Colorado Real Estate Pre-Licensing Course

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Colorado Real EstatePre-Licensing Course

DEMO - REAL PROPERTY

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KEY WORDS - REAL PROPERTYTo look up each word listed below in the TERMINOLOGY section, click on the "+" next to "Terminology" onthe left side of your screen. Next, click on the "+" next to the first letter of the word you are looking for. Scrolldown to the word, click and the definition will appear. To return to list of keywords "Scroll" down and click on"Key Words" on the left margin.

DO NOT SKIP THIS STEP!! It will be your best friend and loyal helper now, after the exam and beyond.

ADVERSE POSSESSION

CHATTEL

COMMUNITY PROPERTY

CONDITION (DEED)

DEFEASIBLE FEE

EASEMENT

EMBLEMENT

ENCUMBRANCE

ESTATE

FEE SIMPLE

FREEHOLD

GRANT DEED

GRANTEE

GRANTOR

INTESTATE

JOINT TENANCY

LEGAL DESCRIPTION

LIFE ESTATE

MECHANIC’S LIEN

MERIDIAN LINE

METES & BOUNDS

PERSONALTY

QUIT CLAIM DEED

REAL ESTATE

REMAINDERMAN

SECTION

SPECIAL WARRANTY DEED

TENANCY AT SUFFERANCE

TENANCY IN COMMON

TITLE EVIDENCE

TRADE FIXTURE

TRUE POINT OF BEGINNING (TPOB)

PLEASE READ!IMPORTANT INSTRUCTIONS!

NAVIGATION

On the left side of your screen is an interactive Table of Contents for this course. Click the [+] (to the left of thesection you wish to view) and subsections under that section will be listed on a drop-down. The [+] changes to a[-]. If you click on any section or subsection you will automatically move there. After you are finished click the[-] and the subsections will close with only the section headers being displayed.

To go to a specific page, press "Shift", "Ctrl" and the letter "n" at the same time. A"Go to Page" box will open. Enter the specific page you wish to view and press "ok" and that page will be displayed. To move from page to page press the up arrow or down arrow on the menu bar above your coursematerial or you can use the "page up" and "page down" keys on your keyboard..

To adjust the type size on your screen use the "+" or "-" buttons on the tool bar.

COLORADO REAL ESTATE PRE-LICENSING COURSEREAL PROPERTY

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TABLE OF CONTENTS

I. THE NATURE OF REAL PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5A. Definitions of Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5B. Specifics of the Nature of Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

HOW TO TAKE THE PROGRESS TEST/FINAL EXAM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

END OF DEMO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

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IMPORTANT NOTE: Through out the course material you will see words in RED. If you have notpreviously looked these words up in the Terminology, we suggest you do tofamiliarize yourself with particular real estate words and terms. To look up any wordat any time click on Terminology on the left side of your screen.

I. THE NATURE OF REAL PROPERTY - The foundation of our real property law is English CommonLaw and the product of legislative and administrative processes. The important thing to remember is whenwe speak of property, we are not speaking technically of the thing owned, but rather of the rights, powersand interest in the particular thing owned. These rights and interests are rights to control, use, possess,enjoy and dispose. In a broad sense, we refer to anything which may be possessed as an estate. Property isdivided into two kinds: real property and personal property. Respectively, these are also known as realtyand personalty. Realty is the property rights to real property; personalty is the property rights to personalproperty.

A. Definitions of Property

1. Rights or interests which a person has in lands and chattels to the exclusion of all others.

2. Blackstone defines land as comprehending all things of a permanent and substantial nature.

3. Estate - Quantity of ownership.

4. Title - Quality of ownership.

5. Land - Realty, real estate, or real property.

6. Chattel -Personalty or personal property which is not permanently attached to real property

7. Property of any kind that is capable of being owned falls into one of the two classifications: (SeeFigure 1)

a. Real Property

b. Personal Property

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Figure 1

Real property, real estate, realty, land is immovable, indestructible, non-homogenous. It can be dividedinto three categories - air rights, surface rights and mineral rights, as shown in Figure 2.

Figure 2

Land may be defined as the surface of the earth (soil, rock or other substance), material beneath (water,oil, minerals) and air space (limited by law). It could also be stated as “the center of the earth to theupper limits of the sky”.

“The Language of Real Estate “ - by John W. Reilly defines the term real estate as follows:

“REAL ESTATE -The physical land at, above, and below the earth's surface with allappurtenances, including any structures; any and every interest in land whether corporeal orincorporeal, freehold or non-freehold; for all practical purposes synonymous with real property."

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B. Specifics of the Nature of Property - Real Property includes the earth's surface, the air above and theground below, as well as all appurtenances to the land, including buildings, structures, fixtures, fencesand improvements erected upon or affixed to the same. This excludes, however, growing crops(emblements). The term real property refers to the interests, benefits and rights inherent in theownership of real estate, i.e., the bundle of rights.

1. The bundle of rights concept or theory describes the legal rights inherent in the ownership of realproperty and compares it to a bundle of sticks, each stick representing a legal right or privilege. These rights transfer from one owner to the next, unless some are limited or reserved by the presentowner or are not transferable. Private interests and rights are subject to the restrictions andlimitations of the public interests and rights.

Property is not only the item that is owned, but it is also a set of rights associated with the itemenjoyed by the owner (Remember “CUPED”). These include the rights to:

a. Control - One's right to use may not infringe on the rights of others to use and enjoy theirproperty.

b. Use - The right to use a property refers to the right to use it in certain ways, such as building,landscaping, razing, cultivating, and mining on the property. Rights are subject to thelimitations of local zoning and the legality of the use.

c. Possess - To control the occupancy of the property; to use the property without any legitimatechallenges to one’s use or title.

d. Enjoy - To use the property without any legitimate challenges to one’s use of title to theexclusion of others. The right to exclude gives the property owner the legal right to keepothers off the property and to prosecute trespassers.

e. Dispose - The right to transfer interests in the property includes the right to sell, bequeath,lease, donate or assign ownership interests. An owner may transfer certain individual rights tothe property without transferring total ownership. One may also transfer ownership whileretaining individual interests. For example, a person may sell mineral rights without sellingthe right of possession. On the other hand, the owner may convey all rights to the property andretain the mineral rights.

End of the demo course material

You are now ready to take the demo progress test!

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HOW TO TAKE THE PROGRESS TEST/FINAL EXAM

FOR CD USERS: We recommend you print the blank exam form from the next page as a worksheet forentering your answers. After you have answered all the questions see “SUBMITTING ANSWERS” below.

FOR TEXTBOOK USERS: Use the exam form at the back of the text, enter your answers on the form. Afteryou have answered all the questions, see “SUBMITTING ANSWERS” below.

SUBMITTING ANSWERS

Answers to the Progress Tests and/or Final Exams MUST be submitted via the Internet.

The Textbook and/or CD version contains the same text as found on the Internet, but does not provide theinteractivity found on the Internet. You should mark your answers on the Exam Form, log onto the Internetwww.realestatetrainingcenter.us and indicate your answers on each individual question. This will let you takeadvantage of the interactivity of the Internet program and instantly score your test, complete with explanations. You MUST score an 80% or better before you can go to the next course.

If you do not have access to a computer with Internet capabilities, please contact your Student Representative at1-866-311-7382.

YOU ARE NOW READY TO TAKE THE DEMO PROGRESS TESTUSING THE DIRECTIONS ABOVE.

Thank you,

RETCY & Staff

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END OF DEMOThank you for considering Real Estate Training Center.

If you have any questions please contact us at 1-866-311-7382. A Student representative will becontacting you in the near future to see how we may be of further service.

Thank you for your interest.

Sincerely,

Retcy & Staff

To enroll, click on our website www.realestatetrainingcenter.us then click on "ENROLLNOW" or call 1-866-311-7382.

We look forward to helping you make your dream a reality.

Learn Real Estate at Home!Over 40 Years of Continuous Service

WELCOME TO REAL ESTATE TRAINING CENTER

DO NOT CONTINUE UNTIL YOU HAVE READ THIS PAGE.

This is the key!! It has been said many times, and rightly so, that to understand the terminology of a subject is tounderstand the subject itself. This is so true that if you had only one book to study for a new profession, adictionary of the terms peculiar to that profession would be your best possible choice. That is why we include theterminology with every course available from Real Estate Training Center, and I would like you to join me nowas we explore the "Real Estate Terminology" to give yourself a head start.

The first page of each individual subject area throughout your entire course will be a list of "KEY WORDS".Before starting the text, look up all “KEY WORDS” in the terminology to obtain a basic understanding of whatthe subject area will be. DO NOT SKIP THIS STEP!! It will be your best friend and loyal helper from nowuntil after the exam and beyond.

Enjoy!

RETCY and Staff

USING TERMINOLOGY

To look up each word listed below in the TERMINOLOGY section, click on the [+] next to"Terminology" on the left side of your screen. Next, click on the [+] next to the first letter of theword you are looking for. Scroll down to the word, click and the definition will appear. Toreturn to list of keywords "Scroll" down and click on "Key Words" on the left margin.

You may look up as many words/phrases as you choose from within the program.

REAL ESTATE TERMINOLOGY

a.k.a.

"Also known as"; pertains to a persons name; an alias.

A.L.T.A. TITLE POLICY

American Land Title Association:. Covers the insured for thestandard exception in a title policy (i.e., mechanic lien, tax liens,encumbrances, easements, rights of parties in possession, etc.).

A.M.O.

Accredited Management Organization.

APR (ANNUAL PERCENTAGE RATE)

A term used in the “Truth in Lending Act”. It represents therelationship of the total finance charge (interest, discount points,origination fees, loan broker commission, etc.) to the amount of theloan.

ABANDONMENT

Voluntary surrender or relinquishing possession of real property,without vesting interest in another person.

Able refers to being financially able to complete a contract.

ABSENTEE OWNER

A property owner who resides at a distance from the property;typically, relying on a property manager to manage his investment.

ABSTRACT OF JUDGMENT

Summary of a court order which creates a general lien upon real andpersonal property of a judgment debtor in the county where recorded.

ABSTRACT OF TITLE

Summary or condensation of the essential parts of all recordedinstruments which affect a particular piece of real estate, arranged inthe order in which they were recorded.

ACCELERATION CLAUSE

A clause in a mortgage, land purchase contract or lease stating that,upon default of any terms of original contract, the balance of theobligation should at once become due and payable. See Finance

ACCEPTANCE

Voluntarily agreeing to the price and terms of an offer. Offer andacceptance create a contract. See Contracts & Regs - PracticalApplications

ACCESS RIGHT

A property owner's right to have ingress and egress.

ACCORD & SATISFACTION

An agreement by a creditor to accept something less, or different,than the creditor believes they are entitled; acceptance by thecreditor constitutes satisfaction.

ACCOUNTS RECEIVABLE

Monies earned, but not yet received.

ACCRETION

Gradual increase of land on a shore or bank of a river by action ofthe water or wind.

ACCRUAL METHOD

An accounting method of reporting income and expenses for a givenperiod, although such income and expenses have not actually beenreceived or paid. It is the right to receive, not the actual receipt, thatdetermines the inclusion of the amount of gross income. Opposite ofCash Method.

ACCRUED

Accounting entries that have accumulated over a period of time suchas accrued depreciation, accrued expenses, or accrued interest,even though they may not have actually been paid.

ACCRUED DEPRECIATION

Depreciation which has accumulated over a period of time. SeeValuation Appraisal

ACKNOWLEDGMENT

A formal declaration made before a duly authorized officer, usually anotary public, by a person who has signed a document.

ACQUISITION COST

Costs of acquiring property, including purchase price, closing costs,appraisal fees, loan origination fees, finance charges, title insurance,etc.

ACQUISITIONS

The act or process by which a person attains or procures property.

Any measure of land equaling 43,560 square feet of land area. (Asquare acre is approximately 209' x 209'.)

ACRE FOOT

A term used in measuring volume of water equal to the quantity ofwater required to cover 1 acre 1 foot in depth, or 43,560 cubic feet.

ACTION OF THE SUN

Consideration in the selection of a retail store; the shadiest sides ofthe street (south and west) are more desirable.

ACTION TO QUIET TITLE

A court action to remove any interest or claim in, or to, the title to realproperty.

ACTIVE CAPITAL INVESTMENT

Any investment that requires action on the part of the investor toachieve maximum gain, such as rental real estate.

ACTIVE INVESTOR

An investor invests capital, plus takes an active role managing theinvestment.

ACTUAL AGE

Chronological age.

ACTUAL NOTICE

To inform, or express information, of a fact.

The uniting of two or more numbers in one sum. See Math

ADDENDUM

A thing that is added or to be added; a list or section consisting ofadded material. In Real Estate, addendum generally refers to termsor provisions that are added to or changed 1) with respect to analready existing contract or 2) with respect to the initial preparation ofa standard contract form.

NOTE: The substance of an addendum must contain the threefundamental elements of a contract - offer, acceptance,and consideration.

ADDITIONAL PROVISIONS

Refers to the preprinted standard clause, by the same name, thatappears near the end of most of the Colorado Real EstateCommission-approved contract forms. This clause contains blankspace that allows the parties to insert only such additional terms,provisions, representations, or acknowledgments as have beennegotiated by the parties and that pertain specifically to thetransaction governed by the contract itself.

NOTE: See Commission Rule F, Commission Position #17 (CP-17), entitled “Statement of Policy Concerning Rule F,”sections 5, 8(f), 9, and the March 1997 Guidelines for theUse of Addenda and Additional Provisions.

ADJUSTABLE RATE MORTGAGE (ARM)

A loan with rates and terms that may change at specified times(usually one year), either up or down, a specified amount (usuallyone percent), and normally tied to a financial index of some kind,such as the one year T-Bill rate. See Finance

ADJUSTED COST BASIS

Referring to accounting practice, the original cost basis of a propertyreduced by certain expenses (depreciation, etc.) and increased bycertain capital improvement costs. The amount of gain or lossrecognized upon sale of property is computed by subtracting theadjusted basis on the date of sale from the net proceeds of sale.

ADJUSTED SALES PRICE

Referring to the sales comparison, the resulting dollar figure on acomparable sale after adjustments are made.

ADJUSTMENTS

Referring to real estate appraisal increases or decreases the marketvalue of a property in comparison to the subject property to adjust fora feature (or features) that the subject property has or does not have.

ADMINISTRATOR

Person appointed by the probate court to administer the estate of adeceased person who left no will. See INTESTATE.

ADMINISTRATRIX

A female administrator.

AD VALOREM

Latin for "according to valuation", usually referring to a tax orassessment. Real property tax is an ad valorem tax, based on theassessed valuation of the property. See Government Controls

ADVANCE

Transfer of funds from lender to a borrower in advance on a loan.

ADVANCE COMMITMENT

The institutional investor's prior agreement to provide long termfinancing upon completion of construction.

ADVANCE FEE

Money demanded or collected from the owner of a businessopportunity to pay for promotional services, in the form of advertisingin a publication devoted to describing properties available for sale orlease.

ADVERSE POSSESSION

The right of an occupant of land to acquire title against the realowner, where possession has been actual, continuous, hostile,visible and distinct for the statutory period. See Real Property

AFFIDAVIT

A written statement of facts sworn to, or affirmed by, oath before anauthorized official (usually a notary public).

AFFIDAVIT OF TITLE

A statement, in writing, made under oath by seller or grantor,acknowledged before a Notary Public in which the affiant identifieshimself and his marital status, certifying that since the examination oftitle on the contract date there are no judgments, bankruptcies ordivorces, no unrecorded deeds, contracts, unpaid repairs orimprovements or defects of title known to him; and that he is inpossession of the property.

AFFIRM

To confirm, to aver, to ratify, to verify.

AFFIRMATION

A solemn declaration by a person whose religious beliefs forbid thetaking of an oath.

AFTER TAX RETURN

The net return of an investment after all expenses, etc., have beendeducted from the sales price, including taxpayer's income taxexpense.

AGENCY

A legal relationship created by agreement or contract between twolegal persons whereby one (the “agent”) is authorized by the other(the “principal”) to do or perform certain acts for, on behalf of, and inthe place of the principal. In Real Estate, the most common agencyrelationship is that between the property owner (principal) and a realestate broker (agent).

NOTE: Agency creates a fiduciary relationship between theprincipal and the agent, with accompanying legal rights andduties of special trust and confidence. See Contracts &Regs - Contract Agency

One (person, partnership, corporation, etc.) who, by agreement withanother (the “principal”) has the legal power and authority to act for,on behalf of, and in place of the principal with respect to theperformance of certain acts. See Contract Agency

AGREEMENT

A contract. Mutual assent between two or more parties

AGREEMENT FOR SALE AND PURCHASE

See CONDITIONAL SALES CONTRACT.

AGREEMENT OF SALE

AIR RIGHTS

The ownership of the right to use, control or occupy the air spaceover a designated property.

ALIENATE

Transferring estate or interest in property to another.

ALIENATION

See ALIENATE.

ALIENATION CLAUSE

A special type of acceleration clause, which demands payment of theentire loan balance upon sale or other transfer of the title. SeeFinance

ALL-INCLUSIVE TRUST DEED

See WRAP AROUND MORTGAGE.

ALLODIAL TENURE

A real property ownership system, wherein ownership may becomplete except for those rights held by government. Allodial is incontrast to feudal tenure.

ALLUVION

That actual increase of soil on a shore or bank of a river which isadded by the process of accretion.

AMBULATORY

Changeable or variable. Used to designate a type of will in which theterms are changeable at the option of the testator.

AMEND/EXTEND AGREEMENT

The term “Amend/Extend Agreement” is used to refer to either of thetwo Commission-approved forms discussed below.

Colorado Real Estate Commission Rule F-4 requires that a realestate broker use a Commission-approved form whenever it isappropriate for the broker to prepare an amendment to, or anextension of, 1) an existing Contract to Buy and Sell Real Estate, or2) a contract with a real estate broker.

1) Agreement to Amend/Extend Contract (Form No. AE41-9-00). Foruse in preparing an amendment to, or extension of a Contract toBuy and Sell Real Estate (Buyer and Seller are the parties to thiscontract).

2) Agreement to Amend/Extend Contract with Broker (Form No.AE42-7-96). For use in preparing an amendment to, or extensionof, a contract with a real estate broker (Broker is one party to thiscontract and either Buyer or Seller may be other party, i.e. ListingContract, Exclusive Right-to-Buy Contract).

NOTE: The original contract to which an Amend/Extend Agreementrefers continues to completely govern the contractualrelationship of the parties to the contract, except withrespect to the provisions of the Amend/Extend Agreement.

AMENITIES

The pleasures of the property, such as good neighborhood, schools,parks, playgrounds, etc.

AMERICAN INSTITUTE OF REAL ESTATE APPRAISERS

A trade association of real estate appraisers.

AMORTIZATION

Repayment of debt in equal periodic payments of principal andinterest, rather than interest only payments. See Math

AMORTIZATION SCHEDULE

A table showing the amounts of principal and interest due at regularintervals or various loan amounts, over varied loan terms, at variousinterest rates.

