate period of time in the future.
Fee simple qualified
A fee simple estate with some restrictions on the right of possession.
FICO score
Consumer credit score developed by the Fair Isaac Corporation; found at www.myfico.com.
Fictitious business name statement
Document indicating the name under which a business is operating; filed with the county where the business is located. Information is available at www.sos.ca.gov/business/corp/corp_irc.htm.
Fiduciary
A person in a position of trust and confidence who owes a certain loyalty to another, such as an agent to a principal.
Final subdivision map
See tentative subdivision map.
Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA)
Federal legislation passed in response to the savings and loan crisis of the 1980s’ established requirement for state appraiser licensing. Bibliography can be found at www.fdic.gov/bank/historical/S&l/s/bib11.html.
Fire stops
Wood blocks placed at intervals between wall studs to slow spread of fire.
Fiscal year
A business or an accounting year as distinguished from a calendar year.
Fixed-rate mortgage
Loan secured by mortgage or deed of trust on real estate that carries an interest rate that does not change over the life of the loan.
Fixture
Anything permanently attached to land or improvements so as to become real property.
Flashing
Metal strips intended to prevent water entry at openings in a roof for chimneys, vents, dormers, and changes in roof line.
Foreclosure
Sale of real property by mortgagee, trustee, or other lien holder on default by the borrower. See also judicial foreclosure action.
Forfeiture
Breach of a condition subsequent in a deed; entitles grantor or grantor’s successor to reacquire title to the property.
Form appraisal report
A short report, typically two pages plus addenda, using a preprinted form to summarize the data contributing to an appraiser’s conclusion of value.
Form-based planning
Type of land use planning permitted in California that provides a mis of land uses while taking into account the relationship of buildings and public areas. Information can be found at www.lgc.org/freepub/doc/community_design/fact_sheets/form_based_codes.pdf.
Foundation
Base of building, typically of poured concrete consisting of walls or footings.
Frame
Support posts, beams, and roof members, typically wood in residential construction; steel-frame construction is common for commercial structures and is also used for homes.
Franchise
A contract or agreement between the franchisor (grantor) and the franchisee (grantee).
Franchise Tax Fraud
California tax on corporations. The intentional and successful use of any cunning, deception, collusion, or artifice to circumvent, cheat, or deceive another person, so that the other person acts on it to the loose of property and legal injury; actual fraud is a deliberate misrepresentation or a representation made in reckless disregard of truth, a promise made without the intention to perform it. or any other act intended to deceive; constructive fraud is any misrepresentation made without fraudulent intent (the deliberate intent to deceive.) Fraud is negative when it is a deliberate concealment of something that should be revealed.
Fraudulent misrepresentation
Deliberate intent to deceive; fraudulent misrepresentation of a material fact in a real estate transaction is grounds for a legal action that may result in damages or rescission.
Freddie Mac
Formerly the Federal Home Loan Mortgage Association; private corporation under federal supervision created by Congress in 1970 to provide a secondary market for conventional residential mortgage loans; found at www.freddiemac.com
Freehold estate
An estate in land in which ownership is for an indeterminate length of time as in a fee simple or life estate.
Front foot
Property measured by the front linear foot on its street line, each front foot extending the depth of the lot.
Fructus industriales
Plant growth that is the result of cultivation.
Fructus naturales
Plant growth that does not require cultivation, such as natural trees, grasses, and shrubbery.
Full disclosure of material facts
Obligation of real estate licensee to make known to the licensee’s client as well as prospective purchasers all facts concerning the property and likely to affect its value that are known to the licensee and the licensee is both otherwise prohibited by law from disclosing.
Functional obsolescence
Loss in value due to adverse factors within a structure that affect its marketability, such as its design, layout, or utility.
General agent
See agent.
General indexes
Lists of property owners and documents affecting property title maintained by titles companies.
General lien
Lien on all property of the debtor.
General partnership
An association of two or more persons, called the partners, to carry on a business as co-owners for profit.
General plan
An association of two or more persons, called the partners, to carry on a business as co-owners for profit.
General plan
Master plan’ includes a statement of policy of the development and land uses within a city or county and a program to implement that policy.
General power of attorney
Authority to act on behalf of someone else for financial purposes. See also power of attorney.
Gentrification
Renovation of run-down properties in neighborhoods that are in decline.
Gift
Voluntary transfer by an individual of any type of property for less than full consideration.
Gift deed
A deed for which the only consideration is “love and affection”.
Gift tax
Federal tax owed by donor on gift in excess of allowable annual amount per individual; for 2008, gifts of no more than $12,000.00 per individual are not taxed.
Ginnie Mae
Formerly the Government National Mortgage Association; created from the Federal National Mortgage Association (now known as Fannie Mae) in 1968 to provide a secondary market for federally backed residential mortgage loans; found at www.ginniemae.gov.
Girders
Beams that span foundation walls and footings to provide support for floor of structure.
Good faith and honesty
Obligation of real estate agent to act in the client’s best interest while acting fairly to all parties in the transaction.
Good-faith estimate
Statement of transaction closing costs provided b lender to borrower as required by the Real Estate Settlement Procedures Act (RESPA). Sample can be found at www.hud.gov/offices/hsg/rmra/res/gfestimate.pdf.
Goodwill
An intangible but a salable asset of a business derived from the expectation of continued public patronage.
Graduated payment adjustable-rate mortgage
Financing instrument that carries an interest rate that is subject to change based on a specified index, with loan payments limited to increases permitted at specified intervals.
Graduated payment mortgage
Financing instrument in which payments are increased during the first five years of the loan term and then remain fixed for the remainder of the term.
Grant
A conveyance of real estate.
Grant deed
A limited warranty deed using a granting clause-the word grant or words to that effect- assuring the grantee that the estate being conveyed is free from encumbrances placed on the property by the present owner (the grantor), and that the grantor has not previously conveyed the property to anyone else.
Grantee
A person to whom property is transferred by grant.
Granting Clause
Portion of a deed that contains the words of conveyance.
Grantor
A person conveying property to another by grant.
Gross income
Total property income from all sources before any expenses are deducted.
Gross income multiplier
Gross rent multiplier; a number derived by dividing the slew price of a comparable property by the income it produces, when then is multiplied by the gross income produced by the subject property to derive an estimate of value.
Gross lease
Provides for the tenant to pay a fixed rental over the lease term, with the landlord paying all expenses of ownership, such as taxes, assessments, and insurance.
Ground lease
An agreement for the use of land only, sometimes secured by improvements placed on the land by the user.
Ground rent
Earnings of improved property credited to earnings of the ground itself after allowance is made for earnings of improvements.
Growing equity mortgage
Financing instrument in which payment of principal are increased based on the movement of a stated index, thereby decreasing the loan term.
Growth
Period o life cycle of neighborhood in which property development is ongoing.
Guarantee of title
Guarantee of title as determined from examination of the public records and described in the guarantee document.
Guide meridians
See correction lines
Gutter
Trough along roof line of structure that collects rainfall, which is diverted to a drainage pipe that carries it to the ground and away from the structure.
Highest and best use
In appraising real estate the most profitable, physically possible, and legally permissible use for the property under consideration.
Holder in due course
Someone who takes a negotiable instrument for value, in good faith, and without notice of any defense against its enforcement that might be made by any person.
Holdover tenancy
Possession of property buy a tenant who remains in possession after the expiration or termination of the lease term.
Holographic will
A will written entirely in the testator’s handwriting, signed, and dated by the testator.
Home energy rating program
Program of the California Energy Commission that certifies home energy rating services and is intended to provide reliable information to differentiate the energy rating services and is intended to provide reliable information to differentiate the energy efficiency levels among California homes and to guide investment in cost-effective home energy efficiency measures; found at www.energy.ca.gov/HERS.
