Words I Struggle with Flashcards
Principle of progression
The idea that the value of a house increases when other, more valuable houses are built in the area. In other words, the “nicer” a neighborhood becomes, the more valuable all houses in it become.
Functional obsolescence
a loss of value to improved real property due to inadequate, outmoded, or inappropriate improvements
Special warranty deed
a deed in which the grantor warrants, or guarantees, the title only against defects arising during her tenure and ownership of the property and not against defects existing before that time, generally using the language “by, through or under the grantor but not otherwise”
Lawful object
A lawful object is an element that must be present in a valid contract. It is legal, implying that something illegal cannot be the object of a contract. For example, a contract to sell a stolen car is a voidable contract from the beginning, as it is illegal to sell a stolen car.
Contract for deed
a contract for the sale of real estate under which the sale price is paid in periodic installments by the purchaser, who is in possession and holds equitable title, although actual title is retained by the seller until final payment
CC&Rs
Covenants, Conditions, and Restrictions. Condominium documents that serve as the operational procedures describing the rights and prohibitions of the co-owners in a condominium association
Balloon loan
also known as a partially amortized loan, it has a fixed rate of interest over a period of time. At the end of the balloon period, the borrower must refinance or pay off the remaining balance - in other words, the rest of the loan balance becomes due.
Impounds
account maintained by the mortgage company to collect recurring costs such as insurance and tax payments that are necessary for you to keep your home, but are not technically part of the mortgage
Leasehold estate
a tenant’s right to occupy real estate during the term of a lease, generally considered to be a personal property interest
Capitalization rate
the rate of return a property will produce on the owner’s investment
Township
the principal unit of the rectangular survey system. A township is a square with 6-mile sides and an area of 36 square miles
Prepayment penalty
a charge imposed on a borrower who pays off the loan principal early. This penalty compensates the lender for interest and other charges that otherwise are lost
Land trust
a legal entity that takes ownership of, or authority over, a piece of property at the request of the property owner
Reversion
the remnant of an estate that the grantor holds after granting a life estate to another person – the estate will return, or revert, to the grantor; also called a reverter
Involuntary alienation
the act of transferring property to another without the owner’s consent, as through eminent domain or adverse possession
Freehold estate
an estate in land in which ownership is for an indeterminate length of time, in contrast to a leasehold estate
suit to quiet title
a court action intended to establish or settle the title to a particular property, especially when a cloud on the title exists
Procuring cause
the effort that brings about the desired result. under an open listing, the broker who is the procuring cause of the sale receives commission
Estate at sufferance
Estate at sufferance is a leasehold estate that occurs when a tenant stays in possession of a rental property after their lease expires or terminates
Regulation Z
law requiring credit institutions to inform borrowers of the true cost of obtaining credit; commonly called the Truth in Lending Act
Right of survivorship
the right for a surviving joint tenant(s) to acquire the interest of a deceased joint tenant; also applies to community property right of survorship
Economic life
the period of time during which a structure may reasonably be expected to perform the function for which it was designed or intended
Blockbusting
the illegal practice of inducing homeowners to sell their properties by making representations regarding the entry or prospective entry of minority persons into the neighborhood
Escrow
the closing of a transaction through a third party called an escrow agent, or escrowee, who receives certain funds and documents to be delivered on the performance of certain funds and documents to be delivered on the performance of certain conditions outlined in the escrow agreement
Fee appraiser
also known as individual appraisal, is a comprehensive and detailed evaluation of a single property. It is often performed when a property is being sold, refinanced, or for other purposes such as estate planning or litigation.