AMORTIZED LOAN

A loan that is completely paid off, interest and principal, by a seriesof regular payments that are equal or nearly equal. Also called aLevel Payment Loan.

ANCHOR TENANT

The key tenant in a commercial property. Since the quality of thetenant usually dictates the size of the mortgage that can be securedfor development purposes, a large national firm is most desirable.

ANIMAL UNIT (A.U.)

The grazing capacity of land to properly sustain one animal andoffspring, if any, for one year.

ANNEXATION

An addition to a property (real or personal) by the act of attachinganother thing to the property. Example: Attaching personal property to real property or real property to real property.

ANNUAL MORTGAGE CONSTANT

See CONSTANT.

ANNUAL PERCENTAGE RATE (APR)

The yearly interest percentage of a loan, as expressed by the actualrate of interest paid. For example: 6% add-on interest would bemuch more than 6%. The A.P.R. is disclosed as a requirement offederal truth in lending statutes.

See RESCIND.

ANTICIPATION, PRINCIPLE OF

Affirms that value is created by anticipated benefits to be derived inthe future.

APARTMENT BUILDING (HOUSE)

A building containing two or more separate dwelling units forpermanent tenants who rent or lease them.

APPARENT AUTHORITY

In the law of agency, refers to the authority that an agent has to actfor the principal not as a result of the agreement between the agentand the principal, but rather as a result of statements, actions, orother behavior by the principal that would cause a third-party toreasonably believe that the agent has that certain authority to act forthe principal. (The agent’s authority is “apparent” from the principal’sactions or words).

The legal significance of apparent authority is that the principal willnot be allowed to deny that the agent had the “apparent” authorityand will, as a result, be held liable for the agent’s actions on behalf ofthe principal so long as those actions are within the scope of(consistent with) that “apparent” authority.

NOTE: Remember, an agency relationship is created by agreement(contract) between the agent and the principal. Actual orreal authority (of the agent to act for the principal) is thatauthority flowing from the “actual” agreement of the parties.

APPORTION

To prorate charges to each party in a contract, charging each partyonly their proportionate share.

APPRAISAL METHOD

Generally, the three major methods of appraisal: Cost Approach,Income Approach, and Sales Comparison Approach.

APPRAISAL

An opinion of value based upon a factual analysis. Note: Anappraisal is an estimate, not a determination of value. See ValuationAppraisal

APPRAISAL PROCESS

An organized and systematic program for estimating real propertyvalue.

APPRAISAL REPORT

A report containing an estimate of property value and the data onwhich the estimate is based.

APPRAISER

One qualified by education, training and experience who is hired toestimate the value of real and personal property based onexperience, judgment, facts, and use of formal appraisal processes.

APPRAISAL INSTITUTE

A trade association of real estate appraisers.

APPRECIATION

An increased value of property due to either a positive improvementof the area or the elimination of negative factors. The opposite ofdepreciation. See Math

APPROPRIATION (OF WATER)

A legal term, designating the act or acts involved in the taking andreducing to personal possession of water occurring in a stream orother body of water, and of applying such water to beneficial uses orpurposes.

APPURTENANCE

The rights, privileges and improvements that belong to, and aretransferred with, the property, but that are not actually "property".

APPURTENANT

A part of, belonging to, annexed to (i.e., the barn is appurtenant tothe house).

ARCHITECT

A person whose profession is designing buildings, drawing up plans,and generally supervising construction of the building.

ARCHITECTURAL STYLE

Generally, the appearances and character of a building's design andconstruction.

ARRANGER

A person who structures extension of consumer credit, which is, infact, granted. See TRUTH-IN-LENDING.

ARREARS

Late or delinquent paying a debt. Not current. See Closings -Recordkeeping - Settlement Closings

ARELLO

The abbreviation for the National Association of Real Estate LicenseLaw Officials.

ARTIFICIAL PERSON

A corporation or other legally recognized entity.

"AS IS"

No guarantees are included. It is being purchased exactly as found.

ASKING PRICE

The price at which the seller is offering property for sale. Theeventual selling price may be less, or more, after negotiation with abuyer.

ASSEMBLAGE

The act of combining two or more parcels, which results in somevalue greater than the sum of the individual parcels. The increase invalue is termed plottage or plottage increment.

ASSENT

See CONSENT.

ASSESSED VALUE

Value placed on property for the purpose of computing real propertytaxes. Percentage of Market Value. See Math

ASSESSED VALUATION

The value of real property established by county and townshipassessors for the purpose of computing real property taxes.

ASSESSMENT

(1) The estimate of value of property for tax purposes. (2) A levyagainst property in addition to general taxes. Usually forimprovements such as streets, sewers, etc.

ASSESSMENT ROLLS

Public records of all properties in a given area.

ASSESSOR

A public official who determines assessed valuation of property fortax purposes. Note: Assessor does not determine tax rate.

ASSETS

Anything the borrower owns: cash, equities, securities, etc., includedon lender's financial report.

ASSIGN

To transfer over to another any claim, right or title to property.

ASSIGNEE

The person receiving the right or property being assigned(transferred).

ASSIGNMENT

The act of transferring property itself, or any rights or interests inproperty, to another. Pertains to all property whether real or personal. See Closings - Recordkeeping - Settlement Closings - CurrentLegal Issues - Contract Agency

ASSIGNMENT OF RENTS CLAUSE

A clause in a trust deed or mortgage, which gives the beneficiary theright to collect rents of the secured property in the event of a default.

ASSIGNOR

The giver of a right or property being assigned (transferred).

ASSOCIATION OF UNIT OWNERS

The unit owners of a condominium acting as a group for theadministration of the project, in accordance with the condominiumdeclaration and bylaws.

ASSUME & AGREE TO PAY

An agreement to become personally liable for the terms andconditions of a mortgage, including the payments.

ASSUMABLE MORTGAGE

One that does not contain an alienation clause.

ASSUMED NAME

A name taken or by which a person may be identified, other than hislegal name.

ASSUMPTION AGREEMENT

An undertaking or adoption of a debt or obligation primarily restingupon another person.

ASSUMPTION FEE

A lender's charge for changing over and processing new records fora new owner who is assuming an existing loan.

ASSUMPTION OF MORTGAGE

Agreement by a buyer to assume the liability under an existing notesecured by a mortgage or deed of trust. The lender must usuallyapprove the new debtor in order to release the existing debtor(usually the seller) from liability. See Closings - Recordkeeping -Settlement Closings

ATTACHMENT

Seizure of property by court order to have it available to satisfy ajudgment.

ATTEST

To affirm to be true or genuine; an official act establishingauthenticity.

ATTORNEY-IN-FACT

One who is authorized to perform certain acts for another under apower of attorney. Power of attorney may be limited to a specific actor acts, or be general. See Contract Agency - Contracts & Regs

ATTORNEY'S OPINION

In real estate, the written opinion of an attorney-at-law regarding themarketability of title to real property based upon an examination ofthe abstract of title or the records in the county clerk and recorder'soffice.

ATTORNMENT

When a renter formally agrees to become the tenant of a successorlandlord.

ATTRACTIVE NUISANCE

Anything on a property which may attract small children, and isdangerous to them. Reasonable care must be used to prevent injuryto the children.

AUTHORIZATION TO SELL

A listing contract whereby an agent (Broker) is employed by a sellerto locate a buyer for a property.

AVULSION

The loss of land when a sudden or violent action of nature results inits washing away.

AZIMUTH

An azimuth of a boundary line is the direction of the line in relation toa north-south line or median, or the angle between a north-south lineand the boundary line measured from the north point in the northernhemisphere and the south point in the southern hemisphere. Everyline has two azimuths, depending on the direction one looks downthe line. Thus, the azimuth of line A B is 240 degrees, but theazimuth of line B A is 60 degrees.

B.T.U.

British Thermal Unit. The quantity of heat required to raise the tem-perature of one pound of water one degree Fahrenheit, at sea level.

BACKFILL

The replacement of excavated earth into a hole or against astructure.

BALANCE, PRINCIPLE OF

Holds that value is created and maintained in proportion to theequilibrium attained in the amount and location of essential uses ofreal estate.

BALANCE SHEET

A financial statement that indicates what assets a person orcorporation owns, and how those assets are financed in the form ofliability or owner's equity.

BALLOON MORTGAGE

One in which the scheduled payment will not fully amortize the loanover the mortgage term. Therefore, it requires a final pay called aballoon payment, larger than the uniform payments, to fully satisfythe debt. See Finance

BALLOON PAYMENT

The final payment of a note or obligation, which is normally largerthan the previous installment payments, and which repays the debtin full.

BAND OF INVESTMENT

A method of developing an interest or capitalization rate by applyingmortgage and equity rates of comparable properties.

BANKRUPTCY

Financially insolvent, unable to pay debts. Liabilities exceed assets. May be voluntary or involuntary.

BARE (NAKED) LEGAL TITLE

Title in name only - No benefits of ownership.

BARGAIN AND SALE DEED

A form of deed with or without covenants of title.

BASE FEE

See DEFEASABLE FEE.

BASE LINE

Survey line running east and west, which is used in establishingtownship boundaries.

BASE AND MERIDIAN

Imaginary lines used by surveyors to find and describe the locationof private or public lands.

The value of the property for purposes of depreciation.

BEARING

An angle of from 0o to 90o in relation to true North or South, fixingdirection. Used in surveying. The Bearing System

BEARING WALL OR PARTITION

A wall or partition supporting any vertical load in addition to its ownweight.

BEFORE TAX RETURN

The net return of an investment after all expenses, etc., have beendeducted from the sales price, except taxpayer's income taxesexpenses.

BENCH MARKS

A location indicated on a durable marker by surveyors.

BENEFICIAL TITLE

The equitable title to real property retained by a mortgagor or trustorconveying the legal title to secure a mortgage debt.

BENEFICIARY

One who receives the income from a trustor/grantor. The lender ona note and trust deed transaction.

BENEFICIARY'S STATEMENT

Statement of a lender, giving the remaining principal balance andother information concerning the loan. Usually obtained when anowner wishes to sell or refinance. Referred to as a "BeneStatement", "Offset Statement" or "Payoff Statement".

BEQUEATH

A transfer of personal property by will.

BEQUEST

Personal property which is transferred by will.

BETTERMENT

An improvement upon real property, which increases the propertyvalue, and is considered as a capital asset, as distinguished fromrepairs or replacements, where the original character or cost isunchanged.

BILATERAL CONTRACT

A contract wherein one party gives a promise or promises inexchange for a promise or promises from the other party (as in “ Ipromise to transfer title to my house to you and you promise to payme $250,000.00 in exchange). Once the contract is created, bothparties are legally bound to perform their promise/s. Failure of eitherparty to perform any promise constitutes a breach of the contract forwhich the law provides a remedy. See Contract Agency

BILL OF SALE

Document used to transfer title (ownership) of personal property. See Practical Applications

BINDER

An agreement to consider a down payment for the purchase of realestate as evidence of good faith on the part of the purchaser. Also, anotation of coverage on an insurance policy, issued by an agent, andgiven to the insured prior to issuing of the policy.

BLACKTOP

Asphalt paving used in streets and driveways.

BLANKET MORTGAGE (OR TRUST DEED)

A mortgage or trust deed which covers more than one lot or parcel ofreal estate.

BLIGHTED AREA

A term once popular in urban renewal, referring to a run-down area. A declining area, in which real property values are seriously affectedby destructive economic forces, infiltration of lower social andeconomic classes of inhabitants, and/or rapidly depreciatingbuildings.

BLIND ADVERTISING

Failure to disclose identity of advertiser. Normally prohibited for realestate licensees.

BLOCKBUSTING

Illegal, discriminatory practice, whereby a person is induced byanother to enter into a real estate transaction for the financial benefitof the first person, who represents that a racial change in theneighborhood may result in the lowering of the property values.

BLUE SKY

See GOOD WILL.

BOARD FOOT

A unit of measurement of lumber; one foot wide, one foot long, oneinch thick; 144 cubic inches.

BOARD OF EQUALIZATION

State agency which (1 supervises county assessors and taxcollectors in order to create uniformity in tax assessment; and (2)collects sales taxes.

BONA FIDE

In good faith, without fraud.

BOOK VALUE

In accounting terms, the value of a property as a capital asset (costplus additions to value, less depreciation).

Generally, something given “in addition to” something else. In RealEstate, pertains to the situation wherein two parties are exchangingparcels of real property of unequal values. Boot is money or otherproperty given from one party to another to equalize the total value ofthe exchange.

For example, Joe wants to exchange an apartment building he ownsin Dallas (worth $900,000) for an apartment building that Sharonowns in San Antonio (worth $1,000,000). Sharon says to Joe, I’mokay with this exchange, but you’re going to have to come up withanother $100,000 to even this out and make it fair to me.” Joeagrees to also give Sharon his $50,000 Mercedes and $50,000 cashto equalize the values in the exchange. Sharon agrees. In this case,the Mercedes and the cash constitute “boot.” See Contract Agency

BOUNDARIES

The limit, or perimeter of, a parcel of land according to its legaldescription.

BOUNDARY

A separation, natural or artificial, which marks the division of twocontiguous properties.

BOUNDS

Refers to direction, based on terminal points and angles.

BRACKETING

The selecting of a value that falls within the highs and lows of recentselling prices of comparable homes. Used in the Sales ComparisonApproach.

BRANCH OFFICE

Any secondary place of business apart from the principal or mainoffice from which real estate business is conducted.

BREACH\ (OF CONTRACT)

When a party to a contract fails to perform (or otherwise violates) anyof the terms, conditions, obligations, or promises in the contract,without a legally recognized excuse for the failure or violation.

NOTE: The law provides various remedies for the “wronged” party,usually dependent upon the nature, severity, andcircumstances of the breach.

See Contract Agency

BRIDGE LOAN

Usually a short-term loan covering the period of time between theend of a construction loan and the permanent or "take-out" loan.

BROKER

One who acts as an intermediary between parties to a transaction. Areal estate broker is a properly licensed party (individual, corporation,or partnership) who, for a valuable consideration or promise ofconsideration, serves as a special agent to others to facilitate thesale or lease of real property. Also referred to as “Qualifying Broker”and “Employing Broker”.

BROKER, REAL ESTATE

A natural or legal person, who for compensation or in expectation ofcompensation, acts for another in a real estate transaction.

BROKERAGE

The act of bringing together principals (buyer-seller, landlord-tenant,etc.) for a fee or commission, rather than acting as a principal.

BROKERAGE RELATIONSHIPS

The establishment of the working relationship a licensee has with acustomer or client (i.e., agent or Transaction-Broker, Facilitator). Anagent "represents," a Transaction-Broker "helps" or "assists". SeeAGENCY, TRANSACTION-BROKER.

BROWNSTONE

A row house constructed with reddish-brown sandstone; usually astructure constructed during the nineteenth century.

BUDGET MORTGAGE

Payment includes reserves for tax, insurance, etc.

BUILDING CODES

A comprehensive set of laws, which control the construction ofbuildings, including design, materials used, construction, use, repair,remodeling, and other similar factors.

BUILDING LINE

A line set by law a certain distance from a street line, in front ofwhich, an owner cannot build on his lot.

BUILDING, MARKET VALUE OF

The sum of money which the presence of that structure adds to, orsubtracts from, the value of the land it occupies. Land: valued onthe basis of highest and best use.

BUILDING PAPER

A heavy waterproofed paper used as sheathing in wall or roofconstruction as a protection against air passage and moisture.

BUILDING RESIDUAL TECHNIQUE

An income capitalization technique used to isolate the value of abuilding.

BUILDING RESTRICTIONS

Prohibition by a government body (zoning restriction) or a privateparty (a former owner) against construction of certain structures on aproperty.

BUILT-IN

Cabinets, or other features, built as part of the house.

BULK SALES ACT

Uniform Commercial code that regulates the sale of inventory of abusiness for protection of the seller's creditors.

BUNDLE OF RIGHTS

The rights or interests that a person has in a thing; the exclusive rightof a person to control, use, possess, enjoy, and dispose of real orpersonal property (CUPED).

BUNGALOW

A small, one or one-and-one-half story house.

BUSINESS OPPORTUNITY

The term used to describe a business or a going concern andincludes the stock-in-trade, fixtures and good-will.

BUYDOWN

A method used to lower the monthly payments on a loan, by buyingdown the interest rate charged for a period of time, such as one tothree years.

BUYER AGENCY

The Brokerage Relationship established when a buyer contracts witha real estate broker to have that broker represent only the buyer andthe buyer’s interests in a real estate transaction. The buyer is theprincipal and the broker is the agent in this agency relationship. Itcreates a fiduciary relationship grounded in special trust andconfidence. Accordingly, the broker owes additional and greaterduties to the buyer than when acting as a transaction broker.

NOTE: This relationship is established, in Colorado, by theexecution (signing by both the buyer and the broker) of theCommission-approved Form No. BC17-6-01, ExclusiveRight-to-Buy Contract (Buyer Agency).

See Contracts & Regs

BUYER MARKET

This occurs when the supply exceeds the demand. There are morehouses for sale than there are buyers available to purchase them.

BUYER’S AGENT

A real estate broker who has agreed with a buyer to represent onlythat buyer and that buyer’s best interests in a real estate transaction. Also referred to as a BUYER’S BROKER. See BUYER AGENCY.

This term is specifically defined in the Colorado Revised Statutes,Section 12-61-802 (4) (a).

BUY/SELL CONTRACT

The written agreement used to purchase or lease real estate inColorado, where the parties agree to do certain things.

C.C.& R.

Covenants, Conditions, and Restrictions. Normally found in a deed.

C.P.M.

See CERTIFIED PROPERTY MANAGER.

C.R.B.

Certified Residential Broker.

C.R.V.

See CERTIFICATE OF REASONABLE VALUE.

CALLED LOAN

A loan that is due and payable at the demand of the lender, usuallyas a result of an acceleration or alienation clause.

CAPACITY

See COMPETENT PARTY.

CAPITAL

Money used to create income through investment.

CAPITAL BASE

Investor initiated money in an investment.

CAPITAL EXPENDITURE

Investments of cash or the creation of liability incurred for additionsor betterments; usually land, buildings, machinery and equipment.

CAPITAL GAINS

Gains realized from the sale of capital assets. Generally, thedifference between cost and selling price, less certain deductibleexpenses. Used mainly for income tax purposes. See GovernmentControls

CAPITAL GAINS TAX RATE

The effective rate of taxation on a capital gain.

CAPITAL IMPROVEMENT

Any structure erected as a permanent improvement to real property,an improvement made to add to the value of the property or toextend the useful life of a property.

CAPITAL LOSS

A loss derived from the sale of a capital asset.

CAPITAL RECAPTURE

The systematic, periodic recovery of the amount of principalinvested in a depreciable asset, such as a building.

CAPITAL RECAPTURE PERIOD

The number of years over which a typical investor will permit hiscapital to be extended. Quite frequently, this is said to be the sameas the property's "Remaining Economic Life".