Home equity sales contract
Agreement to sell a homeowner’s equity in the home; regulated by the California Civil Code, which requires specific notice, including right of cancellation to homeowners.
Homeowner Assistance Program
California program for senior citizens and vlid or disabled citizens of any age, providing property tax rebate for low-income taxpayers.
Homeowner’s Bill of Rights of 2004
Law enacted after 2003 Southern California wildfires to clarify rights of homeowners under homeowner insurance policies. Information on the law can be found at www.insurance.ca.gov/consumer-alerts/2007newlawsnoticewildfire.cfm.
Homeowner’s exemption
Amount of property value of owner-occupied residence excluded from property taxation.
Homeowners Protection Act of 1998
(HPA) Federal law requiring that lenders of services provide certain disclosures and notifications concerning private mortgage insurance (PMI) on residential mortgage transaction completed on of after July 29, 1999. Information on the law can be found www.ferderalreserve.gov/boarddocs/caletters/2004/0405/CA04-5Attach1.pdf.
Homestead exemption
A statutory exemption of real property used as a home from the claims of certain creditors and judgements up to a specified amount.
Housing Finance Board
Created by the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) to supervise savings and loan associations.
Housing Financial Discrimination Act
The Holden Act; California law effective January 1, 1978, that prohibits all financial institutions from discriminating in real estate loan decisions based on location or other property characteristic unless decision can be shown to have been based on sound business practice.
Hypothecation
Use of real property as collateral for a debt.
Implied agency
Action of a principal that causes a third party to rely on the representation of an agency relationship.
Implied Contract
Agreement that can be established from the conduct of the parties rather than express agreement.
Implied warranties
Warranties by grantor to grantee that will implied by law, even if not mentioned in the deed; the grantor warrants that he or she has not already conveyed the property, and that there are no encumbrances on the property brought about by the grantor or any person who might claim title from the grantor.
Impossibility of performance
Event, such as destruction of property, that makes it impossible to perform a contract on it terms.
Impound account
A trust account established by a lender for accumulation of borrower funds to pay taxes and other recurring cost.
Impracticability of performance
See commercial frustration .
Income capitalization approach
Appraisal method in which the actual or likely net operating income of property is divided by its expected rate of return (capitalization rate) to arrive at an estimate of market value. See also capitalization rate.
Independent contractor
A person employed by another who has almost complete freedom to accomplish the purposes of the employment.
Index method
Way estimating building reproduction cost by multiplying the original cost of the subject building by a factor that represents the percentage change in construction costs generally from the time of construction to the time of valuation.
Inherent authority
The authority of an agent to perform activities that are not specifically mentioned in the agency agreement but are necessary or customary to carry out an authorized act.
Inheritance tax
Tax on property received on the death of the previous owner; California no longer has an inheritance tax.
Injunction
A writ or an order issued by a court to restrain one or more parties to a suit or proceeding from doing an act deemed to be inequitable or unjust in regard to the rights of some other party or parties in the suit or proceeding.
Installment note
Promissory note that provides regular payments over the loan term, usually including both principal and interest.
Installment sale
Sale involving extension of credit by property seller, who receives regular parents from buyer on terms specified.
Installment sales contract
See sales contract.
Institutional lenders
A financial intermediary or depository, such as a savings and loan association, commercial bank, or life insurance company, that pools the money of its depositors and then invest funds in various ways, including trust deeds and mortgage loans.
Insulation
Use of wrapping and filling materials to reduce heat conductivity and improve energy efficiency of buildings and building components; measured in R-value.
Interest
A portion, share, or right in something; partial ownership; the charge in dollars for the use of money for a period of time.
Interest rate
The percentage of a sum of money borrowed that is charged for its use.
Interest rate reduction refinancing loan (IRRRL)
Type of VA-guaranteed loan that can be used for a loan refinancing.
Interim loan
A short-term temporary loan used until permanent financing is available, typically during building construction.
Interim use
The use to which a site or improved property may be put until ready for the more productive highest and best use.
Internet
Worldwide network of computers, originally created for military and university communications, making use of telephone lines or microwave links.
Interpleader
A court proceeding that may be brought by someone, such as an escrow agent, who holds property for another, for the purpose of deciding who smog the claimants is legally entitled to the property.
Inter vivos trust
See living trust.
Intestate
Dying without leaving a valid will.
Intestate succession
Statutory method of distribution of property that belonged to someone who died intestate (without having made a valid will).
Inverse condemnation
A legal action brought by the owner of land when government puts nearby land to a use that diminishes the value of the owner’s property.
Involuntary lien
Lien on property that can be imposed without the express permission of the property owner; lax liens are involuntary liens.
Joint and several liability
Obligation of all cosigners of a promissory note to repay the entire note, even if one defaults.
Joint tenancy
Ownership of property by two or more co-owners, each of whom has an equal share and the right of survivorship.
Joint venture
Two or more individuals or firms joining together on a single project as partners, typically with a lender contributing the necessary funds and the other partner’s contributing his or her expertise.
Joists
Beams used to support flooring.
Jones v. Mayer
The 1968 decision of the U.S. Supreme Court that upheld the Civil Rights Act 1866; 392 U.S. 409. Text of the case is at http://law2.umkc.edu/faculty/projects/ftrials/conlaw/mayer.html.
Judgment
The final determination of a court of competent jurisdiction of a matter presented to it; may include an award of money damages.
Judicial foreclosure
Proceeding in which a mortgage, a trustee, or another lien holder on property requests a court-supervised sale of the property to cover the unpaid balance of delinquent debt.
Junior lienor
Lienholder whose rights are subordinate to those of another lien holder.
Kickback
An illegal fee paid by a non licensee to a salesperson or bank.
Land
The earth’s surface, including substances beneath the surface extending downward to the center of the earth and the airspace above the surface for an indefinite distance upward.
Land contract
See sales contract.
Landlord
Lessor; one who leases his or her property to another.
Lateral support
The support that the soil of an adjoining owner gives to a neighbor’s land.
Lath and plaster
Method of interior wall finishing used in older homes in which wet plaster is applied to a framework of wood slats, called laths, and wire.
Lawful object
Contract performance that does not violate any laws; requirement for a valid contract.
Lead-based paint
Paint, no longer allowed for use in buildings or products, that contains lead. Information on lead found in paint, dust, and soil is available at www.epa.gov/lead.
Lease
A contract between a property owner, called lessor or landlord, and another, lessee or tenant, conveying and setting forth the conditions of occupancy and use of the property by the tenant.
Lease assignment
Transfer of leasehold interest by tenant to another party, with first enact secondarily liable for lease obligations unless landlord trees to a release of first tenant from those responsibilities.
Leaseback
See sale-leaseback.
Leasehold
Interest of one who leases property.
Leasehold estate
EstateEstate of tenancy; a tenant’s right to occupy real estate during the term of the lease; a personal property interest.
Lease option
A lease accompanied by the right to purchase the leased property within a specified period for a specified or determinable price.
Legacy
Property, usually personal property, transferred by will.
Legal capacity
Person who is an adult or emancipated minor and mentally competent to enter into a contract.
Legal description
A land description used to define a parcel of land to the exclusion of all others that is acceptable by a court of law.
Legatee
Person who receives property, called a legacy, by bequest. See also devisee.
Lessee
One who leases property owned by one one else.
Lessor
Property owner; landlord.
Letter of opinion
A letter from appraiser to client presenting only the appraiser’s conclusion of value, with no supporting data.
Leverage
Use of debt financing to purchase an investment, thus maximizing the return per dollar of equity invested; enables a purchaser to obtain possession for little or no initial cash outlay and relatively small periodic payments of the debt incurred.