Earnest Money Deposit
an amount of money, deposited by a prospective buyer as evidence of good faith under the terms of a contract, that is to be forfeited if the buyer defaults but applied to the purchase price if the sale is closed
Special Assessment
a tax or levy customarily imposed against only those specific parcels of real estate that will benefit from a proposed public improvement like a street or paved alley
Trust deed
a deed of trust
Open listing
a listing contract under which the broker’s commission is contingent on the broker’s producing a ready, willing, and able buyer before the property is sold by the seller or another broker
Equitable title
the interest held by a vendee under a contract for deed or an installment contract; the equitable right to obtain absolute ownership to property when legal title is held in another’s name
Cost approach
an estimate of value based on current construction costs, less depreciation, plus land value. Contrast with the income approach to value and the sales comparison approach to value
Laches
an equitable doctrine used by courts to bar a legal claim or prevent the assertation of a right because of undue delay or failure to assert the claim or right
Encroachment
a building or some portion of it – a wall or fence, for instance – that extends beyond the land of the owner and illegally intrudes on some land of an adjoining owner or a street or alley
Prepayment penalty
a charge imposed on a borrower who pays off the loan principal early. this penalty compensates the lender for interest and other charges that otherwise are lost
servient tenement
land on which an easement exists in favor of an adjacent property (called the dominant tenement); also called servient estate
Farmer Mac - FAMC
the Federal Agricultural Mortgage Corporation - a secondary market for farm real estate loans
Real Estate Recovery Trust Account
a fund established from real estate license revenues to cover claims of aggrieved parties who have suffered monetary damage through the illegal actions of a real estate or property inspection license holder
Fidelity
an agent’s duty to represent the interests of the client
Homestead
land that is owned and occupied as the family home. In TX, homestead property is protected or exempt from forced sale by creditors for payments of most debts, with several exceptions
Referral fees
the money paid to or received when a real estate agent has referred a client to another real estate agent
Nonconforming use
a use of property that is permitted to continue after a zoning ordinance prohibiting it has been established for the area
Economic obsolescence
also known as external obsolescence; reduction in property’s value caused by factors outside the subject property, such as social or environmental forces
Ginnie Mae - GNMA
Government National Mortgage Association - a corporation within HUD that participates in the secondary market. It sells mortgage-backed securities that are backed by pools of FHA and VA loans
Sherman Anti-Trust Act
the first federal law prohibiting contracts, conspiracies, or agreements that restrain trade
Subordination clause
a written agreement between holders of liens on a property that changes the priority of mortgage, judgment, and other liens under certain circumstances.
Protection Period Clause (safety clause)
included in a listing agreement to protect the agent. It allows the agent to continue receiving their commission even after the listing period expires if certain criteria are met.
Reconveyance deed
a legal document that transfers the title of a property from a lender or mortgage holder back to the borrower once a mortgage has been fully paid off
Easement in gross
an easement that is not created for the benefit of any land owned by the owner of the easement but that attaches personally to the easement owner; for example, a utility easement
Graduated payment adjustable mortgage (GPAM)
allows for the deferment of certain principal payments. typically, this means that payments on a loan start at a lower monthly payment and increase over a specified time frame
Police power
the government’s right to impose laws, statutes, and ordinances, including zoning ordinances and building codes, to protect the public health, safety, morals, and welfare
Statute of frauds
that part of state law that requires certain instruments, such as deeds, real estate sales contracts, and certain leases, to be in writing to be legally enforceable
Intestate
the condition of a property owner who dies without leaving a valid will. Title to the property will pass to the heirs as provided in the state law of descent
Liquidated damages
an amount predetermined by the parties to an agreement as the total amount of compensation an injured party should receive if the other party breaches a contract; usually the earnest money in residential sales transaction
Promissory note
an unconditional written promise of one person to pay a certain sum of money to another at a future specified time
Bequest
the transfer of personal property to a legatee in accordance with a will
Probate
a legal process by which a court determines who will inherit a decedent’s property and what the estate’s assets are; literally means “to prove”
Real Estate Investment Trust (REIT)
trust ownership of real estate by a group of at least 100 individuals who purchase certificates of ownership in the trust, which in turn invests the money in real property and distributes the profits back to the investors free of corporate income tax
Real Estate Mortgage Investment Conduit (REMIC)
a tax device that allows cash flows from an underlying block of commercial mortgages to be passed through holders without being subject to income taxes at the level of trustee or agent
Real Estate Settlement Procedures Act (RESPA)
the federal law that requires certain disclosures to consumers about mortgage loan settlements. the law also prohibits the payment or receipt of kickbacks and certain kinds of referral fees
Riparian rights
an owner’s rights in land that borders on or includes a stream or river. these rights include access to and use of the water for domestic purposes
Tenancy at will
a tenancy without a predetermined duration for the tenancy. Either party can terminate this tenancy at any time.