CAPITALIZATION

Determining a present value of income property by converting allfuture benefits, such as tax benefits, cash flow, and reversion into avalue estimate. See Valuation Appraisal

CAPITALIZATION RATE

The percentage (acceptable to an average buyer) used to determinethe value of income property through capitalization. See ValuationAppraisal

CAPITALIZATION RATE, OVER-ALL

An interest rate, plus a recapture rate. The overall capitalization rateis a weighted rate, which combines the interest rate for the land andthe capitalization rate for the building. The "interest rate for the land"is the rate of interest which the value of the land should earn ifinvested. It contains proper provision for interest to the land and tothe building. Recapture of the capital invested in the building over itsestimated remaining economic life is recapture rate. It is the ratedeveloped when a property's net income is divided by its sales price.

Cap Rate = Risk Interest (Return ON investment) (+) RecaptureRate (Return OF investment)

CARRY-BACK (LOAN)

Refers to a note for a part of the purchase price usually secured by ajunior mortgage. The difference in the equity the buyer doesn't haveavailable to pay to the seller.

CASH AT CLOSING

Buyer's agreed upon down payment, plus buyer's closing costs andprepaid items, less original earnest money deposit.

CASH BASIS ACCOUNTING

A method of recognizing revenue and expense when cash isreceived or disbursed rather than when earned or incurred. SeeClosings

CASH DISBURSEMENTS JOURNAL

A record of the disposition of trust funds, held by the broker, in theform of cash or checks.

CASH FLOW

In investment property, the actual cash the investor will receive afterdeduction of operating expenses and debt service (loan payment)from his gross income.

CASH FLOW OR CASH SPENDABLE

The actual annual cash income produced by an investment afterpaying all expenses, including principal and interest payments (debtservice).

CASH METHOD

An accounting method of reporting income in the taxable year, inwhich the income is actually or constructively received and reportingexpenses when actually paid out. Opposite of Accrual Method.

CASH RECEIPTS JOURNAL

A record of all trust funds received.

CASH RESERVE

A money reserve used to smooth out the irregularity of income andexpenses.

CAVEAT EMPTOR

Latin term meaning "Let the buyer beware". The buyer mustexamine his purchase and buy at his own risk.

CENTER OF INFLUENCE

One who, by nature of his relationships, is in a position to swayothers.

CERTIFICATE OF ELIGIBILITY

A statement provided to veterans of military service setting forth theamount of loan guarantee to which they are entitled at that time.

CERTIFICATE OF NO DEFENSE

(1) Estoppel Certificate. (2) A tax certificate, e.g., the CountyTreasurer - when he signs a tax certificate, saying that taxes havebeen paid there is no defense; he cannot come back later and saythat they haven't been paid. Any loss would have to be stood by thecounty.

CERTIFICATE OF OCCUPANCY

A certificate issued by a governmental building department showingthat a building is fit for occupancy.

CERTIFICATE OF PURCHASE

The instrument which the purchaser receives at the time of a tax saleor a foreclosure sale on a deed of trust.

CERTIFICATE OF REASONABLE VALUE (CRV)

Any estimate of value issued by a Veterans Administration appraiser.

CERTIFICATE OF SALE

A certificate issued to the purchaser at a judicial sale, as in the caseof a mortgage foreclosure by the court.

CERTIFICATE OF TAXES DUE

(Estoppel Certificate) A written statement of guaranty of thecondition of the taxes on a certain property made by the CountyTreasurer of the county wherein the property is located.

CERTIFICATE OF TITLE

In areas where an attorney examines abstracts or chains of title, awritten opinion, executed by the examining attorney, stating that titleis vested as stated in the abstract.

CERTIFIED PROPERTY MANAGER (CPM)

A designation granted to Property Managers upon successfulcompletion of specified courses, and written reports. Granted by theINSTITUTE OF REAL ESTATE MANAGEMENT, a part of theNational Association of Realtors.

CERTIFY

To guarantee in writing, written testimony.

CESSION DEED

Used to transfer or dedicate streets or street rights.

A unit of measurement used by surveyors. A chain consists of 100links equal to 66 feet.

CHAIN OF TITLE

A history of all of the documents transferring title to a parcel of realestate, beginning with the document originally transferring title fromthe government to private ownership, and ending with the latestdocument transferring title.

CHANGE, PRINCIPLE OF

Holds that it is the future, not the past, which is of prime importancein estimating value; fundamentally, the law of cause and effect. Subsidiary principles; (1) integration, equilibrium, and disintegration;(2) regression, and (3) progression.

CHARACTER OF SOIL

A distinctive quality or nature of land. The soil may be sandy, adobe,rocky, fertile, etc.

CHATTEL

Items of tangible personal property, transferred by means of a bill-of-sale. See Real Property

CHATTEL MORTGAGE

A personal property mortgage; replaced by Security Agreement.

CHATTEL REAL

Personal property which is closely related to real estate, such as alease.

An article of personal property. "CHOSE IN ACTION" - is intangiblepersonal property (i.e., rights in an instrument). "CHOSE INPOSSESSION" - is tangible personal property (i.e., a desk).

CHRONOLOGICAL AGE

The age of a property measured by the actual number of yearselapsed since the original structure was built.

CIVIL RIGHTS ACT OF 1866

A federal law that prohibits all discrimination of the basis of race.

CLAPBOARD

Boards, usually thicker at one edge, used for siding.

CLIENT

Traditionally, one who employs an attorney. Has loosely been usedto refer to the principal of a real estate agent, insurance agent,stockbroker, etc.

CLOSE OF ESCROW

See CLOSING STATEMENT.

CLOSING

In a real estate transaction, the final procedure, in which documentsare executed and/or recorded, and the sale (or loan) is completed. See Closings - Recordkeeping - Settlement Closings - PracticalApplications

CLOSING COSTS

Expenses incidental to a sale of real estate, such as loan fees, titlefees, appraisal fees, etc.

CLOSING INSTRUCTIONS

The form captioned “Closing Instructions” to be used when it isappropriate for a broker to prepare closing instructions in connectionwith the closing of a real estate transaction.

CLOSING STATEMENT

The statement which lists the financial settlement between buyer andseller, and also the costs each must pay. A separate statement forbuyer and seller is sometimes prepared. See Closings -Recordkeeping - Settlement Closings - Contracts & Regs

CLOUD ON THE TITLE

Condition which affects the clear title to real property.

CODE OF ETHICS

With regard to professions, a code of professional standards,containing aspects of fairness and duty to the profession and thegeneral public.

CODICIL

An addition or change to a will.

See COMMUNITY APARTMENT PROJECT and STOCKCOOPERATIVE PROJECT.

CO-ORDINATE SYSTEM

A method of land description using measurements from anintersection of a defined north-south axis and a defined east-westaxis.

COGNOVIT NOTE

Note authorizing confession of judgment.

COLLAR BEAM

Beam that connects opposing roof rafters above the attic floor.

COLLATERAL

Property given in addition to the personal obligation of the borrower,which is held by the lender as security; that is, to insure theperformance of the obligation.

COLLATERAL SECURITY

A separate obligation attached to a contract to guarantee itsperformance; the transfer of property, or of other contracts orvaluables, to insure the performance of a principal agreement.

COLLUSION

A secret agreement between two or more persons to defraudanother of his rights. See Practical Applications

COLOR OF TITLE

A title that appears to be good, but because of a certain defect, is notvalid (paper title).

COMMENCEMENT OF WORK

The visible beginning of work on real estate. Something happeningthat can be seen.

COMMERCIAL ACRE

That portion of land available to a developer to build on, after streets,sidewalks, parks, etc., have been deducted.

COMMERCIAL PROPERTY

Property which is zoned "commercial" (for business uses). Propertysuch as stores, restaurants, etc., falling between residential andindustrial.

COMMINGLING

To mingle or mix funds held in trust with other funds. See Closings -Recordkeeping - Settlement Closings - Current Legal Issues

COMMISSION

n amount, usually a percentage paid to a real estate brokernormally by seller), for services rendered in connection with the saler exchange of real property. See Closings - Recordkeeping -ettlement Closings - Math - Contracts & Regs - Practicalpplications

COMMISSION REGULATIONS

Regulations adopted by the Real Estate Commission to implementthe administration and enforcement of the Real Estate Law. Theyhave the force and effect of the law itself. See Closings -Recordkeeping - Settlement Closings

COMMITMENT

(1) Title insurance term for the preliminary report issued before theactual policy. Said report shows the condition of title and the stepsnecessary to complete the transfer of title as contemplated by buyerand seller. (2) A written promise to make or insure a loan for aspecified amount and on specified terms.

COMMON AREA

Land or improvements owned in common for the use and benefit ofall property owners and residents.

COMMON EXPENSES

All operating expenses of a condominium development, excludingthose associated with the individual dwelling units, includingoperating and maintenance.

COMMON INTEREST

The undivided ownership percentage in the common elementsbelonging to each condominium apartment used to promote commonexpenses.

COMMON LAW

Body of law that grew from custom, and legally decided cases(English Law).

COMMON WALL

The wall separating two living units (as in condominiums orapartment buildings).

COMMUNITY

A part of a metropolitan area that has a number of neighborhoodsthat have a tendency toward common interests and problems.

COMMUNITY APARTMENT PROJECT

Multiple ownership of an apartment, in which each owner is atenant-in-common, with the right to occupy one of the apartments.

COMMUNITY PROPERTY

Property acquired by husband and wife during marriage, when notacquired as separate property. See Real Property

COMPACTING

Whenever extra soil is added to a lot to fill in low places or to raisethe level of the lot, the added soil is often too loose and soft tosustain the weight of the buildings. Therefore, it is necessary to tampdown the added soil so that it will carry the weight of buildingswithout the danger of their tilting, settling or cracking.

COMPARABLE SALES

Sales which have similar characteristics as the subject property andare used for analysis in the appraisal process.

COMPARABLES

Recently sold properties used in the Sales Comparison Approach toappraisal. Used as comparisons to determine the value of a specificproperty.

COMPARATIVE MARKET ANALYSIS

Appraising the value of a property by comparing the price of similarproperties (comparables) recently sold. The degree of similarity ofthe properties and circumstances of the sale are the importantcharacteristics to consider. See Valuation Appraisal

COMPENSATION

Money, or the equivalent of money, received for services.

COMPETENT PARTY

The ability of a person to be legally qualified to perform certain civilacts. One of the essential elements of a contract.

COMPETITION, PRINCIPLE OF

Holds that profits tend to breed competition, and excess profits tendto breed ruinous competition. See Valuation Appraisal

COMPOUND INTEREST

Interest on the original principal, plus accrued interest.

CONCENTRIC CIRCLE THEORY

That a city will grow outward in concentric circles.

CONCLUSION

The final estimate of value, realized from facts, data, experience, andjudgment.

CONDEMNATION

The act of taking private property, through the exercise of the powerof eminent domain, for public use, upon the payment of a faircompensation. See Valuation Appraisal

CONDITION

A stipulation or qualification in a deed, which, if violated or notperformed, defeats the deed and places the title back in the hands ofthe original grantor. See Real Property

CONDITIONAL SALES CONTRACT

A contract for the sale of real or personal property in whichpossession is delivered to the buyer, title to remain vested in theseller until all the conditions of the contract have been fulfilled. SeeFinance

CONDOMINIUM

A structure of two or more units, the interior space of which areindividually owned; balance of the property (both land and building) isowned in common by the owners of the individual units. The size ofeach unit is measured from the interior surfaces (exclusive of paint orother finishes) of the exterior walls, floors and ceiling. The balanceof the property is called the common area.

CONDOMINIUM DECLARATION

The document which, when recorded, creates a condominium. Alsocalled a “master deed”.

CONDOMINIUM OWNERSHIP

The individual outright ownership of a single unit in a multi-unitproperty, together with an interest in the common elements of thatproperty.

CONDUIT

Usually a metal pipe, into which electrical wiring is installed.

CONFESSION OF JUDGMENT

An entry of judgment upon the debtor's voluntary admission orconfession. Illegal in many states.

CONFISCATION

To seize as forfeiture.

CONFORMITY, PRINCIPLE OF

Holds that the maximum of value is realized when a reasonabledegree of homogeneity of improvements is present. See ValuationAppraisal

CONSENT

To agree to the terms, to approve.

CONSEQUENTIAL DAMAGES

Damages occurring through breach of contract or by adjacentlandowners through adverse neighborhood influence.

CONSIDERATION

Anything of value to induce another to enter into a contract; may bemoney, services, a promise, or love and affection.

CONSPICUOUSNESS

A factor of publicity value. Is of great importance to a businessdependent upon advertising.

CONSTANT

The total annual combined principal and interest payments per$1,000 of mortgage, expressed as a percent. Example - an annualpayment of $9,000 ($750.00 per month) on a $100,000 loan is anannual mortgage constant of 9%. The annual mortgage constant isalways greater than the interest rate, as it also includes amortizationof principal. The annual mortgage constant varies according to theterm of the loan and the interest rate involved. The purpose of theAnnual Mortgage Constant is to remove the distortion caused byhigher interest payments in the beginning years of a mortgage, andto give a true picture of the investment over a period of time, such asa 10 year average.

CONSTRUCTION LOAN

A short-term mortgage used to finance the building of a structure. Provides for progressive payments of the loan proceeds duringerection of the building (also, Interim Loan).

CONSTRUCTIVE EVICTION

Breach of a covenant of warranty of quiet enjoyment, e.g., theinability of a lessee to obtain possession because of a paramountdefect in title, or a condition making occupancy hazardous.

CONSTRUCTIVE NOTICE

Notice given by the public records, or possession.

CONTIGUOUS

Adjoining or touching upon, such as parcels of land next to eachother.

CONTINGENCY

A condition upon which a valid contract is dependent. See PracticalApplications

CONTINUATION STATEMENT

Statement filed with the Secretary of State to extend the time limit ona previously filed financing statement.

CONTOUR

The surface configuration of land.

CONTRACT

A legally enforceable agreement between two or more competentparties or entities who agree to perform, or refrain from performing,certain acts for a consideration. A contract is an enforceablepromise. See Contracts & Regs

CONTRACT FOR DEED

A contract of sale and a financing instrument wherein the selleragrees to convey title when the buyer completes the purchase priceinstallment payments. Also called installment land contract, landcontract and conditional sales contract.

CONTRACT OF SALE

CONTRACT RENT

The rent payable as set forth in a lease.

CONTRIBUTION, PRINCIPLE OF

See INCREASING AND DIMINISHING RETURNS. See ValuationAppraisal

CONTROLLER OF THE CURRENCY

A governmental entity, acting in concert with the Department of theTreasury and the Federal Reserve System, to regulate theavailability, flow, and cost of money.

CONSUMER PRICE INDEX (CPI)

An index of the change in prices of various commodities andservices that provides a measure of the rate of inflation.

CONVENTIONAL LOAN

A loan made with real estate as security, and not involvinggovernment participation in the form of insuring (FHA) orguaranteeing (VA) the loan. The lender (institution or private party)looks solely to the credit of the borrower and the security of theproperty to assure payment of the debt. See Finance

CONVERSION

Change from one character or use to another.

CONVEY

To transfer title to property from one person to another.

CONVEYANCE

A document, such as a deed, used to transfer title to property fromone person to another.

COOPERATIVE APARTMENT

A form of apartment ownership. Ownership of shares in acooperative venture which entitles the owner to use, rent, or sell aspecific apartment unit.

COOPERATING BROKER

Usually the selling broker, who assists the listing broker in a realestate transaction.

CO-OWNERSHIP

Title to real property held by two or more persons at the same time. Also called “concurrent ownership”.

CORNER INFLUENCE

The increase in value of a corner lot due to its location.

CORNER INFLUENCE TABLE

A statistical table that may be used to estimate the added value of acorner lot.

CORNER STAKES

Stakes used by a surveyor in a metes and bounds survey toestablish the survey on the ground, and are used each time thedirection changes.

CORPORATION

An artificial "person", created by law which has many of the powersand duties of an individual.

CORPOREAL

Possessory rights in real property.

CORRECTION DEED

See QUIT CLAIM DEED.

CORRECTION LINES

A system for compensating inaccuracies in the GovernmentRectangular Survey System due to the curvature of the earth. Everyfourth township line, 24 mile intervals, is used as a correction line onwhich the intervals between the north and south range lines areremeasured and corrected to a full 6 miles.

CORRELATE THE FINDINGS

Interpret the data and value estimates to bring them together to afinal conclusion of value.

CORRELATIVE WATER RIGHT

Allows the holder of riparian water rights to take only a "reasonable"amount of water from a common water source.

A historical record of past expenditures, or an amount which wouldbe given in exchange for other things.

COST APPROACH

An appraisal approach to the evaluation of property based on theproperty's current reproduction or replacement cost, lessdepreciation, plus land value. See Valuation Appraisal

COST BASIS

An accounting concept which refers to the original purchase cost ofan investment, such as real estate which includes purchase price,closing costs, etc.

COST REPLACEMENT OR REPRODUCTION

The current cost of constructing a new improvement similar to theimprovement being appraised. Technically, reproduction cost is saidto be the current cost of reproducing an exact replica structure,whereas replacement cost is the current cost of reproducing withmodern materials a new improvement having substantially the sameutility as the building being appraised.

COUNTER OFFER

An offer (instead of acceptance) in response to an offer. Forexample: A offers to buy B's house for X dollars. B, in responseoffers to sell to A at a higher price. B's offer to A is a counter offer. See Contracts & Regs - Practical Applications

COURSES AND DISTANCES

A method of describing or locating real property; this descriptiongives a starting point and the direction and length of lines to be run;practically indistinguishable from a metes and bounds description.

COVENANT

A clause in a contract, a promise, an agreement contained in a deedfor the performance or non-performance of certain acts, or the use ornon-use of the property.

COVENANT OF

There are: covenant of seizincovenant against encumbrancescovenant of further assurancecovenant of quite possessioncovenant of warranty forever

COVENANT AGAINST ENCUMBRANCES

A promise in a deed that there are no encumbrances against the titleexcept those set forth in the deed.

COVENANT OF FURTHER ASSURANCE

A promise in a deed that the grantor will execute such furtherassurances as may be reasonable or necessary to perfect the title inthe grantee.

COVENANT OF QUIET ENJOYMENT

A promise in a deed that the grantor has the legal capacity to conveythe title.

COVENANT OF SEISIN

A promise in a deed assuring to the grantee that the grantor has thetitle being conveyed.

COVENANT OF WARRANTY

Forever a promise in a deed that the grantor will guarantee anddefend the title against lawful claimants.

CRAWL HOLE

Exterior or interior opening permitting access underneath a building,as required by building codes.

CRAWL SPACE

The area left underneath the first floor of a building for access. FHAminimum requirement - 18 inches.

CREATIVE FINANCING

A generic term that describes a variety of non-traditional methods forfinancing property.

CREDIT

The ability to acquire a liability that will become due at a future time. See Closings - Recordkeeping - Settlement Closings

CREDIT RATING

Payment habits of a natural or legal person. Lender considersbuyer's credit rating, but property is lender's main security.

CREDIT REPORT

A report on the past ability of a loan applicant to pay installmentpayments. Several national and local companies make such reports. See Closings - Recordkeeping - Settlement Closings

CREDITOR

Anyone who extends consumer credit. See TRUTH-IN-LENDING.