License
Permission to enter onto the land of another for a specific purpose and/or length of time.
Lien
An encumbrance that makes property security for the payment of a debt or discharge of an obligation; a voluntary lien is one agreed to by the property owner, such as a deed of trust; an involuntary lien exist by operation of law to create a burden on property for certain unpaid debts, such as a tax lien.
Lien release
Filed by holder of mechanic’s lien to voluntarily remove the encumbrance from the property owner’s title.
Lien release bond
Filed with the county recorder by property owner who disputes the correctness or validity of a mechanic’s lien to stop foreclosure of the property; must be in an amount equal to 150 percent of either the entire claim against the property or the portion of the claim allocated to the parcel (s) sought to be released; can also be filed by anyone having an interest in the property or by any other lien holder affected by the claim.
Life estate
An interest in real property conveying the right to possession and use for a term measured by the life or lives of one or more persons, most often the holder of the life estate.
Life tenant
Holder of a life estate.
limited equity housing cooperative
A stock cooperative financed by the California Housing Finance Agency.
Limited liability company (LLC)
Form of business ownership in California that offers owners the limited liability of a corporation while still having the ability to take part in running the company.
Limited partnership
Partnership of one or more general partners, who run the business and are liable as partners, and limited partners, investors who do not run the business and are liable only up to the amount invested.
Liquidated damages
An amount agreed on by the parties to be full damages if a certain even occurs.
listing agreement
Authorization by the owner of property, acting as principal, for a real estate broker to act as the agent of the principal in finding a person to buy, lease , or rent property; may be used to employ a real estate broker to act as agent for a person seeking property to buy, lease, or rent.
Littoral rights
Right to use of water from a lake or other body of still water by adjoining property owners.
Living trust
Inter vivos trust; established during lifetime of truster/beneficiary to hold title to real property and /or other assets and, on death of truster, to pass title to contingent beneficiary without need for probate.
Loan commitment
Lender’s agreement to make specified loan on indicated terms.
Loan-to-value ratio
Amount of loan divided by purchase or market value of property.
Lock-in clause
Provision in a promissory note or land contract that prohibits the promiser from paying off the debt prior to the date set forth in the contract.
Lot and block system
Subdivision system; method of legal description of land using parcel maps identified by tract, block, and lot numbers.
lot books
Catalogs maintained by title and abstract companies listing properties by location and showing deeds and other documents affecting title.
Loyalty
Obligation of agent to place interest of principal above those of the agent or any other party with whom the agent does business on behalf of the principal.
Manufactured home
A structure transportable in one or more sections, designed and equipped to contain not more than two dwelling units and to comply with HUD building specifications.
Marker
See metes and bounds.
Marketable title
Title that a reasonably prudent purchaser, acting with full knowledge of the facts and their legal significance, would be willing and ought to accept.
Market comparison approach
See sales comparison approach.
Market data approach
See sales comparison approach.
Market rent
The rent that could be charged for property at the present time, based on demand and the number of available properties.
Market value
The most probable price property would bring in an arm’s-lenght transaction under normal conditions on the open market. See also arm’s-lenght transaction.
Masonry
Brick and stone products used for exterior building finishing, fireplaces, and other applications.
Master plan
The general plan’ the comprehensive, long-term land-use plan for a jurisdiction.
Material fact
A fact that would be likely to affect the judgment of a person to whom it is known, such as information concerning the poor physical condition of a building that is for sale.
Measuring life
The person, usually the holder of a life estate, against whose life the duration of the life estate is determined.
Mechanic’s lien
A statutory lien against real property in favor of persons who have performed work or furnished materials for the improvement of the property.
Mello-Roos Community Facilities Act
California law that requires property owners benefiting from public improvements financed by bond issues to repay the bonds; requires notification to a prospective purchase of lien assessments on the property.
Meridians
Imaginary lines that run north to south and intersect base lines that run east to west to form the starting point for land measurement using the rectangular survey system of land description.
Metes and bounds
Method of legal description of land using distances (called mess) measured from a point of beginning and using natural or artificial boundaries (called bounds) as well as single objects (called monuments or markers) as points of reference.
Mineral rights
Right of the owner of real estate to explore for and remove solid, liquid, and gaseous substances from the property; can be transferred independently of the right to occupy the property’s surface.
Minimum property requirements (MPRs)
Minimally acceptable property condition for FHA-insured or VA-guaranteed loans; usually determined by compliance with loan building codes.
Minor
A person younger than the age of 18 years.
Mobile home
See manufactured home.
Mobile home dealer
Agent who displays or offers for sale two or more registered mobile homes at the agent’s place of business; requires licensure by the California Department of Housing an dCommunity Development; found at wwww.housing.hcd.ca.gov.
Mobile home park
Any area or tract of land where two or more mobile home lots are rented or leased or held out for rent or lease.
Mobilehome Residency Law (MRL)
Portion of California Civil Code that regulates manufactured (mobile) home rental agreements, charges, bounds for eviction, and eviction procedures. The text of the law is available at www.hcd.ca.gov.
Mold
Naturally occurring organism, transmitted in the form of microscopic spores, that thrive in a damp or humid conditions and can cause an allergic reaction in some individuals; certain types of mold are considered poisonous. For more information www.epa.gov/mold/moldguide.html.
Monument
See metes and bounds.
Morgan Property Taxpayers’ Bill of Rights
California law effective January 1, 1994, to ensure that taxpayers are provided fair and understandable explanations of their rights sand duties with respect to property taxation, prompt resolution of legitimate questions and appeals regarding their property taxes, and prompt corrections when error have occurred in property tax assessments. Information can be found at www.boe.ca.gov/
Mortgage
A legal instrument by which property is pledged by a borrower, the mortgagor, as security for the payment of a debt or an obligation owed to a lender, the mortgagee.
Mortgage-backed securities
Debt instruments that consist of blocks or pools for mortgages on real estate.
Mortgage bankers
Those who make mortgage loans and may also serve as mortgage brokers; in California, mortgage bankers are licensed by the California Department of Corporations and subject to the California Residential Mortgage Lending Act (CRMLA), found in the California Financial Code.
Mortgagee
Lender to whom a property owner (mortgagor) gives a security interest in the property.
Mortgage Insurance
Private mortgage insurance, required by lenders when mortgage indebtedness exceeds 80 percent of property value; also refers to a term life insurance policy that may be purchased by a borrower in an amount equal to the remaining mortgage indebtedness.
Mortgage insurance premium
Fee paid by borrower in exchange for lender’s protection in the event of borrower’s default in payment of mortgage debt.
Mortgage loan brokerage
Individual of company that brings borrowers and lenders together; in California, real estate broker’s license also includes authority to act as a mortgage broker.
Mortgage loan disclosure statement
The statement on a form approved by the Real Estate Commissioner that is required by law to be furnished by a mortgage loan broker to the prospective borrower of a loan of a statutorily prescribed amount before the borrower becomes obligated to complete the loan.
Mortgage revenue bonds
Method of financing community redevelopment projects through issuance of bonds that are repaid by property assessments.
Mortgagor
Property owner who gives security interest in the property to a lender (mortgagee) in exchange for a loan.
Multiple listing clause
Clause in a listing agreement, usually part of an exclusive authorization and right-to-sell listing, taken by a member of a multiple listing service (MLS), providing that the property will be made available through the MLS, in accordance with MLS rules.
Multiple listing service (MLS)
An organization of real estate agents providing for a pooling of listings and the sharing of commissions on transactions involving more than one agent.
Mutual consent
Agreement of all parties to the specified terms; requirement for a valid contract.
Mutuality of contract
Agreement of all parties to the specified terms; requirement for a valid contract.