Peddling
the illegal practice of inducing people in a neighborhood to sell their homes, by making them believe that members of a minority group are likely to buy property in and around their residential area. (Blockbusting)
Home Equity Line of Credit (HELOC)
a line of credit that uses the equity you have in your home as collateral
Eminent domain
the right of a government or public entity to acquire property for public use; the entity must make a good-faith effort to acquire the real property through direct negotiation and purchase from the owner
Fee simple
the highest interest in real estate recognized by the law; the holder is entitled to all rights to the property
Fee simple defeasible
a fee simple estate qualified by a special limitation. Language used to describe the limitation includes the words so long as, while, or during
Secondary mortgage market
a market for the purchase and sale of existing mortgages, designed to provide greater liquidity for mortgages; also called the secondary money market. Mortgages are originated in the primary mortgage market
Escheat
the reversion of property to the state in the event the property is abandoned or the owner dies without leaving a will and has no heirs to whom the property may pass
LTV
the ratio of debt to value of a property; the loan amount divided by the lesser of sales price or appraisal
TRID
requires the lender to provide the Loan Estimate, showing estimated costs, to the borrower within three business days of the date the borrower submits a loan application and the Closing Disclosure, showing actual costs, must be provided to the borrower three business days before closing
Easement
a right to use the land of another for a specific purpose, such as for a right-of-way or utilities
Option
the right to purchase property within a definite time at a specified price. there is no obligation to purchase, but the seller is obligated to sell if the option holder exercises the right to purchase
easement appurtenant
an easement that passes with the land on conveyance
easement by necessity
an easement allowed by law as necessary for the full enjoyment of a parcel of real estate; for example, a right of ingress and egress over a grantor’s land
easement by prescription
an easement acquired by continuous, open, uninterrupted, exclusive, and adverse use of the property for 10 years
underwriter
approves, rejects, or returns the loan package to processing with contingency requirements that must be met before resubmission for approval
bill of sale
a written instrument given to pass title to personal property
lien
a right given by law to certain creditors to have debts paid out of the property of a defaulting debtor, usually by means of a court sale
PMI
private mortgage insurance - default insurance on conventional loans, normally insuring the top 20-25% of the loan and not the whole loan
Acceleration clause
the clause in a mortgage or deed of trust that can be enforced to make the entire debt due immediately if the borrower defaults on an installment payment or other obligation
capital gains
income earned from the sale of an asset
millage rate
the amount of tax payable per dollar of the assessed value of a property
appurtenance
those rights, privileges, and improvements that belong to and pass with the transfer of real property but are not necessarily a part of the property, such as rights-of-way, easements, water rights, and property improvements
arrears
can refer to late payments or to payments made after services are rendered, such as property taxes
marketable title
good or clear title, reasonably free from the risk of litigation over possible defects
cloud
any document, claim, unreleased lien, or encumbrance that may impair the title to real property or make the title doubtful; usually revealed by a title search and removed by either a quitclaim deed or suit to quiet title
adverse possession
the actual, visible, hostile, notorious, exclusive, and continuous possession of another’s land under a claim of title. possession for a statutory period may be a means of acquiring title
encumberance
any lien (such as a mortgage, tax, or judgment lien) or an easement or a restriction on the use of the land that may diminish the value of a property; a cloud against clear, free title to property
Mrs Murphy Exemption
Allows property owners to deny applicants based on nearly any criteria they choose.
This exemption states that if a single dwelling has four or fewer units, and the owner lives in one of those units, that home is not subject to FHA regulations and discrimination lawsuits.
Latent Defects
a hidden structural defect presumably resulting from faulty construction, known to the seller but not to the purchaser and not readily discoverable by inspection
habendum clause
that part of a deed beginning with the words “to have and to hold”, following the granting clause and defining the extent of ownership the grantor is conveying
Chain of title
the succession of conveyances from some accepted starting point, whereby the present holder of real property derives title
HUD
Department of Housing and Urban Development - a foreclosed property owned by the U.S. Department of Housing and Urban Development.
Testate
having made and left a valid will
Commingling
the illegal act by a real estate broker of placing client or customer funds with personal funds. By law, brokers are required to maintain a separate trust or escrow account for other parties’ funds held temporarily by the broker
Conversion
refers to the process of changing a property’s use to enhance its value and marketability
Littoral rights
property rights adjacent to a non-flowing body of water, such as a lake or ocean
conveyance
the act of transferring property from one party to another
cooperative broker
a real estate broker who helps another broker in a private property transaction
express agency
a formal relationship between a property owner and a real estate agent or broker
ostensible agency
a form of implied agency relationship created by the actions of the parties involved rather than by written agreement or document
revocation
termination of licensure privileges for cause
addendum
any provision added to an existing contract without altering the content of the original. It must be signed by all parties
Certificate of reasonable value (CRV)
a form indicating the appraised value of a property being financed with a VA loan
Grantee
a person who receives a transfer of real property from a grantor
Hypothecation
to pledge property as security for an obligation or loan without giving up possession of it
“subject to”
situation in which a buyer takes title to property but the existing loan stays in the name of the seller, so the seller is primarily liable for the loan
Acre
a unit of land area equal to 4,840 square yards