A system or doctrine in which a person believes.

CUBAGE

Front or width of a building, multiplied by depth of the building and bythe height; figured from basement floor to the outer surfaces of wallsand roof.

CUBIC FOOT

A block whose length, width and height are each 12", or anyequivalent of 1,728 cubic inches. See Math

CUBIC FOOT PER SECOND

A unit of discharge for measurement of flowing liquid equal to a flowof 1 cu. ft. per second past a given section. Also called SecondFoot.

CUBIC YARD

A block whose length, width and height are each 1 yard. 1 yard (3')X 1 yard (3') X 1 yard (3') = 1 cubic yard, or any equivalent of 27cubic feet. See Math

CUL-DE-SAC

A passageway with one outlet. Streets in newer subdivisions aresometimes built in cul-de-sac fashion.

CURABLE DEPRECIATION

Physical or functional items where the value added by repairing orreplacing a component will be recaptured at the time of sale.

CURTESY

The right which a husband has in his wife's estate at her death.

CUSTOMER

Prospective buyer.

DAMAGES

Money payment ordered by a court to be paid to one whoseproperty, or personal, rights have been violated.

DATA PLANT

An appraiser's file of information on real estate.

DEALER

An Internal Revenue Service designation for a person who regularlybuys and sells real property as a business, not as an investor. Adealer is not allowed the capital gains benefits of an investor.

DEBENTURE

Bonds issued without specific security, and secured only by theoverall equity of the issuer.

A charge to a party or entity on a closing statement or balance sheet. See Closings - Recordkeeping - Settlement Closings

DEBT SERVICE

The amount of money needed to meet the periodic amortizationpayments of a loan.

DEBTOR

One who owes a debt. Anyone liable for a claim.

Claims against the borrower; Accounts Payable on a financial report.Important item in determining qualification of buyer.

DECIDUOUS

Deciduous trees lose their leaves in the autumn and winter.

DECLARATION

It refers to condominium ownership, and it commits the property tocondominium development; defines the complex and the air spaces,the general common elements and limited common elements; andestablishes the basic rights and obligations of the owners. Inaddition, it provides for the creation of a management associationwith the authority to collect common expenses.

DEDICATION

An appropriation of land by its owner for some public use, andaccepted for such use by authorized public officials on behalf of thepublic.

conveyancing instrument given to pass fee title to property uponale. See Practical Applications

DEED IN LIEU OF FORECLOSURE

A deed given to the mortgagee by the mortgagor giving up all rightsin the property to prevent the mortgagee from foreclosing on amortgage that is in default.

DEED OF RECONVEYANCE

The transfer of legal title from the trustee to the trustor (borrower)after a trust deed debt has been paid. See RELEASE OF DEED OFTRUST.

DEED OF TRUST

An instrument used in many states in place of a mortgage. Propertyis transferred to a trustee by the borrower (trustor), in favor of thelender (beneficiary), and reconveyed upon payment in full. SeeClosings - Recordkeeping - Settlement Closings - Finance

DEED RESTRICTION

A provision in a deed controlling or limiting the use of the land.

DEFAULT

Failure to perform a duty or to discharge an obligation. See PracticalApplications

DEFAULT JUDGMENT

A court order resulting from the failure of a defendant to answer acomplaint in a lawsuit.

DEFEASABLE FEE

Ownership with conditional restrictions which, if broken, can causeforfeiture of title to the grantor or his heirs (Defeatable).

DEFEASANCE CLAUSE

A clause to terminate a party's rights in an instrument under specifiedconditions, such as reconveyance of title upon payment of debt. SeeFinance

DEFERRED MAINTENANCE

Repairs necessary to put a property in good condition. A concern ofa purchaser. An owner may have a capital account for suchmaintenance.

DEFERRED PAYMENT OPTIONS

The privilege of deferring income payments to take advantage of taxstatutes.

DEFICIENCY JUDGMENT

A court order to pay the balance (deficiency) owed on a loan, afterthe proceeds from the sale of the security are not sufficient to pay offthe loan.

DEGREE

1/360th of a circle, used in surveying.

DELIVERY

In the legal act of transferring ownership of property, the deed mustbe delivered (given to) and accepted by the buyer to be valid.

DEMAND

One of the four essential elements of value. A desire to possess.

DEMISE

In real estate, the leasing or renting of property for a certain period oftime.

DEMURRER

An objection made by one party to his opponent's pleading, allegingthat he ought not to answer it, for some defect in law or the pleading.

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT(HUD)

A federal agency involved with housing.

DEPARTMENT OF REAL ESTATE

That department of the state government responsible for thelicensing and regulation of persons engaged in the real estatebusiness. The person heading the department is usually called TheReal Estate Commissioner. Other names for the department are TheDivision of Real Estate and The Real Estate Commission.

DEPOSIT

Money given by the buyer with an offer to purchase. Shows goodfaith. See also EARNEST MONEY.

DEPOSIT RECEIPT

A form used to accept "earnest money" to bind an offer for thepurchase of real property.

DEPRECIABLE LIFE

A tax term meaning the number of years used to determinedepreciation of an asset (generally a building).

DEPRECIABLE REAL PROPERTY

Property of a type that is subject to wear and tear, including held forinvestment or used in trade or business.

DEPRECIATED VALUE

The original basis of a property less the amount of depreciationtaken at any point of time.

DEPRECIATION, ACCOUNTING

A theoretical paper loss, which may or may not have actuallyoccurred within the item being exhausted.

DEPRECIATION (APPRAISAL)

A loss in value due to any cause. For appraisal purposes,depreciation is divided into three classes according to its cause: physical deterioration, functional obsolescence, and economicobsolescence.

DEPRECIATION BASIS

The adjusted basis of a property, which geographically defines realproperty and is acceptable in a court of law.

DEPRECIATION RATE

An estimate or theoretic annual amount or percentage, at which theusefulness of a property is being exhausted.

DEPRECIATION (TAX)

For income tax purposes, depreciation is an expense deductiontaken for an investment in depreciable property. See GovernmentControls

DEPTH FACTOR

The increase or decrease of the value of a lot as the depth increasesor decreases; the frontage remains the same.

DEPTH TABLE

Tables used by appraisers to provide a uniform system of measuringthe additional value which accrues to a commercial lot because ofadded depth.

DERELICTION

See RELICTION.

DESCENT

Inheriting property by operation of law, where the heir obtainsownership through hereditary succession (passes from father toson).

DESCRIPTION

The portion of a conveyance document which geographically definesreal property and is acceptable in a court of law.

DETERIORATION

A cause of loss of value due to wear and tear.

DETERMINABLE FEE

Sometimes called "fee simple determinable" and exists "as long as","during the time or period of", or "while", a certain prescribed use ofthe property continues.

DEVISE

A gift of real property by will.

DEVISEE

One who receives (inherits) real property by will.

DEVISOR

One who bequeaths (gives) by will.

DIRECTIONAL GROWTH

The path of growth of an urban area. Used to determine wherefuture development will be most profitable.

DISBURSEMENT

Money paid out of an account, such as at a closing.

DISCHARGE OF CONTRACT

The termination or cancellation of a contract by performance, non-performance, breach, rescission, etc.

DISCLOSURE

The act of making information known to others. In RealEstate, usually pertains to the disclosure of important, orotherwise material or confidential, information. The “others”(to whom disclosure is required or prohibited) pertains to theinterested parties to a transaction. Most often, the rules orregulations dealing with disclosure address 1) the kind ofinformation the disclosure of which is required or prohibited;2) the identity of persons both from whom and to whom. SeeContract Agency

DISCLOSURE STATEMENT

An accounting of all financial aspects of a mortgage loan required oflenders to borrowers in residential mortgage loans by Regulation Z ofthe Federal Reserve Board.

DISCOUNT

To reduce the cost of something. The difference between the cashvalue and the face value of something.

DISCOUNT POINTS

A loan fee charged by a lender when accepting an FHA or VA loan,to increase the yield on the investment (also known in the trade asPoints), to offset the lower interest received in comparison withconventional loan interest rates. See Contracts & Regs - Math

DISCOUNTING

A process based on the concept that present value is always worthmore than future money; and conversely, money receivable in thefuture is worth less than money today.

DISCRIMINATION

In real estate, prejudice or refusal to rent or sell to a person becauseof race, color, religion, sex, marital status, or ethnic origin.

DISINTEGRATION, PRINCIPLE OF

The last stage of the life cycle of property value. Disintegration is thedecline or decay state.

DISINTERMEDIATION

The process of the direct investing of funds by the owners of thefunds, instead of placing the funds in banks or Saving and Loan's forthem to invest.

DISPOSSESS

To deprive one of the use of real estate.

DISTRESS SALE

A sale of property when the seller is under extreme pressure to sell. Generally, the property is sold for less than market value.

DISTRESSED PROPERTY

Property the brings an insufficient return to the owner or is indifficulty for other reasons.

DIVIDE

To cut or otherwise separate into two or more parts. See Math

DOCUMENTARY (FEE) TRANSFER TAX

A Colorado state law requiring a fee of one cent for each onehundred dollars of consideration paid by the person recording aninstrument of conveyance to the county clerk and recorder. SeePractical Applications

DOMINANT TENEMENT

The tenement benefitting by an easement appurtenant.

A person to whom a gift is made.

A person who makes a gift.

The right which a wife has in her husband's estate at his death.

DOWN PAYMENT

Cash portion paid by a buyer from his or her own funds, as opposedto that portion of the purchase price which is financed.

DUAL AGENCY

An agent, who by agreement, represents both parties in a real estatetransaction. Each party gives up some loyalty and confidentialitythey are owed by the agent. See Contracts & Regs - Current LegalIssues

DUE DILIGENCE

A proper and fair amount of activity and care, used in performingduties and obligations in a contract.

DUE ON SALE CLAUSE

See ALIENATION CLAUSE. See Finance

DUPLEX

A building comprised of two dwelling units.

DURESS

Unlawful force used to compel a person to do something against hiswill. See Contract Agency

DWELLING

Any building, structure, or part thereof, used and occupied for humanhabitation or intended to be so used, including any appurtenances.

DWELLING UNIT

As defined in many zoning codes, an apartment, building or group ofbuildings comprised of a room, or rooms constituting an independenthousekeeping unit for a family and containing a single kitchen.

See ERRORS AND OMISSIONS INSURANCE.

EARNEST MONEY

The cash deposit paid by a prospective buyer of real estate asevidence of intention to complete the transaction. See Closings -Recordkeeping - Settlement Closings - Practical Applications -Contracts & Regs

EASEMENT

A right to use the land of another. See Real Property

EASEMENT APPURTENANT

An easement usually adjoining land which remains part of theowner's land (appurtenant to).

EASEMENT BY PRESCRIPTION

See PRESCRIPTION.

EASEMENT IN GROSS

(Commercial) An easement held which is not attached orappurtenant to any specific land (i.e., a public utility companypersonal to the holder), similar to a license.

EASEMENT OF NECESSITY

Easement necessary to obtain ingress and egress to a landlockedproperty.

The lower part of a roof projecting over the wall.

ECONOMIC LIFE

The "profitable" life of an improvement. Generally, shorter than thephysical life (before it is worn out). See Valuation Appraisal

ECONOMIC OBSOLESCENCE

Loss of desirability and useful life of a property through economicforces, such as zoning changes, traffic pattern changes, etc., ratherthan deterioration or functional obsolescence. See ValuationAppraisal

ECONOMIC RENT

The market rental value of a property at any given time, even thoughthe actual rent may be different.

EFFECTIVE AGE

Age of a structure as estimated by its condition, rather than actualage. Takes into account rehabilitation and maintenance.

EFFECTIVE DATE OF VALUE

The specific day the conclusion of value applies.

EFFECTIVE GROSS INCOME

Gross income less vacancy and bad debt allowance.

EFFECTIVE INTEREST RATE

The percentage of interest that is actually being paid by the borrowerfor the use of the money.

EFFICIENCY UNIT

An apartment consisting of one room, sectioned into areas for akitchen, bedroom, etc.

EGRESS

A way to exit from a property. Opposite of ingress.

ELEVATIONS

Profile of building, showing roof lines, windows, doors -- usuallyshowing all four sides.

ELLWOOD MORTGAGE - EQUITY - ANALYSIS

This is a method which enables the analysis of a property by takinginto account differing effects of various mortgage financing, loanamortization and future property appreciation or depreciation at thetime of sale.

EMBLEMENTS

Crops produced annually by the labor of the cultivator. The right of atenant farmer to remove the annual crops he has produced after histenancy has ended.

EMINENT DOMAIN

The power of the government to take (condemn) private property fora public use upon payment of a fair compensation. See GovernmentControls

EMPLOYING BROKER

A broker who can employ, and must supervise other licensees. SeeCurrent Legal Issues

ENCROACHMENT

Generally, construction onto the property of another, as of a wall,fence, building, etc.

ENCUMBER

To place a lien or charge on land.

ENCUMBRANCE

Anything which burdens (limits) the fee title to property, such as alien, easement or restriction of any kind. See Real Property

ENDORSEMENT

Signature on the back of a promissory note or check for the purposeof transferring ownership. "In Blank": Guarantees payment tosubsequent holders. "Without Recourse": Does not guaranteepayment to subsequent holders.

ENFORCEABLE

A contract in which the parties may legally be required to perform.

ENGINEER PROPERTY INSPECTION

A real property inspection conducted by an engineer, for a fee, todetermine the physical condition of the subject property.

ENJOIN

To stop performance of, or require performance of an act.

ENVIRONMENTAL IMPACT STATEMENT

A requirement of National Environmental Policy Act prior to initiatingor changing a land use that may have an adverse affect on theenvironment.

EQUAL CREDIT OPPORTUNITY ACT

Federal law passed in 1974, to prohibit lenders from discrimination inthe granting of credit on the basis of race, creed, color, religion,national origin, sex, marital status, age, or because income comesfrom public assistance programs. See Finance

EQUAL HOUSING OPPORTUNITY

Denotes all citizens shall have the same rights and privileges as allothers, without discrimination of any kind. See Contracts & Regs

EQUILIBRIUM

The middle state of the life cycle of property value. The equilibriumpoint is the static point at the peak of its value.

EQUITABLE LIEN

Lien based on a written agreement to pledge the particular propertyas security.

EQUITABLE TITLE/OWNERSHIP

The interest in the property held by the buyer under an executorycontract. (Prior to transfer of legal title.) See Practical Applications

EQUITY

The market value of real property, less the amount of existing liens.

EQUITY BUILD-UP

By reducing the amount of principal owed on a debt, the equityincreases. See also EQUITY.

EQUITY OF REDEMPTION

Right of a mortgagor, before a foreclosure sale, to reclaim propertywhich had been forfeited due to mortgage default. The mortgagorcan redeem the property by paying the full debt plus interest andcosts.

EQUITY PARTICIPATION

An agreement between a buyer and an investor that allows theinvestor to participate in the equity when the property is sold, inexchange for assisting in, or with, the original financing of thepurchase.

EROSION

The gradual loss of soil due to the operation of currents, tides, orwinds; the opposite of accretion.

ERRORS AND OMISSIONS INSURANCE (E & O)

A form of malpractice insurance that protects brokers and agents forerrors, mistakes and negligence in real estate contracts they areinvolved in.

ESCALATION CLAUSE

The right reserved by the lender/lessor to increase the amount of thepayment and/or interest upon the happening of a certain event. Some escalator clauses are based upon the "cost of living" index.

ESCHEAT

Reverting of property to the State upon death of an owner withoutheirs, and without will (intestate).

ESCROW

Delivery of a deed by a grantor to a third party for delivery to thegrantee upon the happening of a contingent event.

ESCROW ACCOUNT

See TRUST ACCOUNT, IMPOUNDS, TAX & INSURANCERESERVES. See Closings - Recordkeeping - Settlement Closings -Practical Application - Current Legal Issues

ESCROW HOLDER

A third party who acts as the stakes holder for two or more parties. Escrow holder acts as an agent for all parties.

ESCROW INSTRUCTIONS

See ESCROW and ESCROW HOLDER.

ESTATE

The ownership interest of a person in real property. Also used torefer to the property left by a deceased person. See Real Property

ESTATE AT SUFFERANCE

An estate resulting where there is retention of possession without theconsent of the landlord, after expiration of a lease, creating aholdover tenancy. See Contract Agency - Real Property

ESTATE AT WILL

A type of lease which may be immediately terminated upon notice byeither party. See Contract Agency

ESTATE FOR LIFE

A freehold estate, not of inheritance, but which is held by the tenantfor his own life or the life or lives of one or more other persons, or foran indefinite period, which may endure for the life or lives of personsin being and beyond the period of life.

ESTATE FOR YEARS

Any lease for a definite period of time with a predeterminedtermination date.

ESTATE FROM PERIOD-TO-PERIOD

An interest in land, where there is no definite termination date but therental period is fixed at a certain sum per week, month, or year. Alsocalled a periodic tenancy.

ESTATE IN ENTIRETY

An estate held by husband and wife together so long as both live,and, after the death of either, by the survivor.

ESTATE IN FEE

Same as Fee Simple Absolute Estate (Fee Simple Estate).

ESTATE IN REMAINDER

The future interest in the title given by the grantor to a third person inthe remainder of a life estate.

ESTATE IN REVERSION

The future interest in the title remaining in the grantor to the residueof a life estate.

ESTATE OF INHERITANCE

Any estate capable of being inherited. All freehold estates areestates of inheritance, except life estates.

ESTIMATE OF VALUE

An opinion of value.

ESTOPPEL

The prevention of a person from making an affirmation or denial,because it is contrary to a previous affirmation or denial that he hasmade. See CERTIFICATE OF NO DEFENSE.

An abbreviation for "et alii", meaning "and others". It may also mean"and another" in the singular. (Latin).

Term meaning "and wife". (Latin)

ETHICS

Denotes a higher standard of conduct than that demanded by law. See CODE OF ETHICS.

ETHNIC GROUP

People having a common language, heritage, culture and customs,and usually belonging to the same race.

EVICTION

Refers to process instituted to oust a person from possession.

EVIDENCE OF TITLE

In Colorado, evidence of title may be shown by Title Insurance, anAbstract and Opinion or a Torrens Certificate. There is no documentknown as a "Title" to real estate as there is for an automobile.

EXCHANGE

A reciprocal transfer of real property, which has certain taxadvantages over a sale. Definite procedures must be followed inorder to qualify the transfer as an exchange.

EXCLUSIVE AGENCY LISTING

A written instrument giving one agent the right to sell property for aspecified time, but reserving the right of the owner to sell theproperty himself without the payment of a commission. See PracticalApplications - Contracts & Regs

EXCLUSIVE RIGHT-TO-SELL LISTING

A written agreement between owner and agent giving agent the rightto collect a commission if the property is sold by anyone during theterm of the listing. See Contract Agency - Current Legal Issues -Practical Applications - Contracts & Regs

EXCULPATORY CLAUSE

A clause sometimes inserted in a mortgage note, in which the lenderwaives the right to a deficiency judgment.