Narrative appraisal report
The longest and most thorough appraisal report, containing a summary of all factual materials, techniques, and appraisal methods used in setting forth the appraiser’s conclusion of value.
Natural Hazard Disclosure Statement
Document indicating property location in a hazardous area that must be provided by seller to buyer in California residential transactions of one to four dwelling units, with certain exceptions. Information is available at http://cees.ca.gov/planning/nhd.
Negative amortization
Increase in principal balance that occurs when monthly loan payment does not cover entire interest owed for the payment period.
Negative declaration
Statement that a proposed property use is not expected too have a significant impact on the environment and therefore does not require preparation of an environmental impact report.
Negative fraud
Deliberate concealment of something that should be revealed.
Negligent misrepresentation
A representation made carelessly that turns out to be false.
Negotiable instrument
An instrument, such as a promissory note, that is capable of being assigned or transferred in the ordinary course of business.
Net listing
A listing agreement providing that the agent may retain as compensation for his or her services all sums received over and above a net price to the owner.
Net, net, net lease
See triple-net lease.
Net operating income
Profit; the money remaining after expenses are deducted from income.
Nominal rate
The stated interest rate of a loan before taking into account loan fees, points, and other costs that make up the annual percentage rate (APR).
Nonamortized
A loan that includes payment of interest and may include payment of principal, but not enough principal to bring the outstanding balance of the loan to zero at the end of the loan term.
Nonconforming use
A property use that is not allowed by the current zoning ordinance.
Nonexclusive listing
See open listing.
Notice
Knowledge of a fact; actual notice is express or implied knowledge of a fact; constructive notice is knowledge of a fact that is imputed to a person by law because of the person’s actual notice of circumstances and the inquiry that a prudent person would have been expected to make; legal notice is information required to be given by law.
Notice of cessation
Notice that can be filed by a property owner after work on a construction project has been stopped for 30 continuous days.
Notice of completion
Notice that can be filed by a property owner with ten days following completion of a construction project.
Notice of default
Notice by trustee of the truster’s default in payment of the debt underlying the deed of trust and stating intention of the trustee to sell the property being held by the trustee as security for the debt.
Notice non responsibility
Notice that must be filed by a property owner and posted in a conspicuous place on the property within ten days of learning of construction, repair, or other work being performed on the property that the owner has not authorized.
Notice of trustee’s sale
Notice of a sale of property under the terms of a deed of trust securing a debt on which the borrower has defaulted.
Notice to pay or quit
Notice by a landlord to a tenant who has defaulted in payment of rent that the amount owed must be paid within
three days of the notice or the tenant is required to vacate and surrender possession of the premises.
Novation
The substitution or exchange of a new obligation or contract for an old one by mutual agreement of the parties.
Null and void
Of no legal validity or effect.
Obedience
Duty owed by agent to principal to follow all lawful instructions of the principal regarding the transaction.
Observed condition method
Breakdown method; depreciation computed by estimating the loss in value caused by every item of depreciation, whether curable or incurable.
Offer and acceptance
Required for a valid contract; an offer by one party that is accepted by the other.
Offeree
The party to whom an offer is made.
Offeror
The party who makes an offer.
Office of Federal Housing Enterprise Oversight (OFHEO)
Federal agency charged with supervising the privately owned but government-sponsored enterprises (GSE’s), which include Fannie Mae and Freddie Mac. More information is available at www.fhfa.gov.
Open-ended mortgage
A mortgage that permits additional amounts to be borrowed according to the note terms.
Open listing
Nonexclusive listing; the non-exclusive right to secure a purchaser, given by a property owner to a real estate agent; more than one ager may be given such authorization, and only the first to procure a ready, willing, and able buyer-or an offer acceptable to the seller-will be entitled to compensation.
Opinion of title
An attorney’s written evaluation of the condition of the title to a parcel of land after examination of the abstract of title.
Option
A right given for a consideration to purchase or lease property on specified within a specified time, with no obligation on the part of the person receiving the right to exercise it.
Option listing
A listing agreement that give the listing broker the right to purchase the listed property; because of the potential for the appearance of impropriety, if the option is exercised the principal should be informed of the broker’s profit in the transaction and agree to it in writing.
Oral contract
A contract that is not in writing; because the statute of frauds requires a written agreement in certain cases, such as an agreement for the sale of real estate, an oral contract may not be enforceable.
Ordinance
Law established by the governing body of a municipal or county jurisdiction.
Ordinary income
Income that does not qualify for capital gains treatment.
Orientation
Placement of a structure on a site, ideally to take maximum advantage of street frontage, view, and access to light and air.
Ostensible agency
Holding out an agency relationship on which another relies.
Overriding trust deed
See wraparound mortgage or trust deed.
Ownership in severalty
Separate ownership; ownership of property by one person only.
Parcel map
Map that shows all property boundaries within a subdivision.
Partition action
Court proceeding by which co-owners may force a division of the property or its sale, with co-owners reimbursed for their individual shares.
Partners
See general partnership.
Partnership
See general partnership.
Payment bond
Bond that may be required of a building contractor to compensate the property owner if the contractor defaults in performance of contract obligations, such as payment of subcontractors, workers, and suppliers.
Percentage Lease
Provides for rent as a percentage of the tenant’s gross income, usually with a minimum base amount, the percentage may decrease as the tenant’s income increases.
Perc test
Test to determine drainage capability of soil.
Performance
Obligation to be performed under the terms of a contract.
Periodic tenancy
See estate from period to period.
Personal property
All property that is not real property.
Personal Responsibility and Work Opportunity Act
Federal law, effective August 1, 1998, requiring that certain public benefits be withheld from illegal immigrants, including professional and occupational licenses issued by state agencies. The text of law is at www.access.gpo.gov/congress/wm015.txt.
Physical deterioration
Loss in value brought about by wear and tear, disintegration, use, and action of the elements.
Plaintiff
The person who sues in a court action.
Planned development
See planned unit development.
Planned unit development (PUD)
A land-use design that provides intensive utilization of the land through a combination of private and common areas with prearranged sharing of responsibilities for the common areas; individual lots are owned in fee with joint ownership of open areas; primarily residential but may include commercial and /or industrial uses.
Planning commission
An agency of local government charged with planning the development, redevelopment, or preservation of an area.
Plasterboard
Drywall; interior wall finishing material.
Platform frame
Construction technique in which each floor of a building provides support for the floor above it.
Plat map
Subdivision map showing division of property into tracts, blocks, and lots.
Pledged
Use of property as security for a debt by allowing lender to take possession of it until debt is repaid.
Plottage
Assemblage; an appraisal term for the increased value of two or more adjoining lots when they are placed under single ownership and available for use as a larger single lot.
Pocket listing
Property listing that the listing agent markets privately before entering it in the multiple listing service (MLS); usually a violation MLS rules.
Point of beginning
The place at which a legal description using metes and bounds starts.
Points
One point represents one percentage point of a loan amount; may be charged by lenders at the time of loan funding to increase the loan’s effective interest rate.
Police power
The right of government to enact laws and enforce them to benefit the public health, safety, and general welfare.
Post-and beam frame
Construction technique in which interior post support ceiling boards, allowing for more open space within a structure than is possible with other forms of construction.
Potential gross income
The maximum income that property is capable of producing.
Power of attorney
A written instrument authorizing an agent to act in the capacity of the principal; a general power of attorney provides authority to carry out all of the business dealings of the principal; a special power of attorney provides authority to carry out a specific act or acts.
Power of eminent domain
The government’s right to take property for a public purpose on payment of just compensation to the property owner.
Power of sale
The power that may be given by a promissory note to a trustee, a mortgagee, or another lien holder to sell secured property without judicial proceedings if the borrower defaults.