EXECUTE

To complete, to make, to perform, to do, to follow out; to execute adeed, to make a deed, including especially signing, sealing anddelivery; to execute a contract is to perform the contract, to follow outto the end, often referred to as the "Closing".

EXECUTED

A contract that has been fully performed; a signed instrument,completed.

EXECUTION

A writ issued by a court to the sheriff, directing him to sell property tosatisfy a debt.

EXECUTOR

A person named in a will to carry out its provisions as to thedisposition of the estate of a person deceased.

EXECUTORY CONTRACT

A contract in which one or both of the parties has not yet performed. See Closings.

EXECUTRIX

A woman executor.

EXEMPT

Relieved of liability.

EXPENSES

To an appraiser, this means all of the periodic annual expenseschargeable to the operation of a property. It does not includemortgage interest or amortization, the owner's income tax, or itemswhich are actually capital improvements.

EXPENSES OF SALE

Certain items which may appear on a closing statement inconnection with a real estate sale.

EXPRESS

To state; to put into words or writing.

EXTENDED COVERAGE

A broad form of title insurance that is available to home owners.

EXTENSION

Agreement between two or more parties to extend the maturity dateof a contract after it becomes due.

F.H.A.

See FEDERAL HOUSING ADMINISTRATION.

F.T.C.

See FEDERAL TRADE COMMISSION.

FACADE

Front of a building.

FACILITATOR

A real estate licensee that assists a customer to buy or sell realestate without "representing" them, or being their "advocate" (sameas Transaction-Broker).

FAIR CREDIT REPORTING ACT

A federal law requiring the accurate reporting of credit information bycredit agencies (designed to protect the public).

FAIR HOUSING ACT

See EQUAL HOUSING OPPORTUNITY. See Contracts & Regs

FAIR HOUSING VALUE

A price for property agreed upon between buyer and seller in acompetitive market with neither party being undue pressure.

FAIR HOUSING ACT OF 1968

A federal prohibition on discrimination in the sale, rental or financingof housing on the basis of race, color, religion, sex or national origin.

FALSE ADVERTISING

In most instances, when in connection with real estate, newspaperclassified advertising which misrepresents the property, price, orterms. A broker may have his or her license suspended or revoked ifthe offense is prolonged or deliberately fraudulent.

FALSE PROMISE

A promise to induce an act with no intent of fulfillment.

FANNIE MAE

The shortened name for the Federal National Mortgage Association.

FARMERS HOME ADMINISTRATION (FmHA)

An agency of the Department of Agriculture. Primary responsibility isto provide financial assistance for farmers and others living in ruralareas where financing is not available on reasonable terms fromprivate sources.

FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC)

The federal agency created to insure savings accounts of depositorsin state and federally chartered banks and savings and loans. SeeClosings - Recordkeeping - Settlement Closings

FEDERAL HOME LOAN BANK (FHLB)

A federal organization formed in 1932, to provide a Credit ReserveSystem for member State and Federal Savings and LoanAssociations, through which, they would be able to borrow for a shortor long term.

FEDERAL HOME LOAN BANK BOARD (FHLBB)

The administrative agency that charters Federal Savings and Loanassociations and exercises regulatory authority over the FHLBsystem.

FEDERAL HOME LOAN MORTGAGE CORPORATION

See FHLMC.

FEDERAL HOUSING ADMINISTRATION (FHA)

The Federal Government agency which administers FHA insuredloans. See Finance

FEDERAL HOUSING FINANCE BOARD (FHFB)

See FEDERAL HOME LOAN BANK BOARD.

FEDERAL LAND BANK

A privately owned cooperative organization administered by the FarmCredit Administration, it provides low-cost, long-term loans to farmersthat belong to the Federal Land Bank Association. There are 12districts with a Federal Land Bank in each district servicing memberbanks in that district.

FEDERAL RESERVE (The Fed)

A quasi-governmental agency. Actually, a private organizationentrusted with the control and management of the nation's economy. Composed of 12 districts, with a Federal Reserve Bank in eachdistrict servicing member banks in that district.

FEDERAL SAVINGS AND LOAN ASSOCIATION

An association chartered by the FHLBB in contrast to a state-chartered Savings and Loan.

FEDERAL TRADE COMMISSION (FTC)

A Federal Agency created to investigate and eliminate deceptive andunfair trade practices.

An estate of inheritance in real property.

FEE SIMPLE

Ownership of title to real property without limitation or end; inperpetuity. The greatest and most inclusive type of real estateownership. Includes rights to control, use, possess, enjoy anddispose (CUPED). See Real Property

FEE TAIL

An estate of inheritance given to a person and "the heirs of hisbody". If the grantee dies without leaving issue, the estateterminates and would revert to the grantor (abolished in all states).

FELONY

A major crime, the penalty of which is usually imprisonment in apenitentiary.

FEUDAL SYSTEM

Ownership of land was with the king or sovereign who allowed hissubjects the right to use the land for their benefit.

FEUDAL TENURE SYSTEM

A real property ownership system where ownership rests with asovereign who, in turn, may grant lesser interests in return forservice or loyalty. In contrast to allodial tenure.

FHA CONDITIONAL

See COMMITMENT.

FHA FIRM

See COMMITMENT.

FHA INSURED MORTGAGE

A mortgage under which the Federal Housing Administration insuresloans made according to its regulation by approved lenders.

(Freddie Mac) A secondary money market similar to FNMA andGNMA (Federal Home Loan Mortgage Corporation).

FICTITIOUS NAME

Commonly refers to a company name in a business not incorporated. The owner files a certificate of fictitious name. For example: JoeSmith (real name); Joe's Garage, (fictitious name). Also called aD.B.A. (doing business as).

FIDUCIARY

A person holding a position of trust for another. Agents, trustees,executors, administrators and attorneys-in-fact are fiduciaries. SeeContracts & Regs

FINANCE CHARGE

The total cost imposed directly, or indirectly, by the lender, andpayable either directly, or indirectly, by the borrower as defined bythe Federal Truth-in-Lending laws.

FINANCIAL INSTITUTIONS REFORM, RECOVERY, ANDENFORCEMENT ACT

A law to provide guidelines for the regulation of financial institutions. Referred to as the “savings and loan bailout bill, FIRREA created theSavings Association Insurance Fund (SAIF) and the Bank InsuranceFund (BIF), both of which are administered by the restructuredFederal Deposit Insurance Corporation (FDIC). FIRREA alsocreated the Resolution Trust Corporation (RTC) to manage theassets of insolvent savings and loan associations. One part of thelaw created the Appraisal Foundation and requires the use of state-certified or state-licensed appraisers to appraise properties involvinga federally insured or federally regulated industry.

FINANCIAL STATEMENT

A formal statement of the financial status and net worth of a personor company, disclosing assets and liabilities as of a specified date.

FINDER'S FEE

A fee paid to someone for referring a prospect to the payor. InColorado, it is illegal to pay or receive a finder's fee to or by anunlicensed person.

FIRE STOP

Boards placed horizontally between studs.

FIRE WALL

A wall constructed of fire-retardant materials, used to prevent thespread of fire in a structure or building.

FIRM COMMITMENT

A definite undertaking by a lender to loan a set amount of money at aspecified interest rate for a certain term; also, a commitment by theFHA to insure a mortgage on certain property to a specifiedmortgagor (as opposed to a commitment conditioned on approval ofa yet-to-be determined mortgagor).

FIRREA

See Financial Institutions Reform, Recovery, and Enforcement Act.

FIRST MORTGAGE

The mortgage on a property that is superior in right to any othermortgage.

FIRST RIGHT OF REFUSAL

A right that gives someone the first chance to purchase or leaseproperty.

FIRST USER

Relates to depreciable property purchased prior to 1981. It allowscertain tax breaks to the first owner who puts the property to the usefor which it was intended.

FIXED EXPENSES

The regular recurring costs of charges required in the holding of aproperty, such as taxes and fire insurance.

FIXED LEASE

See FLAT LEASE.

FIXED RATE LOAN

A loan in which the interest rate remains the same for the life of theloan.

FIXITY OF LOCATION

The physical characteristic of real estate that subjects it to theinfluence of its surroundings.

FIXTURES

Personal property that has been attached to real property by nails,screws, glue, etc., so it has become real property. It depends onintent and manner of attachment. Fixtures used in a trade orbusiness usually remain personal property.

FLASHING

Sheet metal or other material used to protect a building fromseepage of water.

An apartment unit or an entire floor of a building used for residentialpurposes.

FLAT LEASE

A lease, in which the rental is a fixed sum paid periodicallythroughout the entire lease term.

FLEXIBLE-PAYMENT MORTGAGE

A loan in which the payment schedule is based on the borrower'sparticular financial condition. Often, interest rates are initially lowerthan ordinary mortgages and the initial payments are below those ofan amortized mortgage.

A mortgage banking term that refers to the spread of the variableinterest rate on a loan; the "pegged rate" - for example, the intereston a development loan might be set at 3 percent above the localprime rate. A float can have a floor or a ceiling, such as, "in noevent below 9 percent or above 15 percent"; or it can have nolimitation, as a full float.

FLOOD WATERS

Waters overflowing a regularly defined channel.

FLOOR JOIST

The boards that support the floor; they are laid horizontally, on edge,and the sub-floor is nailed directly into the joists.

FLOOR PLAN

An architectural drawing showing the physical layout of a building,including the exact room sizes and their interrelationships.

(Fannie Mae) - Abbreviation for Federal National MortgageAssociation. A secondary money market. See Finance

FOOTING

The base or bottom of a foundation wall, pier, or column.

FORBEARANCE

The failure to pursue legal recourse to which the lender is entitled ona delinquent loan, usually based on an agreement.

FORCIBLE ENTRY & DETAINER (FED)

Lawful eviction proceedings.

FORECASTING (APPRAISAL)

Taking the past as a guide to the future, together with presentconditions, and tempering this with the appraiser's judgment for theprojection of the future.

FORECLOSURE

Procedure whereby property pledged as security for a debt is sold topay the debt in the event of default.

FORFEITURE

Loss of anything of value due to failure to perform. See Contracts &Regs

FOUNDATION PLAN

A scale drawing providing the essential details concerning the size offootings, size and dimensions of piers, and constructionmeasurements and details of the subfloor area.

FOURPLEX

A building comprised of four dwelling units.

FRANCHISE

A specified privilege awarded by a government or business firmwhich awards an exclusive dealership.

FRACTIONS

One or more or a number of equal parts into which a unit is divided. See Math

An intentional false representation or concealment of material fact,which is used to induce another person to act, which act causes aloss of property or legal rights. See Contracts & Regs - ContractAgency - Current Legal Issues

FREDDIE MAC

See FHLMC.

FREE AND CLEAR

"Free" means a freehold estate (i.e., one of indefinite duration), and"clear" indicates no money encumbrances against the title. Noproperty is ever truly "free and clear" (i.e., taxes, etc.).

FREEHOLD

The holding of real property as an estate of inheritance (fee simple),or as a lesser estate for life (life estate), it includes actual ownershipof unpredictable duration. See Real Property

FREEHOLD ESTATE

An estate in fee simple or for life.

FRONT FOOT

A foot of property along the street frontage; each front foot extendingthe depth of the lot. A valuation for property measurement or salepurposes.

FRONT MONEY

The minimum amount of money necessary to initiate a real estateventure.

FRONTAGE

Land bordering a street.

FRUCTUS INDUSTRIALES

Crops grown and cultivated.

FRUCTUS NATURALES

Vegetation growing naturally on the property, not a "planted" crop.

Federal Savings & Loan Insurance Corporation. Provides depositorswith savings insurance. Currently insures deposits in amounts up to$100,000 per account.

FULL DISCLOSURE

The requirement to fully disclose all material facts known pertainingto a real estate transaction by the licensee involved.

FUNCTIONAL OBSOLESCENCE

A loss in value of an improvement to real property due to functionalinadequacies, deficiency, and pool design, or a loss in value due to asuper adequate feature. See Valuation Appraisal

FURRING

Strips of wood or metal applied to a wall or other surface to even it,to form an air space, or to give the wall an appearance of greaterthickness.

FUTURE BENEFITS

The anticipated benefits the present owner will receive from hisproperty in the future.

GABLE ROOF

A pitched roof with 2 sloping sides.

GARDEN APARTMENT

A dwelling unit of an apartment building that is partially in the ground(i.e., at garden level).

GARNISHMENT

A legal process used by creditors to collect a debt through a courthearing, having already obtained a judgement. Usually paid ininstallments by the debtor.

GENERAL AGENT

An agent who has authority to perform any and all acts for theprincipal relating to the objective for which the agent was engaged.

GENERAL LIEN

A lien on all the property of a debtor.

GENERAL PARTNER

A co-owner in a partnership who has full authority to act for thepartnership, and who has full liability for its debts.

GENERAL WARRANTY DEED

See WARRANTY DEED. See Real Property - Practical Applications

GI LOAN

A Government-guaranteed loan available to eligible veterans.

GIFT DEED

A deed used to make a gift of real estate. No monetaryconsideration required.

GNMA (Ginnie Mae)

(Government National Mortgage Association) A secondary moneymarket that deals primarily in subsidized loans.

GOOD CONSIDERATION

Love and affection (non-monetary). Does not establish basis forbreach of contract. See Contract Agency

GOOD FAITH

Any act done with honest intent. Bona Fide.

GOOD FAITH ESTIMATE

The lender’s estimate of a borrower’s settlement costs that isrequired by RESPA to be furnished to borrowers at time of loanapplication. See Closings - Recordkeeping - Settlement Closings

GOOD FUNDS

Examples of good funds are: cash, wire transfers, cashier’s checks,certified checks. See Closings - Recordkeeping - SettlementClosings

GOOD WILL

The expectation of continued public patronage.

GOVERNMENT PATENT

See PATENT.

GOVERNMENT SURVEY

The survey from which our present system of townships, sections,etc., was developed.

Ground level at the foundation.

GRADUATED LEASE

A lease, which provides for a varying rental rate, often based uponsome future determination, such as Cost of Living Index, etc.

GRADUATED PAYMENT MORTGAGE (GPM)

A mortgage that has payments beginning at less than interest only,and gradually increase at specified times (usually once each year forseven years), then level off and stay the same for the balance of theloan term. See Finance

GRANDFATHER CLAUSE

An expression conveying the idea that something that formerly waspermissible may continue, despite changes which now make it non-permissible.

A technical term used in deeds of conveyance of lands to import atransfer.

GRANT DEED

Customary document used in some states to transfer title to realproperty. Contains two implied warranties. See also WARRANTYDEED. See Real Property

GRANTEE

The receiver of the title being granted by deed. See Real Property

GRANTING CLAUSE

A clause wherein the grantor(giver) transfers an interest in theproperty to the grantee(receiver) by deed. See Contracts & Regs

GRANTOR

The owner of the title being granted by deed. The person whomakes a grant. See Real Property

Graduate, REALTORS Institute.

GROSS INCOME

The scheduled total income derived from an income-businessproperty before deductions and or expenses, depreciation, taxes,etc.

GROSS INCOME MULTIPLIER

A factor determined from comparable rental property sales that,when multiplied by the annual gross income of a property, willsuggest a market value.

GROSS LEASE

Tenant only pays rent, the lessor pays taxes, insurance, etc. Sometimes called a "fixed" or "flat" lease.

GROSS RENT MULTIPLIER

A factor determined from comparable rental property sales that,when multiplied by the monthly rent, will suggest a market value. See Valuation Appraisal

GROUND LEASE

Lease of land only, sometimes secured by the improvements placedon the land by the user.

GROUND RENT

Earnings of improved property credited to earnings of the grounditself, after allowance is made for earnings of improvements.

GROUND WATER

A pervious formation with sides and bottom of relatively imperviousmaterial, in which ground water is held or retained. Also calledSUBSURFACE WATER BASIN.

GUARANTEED INVENTORY

A guarantee given by the seller that the actual amount of inventoryon hand at the close of escrow, will equal that value placed upon theinventory at the time the sales agreement was entered into.

GUARANTEED SALE PROGRAM

Broker or agent agrees to pay a pre-determined price for a property,if it doesn't sell during the time specified in the listing contract.

GUARANTY

A pledge or security given by one person to assure performance byanother.

GUARDIAN DEED

See SPECIAL WARRANTY DEED.

H.O.W. (HOME OWNERS' WARRANTY)

See HOME WARRANTY PROGRAM.

HABENDUM CLAUSE

The "To Have and To Hold" clause, which defines or limits thequantity of the estate granted in the premises of the deed.

HABITABLE

Being in a condition that is fit to live in.

HANDICAPPED

A physical or mental impairment, which substantially limits one ormore major life activities of a person. It includes, alcoholism,A.I.D.S., H.I.V. virus, certain physiological disorders, specifiedanatomical losses, mental illness, retardation, and psychologicaldisorders.

HAZARD INSURANCE

Insurance on property (mainly the buildings), that insures lossescaused by fire, hail and windstorms.

HEADER

A beam placed perpendicular to joists, and to which joists are nailedin framing for chimney, stairway, or other openings.

HEIRS AND ASSIGNS

Words usually found in a deed, showing the interest the grantee isreceiving. A deed to "A, his heirs and assigns", would grant theproperty to A, with the right to assign said property or have itdescend to A's heirs upon A's death.

HEREDITAMENTS

Anything capable of being inherited, includes both real and personalproperty.

HIGHEST AND BEST USE

That use which is most likely to produce the greatest net return to theland and/or building, over a given period of time. See ValuationAppraisal

HIP ROOF

A pitched roof with 4 sloping sides and ends.

HISTORICAL AGE

Same as CHRONOLOGICAL AGE.

HOLD HARMLESS CLAUSE

A clause in a contract where one party agrees to indemnify the otherparty against injuries or suits resulting from the contractualagreement.

HOLDER IN DUE COURSE

Person who, in good faith and for value, obtains a promissory note orcheck before it was overdue, and who does not have notice that ithad been previously dishonored, and does not have knowledge ofany defects. See Finance

HOLDING PERIOD

The length of time a property is owned.

HOLDOVER CLAUSE

The number of days following expiration of listing that the broker’scommission is protected. See Practical Applications

HOLDOVER TENANT

A tenant who remains in possession of leased property after theexpiration of the lease term. See ESTATE AT SUFFERANCE.

HOLOGRAPHIC WILL

A will that is written entirely in the handwriting of the testator.

HOME LOAN

A loan secured by a residence for one, two, three, or four familiesunder either a mortgage or a deed of trust.

HOME OWNERSHIP

Ownership as opposed to rental status.

HOME WARRANTY INSURANCE

Private insurance, insuring a buyer against defects (usuallyplumbing, heating, and electrical) in the home he has purchased. The period of insurance varies and both new and used homes maybe insured.

HOMEOWNERS' ASSOCIATION

(1) An association of people who own homes in a given area, formedfor the purpose of improving or maintaining the quality of the area. (2) An association formed by the builder of condominiums orplanned developments, and required by statute in some states. Thebuilder's participation, as well as the duties of the association, arecontrolled by statute.

HOMEOWNERS’ POLICY

An insurance policy protecting against a variety of hazards.

HOMEOWNERS' WARRANTY PROGRAM (HOW)

Insurance offered by a subsidiary of the National Association ofHome Builders that provides a buyer of a new home a ten-yearwarranty against certain physical defects.

HOMESTEAD

A limited exemption against certain money judgments allowed ahomeowner. A home upon which the owner has recorded aDeclaration of Homestead.

HOSTILE POSSESSION

Possession and occupation of property adverse to the titled owner ofthe property.

HOUSING OPPORTUNITY

See EQUAL HOUSING OPPORTUNITY.

Department of Housing and Urban Development.

HUD FORM NO. 1

A standard settlement form required by RESPA.

HUNDRED PERCENT LOCATION

The best retail business location in a community for attractingbusiness.

HYPOTHECATE

To make property security for a debt without giving up possession.

I.R.E.M.

See INSTITUTE OF REAL ESTATE MANAGEMENT.

IRS FORM 1099-S

A form that summarizes and reports transaction data from a closingfor IRS. See Closings

ILLEGAL

Contrary to law; not authorized by law.

IMPLIED

Presumed, or inferred, rather than expressed.

IMPLIED AGENCY

An agency created by the words, conduct or acts of the parties.

IMPLIED CONTRACT

A contract created by the words, conduct or acts of the parties, it isboth unwritten and unintended.

IMPLIED WARRANTIES

The warranties inferred, and not expressed, in a deed which usesthe word "grant" to convey a fee estate.

IMPOUND ACCOUNT

A trust-type account, established by lenders for the accumulation offunds to meet taxes, mortgage insurance premiums, and/or futureinsurance policy premiums, required to protect their security.Impounds are usually collected with the note payment. SeeESCROW ACCOUNT, TAX AND INSURANCE RESERVE. SeeClosings - Recordkeeping - Settlement Closings - PracticalApplications - Current Legal Issues

IMPROVED LAND

Land having either on-site improvements, off-site improvements, orboth.

IMPROVEMENT DISTRICT

See SPECIAL IMPROVEMENT DISTRICT. See GovernmentControls

IMPROVEMENTS

Generally, buildings, but may include any permanent structure orother development, such as a street, utilities, etc.

IMPUTED INTEREST

Rate of interest on a note that is implied by law, when the statedamount is less than 9%, or there is no stated amount.

IMPUTED KNOWLEDGE

Knowledge an agent has that is binding on a principal as a result ofthe agency relationship (whether or not the principal has this sameknowledge).

INCOME APPROACH

An appraisal method to determine the value of rental property by useof the estimated net income and other benefits to the owner,discounted or capitalized to determine its present value. SeeValuation Appraisal

INCOME, EFFECTIVE OR ADJUSTED GROSS

The actual amount of dollar income the property is likely to produce. It is the potential income, less a reasonable estimate of an allowancefor vacancy and collection loss.

INCOME, NET

The income that remains after all expenses have been deductedfrom effective gross income. Net income is derived without anydeduction for depreciation or debt service.

INCOME, POTENTIAL OR SCHEDULED GROSS

The annual market or economic rent of the property at 100%occupancy and no credit losses.

INCOME PROPERTY

Any real property that produces income, usually from rent.

INCOMPETENT

One who is mentally incapable; any person who, though not insane,is - by reason of old age, disease, weakness of mind, or any othercause - unable to properly manage and take care of himself or hisproperty unassisted, and by reason thereof, would likely be deceivedor imposed upon by designing persons. See Contract Agency

INCORPOREAL

Intangible, not able to be seen or felt (a right to use is incorporeal).

INCORPOREAL RIGHTS

Non-possessory rights in real estate.

INCREASING AND DIMINISHING RETURNS, PRINCIPLE OF

Holds that in successively applying equal increments of land, laborand/or capital to the already existing factor(s), a greater or lesseryield is reached. See Valuation Appraisal

INCREMENT

An increase in value. See PLOTTAGE.

INCURABLE DEPRECIATION

A loss in value due to physical deterioration, functionalobsolescence, or economic obsolescence that is economicallyinfeasible to fix; the contemplated dollar cost to fix the problem wouldnot be recaptured at sale, as of the date of appraisal.

INDEMNITY AGREEMENT

Agreement to insure; to secure against loss.

INDEPENDENT CONTRACTOR

One whose time and efforts are not regulated by others.

INFLATION

The expense or increase in an economy over its natural growth. Usually caused by over printing money and over-extending credit. Marked by a rapid increase in the price of goods.

INGRESS

A way to enter a property.

INHERITANCE

Property received by the laws of inheritance.

INJUNCTION

An instrument of a court to discontinue a specified activity.

IN-SERVICE LOAN

An allowance paid for active-duty military personnel, covering theirHUD required mortgage insurance premium.

INSPECTION

A visit to and review of the premises. See Closings - Recordkeeping- Settlement Closings

INSTALLMENT LAND CONTRACT

Purchase of real estate wherein the purchase price is paid ininstallments over a long period of time and title is retained by seller. Upon default, the payments are forfeited. See also LANDCONTRACT, CONTRACT FOR DEED, REAL PROPERTY SALESCONTRACT, etc. See Contract Agency - Finance

INSTALLMENT LOAN

A loan providing for payment of the principal in two or more amountsat different stated times.

INSTALLMENT NOTE

A note, which provides for payments of a certain sum or amount tobe paid on the dates specified in the instrument.

INSTALLMENT REPORTING

A method of reporting capital gains by installments for successive taxyears to minimize the impact of the totality of the capital gains tax inthe year of the sale.

INSTALLMENT SALE

A sale, for income tax purposes, in which the seller spreads thereceipts of the proceeds over two or more tax years, and does notreceive the entire principal amount in the first year of sale. SeeGovernment Controls

INSTITUTE OF REAL ESTATE MANAGEMENT

The organization conferring the designation of C.P.M. (CertifiedProperty Manager), which is considered the most prestigiousdesignation in the field of property management.

INSTITUTIONAL LENDER

A bank, insurance company, mutual savings bank, or savings andloan company, that deals heavily in real estate loans.

INSTRUMENT

A written legal document.

INSURABLE INTEREST

The degree of interest qualifying for insurance.

INSURANCE

Indemnification against loss from a specific hazard or peril.

INSURED MORTGAGE

A mortgage insured against loss to the mortgagee, in the event ofdefault and a failure of the mortgaged property to satisfy the balanceowing, plus costs of foreclosure. May be insured by F.H.A., V.A., orby independent mortgage insurance companies.

INTANGIBLE PROPERTY

That which cannot be touched, such as good will.

INTEGRATION, PRINCIPLE OF

The development stage of the life cycle of property value.

INTEREST

The sum paid or accrued in return for the use of money. SeeClosings - Recordkeeping - Settlement Closings

INTEREST RATE

The percentage of a sum of money charged for its use. Rent rateon money. See Math

INTERIM FINANCING

A short-term loan used until long-term financing is available. Usuallypaid off with the proceeds of a "take out" loan.

INTERNAL RATE OF RETURN (IRR)

A rate of discount, at which the present worth of future cash flows isexactly equal to the initial capital investment.

INTERPLEADER

A legal proceeding that allows an escrow holder of funds to ask thecourt to decide who gets what, when ownership of said funds is indispute. See Contracts & Regs - Practical Applications

INTERSTATE LAND SALES (ILSFD)

The Interstate Land Sales Full Disclosure Act is a federal law,enacted in 1968, which regulates interstate land sales by requiringregistration of real property with HUD. The main purpose of the actis to require disclosure of full and accurate information regarding theproperty to buyers before they decide to buy.

INTESTATE

A person who dies without leaving a valid will. See Real Property

To come into use or take effect.

INVENTORY

A detailed list of the stock-in-trade of a business.

INVALID

Not legally enforceable.

INVERSE CONDEMNATION

A request for condemnation brought about by the owner, rather thana governmental agency, as a result of loss sustained.

INVESTMENT YIELD

The gain from an investment in real property, including both incomeand resale. Expressed as a percentage of the amount invested.

INVESTOR

A person who commits money in order to earn financial return.

INVOLUNTARY LIEN

A lien imposed against property by operation of law without consentof the owner, such as a tax lien, judgment lien or mechanic's lien.

INWOOD ANNUITY CAPITALIZATION

This capitalization method is most frequently used to estimate thevalue of property under a long-term lease.

IRS (INTERNAL REVENUE SERVICE)

That branch of the Federal Government that regulates and controlsthe Federal Income Tax Service.

IRREVOCABLE

That which cannot be revoked or changed.

IRRIGATION DISTRICT

Quasi-political districts, created under special laws, to provide forwater services to property owners in the district; an operationgoverned to a great extent by law.

The side post or lining of a doorway, window or other opening.

JOINT TENANCY

A type of ownership of property by two or more people with the rightof survivorship. Requires the four unities of time, title, interest andpossession. See Real Property - Practical Applications

JOINT VENTURE

Two or more individuals, or firms, joining together on a single projectas partners.

JOINTLY AND SEVERALLY LIABLE

Each party may be sued individually for the entire liability or allparties may be sued jointly.

One of a series of parallel beams to which the boards of a floor andceiling laths are nailed, and supported in turn by larger beams,girders, or bearing walls.

JOURNAL

A chronological record of receipts and disbursements made to a trustescrow account. Required in Colorado. The ending journal balanceshows the total amount of money on deposit as of any given date. See Closings - Recordkeeping - Settlement Closings

JUDGMENT

The final determination of a court of a matter presented to it.

JUDGMENT LIEN

A legal claim on all of the property of a judgment debtor, whichenables the judgment creditor to have the property sold for paymentof the amount of the judgment.

JUDICIAL FORECLOSURE

A sale of property by a court proceeding to satisfy a lien.

JUNIOR MORTGAGES

Mortgages second in lien to previous mortgages.

JURISDICTION

The authority by which judicial officers take cognizance of anddecide causes; the power to hear and determine a cause; the rightand power which a judicial officer has to enter upon the inquiry.

JUST COMPENSATION

The amount of money received by a party whose property was takenby condemnation as determined by a court proceeding.

KEY LOT

A lot that is more valuable because of its location, especially whenneeded for the highest and best use of contiguous property.

KICKER

Different kinds of equity incentives a lender may ask for as acondition for making the loan.

LACHES

Failure to assert one's legal rights in the statutory period allowed. See STATUTE OF LIMITATIONS.

A general term, which includes the ground and those things of apermanent nature such as trees, crops, oil and minerals in theground, unless specifically excepted.

LAND ALLOCATION

The part of the cost basis of an income property that is the value ofthe land. The land portion of an income property is not depreciated,thus it must be allocated out for tax depreciation purposes.

LAND BANK

Land held for open space and/or future development.

LAND CONTRACT

See CONDITIONAL SALES CONTRACT. See Finance

LAND DESCRIPTION

A description of a particular piece of real property.

LAND GRANT

The giving of public lands, by the government, for the benefit of itscitizens, usually for roads, railroads, colleges, etc.

LAND LOCKED

Property that has no ingress or egress, except across land belongingto another.

LAND PROJECT

Subdivision of 50 or more unimproved parcels subject to FederalLand Subdivision Law.

LAND RESIDUAL PROCESS

Method of appraising vacant land by subtracting building value fromtotal value.

LANDLORD

Owner or lessor of real property.

LANDLORD-TENANT CODE

Laws intended to provide some uniformity in regulating therelationship of landlord and tenant.

LANDSCAPING

The act of modifying a landscape, or features used in suchmodification, such as trees, lawns, grade changes, etc.

LATERAL SUPPORT

The right to have land supported by the adjoining land.

LAWFUL OBJECT

The object of a contract, which is permitted by law. One of theessential elements of a contract.

An agreement, written or unwritten, by which an owner of realproperty (lessor) gives the right of possession to another (lessee) fora specified period of time (term), and for a specified consideration(rent).

LEASE OPTION

A rental agreement containing a clause giving the tenant the right topurchase, according to specified conditions.

LEASEHOLD ESTATE

A tenant's right to occupy real estate during the term of the lease.

LEDGER

The principal book of accounts containing the final entries of debitsand credits. See Closings

LEDGER CARD

An accounting document that contains only those debits and creditsthat affect an individual, or one particular property.

LEGACY

A gift of personal property by will, usually money.

Required or permitted by law; conforming to the law.

LEGAL AGE

The age, according to statutes, a person attains majority and is nolonger a minor, currently 18 years.

LEGAL CAPACITY

The ability to contract.

LEGAL DESCRIPTION

A proper and formal method of describing a parcel of real estate thatis recognized by law. See Real Property - Math

LEGAL PERSON

A creature of law having certain powers and duties of a naturalperson, usually a corporation.

LEGAL TITLE

Usually, title without ownership rights, such as the title placed in atrustee under a deed of trust, or the title of a vendor under a landcontract. See Contracts & Regs

LEGATEE

The party receiving a legacy.

LESS THAN FREEHOLD

The manner of holding real property by renting or leasing.

LESSEE

The party to whom a lease (the right to possession) is given, inreturn for a consideration (rent).

LESSOR

The party (usually the owner) who gives the lease (right topossession), in return for a consideration (rent).

To rent or lease.

LEVEL PAYMENT LOAN

See AMORTIZED LOAN.

LEVERAGE

The use of financing to allow a small amount of cash to purchase alarge investment.

LEVERAGE MULTIPLIER

In a leveraged investment, the ratio of purchase price to the cashinvestment.

Imposition of a tax, executing a lien. See Government Controls

LIABILITY

A general term, encompassing all types of debts and obligations.

LICENSE

An authorization, by law, to do some specific thing. See Contracts &Regs

LICENSEE

A person legally licensed by the Real Estate Commission to transactbusiness in real estate. See Current Legal Issues

LICENSE LAW

Laws enacted by all states, the District of Columbia, and certainCanadian provinces which provide the states with the authority tolicense and regulate the activities of real estate brokers andsalespeople.

A charge upon property for the payment of a debt or obligation. SeeReal Property

LIENEE

One whose property is subject to a lien.

LIENOR

the one holding a lien against another.

LIEN THEORY

Treats mortgages only as a security interest in real property, with"title" vested in the mortgagor (owner). Colorado is a lien theorystate.

LIFE ESTATE

An estate in real property, measured by the life of a person. SeeReal Property

LIFE TENANT

One holding a life estate.

LIKE-KIND PROPERTY

A tax term used in exchanges. Property may be exchanged for like-kind property, and the tax postponed. The term does not refer to thephysical similarity of the properties, but the purpose and intent(investment) of the taxpayer.

LIMITED AGENT

An agent whose duties and obligations to a principal are only thoseset forth in C.R.S. 12-61-804 or 12-61-805, with any additional dutiesand obligations agreed to pursuant to section 12-61-803(5).

LIMITED PARTNERSHIP

A partnership composed of limited partners, whose contribution andliability are limited, and has one or more general partners.

LINTEL

A horizontal board that supports the load over an opening, such as adoor or window.

LIQUID ASSETS

Cash, or assets immediately convertible to cash.

LIQUIDATED DAMAGES

The amount of money paid, or to be paid, under a contract in theevent of a breach of contract. See Contracts & Regs - PracticalApplications

LIQUIDITY OF INVESTMENT

The ease with which investments can be immediately converted intocash.

LIS PENDENS

A recorded notice that litigation (a lawsuit) is pending, which mayaffect title of the real estate involved.

LISTING

A written employment agreement between an owner of a realproperty and a real estate agent, whereby the agent agrees tosecure a buyer or tenant for a specific property, at a certain priceand terms, in return for a fee or commission. See Contract Agency -Practical Applications

LISTOR

The licensee who obtains a listing on a particular property.

LITIGATION

A lawsuit.

LOAN ADMINISTRATION

Mortgage bankers not only originate loans, but also "service" themfrom origination to maturity of the loan. (Loan servicing.)

LOAN APPLICATION

A source of information, on which the lender bases his decision tomake the loan; defines the terms of the loan contract, gives the nameof the borrower, place of employment, salary, bank accounts, andcredit references; and describes the real estate that is to bemortgaged. It also stipulates the amount of loan being applied for,and the loan's repayment terms.

LOAN CLOSING

When all conditions have been met, the loan officer authorizes therecording of the trust deed or mortgage. The disbursal procedure offunds is similar to the closing of a real estate sales escrow. Theborrower can expect to receive less than the amount of the loan, astitle, recording, service, and other fees may be withheld, or he canexpect to deposit the cost of these items into the loan escrow. Thisprocess is sometimes called "funding" of the loan.

LOAN COMMITMENT

See COMMITMENT.

LOAN CORRESPONDENT

A representative who negotiates and services loans, usually for anout-of-state lender.

LOAN PAYOFF

The balance, at any point in time, of a partially amortized loan.

LOAN TERM

Period of time allowed for amortization of loan, usually expressed inyears. Certain types of loans have maximum terms, and some arefixed with penalties imposed for prepayment.

LOAN-TO-VALUE RATIO

The ratio, expressed as a percentage, of the amount of a loan to thevalue, or selling price, of real property. Usually, the higher thepercentage, the greater the interest charged. See Math

LOAN VALUE

Value set to aid in determining the amount of a new mortgage ortrust deed loan. See Math

LOCATION (SITUS)

An economic characteristic of land having the greatest effect onvalue of any other characteristic.

LOCK-IN CLAUSE

A clause in a note, mortgage, or trust deed that preventsprepayment. See Finance

Unfinished building area or open space, usually second floor orhigher, typically used for low-cost manufacturing operations.

LOSS PAYEE

Person or entity designated in an insurance policy to be paid in casethe insured property is damaged or destroyed.

Designated member of the Appraisal Institute.

MAGGIE MAE (MGIC)

Mortgage Guarantee Insurance Corporation. See also MUTUALMORTGAGE INSURANCE.

MAINTENANCE

The general repair and upkeep of a building in order to keep it ingood condition.

MAINTENANCE FEE

As applied to condominiums and planned developments, the amountcharged each unit owner to maintain the common area. Usually, amonthly fee paid as part of the budget.

MAJORITY

The age at which a person is no longer considered a minor, currently18 years old in most states, and is valid for most things, such asentering into contracts, etc.

MANAGEMENT AGREEMENT

A contract wherein an owner employs a property manager.

MARKET DATA APPROACH

The primary method of estimating the value of vacant land andsingle-family owner-occupied dwellings. Also called “comparableapproach”. See Valuation Appraisal

MARKET PRICE

The price actually paid for property.

MARKET VALUE

The price for which property can be sold on the open market, if thereis a willing seller, a wiling buyer, and a reasonable time to make thesale. See Valuation Appraisal - Math

MARKETABLE TITLE

Title which can be readily marketed (sold) to a reasonably prudentpurchaser who is aware of the facts, and their legal meaning,concerning liens and encumbrances.

MASTER DEED

The instrument that legally establishes a condominium. Also called“condominium declaration”.

MATERIAL FACT

An important fact that may affect a person’s judgment.

MATERIALMEN

The person or entity that supplies materials used in the constructionof improvements on real property.