Power-of-sale-clause
A provision in a financing instrument that allows the property used as security for a debt to be sold in the event of the borrower’s default without judicial proceeding.
Power of termination
Right of the grantor of real estate to retake possession on violation of a limitation or condition on the deed to the grantee.
Preliminary notice
Notice of the right of a contractor, subcontractor, or material supplier to file a mechanic’s lien; should be made within 20 days of the date on which the work begins or the material is provided.
Preliminary report
Title company’s initial review of the status of a property’s title; that is, the existence of liens or other encumbrances that could affect its marketability.
Prepaid Rental Listing Service (PRLS)
Business that supplies prospective tenants with property listings on payment of a fee; may be performed by a licensed real estate broker or under the authority of a PRLS license.
Primary mortgage market
Composed of lenders that deal directly with borrowers. See also secondary mortgage market.
Prime rate
Interest rate banks charge their most favorably rated commercial borrowers.
Principal
The employer of an agent; one of the parties to a transaction; the amount of money borrowed.
Priority of claims
Order in which creditors will be paid when there are claims against a homestead that result in a judgment against the homeowners.
Private mortgage insurance (PMI)
Mortgage guaranty insurance available to conventional lenders on the high-risk portion of a loan, with payment included in the borrower’s loan installments.
Probate
Court proceeding by which the property of a decedent is distributed according to the decedent’s will or, if the decedent died intestate (without a will), according to the state law of intestate succession.
Probate Code
The portion of California Law that covers the court proceedings for disposition of property on the death of the property owner.
Procuring cause
The cause originating a series of events that lead directly to the intended objective; in a real estate transaction the procuring cause is the real estate agent who first procures a ready, willing, and able buyer.
Progression, principle of
The worth of a less valuable building tends to be enhanced by proximity to buildings of greater value.
Promissory note
A written promise to repay a loan under stipulated terms; establishes personal liability for payment by the person making the note.
Property management
A branch of the real estate business involving the marketing , operation , maintenance, and other day-to-day requirements of rental properties by an individual or a firm acting as agent of the owner.
Property tax year
Fiscal year for California property tax purposes runs from July 1 to June 30. Taxes charged for that period become a lien on the property on the preceding January 1.
Proposition 13
Passed by California voters in 1978; limits property tax rate and property value on which taxes may be based. Overview of property tax prepared by California State Board of Equalization can be found at www.boe.ca.gov/protaxes/pdf/pub29.pdf.
Proration
Adjustment of interest, taxes, insurance, and other costs of property ownership on a pro rata basis as of the closing or agreed-on date; usually apportions those costs based on seller’s and buyer’s respective periods of ownership.
Prospective economic advantage
Legal term for one’s expectations in doing business.
Public report
Real Estate Commissioner’s report on a subdivision, including plans for improvements.
Puffing
Exaggerated comments or opinions that paint an overly optimistic picture of property attributes; may lead to a claim of misrepresentation.
Purchase-moneymortgage or trust deed
A trust deed or mortgage given as part or all of the purchase consideration for real property.
Quantity survey method
Way of estimating building reproduction cost by making a thorough itemization of all construction costs, both direct (material and labor) and indirect (permits, overhead, profit) , then totaling those costs.
Quasi-community property
Any California real estate acquired by an out-of-state married person that would be considered community property if acquired by a resident of California; any California real estate acquired in exchange for real or personal property located anywhere, when the California real estate would been considered comity property if it had been acquired by a California resident.
Quiet title
See action to quiet title.
Quitclaim deed
A deed that conveys any interest the grantor may have in the property at the time of the execution of the deed, without any warranty of title or interest.
Radon
Cancer-causing colorless, odorless radioactive gas caused by the breakdown of natural elements in soil; remediation includes external venting of basements and crawlspaces. Information can be found at www.epa.gov/radon.
Rafters
Beams that extend from ridge line of roof to eave.
Ranges
In the rectangular survey system of land description, townships running east and west of a meridian.
Rate
Interest rate is percentage of loan amount that must be paid as fee for loan.
Ratification
The adoption or approval of an act by the person on whose behalf it was performed, as when a principal ratifies conduct of an agent that was not previously authorized.
Ready, willing, and able buyer
A buyer who wants and is prepared to purchase property, including being able to finance the purchase, at the agreed-on price and terms.
Real estate
Real property ; land; includes the surface of the earth, the substances beneath the surface, the airspace above the surface, fixtures, and anything incidental or appurtenant to the land.
Real Estate Advisory commission
Ten-member group appointed by the Real Estate Commissioner that makes recommendations to the Commissioner on matters involving the Dept. of RE.
Real Estate board
A local organization whose members consist primarily of real estate brokers and salespeople.
Real Estate broker
A person employed for a fee by another to carry on any of the activities listed in the RE Law definition of a broker.
Real Estate brokerage
Business licensed to conduct activities under authority of real estate broker’s license.
Real Estate Education and Research Fund
California fund financed by a fixed portion of real estate license fees, designed to encourage research in land use and real estate development.
Real Estate Fraud Prosecution Trust Fund
Authorized by state law for any county that wishes to establish such a fund to help district attorneys and law enforcement agencies deter, investigate, and prosecute real property fraud crimes; up to $2 may be added to the county’s recording fees fro such a fund.
Real Estate investment trust (REIT)
Way for investors to pool funds for investments in real estate and mortgages, with profits taxed to individual investors, rather than the corporation.
Real Estate Law
Portion of the California Business and Professions code regarding licensing of real estate brokers and salespeople and activities of Department of Real Estate; also includes Subdivided Lands Law.
Real estate purchase contract and receipt for deposit
Form of real estate sales contract commonly used in California.
Real Estate salesperson
A person licensed under the under the provisions of the Real Estate Law to act under the control and supervision of a real estate broker in carrying on any of the activities listed in the license law.
Real Estate Settlement Procedures Act (RESPA)
Federal law requiring certain disclosures by lenders in federally related mortgage loans involving the sale or transfer of residences of one to four dwelling units. Information on RESPA can be found at www.hud.gov/offices/hsg/rmra/res/respa_hm.cfm.
Real estate syndicate
An organization of real estate investors, typically in the form of a limited partnership.
Real Estate Transfer Disclosure Statement
Information on property mechanical and structural conditions that must be disclosed by seller of California residential property of one to four units to a prospective buyer.
Real property
See real estate.
Real Property Loan Law
Part of the California Real Estate Law that covers loans solicited or negotiated by a real estate broker.
Reasonable care and skill
Real estate agent’s obligation to principal to conduct with appropriate expertise and consideration.
Reassessment event
Sale or other transaction, such as addition of improvements, that triggers a revaluation of property for tax purposes.
Reconciliation
In appraising, the final step, in which the estimates of value reached by each of the three appraisal approaches ( sales comparison, cost , and income capitalization) are weighed in light of the type of property being appraised, the purpose of the appraisal, and other factors, to arrive at a final conclusion of value.
Reconveyance deed
Instrument by which the trustee returns title to the truster after the debt underlying a deed of trust is paid.
Recording
Submitting a document to the county recorder for inclusion in the public records of the county on payment of the applicable recording fee.
Recovery Account
State fund financed by real estate license fees and intended to help compensate victims of real estate licensee fraud, misrepresentation , deceit, or conversion of trust funds, when a court-ordered judgment cannot be collected.
Recovery property
Property that can be depreciated for income tax purposes, with the cost of the property deducted from income over a stated period.
Rectangular survey system
Section and township system; U.S. government survey system; method of a legal description of land using areas called townships measured from meridians and base lines.
Redemption
Period following a court-ordered sale of mortgaged property in which the judgment debtor or the judgment debtor’s successor in interest can buy back the property.