MATURITY

The time when a debt, such as a note, becomes due and isextinguished, if paid as agreed.

MECHANIC'S LIEN

A statutory lien on a specific property for labor or materialscontributed to a work or improvement. See Real Property

MEGALOPOLIS

An extensive, heavily-populated, continuous urban area, includingany number of cities.

MERGER

The union of two or more separate interests, by the transfer of all theinterests into one. The acquisition of title by one owner, to title of anadjacent parcel.

MERIDIAN LINE

Survey line running North and South, used in establishing townshipboundaries. See Math

Refers to distance and direction

METES AND BOUNDS

A method of describing the boundaries of land, setting forth all theboundary lines, together with their terminal points and angles. SeeReal Property

MGIC (Maggie Mae)

See MUTUAL MORTGAGE INSURANCE.

5,280 feet, 1,760 yards.

One tenth of a cent (.001). A unit used in computing real propertytaxes. See Government Controls & Math

MINERAL RIGHTS

Subsurface rights in the land, and the profits therefrom.

MINIMUM PROPERTY REQUIREMENTS (MPR)

Minimum standards of planning, construction and generalacceptability required on FHA and VA loans for the purchase orconstruction of residential property.

In most states, a person under 18 years of age.

MISDEMEANOR

A minor crime, usually punishable by a year or less in prison, and/ora fine of $1,000.00 or less.

MISPLACED IMPROVEMENT

An appraisal term indicating an improvement on land which is not the"highest and best use".

MISREPRESENTATION

A false, incorrect, or misleading statement, account or explanation. See Contract Agency

MISTAKE

A misunderstanding or error. May make a contract voidable if themistake was mutual, unintentional, material, and not a result ofnegligence.

See MUTUAL MORTGAGE INSURANCE.

MONETARY CONTROLS

Federal Reserve tools for regulating the availability of money andcredit to influence the level of economic activity.

MONEY MARKET (MONEY MARKET FUND)

A general term, referring to the availability of money for short or longterm loans. A kind of mutual fund, usually trading in short-termnotes, (i.e., T-Bills, certificates of deposits (CD's), etc.).

MONTH-TO-MONTH TENANCY

A lease of real property for the term of one month, renewable foreach succeeding month, at the option of either party.

MONTHLY RENT

The rental income received, or due, during the period of a month.

MONUMENT

A fixed object and point established by surveyors to establish landlocations.

MORATORIUM

A temporary suspension in the payment of any activity.

MORE OR LESS

Sometimes used in describing property, this statement indicates themeasurements or dimensions are approximate.

MORTGAGE

(1) To hypothecate as security, real property for the payment of adebt. The borrower (mortgagor) retains possession and use of theproperty. (2) The instrument by which real estate is hypothecated assecurity for the repayment of a loan.

MORTGAGE BANKER/BROKER

See LOAN CORRESPONDENT & MORTGAGE COMPANY.

MORTGAGE COMPANY

A company that deals in real estate loans that are readily saleable inthe secondary mortgage market. State regulated.

MORTGAGE GUARANTY INSURANCE CORPORATION (MGIC)

A private company, organized in 1956, to insure against financialloss. Available to mortgage lenders.

MORTGAGEE

The party lending the money and receiving the mortgage. Somestates treat the mortgagee as the "legal" owner, entitled to rents fromthe property. Other states treat the mortgagee as a secured creditor,the mortgagor being the owner.

MORTGAGOR

The party who borrows the money and gives the mortgage. SeeFinance

MULTIPLE

The operation by which any given number or quantity may be addedto itself any number of times. See Math

MULTIPLE DWELLING

A building designed as a dwelling for more than four families at thesame time.

MULTIPLE EXCHANGE

One in which more than two like-kind properties are exchanged.

MULTIPLE LISTING

A listing agreement used by a broker who is a member of a multiplelisting organization. The multiple listing agreement is, in effect, anexclusive "right-to-sell", with an additional authority and obligation onthe part of the listing broker to distribute the listing to other brokers ofa multiple listing organization. A listing taken by a member of agroup of brokers, organized so that each member of the groupshares his listings with the fellow members.

MUTUAL CONSENT (ASSENT)

Both parties approve or assent to the terms of a contract freely. Oneof the essential elements of a contract.

MUTUAL MORTGAGE INSURANCE

Insurance premium paid by the borrower, collected by the lender,and paid to the FHA. This fund insures the lender against loss, andprovides enough funds for the full operation of the FHA. If not FHA,use PMI and MGIC.

MUTUAL SAVINGS BANK

A savings bank originated in the New England States, in which thedepositors invested their savings with the right to borrow money forhome loans from the organization.

MUTUAL WATER COMPANY

A water company organized by or for water users in a given district,with the object of securing an ample water supply at a reasonablerate; stock is issued to users and is considered "Real Property" as it"runs with the land".

NAKED LEGAL TITLE

See BARE LEGAL TITLE.

National Association of Realtors (New Association), formerlyNational Association of Real Estate Boards (Old Association).

Founded in 1947, is the oldest and largest minority trade associationin America. Members of the NAREB organization are referred to as“Realtist”. Although the majority of the members are AfricanAmerican, NAREB is open to qualified real estate agents of all raceswho are interested in achieving the ideals of “Democracy inHousing”.

NARRATIVE APPRAISAL

A summary of all factual materials, techniques and appraisalmethods used by the appraiser in setting forth his value conclusion.

NATIONAL ASSOCIATION OF REALTORS® (NAR)

The largest and most prominent trade organization of real estatelicensees.

NATIONAL FOREST

A forest or watershed reservation which is administered by theForest Service, United States Department of Agriculture.

NATURAL PERSON

A living person, contrasted to a legal person (corporation).

NEGATIVE AMORTIZATION LOAN

A financing payment plan, in which the monthly payments are lessthan the actual amortized amount, and the loan balance increasesrather than of decreases (see GPM).

NEGATIVE CASH FLOW

An investment situation where the income from an investmentproperty does not equal the usual expenses. The owner must comeup with cash each month to meet these expenses.

NEGATIVE FRAUD

The withholding of a material fact, thereby inducing a person to enterinto a contract which causes him damage or loss.

NET AFTER TAXES

The net income after all charges, including federal and state incometaxes, have been deducted (i.e., Profit).

NET INCOME

The difference between adjusted gross income and operatingexpenses.

NET LEASE

A lease under which lessor receives a fixed rental and lessee paystaxes, utilities and all other operating expenses.

NET LISTING

A listing which provides that the broker may retain, as hiscommission, that part of the sales price above a specified amount. Frowned upon in most states. See Contract Agency

NET LOSS

The excess of expense over income for a given period.

NET USABLE ACRE

Only that portion of a property that is suitable to build upon.

NET WORTH

The difference between total assets and liabilities of an individual,corporation, etc.

NOMINAL INTEREST RATE

Rate named in the contract.

NON-CONFORMING USE

A use of land that does not conform to the use permitted by a zoningordinance for the area. It may be lawful or unlawful.

NON DISCLOSURE

Failing to reveal a fact, with, or without, intent to conceal.

NON-FREEHOLD ESTATE

See LEASEHOLD ESTATE.

NON-INSTITUTIONAL LENDERS

Sources of real estate loan funds, other than institutional.

NON-RECOURSE NOTE

A note in which the borrower has no personal liability for payment.

NON-RESIDENT

Not residing in this state.

NORMAL WEAR AND TEAR

The deterioration or loss in value caused by the normal andreasonable use of the property. In leases, the tenant is not usuallyresponsible for "normal wear and tear".

NOTARY PUBLIC

An appointed officer with authority to take the acknowledgment ofpersons executing documents, to sign the certificate and affix hisseal.

Document signed by the borrower, obligating them to re-pay theamount borrowed, plus anything else agreed upon. See Closings -Recordkeeping - Settlement Closings

NOTICE

Actual knowledge acquired by being present at the occurrence.

NOTICE OF CESSATION

A notice filed by an owner after work has ceased on a constructionproject, thereby limiting the time in which to file a mechanic's lien.

NOTICE OF COMPLETION

A notice that is recorded by the party who ordered work orimprovements, which places time limits for mechanic's liens.

NOTICE OF NON-RESPONSIBILITY

A notice which, when properly recorded and posted on the property,relieves the owner from the effect of a mechanic's lien for work thatwas not ordered by the owner.

NOTICE TO PAY RENT OR QUIT

A notice required by law before a tenant, delinquent in rentalpayments, may be evicted by an unlawful detainer court action.

NOTICE TO QUIT

An eviction notice, given by the landlord to the tenant terminatingtheir tenancy.

NOVATION

The substitution of a new obligation for an old one. See ContractAgency

NULL AND VOID

Something that is not binding or enforceable, it is of no legal force oreffect, it has no worth.

NUNCUPATIVE WILL

An oral will, made in contemplation of death, such as servicemen inwartime. Must be reduced to writing, and conveys only personalproperty up to a $1,000 limit.

A solemn pledge made before a judge, notary public, or other publicofficial, usually given to affirm the "truth of" or "to something".

"OR MORE" CLAUSE

Clause in a trust deed, or note, which permits an early payoff of theloan, without payoff penalty.

OBLIGATORY ADVANCES

Disbursements of money, in which the lender, under the terms of theloan, has bound himself to make over the period of the construction.

OBLIGEE

One to whom a legal debt is owed.

OBLIGOR

One who owes a legal debt to another.

OBSOLESCENCE

A type of depreciation of property. Functional obsolescence is a lossof value, due to some defect in a structure.

OCCUPANCY

With reference to land, the word has become synonymous withpossession.

OFF-SITE IMPROVEMENTS

Improvements which add to the usefulness (utility) of the site, but arenot located directly on it (i.e., streets, curbs, drainage, sidewalks,lighting, etc.).

A presentation or proposal for acceptance to form a contract. Anoffer must be definite as to price and terms. See Contracts & Regs

OFFER AND ACCEPTANCE

Necessary to make a contract valid. An offer is made by one party(the offeror) and, if accepted by the other party (offeree), a meetingof the minds has been effected and a valid contract exists; providedit is definite and certain as to its required terms (price, location,method of payment, etc.). See Practical Applications

OFFEREE

One to whom an offer is made.

OFFEROR

One who makes an offer.

OFFICE BUILDING

A building constructed of individual offices, used primarily bycompanies to conduct business.

OFFICE OF INTERSTATE LAND SALES REGISTRATION (OILSR)

The federal agency that regulates interstate land sales.

OFFICE OF THRIFT SUPERVISION

A Federal Agency under the Department of Treasury that supervisessavings and loans.

OFFICE POLICY

Written procedures for all office personnel to adhere to. SeeContracts & Regs - Current Legal Issues

OPEN AND NOTORIOUS OCCUPATION OR POSSESSION

Possession of real property, obvious to anyone, that the party inpossession is claiming title to, or an interest in, the property.

OPEN END MORTGAGE (OR TRUST DEED)

Allows for future advances, using the same instrument for security.

OPEN HOUSING LAW

Federal law banning discrimination in the sale, use or rental ofhousing based upon race, color, religion, or national origin of thebuyer or tenant. The two formal names are the Civil Rights Act, TitleVIII and Public Law No. 90-284.

OPEN LISTING

A listing providing that the broker is to receive a commission if he isthe first person to obtain a buyer who is "ready, willing and able" topurchase the property on the terms of the listing, or on other termsacceptable to the owner. Procuring cause is the primeconsideration. See Contracts & Regs - Contract Agency

OPERATING CASH

The money an income property owner has to operate the property,including rental income and cash reserves.

OPERATING EXPENSE RATIO

The ratio of expenses to gross income expressed as a percentage. In general, the older the building, the higher the expense ratio.

OPERATING EXPENSES

The cost of operating an income producing property, such asmanagement, utilities, and similar day to day expenses; as well astaxes, insurance, and a reserve for replacement of items whichperiodically wear out.

OPERATING RESULTS

The profit or loss from the operation of the income property, beforedepreciation adjustment.

OPERATING STATEMENT

A statement setting forth estimated operating incomes and expensesfor a typical year for a property. The appraiser reconstructs theowner's operating statement, including or excluding figuresnecessary to make it illustrative of a typical year of ownership.

OPERATION OF LAW

Rights, and sometimes, duties and/or obligations, that belong to aperson through established rules of law, or by "common law", withoutany action by the person, or by an action taken, or changed by,legislation.

OPINION OF TITLE

An evaluation of the condition of the title to a particular parcel of landafter examination of the abstract of title to the land. Usually, an"Attorney's Opinion".

OPTION

A right given to a person to buy, sell, or lease property within a statedperiod, and under certain specified terms. See Contract Agency

OPTION DEALER

A person buying, selling, or offering to buy or sell options on realproperty.

OPTIONEE

The person who receives an option on property.

OPTIONOR

The owner of the title who gives an option.

ORAL CONTRACT

A verbal or spoken contract. See also PAROL EVIDENCE RULE.

ORDINANCES

Codes, regulations and rules enacted into law by local governingbodies.

ORDINARY INCOME

A term having meaning only in relation to income tax. The regulargraduated scale of tax is paid on income which is called "ordinary",as opposed to capital gains or any other income that is taxeddifferently.

ORIENTATION

Placing an improvement on a lot with regard to its exposure to therays of the sun, prevailing winds, privacy from the street andprotection from outside noises.

ORIGINAL CONTRACTOR

A contractor who contracts directly with the owner of real estate.

ORIGINATION FEE

A fee charged by a lender for making a loan. Usually, covers cost ofdocument preparation. Generally, is between 1% and 2% of loanamount. See Contracts & Regs

"OR MORE"

A term used in a mortgage or Deed of Trust that allows themortgagor to pre-pay the loan without a penalty.

OSTENSIBLE AGENCY

That which appears to be, or seems to be, agency, without a formalcontract.

OUTLAWED

A claim which can no longer be prosecuted, due to the expiration ofthe period permitted by the Statute of Limitations. Outside theprotection of the law.

OVER-IMPROVEMENT

An improvement which is not the "highest and best use" for the siteon which it is placed, by reason of excess size or cost.

OVERAGE

That yield on the loan which exceeds the interest rate, and has itsbasis in the achievement of rental income by the borrower-owner, inexcess of a set minimum.

OVERAGE INCOME

The amount of rent, over the base amount, received by the lessor ina retail lease (a percentage lease).

OVERHANG

That part of the roof extending beyond the walls, to shade buildingsand cover walks.

OWNER/OCCUPANT

Property owner who physically occupies the property.

OWNERSHIP

The right to the use and enjoyment of property to the exclusion ofothers.

P.I.T.I.

The term used to identify "Principal, Interest, Taxes and Insurance",payments on a mortgage or deed of trust. May only be P & I, orP.I.T. payments, as identified in sequence above.

PACKAGE TRUST DEED OR MORTGAGE

A trust deed or mortgage, secured by both real property andpersonal property (appliances, carpeting, etc.).

PANIC PEDDLING

Generally referred to as "block-busting." A real estate licensee usesthe influx of minorities into a neighborhood to induce other owners tosell their property at a discount before the values go down, then re-sells those properties to the minorities at a higher price. Thispractice is a violation of Fair Housing Laws.

A generic term, used to describe notes, mortgages, deeds of trust,etc.

The "average", equal of, or face value of the norm. The "zero" point.

PARCEL

Any area of land contained within one legal description. See Math

PAROL CONTRACT

A verbal or spoken contract (Oral).

PAROL EVIDENCE RULE

Provides that oral agreements may be used as proof of intent, only ifthe written contract is contradictory, illegal or ambiguous, and oraltestimony would be required for proper interpretation.

PARTIAL RECONVEYANCE DEED

A deed used to reconvey a portion of land encumbered by a blanketmortgage or trust deed. See also PARTIAL RELEASE.

PARTIAL RELEASE CLAUSE

A clause in a mortgage or trust deed, which provides for release ofpart of the property from the mortgage or trust deed upon partpayment of all, or part of, the debt. See also PARTIALRECONVEYANCE.

PARTIALLY AMORTIZED

A payment schedule that allows for equal payments of principal andinterest for a certain period or term, followed by payment in full of thebalance, or a balloon payment.

PARTICIPATION

As a concession for making the loan on a commercial property, thelender is given some portion of the ownership, allowing him toparticipate in the profits.

PARTICIPATION LOAN

See PARTICIPATION.

PARTITION

A division of real or personal property between co-owners, usually bycourt action. When the property cannot be physically divided, thecourt will sell the property and divide the proceeds.

PARTNERSHIP

Two or more persons, joined together for the operation of abusiness, sharing the profits in certain proportions.

PARTY WALL

A wall erected on a line between adjoining properties for the use ofboth properties.

PASSIVE INVESTMENT

Any investment that does not require any action on the part of theinvestor, beyond the investment of capital to receive a gain.

PASSIVE INVESTOR

An investor who invests only capital, and does not take an active rolein the investment.

PATENT

An original conveyance of real estate from the Federal governmentto the private owner.

PAYBACK

A time that indicates the time period required to recoup an initialinvestment. Note: Does not include the "time value" of moneyconcept.

The one to whom payment is made, the receiver of the monies.

The one who pays.

PEDESTRIAN COUNT

A count of persons walking past a business location. This count isused in appraising the property for business purposes.

PENALTY

A punishment imposed for violating a law or agreement.

The term, as applied to nails, serves as a measure of nail length, andis abbreviated by the letter "d".

PER AUTRE VIE

Latin meaning “for the life of another”. A life estate measured by thelife of someone other than the life tenant. See also “pur autre vie”.

PERCENT

1/100th, Decimal .01. See Math

PERCENTAGE LEASE

A lease, in which the rent is computed as a percentage of the grossbusiness of the tenant.

PERCOLATION (PERK) TEST

A soil test to determine if soil will take sufficient water seepage foruse of a septic tank.

PERIODIC TENANCY

Tenancy for successive periods of the same length, unlessterminated sooner by proper notice of either party.

PERSONAL PROPERTY

Any property which is not designated by law as real property. SeeReal Property

PERSONALTY

See PERSONAL PROPERTY. See Real Property

PHYSICAL DETERIORATION

Cause of loss in value, resulting from wear and tear.

PHYSICAL LIFE

Estimated period during which a building may be capable of use, ifnormally maintained. Actual period during which a building stands. See Valuation Appraisal

PIGGYBACK LOAN

A loan jointly made with two lenders, who share in a singlemortgage, thereby spreading the liability of the lenders. Usuallyunequal participation, 80% - 20%.

The incline or rise of a roof.

Letters following the amount of a mortgage payment designating thatthe payment includes principal, interest, taxes and insurance.

PLACEMENT FEE

A fee charged to the buyer by a mortgage broker for finding and/ornegotiating a loan between the buyer and lender.

PLANNED UNIT DEVELOPMENT (PUD)

A land use design which provides intensive utilization of the landthrough a combination of private and common areas, withprearranged sharing of responsibilities for the common areas.

PLANNING COMMISSION

A local government agency which plans proper physical growth of acommunity, and recommends zoning ordinances and other laws forthat purpose.

PLAT BOOK

A public record of various recorded plans in the municipality orcounty.

PLAT MAP

A map of a subdivision, section, or land parcel, showing boundariesof individual properties located therein.