Redlining
An illegal lending policy of denying real estate loans on properties in certain areas because of alleged higher lending risks, without due consideration of the individual loan applicant.
Reformation
An action to correct a mistake in a contract, deed, or another document.
Registered domestic partner
One of two persons sharing a residence who have filed a Declaration of Domestic Partnership with the secretary of state.
Regression, principle of
A building’s value will decline if the buildings around it have a lower value.
Regulations of the Real Estate Commissioner
Rulers that clarify and interpret the Real Estate Law and that are binding on real estate licensees.
Regulation Z
Federal Reserve Board requirements that implement the Truth-in-Lending Act.
Reinstatement
Revival of defaulted mortgage by payment of all delinquencies, including court cost and fees, before foreclosure sale.
Rejection
Refusal to accept an offer.
Release
Removal of part of a contract obligation, for consideration, by the party to whom the obligation is owed; removal of part of a property from a lien on payment of part of the debt owed.
Reliction
The increase of a landowner’s property by the receding of an adjacent body of water.
Remainder
The right of future possession and use that will go to someone other than the grantor on termination of a life estate.
Renegotiable-rate mortgage (RRM)
A financing instrument in which the interest rate is adjusted after an agreed-to period following origination, such as three or five years.
Rent
The consideration paid for possession and use of leased property.
Rent control
A regulation imposed by a local governing body as a means of protecting tenants from relatively high rent increases over the occupancy period of a lease.
Repair and deduct
Tenant’s remedy when landlord is on notice of and fails to make necessary repairs to leased premises.
Replacement cost
The cost of a new building using modern construction techniques, design, and materials but having the same utility as the subject property.
Reproduction cost
The cost of a new building using modern construction techniques, design, and materials but having the same utility as the subject property.
Request for reconveyance
Beneficiary’s notice to trustee on payment of underlying deb that title to property is to be returned to the trustor.
Rescission
The cancellation of a contract and restoration of the parties to same position they held before the contract was formed.
Resident apartment manager
Apartment manager who resides in one of the units; required of every California apartment building having at least 16 units.
Restraint on alienation
An illegal condition that would prohibit a property owner from transferring title to real estate.
Restricted license
Real estate license on which one or more conditions are imposed by the RE Commissioner as the result of a disciplinary action.
Restricted use report
Property appraisal that will be limited in either the method of valuation used or the property interests valued.
Restriction
A limitation on the use of real property; public restrictions imposed by government include zoning ordinances; private restrictions imposed by deed may require the grantee to do or refrain from doing something. See also CC&Rs.
Reverse-annuity mortgage (RAM)
Finance instrument that creates an increasing amount of debt secured by the borrower’s residence, based on the amount paid out to the borrower, typically monthly.
Reversion
The right of future possession and use retained by the grantor of a life estate.
Revitalization
Period of property renovation and building in which neighborhood begins a new life cycle.
Revocation
Cancellation of an offer before acceptance.
Rezoning
Change in the land use designation of an area.
Ridge board
Beam that runs along top of roof.
Right of appropriation
Right of government to take, impound, or divert water flowing on the public domain from its natural course for some beneficial purpose.
Right of entry
Right of the landlord to enter leased premises in certain circumstances.
Right of redemption
See redemption
Right of survivorship
The right os surviving covenants to share equally in the interest of a deceased covenant; the last surviving covenant is sole owner of the property.
Right to rescind
Consumer’s three-day right to cancel a credit transaction involving a security interest in the consumer’s principal dwelling, as provided by Regulation Z.
Riparian rights
The right of a landowner whose property borders a lake, river , or stream to the use and enjoyment of the water adjacent to or flowing over the property, provided the use does not injure other riparian landowners.
R-value
Cumulative rating of the effectiveness of various types of insulation.
Safety clause
Provision that protects a listing broker’s commission in the event that property is sold within a stated period to someone who was first brought to the property during the term of the listing.
Sale-leaseback
A transaction in which at the time of sale the seller retains occupancy by concurrently agreeing to lease the property from the purchaser.
Sales associate
See associate licensee.
Sales comparison approach
Market comparison approach; market data approach; appraisal method in which the sales prices of properties that are comparable in construction and location to the subject property are analyzed and adjusted to reflect differences between the com parables and the subject.
Sales contract
Land contract; installment sales contract; a contract used in a sale of real property whereby the seller retains title to the property until all or a prescribed part of the purchase price has been paid, but no earlier than one year from the date of possession.
Sales tax
Owned to the state by retailers of tangible personal property, whether or not paid by a customer; exception is made for some items, such as food, which incurs no sales tax.
Salvage value
In computing depreciation for tax purposes under all but the declining balance method, the reasonably anticipated fair market value of the property at the end of its useful.
Sandwich lease
A leasehold interest between the primary lease and the operating lease.
Satisfaction
Discharge of an obligation before the end of its ten by payment of the total debt owed.
Scarcity
Relative lack of supply of a product’ one of the four basic elements of value that also include demand, utility, and transferability.
S corporation
Business owned by no more than 35 shareholders and incorporated following requirements of Subchapter S of the Internal Revenue Code, which then allows income to flow directly to shareholders, avoiding double taxation.
Secondary financing
A loan secured by a second (or subsequent) mortgage or trust deed on real property.
Secondary mortgage Market
Investment opportunities involving real property securities, other than direct loans from lender to borrower; loans may be bought, sold , or pooled to form the basis for mortgage-backed securities.
Secret Profit
Compensation in any form received by a real estate licensee without the knowledge of the licensee’s client.
Section
A standard land area of one mile square, containing 640 acres, used in the rectangular survey system of land description.
Section and township system
See rectangular survey system.
Security deposit
An amount paid at the start of a lease term and retained by the landlord until the tenant vacates the premises, all or part of which may be kept by the landlord at that time to cover costs of any default in rent payments or reasonable costs of repairs or cleaning necessitated by the tenant’s use of the premises.
Security instrument
A written document executed by a debtor by which the described property is made security for the underlying debt.
Seismic hazards zone
Area specified by the Ca Deprtment. of Conservation as being at high risk of severe earth movement.
Self-contained report
Narrative report; most comprehensive type of appraisal report, including a thorough statement of the background data supporting the opinion of value.
Separate property
Property owned by a married person other than community property, including property owned before marriage, property acquired by gift or inheritance, income from separate property, and property acquired with the proceeds of separate property.
Servient tenement
See easement.
Set-back ordinance
An ordinance requiring improvements built on property to be specified distance from the property line, street, or curb.
Settlement statement
HUD-1; document provided to buyer and seller at closing that indicates all of the income and expenses of the transaction.
Severalty, ownership in
See ownership in severalty.
Shared appreciation mortgage (SAM)
Security instrument in which borrower receives below-market rate of interest and resulting lower payments in exchange for giving the lender an agreed-on portion of future property appreciation, if any.
Shared equity mortgage
A financing instrument that provides for the lender to share in the property’s appreciation.
Sheathing
Insulating and bracing material, such as plywood, applied to exterior walls of wood frame structure, to which exterior finishing material, such as siding or masonry, is applied.
Sheriff’s deed
Deed given to the purchaser at a court-ordered sale to satisfy a judgment, without warranties.
Short rate
Increased premium charged by insurance company on early cancellation of policy to compensate insurer for the fact that the original rate was calculated on the full term of the policy.
Siding
Exterior wall finishing, applied in horizontal boards that can be wood, aluminum, vinyl, or a composite material.
Sill
Wood member placed directly on foundation; in California, state law requires anchor bolts to fasten sill to foundation for earthquake safety .
Simple interest
Interest computed on the principal amount of a loan only. See also compound interest.
Single agency
Representation of only one party to a transaction; for example, a seller’s agent or buyer’s agent.
Sinking fund
Fund set aside from the income from property that, with accrued interest, eventually will pay for replacement of the improvements.
Site value
Determination of land value exclusive of improvements.
Six-month rule
Time period in which a homeowner can sell one home and move into another, less costly one, in order to pay debts that would otherwise threaten a sale of the homestead.
Soffit
Encloses opening between outside wall of structure and end of room overhang.
Solar heating
System that uses warmth of sun; passive when sunlight is allowed to warm tiles or other materials; active when water is passed through solar collector, then recirculated.
Sole proprietor
Only owner of a business.
Special agent
See agent.
Special assessment
Appropriation in the form of a tax on property that is enhanced by the addition or renovation of improvements, such as a light-rail line.
Special limitation
A limiting condition specified in a transfer of fee simple ownership that, if not complied with, will immediately and automatically extinguish the estate and return title to the grantor.
Special power of attorney
Authorization to act for someone else for a specific purpose, such as a real estate transaction.
Special studies zone
One of the areas, typically within a quarter-mile or more of an active earthquake fault, requiring a geologic report for any new project involving improvements of structures initiated after May 4, 1975; the report may be waived by city or county if the state geologist approves.
Special warranty deed
A deed in which the grantor warrants or guarantees the title only against defects arising during the grantor’s ownership of the property and not against defects existing before the time of the grantor’s ownership.
Specific lien
Creditor’s right in identified property of the debtor.
Specific performance
An action to compel a breaching party to adhere to a contract obligation, such as an action to compel the sale of land as an alternative to money damages.
Square-foot method
Formulated after adoption of a general plan by a city or county to give further details of community development, including projected population density and building construction requirements.
Standard parallels
See correction lines.
Standard policy
Policy of title insurance that protects against fraud or other challenges to the owner’s title that would not be discovered by an examination of the property or title records.
Standard subdivision
Area of land divided into parcels intended for separate ownership, with no common (shared) ownership by all of the owners of any of the land.
Standby commitment
Mortgage banker’s promise, for which builder pays a standby fee, to make loans available to prospective purchasers on stated items.
Standby fee
Fee paid by builder to mortgage banker in exchange for agreement to make mortgage loans available at a stated price at a future time.
Starting time
Date on which a construction project begins (work starts or materials are provided.)
Statute of frauds
A state law requiring certain contracts to be in writing and signed before they will be enforceable, such as a contract for the sale of real estate.
Statute of limitations
Law that stipulates the specific time period during which a legal action must be brought following the act that gives rise to it.
Statutory dedication
Dedication of an easement for public use under the provisions of the California Subdivision Map Act.
Statutory warranty deed
A short-term warranty deed that warrants by inference that the seller is the undisputed owner, has the right to convey the property, and will defend the title if necessary; if the seller does not do so, the new owner can defend against said claims and sue the former owner.
Steering
The illegal act of directing prospective homebuyers to or from a particular residential area on the basis of the homebuyer’s race or national origin.
Stock cooperative
A form of subdivision , typically of an apartment building, in which each owner in the stock cooperative is a shareholder in a corporation that holds title to the property, each shareholder being entitled to use, rent, or sell specific apartment unit. See also limited equity housing cooperative.
Straight-line method
Depreciation computed at a constant rate over the estimated useful life of the improvement.
Straight note
A note in which a borrower repays the principal in a lump sum at maturity, with interest due in installments or at maturity.
Stucco
Type of plaster used for exterior finishing of walls.
Studs
Vertical wall supports; wood studs are used in a wood-frame structure and steel studs are used in a steel-frame structure.
Subagent
Person who works through agent on client’s behalf.
Subdivided Lands Law
Part of the California Real Estate Law found in the Business and Professions Code that regulates the formation, marketing, and financing of subdivisions under the authority of the Real Estate Commissioner. A copy of this and other zoning and planning laws can be found at http://ceres.ca.gov/planning/pzd/2000/pzd2000_web/#anchor1018379.
Subdivision
The division of real property into separate parcels or lots for the purpose of sale, lease, or financing.
Subdivision Map Act
Document showing division of land into two or more parcels, required before subdivision approval.
Subdivision public report
Issued by the Real Estate Commissioner after a subdivision developer has met the requirements of the Subdivided Lands Law; provides details of the project and financing, and a copy must be given to all prospective purchasers.
Subdivision system
See lot and block system.
Subject to
When a grantee takes title to real property “subject to” a mortgage or trust deed, the grantee is not responsible to the holder of the promissory note for the payment of the amount due, and the original maker of the note retains primary responsibility for the underlying debt.
Sublease
A lease given by a lessee (tenant).
Subordination agreement
An agreement by the holder of an encumbrance against real property to permit that claim to take an inferior position to other encumbrances against the property.
Substitution agreement
An agreement by the holder of an encumbrance against real property to permit that claim to take an inferior position to other encumbrances against the property.
Successor trustee
Person who takes control of property held in trust on death or incapacitation of original trustee.
Summary report
Appraisal report using a standardized form, such as the Uniform Residential Appraisal Report (URAR) developed by Fannie Mae and Freddie Mac. A copy of the form can be downloaded from www.efanniemae.com/sf/formsdocs/forms/pdf/sellingtrans/1004.pdf.
Supplemental assessment
Additional “catch-up” property tax assessment following a sale or other reassessment event.
Supply and demand, principle of
Takes into account the effect on market value of the relationship between the number of properties on the market at a given time and the number of potential buyers.
Survey
The process by which a parcel of land is measured and its area determined.
Syndicate, real estate tack
See real estate syndicate.
Tack
Adding together successive periods of adverse possession.
Take-out loan
The loan arranged by the owner or builder/developer for a buyer; the permanent financing that pays off and replaces the interim loan used during construction.
Taxable gross income
Income from all sources, less certain payments, such as contributions to a qualified retirement plan.
Taxable income
Income that remains after allowed deductions from adjusted gross income.
Tax bracket
Tax rate applicable to a taxpayer’s taxable income.
Tax credit
Reduction in tax owed.
Tax deed
Deed issued by the country tax collector when property is sold at public auction because of nonpayment of taxes.
Tax-deferred exchange
Transfer of property held for productive use in a trade or business or for investment in exchange for like-kind property in a transaction that meets the requirements of Section 1031 of the Internal Revenue Code.
Tax increment funding
Payments on bonds through collection of increased taxes on improvements financed by the bonds.
Tax lien
An involuntary lien that arises from a taxpayer’s obligation to pay real property taxes, state income and estate taxes, or federal income, gift, and estate taxes.
Taxpayer Advocate’s Office
State office that assists taxpayers in explaining tax issues. Information on the program is available at www.fth.ca.gov/aboutftb/taxpayer_advocate/index.shtml.
Tax rate
Percentage of income, proceeds, or consideration paid that is charged for a specific tax; the documentary transfer tax rate is 55 cents per $500 or fraction of $500 of the consideration paid for property.
Tenancy in common
Co-ownership of property in equal or unequal shares by two or more persons, each holding an undivided interest without right of ownership.
Tenancy in partnership
Ownership by two or more persons, acting as partners, of property held for partnership purposes.
Tenant
Lessee under a lease; one who has the legal right to possession and use of property belonging to another.
Tender
An offer to perform a contracted obligation.
Tentative subdivision map
The initial or tentative map required of subdividers by the Subdivision Map Act, submitted to the local planning commission, which notes its approval or disapproval; a final map embodying any changes requested by the planning commission also must be submitted.
Testamentary trust
A trust established by will and funded with proceeds from the estate of the decedent.
Testator
A person who makes a will.
Tiers
In the rectangular survey system of land description, townships running north and south of a base line.
Time-share estate
A right of occupancy in a time-share project (subdivision) coupled with an estate in the real property.
Time-share project
A form of subdivision of real property into rights to the recurrent, exclusive use or occupancy of a lot or unit of the property on an annual or other periodic basis, for a specified period time.
Time-share use
A license or contractual or membership right of occupancy in a time-share project that is not coupled with an estate in the real property.
Title Insurance
Insurance to protect a real property owner or lender up to a specified amount against certain types of loss affecting title or marketability.
Title insurance company
Business licensed by the state to insure buyers and lenders against losses due to defects in title to real estate.
Title insurance fund
Specified amount of premiums collected by a licensed California title insurance company that must be set aside each year.
Title plant
Database of a title insurance company that includes records of real estate transfers.
Tort
Any wrongful act, other than a breach of contract, for which civil action may be brought by the person wronged.
Township
A standard land area of six miles square, divided into 36 sections of one mile square each, used in the rectangular survey system of land description.
Trade fixtures
Articles of personal property that are attached by a business tenant to real property that are necessary to the carrying on of a trade and are removable by the tenant.
Transferability
One of the four elements that mud be present for a market to be created: demand, utility, scarcity, and transferability.
Triple-net lease
Guarantees a specified net income to the landlord, with the tenant paying that amount plus all operating and other property expenses, such as taxes, assessments, and insurance.
Trust
Method of property ownership in title is transferred by a truster to a trustee to be held for the benefit of a beneficiary.
Trust account
An account separate from a broker’s own funds (business and personal) in which the broker is required by law to deposit all funds collected for clients before disbursement.
Trust deed
A deed issued by a borrower of funds (the trustor) conveying title to a trustee on behalf of a lender, the beneficiary of the trust; the trust deed authorizes the trustee to see the property to pay the remaining indebtedness to the beneficiary if the trustor defaults on the underlying obligation.
Trustee
One who holds property conveyed by a trustor on behalf of (in trust for) the beneficiary, to secure the performance of an obligation.
Trustee in bankruptcy
See bankruptcy.
Trustee’s deed
Deed given to the purchaser at a foreclosure sale by the trustee acting under a deed of trust.
Trustee’s sale
Sale of property held as security for payment of a loan on default of the trustor.
Trustor
One who conveys property to a trustee to hold on behalf of (in trust for) a beneficiary to secure the performance of an obligation; borrower under a deed of trust.
Truth-in Lending Act (TILA)
Federal law that requires certain disclosures in consumer credit transactions; implemented by Regulation Z of the Federal Reserve Board.
Underground water rights
Right to remove water from aquifers and other sources below the surface of the land.
Undivided interest subdivision
An area of land divided into parcels where each owner is a tenant in common with all other owners; for example, a campground with shared facilities.
Undue Influence
Use of fiduciary or confidential relationship to obtain a fraudulent or an unfair advantage over another’s weakness of mind, distress, or necessity.
Uniform codes
Building codes that are developed by national or international groups and adopted by states and local jurisdictions; the International Building Code is now the standard throughout the country, with additional requirements developed and adopted by states and local jurisdictions as warranted.
Uniform Commercial Code
Establishes a unified and comprehensive method for regulation of security transactions in personal property.
Uniform Residential Appraisal Report (URAR)
Summary form of appraisal report developed and required by Fannie Mae and Freddie Mac; www.efanniemae.com;sf;forms/pdf/sellingtrans/1004.pdf
Uniform Settlement Statement
Document developed by HUD that is required by the federal RE Settlement Procedures Act (RESPA) to be provided to parties in federally related mortgage loans involving the sale or transfer of residences of one to four dwelling units. RESPA requirements can be found at www.fdic.gov/regulations/laws/rules/6500-2530.html.
Unilateral contract
A contract that contains promise of performance by only one party that is accepted by performance of the other party.
unit-in-place method
Way of estimating building reproduction cost by adding the construction cost per unit of measure of each of the component parts of the subject property; each unit cost includes material, labor, over-head, and builder’s profit.
Unity possession
The essential element of a cotenancy or other form of co-ownership that gives all co-owners the right to possession of the entire property.
Unlawful detainer
Legal action that may be brought to evict a tenant who is in unlawful possession of leased premises
Unruh Civil Rights Act
California law that prohibits discrimination against persons in one of the identified groups in accommodations and business establishments. Explanation of the law and enforcement procedure is at www.dfeh.ca.gov/publications/publications.aspx? show Pub=36.
Untenantable dwelling
Property lacking one or more necessary utilities, such as water, or in such poor condition that it falls below minimum property standards; uninhabitable.
Urea-formaldehyde
Chemical used in manufacturing process of many home building components and household goods that can emit toxic fumes. Information is available at www.epa.gov/iaq/formalde.html.
URL
Uniform resource locator, the address of a site on the Internet, such as www.dre.ca.gov.
Useful life
The period of years in which a property improvement may be used for its originally intended purpose.
Use tax
California tax charged to the purchaser for storage, use, or other consumption of certain purchased or leased tangible personal property. Information can be found at www.boe.ca.gov/sutax/sutprograms.htm.
U.S. government survey system
See rectangular survey system.
Usury
The charging of a rate of interest on a loan that is greater than the rate permitted by law.
Utility
One of the four elements necessary to create a market: demand, utility, scarcity, and transferability.
Vacancy decontrol
See rent control.
Vacancy factor
The percentage of a building’s space that is unrented over a given period.
Value in exchange
The value of property expressed as the kind and amount of other property that would be acceptable in a transfer of ownership.
Value in use
The subjective value of property to its present owner, as opposed to market value, which should be objective.
Vesting of title
Time at which title to real estate is transferred to new owner.
Veteran’s entitlement
Amount of loan guarantee available to eligible veteran.
Veteran’s exemption
Amount by which value of eligible veteran’s property is reduced for purposes of real property taxation.
Void
To have no force or effect; that which is unenforceable.
Voidable
That which can be adjudged void but is not void unless action is taken to make it zoo.
Voluntary lien
Encumbrance on property imposed on action or with consent of property owner; a mortgage or deed of trust is a voluntary lien on the property identified in the security instrument.
Waiver
The giving up of a right or privilege voluntarily.
Wallboard
Interior wall finishing material.
Warranties, implied
See implied warranties.
Warranty deed
A deed that expressly warrants that the grantor has good title; the grantor thus agrees to defend the premises against the lawful claims of third persons.
Warranty of habitability
Legally implied obligation of a landlord to meet minimal housing and building standards.
Water rights
Right to use of water found at surface of land and underground.
Will
A written, legal declaration of a person called a testator, expressing the testator’s desires for the disposition of his or her property after death.
Wraparound mortgage or trust deed
Over-riding or all-inclusive trust deed; a financing device in which a lender assumes payments on an existing debt and takes from the borrower a junior lien with a face value in an amount equal to the amount outstanding on the old instrument and the additional amount of money borrowed.
Writ of execution
A cour order directing the sheriff or another officer to satisfy a money judgment out of the debtor’s property, including real estate not except from execution.
Writ of possession
Order issued by the court directing the sheriff or marshal to take all legal steps necessary to remove the occupant(s) from the specified premises.
Yield
Profit; return; the interest earned by an investor on an investment or by a bank on the money it has loaned.
Zones
Defined land areas with designated land uses and building specifications.
Zoning
An act of city or county government specifying the possible uses of property in a particular area.
Zoning ordinances
Local laws, regulations, and codes requiring compliance with designated land uses.
Zoning variance
An exception to a requirement of a zoning ordinance to permit a use of the land that is reasonable in light of neighboring land uses.