A horizontal board placed on a wall, or supported on posts or studs,to carry the trusses of a roof or rafters directly; a shoe, or basemember, as of a partition or other frame; a small flat board placed onor in a wall to support girders, rafters, etc.

PLEDGE

Making personal property security for payment of a debt, includingtransfer of possession to the lender.

PLEDGED ACCOUNT MORTGAGE (PAM)

A mortgage device or clause that allows existing saved funds and/orthose saved in the future, to be used for future payments to thelender, or as collateral to be held by the lender for making a higherloan-to-value loan than usual.

PLEDGEE

One who is given a pledge or a security. See also SECUREDPARTY.

PLEDGOR

One who offers a pledge or gives security. See also DEBTOR.

PLOT PLAN

A plan of the location of improvements on a parcel of land. Alsocalled a Plot Map.

PLOTTAGE INCREMENT

Increase in value of several parcels of land, when brought under oneownership, making possible a higher utility as a whole. SeeValuation Appraisal

PLYWOOD

Laminated wood made up in panels; several thicknesses of woodglued together with grain at different angles for strength.

PMI (PRIVATE MORTGAGE INSURANCE)

See MMI.

One percent. When referring to mortgages or deeds of trust, theterm is used to describe the percentage of discount, rather thaninterest (for which the word "percent" is used). The points are paidby the seller in V.A. insured loans, and by either buyer or seller (orboth) in conventional and F.H.A. loans.

POINTS

A generic term for a percentage of the loan amount. One point isequal to 1% of the loan amount, it is also equal to approximately a1/8% change in an interest rate.

POINT OF BEGINNING (POB)

The starting point of a land description, usually tied to the TPOB(True Point of Beginning), which is usually a Government Surveymarker or monument.

POLICE POWER

The right of the state to regulate the use of private property for theprotection of the health, safety, morals, or general welfare of thepublic.

POSSESSION

The actual possession of the property, either physically orconstructively. See Contracts & Regs

POTABLE

Water that is drinkable and not contaminated.

POWER OF ATTORNEY

A written instrument authorizing a person, the attorney-in-fact, to actas the agent on behalf of another to the extent indicated in theinstrument.

POWER OF SALE CLAUSE

A clause in a trust deed, which gives the trustee the right to sellborrower's property publicly, without court procedure, if the borrowerdefaults. This clause may be put into a mortgage instrument byagreement, whereby the lender may foreclose without courtprocedure.

PREFABRICATED HOUSE

A house manufactured and, sometimes, partially assembled beforedelivery to building site.

PREMISES

The subject property that is being deeded or leased.

PREPAID ITEMS OF EXPENSE

Prorations of prepaid items of expense, which are credited to theseller in the closing statement. See Closings - Recordkeeping -Settlement Closings

PREPAYMENT

Provision made for loan payments to be larger than those specifiedin the note.

PREPAYMENT PENALTY

A clause in a note, which provides for a penalty in the event of anearly pay-off of the note.

PREPAYMENT PRIVILEGE

The right a debtor has to pay off all, or a part of, the debt, without apenalty or fee being charged, before the debt becomes due. SeeFinance

PRESCRIPTION

A method of obtaining an easement by use, hostile to owner'swishes. See ADVERSE POSSESSION.

PRESUMPTION

A fact that will stand and be assumed true until overcome by someevidence to the contrary.

PRIMA FACIE

At first sight; "on the face of it"; so far as can be judged from the firstdisclosure.

PRIMARY FINANCING

Trust deed and note that has first priority.

PRIMARY MONEY MARKET

Refers to the source of loan funds available to borrowers, for first,second, or other junior loans.

PRIME LENDING RATE

The most favorable interest rates charged by a commercial bank onshort term loans (not mortgages).

PRIME RATE

The interest rate charged by lenders to their biggest and strongestcustomers.

PRINCIPAL

The employer of an agent. Also means money or capital, asopposed to interest or income. See Math

PRINCIPAL MERIDIAN

A north-south line projected through a prominent landmark,established under the Government Survey System. (Same as PrimeMeridian)

PRINCIPAL NOTE

The promissory note, which is secured by the mortgage or trustdeed.

PRIOR APPROPRIATION

A water law theory that gives water use based on "first to use is firstin rights", even to the extent that the first user may use all the water,to the exclusion of others.

PRIORITY

Preferred rank or position.

PRIVATE INVESTOR

An individual citizen who loans money to the owner(s) orpurchaser(s) of real estate at a higher than market interest rate for ashort term (1-15 years), and usually, less than $20,000.

PRIVATE MORTGAGE INSURANCE (PMI)

Virtually the same as Mutual Mortgage Insurance for F.H.A. and V.A.loans, except P.M.I. was implemented for conventional loans, andallows the lender to make higher loan-to-value loans than before. See Finance

PRIVATE RESTRICTION

A restriction placed on real property by the grantor.

PROBATE

The process for proving a will.

PROCEDURE MANUAL

(See Office Policy)

PRO FORMA STATEMENT

A projected annual operating financial statement that showsexpected income, operating expenses and net operating income. Used for planning and financing purposes.

PROCURING CAUSE - (PROXIMATE CAUSE)

The cause of an event, which, in a natural and continuous sequence,unbroken by any new cause, produced that event; and withoutwhich, the event would not have happened. Primary requisite for anopen listing commission.

PROFIT

The excess of income over expenditure from an investment or abusiness. See Math

PROGRESSION, PRINCIPLE OF

The opposite of the Principle of Regression. It holds that the worthof a lesser valued home is enhanced, when placed in an area withhomes of higher value.

PROMISE

An agreement to do or not to do a certain thing.

PROMISSORY NOTE

A written contract containing a promise to pay a definite amount ofmoney at a definite future time. See Closings - Recordkeeping -Settlement Closings - Finance

PROPERTY

Anything that is owned by someone, including real estate (i.e., realproperty).

PROPERTY MANAGEMENT

he branch of the real estate business dealing with the managementf property. The duties may range from merely collecting rents, toomplete management of all maintenance, and may also includeeing leasing agent. See Closings - Recordkeeping - Settlementlosings - Contracts & Regs

PROPERTY RESIDUAL TECHNIQUE

An appraisal technique that attributes the net income to the wholeproperty, land and building as a complete unit.

PROPERTY TAX

Generally, money levied by the government against real or personalproperty, the amount of taxing dependent upon the value of theproperty. See Math

PRORATE

To divide equally or proportionately, according to time or use. SeeClosings - Recordkeeping - Settlement Closings - Contracts & Regs -Math

PUBLIC PROPERTY

That which is owned by government. See Government Controls

PUBLIC RECORD

Record providing constructive notice of real property conveyancesand other matters.

PUBLIC TRUSTEE

The public official in each county, whose office has been created bystatute, to whom title to real property is conveyed by Trust Deed forthe use and benefit of the beneficiary, who is usually the lender. Notused in all states.

"PUFF" OR "PUFFERY"

Exaggerated comments used in selling, not made as representationsof fact; usually based on the maker's personal opinions.

PURCHASE AGREEMENT

The formal name of the contract used when accepting "earnestmoney" to bind an offer for property by a prospective purchaser. Also known as "deposit receipt", "Receipt & Option", etc.

PURCHASE AND INSTALLMENT SALEBACK

Involves purchase of the property upon completion of constructionand immediate saleback on a long-term installment contract.

PURCHASE MONEY MORTGAGE

Deed of trust, mortgage or land contract given to the seller to securepayment of the balance of the purchase price or a deed of trust,mortgage or land contract on an owner-occupied dwelling of fourunits or less, given to a lender to secure repayment of a loan thatwas used to purchase the property. See Closings - Recordkeeping -Settlement Closings - Finance

PURCHASE OF LAND, LEASEBACK AND LEASEHOLDMORTGAGES

An arrangement, whereby land is purchased by the lender andleased back to the developer, with a mortgage negotiated on theresulting leasehold of the income property constructed. The lenderreceives an annual ground rent, plus a percentage of income fromthe property.

PYRAMIDING

Buying additional properties by leveraging existing properties,usually done by refinancing or selling existing property, then buyingtwo or three with the proceeds from the one.

QUADRANGLE

The largest tract of land surveyed in the Government Survey, itcontains sixteen (16) Townships and measures twenty-four (24)miles on each side.

QUALIFICATION

A process of checking the buyer's credit and payment ability, used bythe lender, prior to approving them for a loan.

QUALIFIED FEE

See DEFEASIBLE FEE.

QUANTITY SURVEY

A time consuming method of construction cost or reproduction costestimating.

QUANTRUM MERUIT

A Latin term meaning "on the quality of it's merits", usuallydetermined by the court.

QUIET ENJOYMENT

Right of an owner to the use of the property, without interference ofpossession.

QUIET TITLE

A suit brought for the purpose of establishing clear title to realproperty, or to remove a cloud on the title.

QUITCLAIM DEED

A deed used to transfer any interest in real property which thegrantor may have. It contains no warranties of any kind. Used forcorrections, quiet title, etc. See Contracts & Regs - PracticalApplications - Real Property

RAFTER

Load-bearing timber of a roof. Flat roof rafters are usually calledjoists.

A strip of land six (6) miles wide, determined by a governmentsurvey, running in a north-south direction.

RANGE LINE

A north and south line used in the location and description oftownships. See Math

RATE OF RETURN

The percentage of the net income produced by a property or otherinvestment.

RATIFICATION

The confirmation of a previous act, done either by the party himself,or by another. The confirmation of a voidable act.

"READY WILLING & ABLE"

A phrase that pertains to a buyer, meaning someone who is legallycapable of entering into a binding, unconditional contract, and who isfinancially able to perform it. See Contract Agency

REAL ESTATE

(1) Land, and anything permanently affixed to the land, such asbuildings, fences; and those things attached to the building, such aslight fixtures, plumbing and heating fixtures, or other such items;which would be personal property if not attached. The term isgenerally synonymous with real property, although in some states afine distinction may be made. (2) May refer to rights in real property,as well as the property itself. See Real Property

REAL ESTATE BOARD

An organization whose members consist, primarily, of real estatebrokers and salespersons.

REAL ESTATE COMMISSION

A state agency charged with the obligation of enforcing real estatelicense laws. See Contracts & Regs

REAL ESTATE INVESTMENT TRUST (REIT)

An unincorporated association of investors, owned by at least 100investors, which, were it not for a special tax exemption, would betaxed as a corporation.

REAL ESTATE MORTGAGE TRUST (REMT)

A type of investment trust (REIT) that buys and sells short term,junior mortgages.

REAL PROPERTY

See REAL ESTATE.

REALTIST

A real estate broker holding active membership in the NationalAssociation of Real Estate Brokers, whose members arepredominantly African American.

REALIZED/RECOGNIZED GAIN

The before-tax capital gain upon the sale of an investment. See alsoBEFORE TAX RETURN.

REALTOR

A designation given to a real estate broker, who is a member of aboard associated with the National Association of Realtors.

REALTY

See REAL PROPERTY.

REBATE

The discounting of the commission received by the broker by givingback a portion to the buyer, sometimes called a kickback.

The “Real Estate Consumers Agency and Disclosure” (RECAD)requires the Alabama Real Estate Commission to write a Real EstateBrokerage Services Disclosure form which describes the alternativetypes of brokerage services available to consumers in Alabamatransactions. The use of this form is mandatory as required byRECAD and this rule. Additionally, the Commission has written aConsumer Information booklet which is optional and may be used byany licensees who choose to use it.

RECAPTURE

Recovery by an owner of money invested in real estate, usuallyreferring to a depreciation allowance.

RECAPTURE PERIOD

Period envisioned by buyers for the return of investment in adepreciable asset, such as a building (remaining economic life).

RECAPTURE RATE

An appraisal term describing the rate, expressed as a percentage, atwhich invested capital will be returned over a period of time.

RECIPROCITY

The mutual agreement by states to extend licensing privileges tolicensees in each state.

RECISION

Usual misspelling of rescission. See RESCISSION.

RECONCILIATION

The final step in the appraisal process, where the appraiserconsiders the three estimates of value derived from the Cost, Incomeand Sales Comparison approaches; and weighs the influence ofeach in relation to his final estimate of value. See ValuationAppraisal

RECONVEYANCE

See DEED OF RECONVEYANCE.

RECORDATION

To file for record in the office of the county recorder. Givesconstructive notice to the world of the contents of the documents. See Real Property

RECORDING FEES

Money charges by the county recorder’s office to record documents. See Closings

RECOVERY FUND

A special state fund to provide financial relief to persons who havesuffered damages that are uncollectible, caused by the fraudulentpractices of a licensee. See Contracts & Regs

RECTANGULAR SURVEY SYSTEM

See U.S. GOVERNMENT SURVEY SYSTEM.

REDEMPTION PERIOD

A period of time established by state law, during which a propertyowner has a right to redeem his or her real estate after a foreclosureor tax sale by paying the sale price, interest, and costs.

REDLINING

Illegal practice of restricting loans or loan amounts in certaingeographic areas.

REDUCTION CERTIFICATE

A lender's statement as to the amount owing at a given time. Alsoreferred to as ASSUMPTION, BENEFICIARY, or PAYOFFSTATEMENT.

REENTRY

The right of the owner to regain possession of real property.

REFERENCE TO PLAT

A method of describing or locating real property by means ofreferring to a map of a subdivision, usually recorded in the office ofthe county clerk and recorder.

REFERRAL FEE

A percentage of a broker’s commission paid to another for referring abuyer or seller.

REFINANCING

The paying-off of an existing obligation, and assuming a newobligation in its place.

REGRESSION

An appraising principle that holds that a high valued property, placedin a neighborhood of lower valued properties, seeks the level of thelower valued properties.

REGULATION Z

See TRUTH-IN-LENDING.

REJECT

To refuse to accept an offer.

REJECTION

The result of being refused. See Contracts & Regs.

RELEASE

The relieving of someone from a legal or contractual obligation.

RELEASE CLAUSE

A stipulation in a trust deed or mortgage, which provides that aspecific described lot, or area, will be removed from the blanket lienupon payment of a specific sum of money.

RELEASE OF DEED OF TRUST

Discharge of a Deed of Trust Security Interest in Real Property. Seealso DEED OF RECONVEYANCE.

RELEASE OF LIEN

The discharge or release of specific property from the charge or lienof a judgment, mortgage or other claim.

RELEASE STATEMENT

The form that is prescribed by the Uniform Commercial Code to beused for the purpose of indicating the release of all, or part of, thesecurity interest.

RELICTION

The gradual recession of water from the usual watermark, and;therefore, an increase of land.

REMAINDER

An estate, which vests after the termination of a life estate.

REMAINDERMAN

The one entitled to the remainder. See Real Property

REMAINING ECONOMIC LIFE

The period of time(years) it takes for the improvement to LIFEbecomes valueless.

REMODELING

Changing the plan, form, or style of a structure to correct functionalor economic deficiencies.

REMUNERATION

To recompense, reward, pay for services or work performed.

Consideration, usually fixed periodic payment, made by the lessee ofa property to the lessor for the possession and use thereof, usuallyby prior agreement (written or unwritten) of the parties. See Closings- Recordkeeping - Settlement Closings

RENT, CONTRACT

The actual agreed payment for the use of a piece of real estate, asdesignated in a lease.

RENT INCREASE

An increase in the amount of the periodic rent payment, due tochanging market conditions or capital improvements made to theproperty.

RENT, MARKET

The going market rental as of the appraisal date. It could begreater, or less, than contract rent.

RENTAL RIDGE

An investor's formula used to forecast rental rates for a property inevaluating its investment potential. Generally, income property witheconomic rents below the rental ridge will show a negative after-taxcash flow.

REPAIRS

The general upkeep of property, without major replacement orchange of the plan or characteristics of the building.

REPLACEMENT COST

The cost of reproducing at current prices, a property having a utilityequivalent to the one being appraised. See Valuation Appraisal

REPOSSESSION

Regaining possession of property as a result of a breach of contractby another.

REPRODUCTION COST

An appraisal term meaning the cost to reproduce, exactly, a structurepreviously built, with the same materials and workmanship as theoriginal. Usually, not economically feasible.

REQUEST FOR NOTICE OF DEFAULT

A recorded notice made by the beneficiary of a Trust Deed,requesting that he be notified in the event that foreclosureproceedings are commenced by another party in interest.

RESALE CERTIFICATE

Certificate that the property is purchased for resale. Wholesaler is,thereby, relieved of the necessity to collect sales tax.

RESCIND

To cancel a contract from the beginning, restoring the parties to theiroriginal positions. To annul.

RESCISSION

The legal method of terminating or canceling a contract, andreturning the parties to their original positions, state or status quo(not R-E-C-I-S-I-O-N).

RESERVATION

A right retained by a grantor in conveying property.

RESERVE FUND

Funds usually required by a lender to be held for payment of itemsin the future, such as taxes and insurance. Sometimes called"reserves", or "impounds".

RESIDENCE

A place where someone lives.

RESIDENT MANAGER

An agent of the owner of a building, who is employed on a salary,and devotes his time to the management of a single building.

RESIDUAL

Whatever is left over, such as the amount of money a buyer has leftafter paying all of the bills.

RESPA (REAL ESTATE SETTLEMENT PROCEDURES ACT)

Federal law enacted to standardize closing procedures in residentialloan transactions. See Closings - Recordkeeping - SettlementClosings - Practical Applications

RESTORATION

Restoring a building to its original form, or a representation of itsoriginal form.

RESTRICTION

An encumbrance, which limits the use of real estate in some way.

RESTRICTIVE COVENANT

A clause in a deed limiting the use to which the property may be put.

RETURN OF CAPITAL INVESTMENT

See RECAPTURE RATE.

RETURN ON CAPITAL INVESTMENT

A rate, expressed as a percentage, that shows how much of theoriginal capital investment is returned during a period, typically 1year.

REVERSE ANNUITY MORTGAGE

Allows elderly home owners to borrow funds against the equity intheir property, so they may receive a monthly income for livingexpenses.

REVERSION

A right to future possession, retained by an owner at the time oftransfer of his interest in real property.

REVERSIONARY INTEREST

The interest which a person has in lands, or other property, upon thetermination of the preceding estate.

REVOCATION

Nullification of an offer to contract (annulment).

REVOKE

See REVOCATION.

An addition, amendment, or endorsement to a document.

RIDGE BOARD

The board placed on edge at the ridge of the roof to support theupper ends of the rafters; highest point of construction.

RIGHT OF FIRST REFUSAL

A clause added to an offer to purchase or lease, giving the offerorthe first right to purchase or lease the property.

RIGHT OF SURVIVORSHIP

The right of a joint tenant to automatically acquire the interest of adeceased joint tenant.

RIGHT OF WAY

An easement, giving a person the right to pass over the land ofanother.

RIPARIAN OWNER

One who owns lands bounding upon a river or water course.

RIPARIAN RIGHTS

The right of a landowner to water on, under, or adjacent to his land.

RISK CAPITAL

Any money invested in a speculative type of investment.

A measurement of 5 ½ yards or 16 ½ feet.

ROLLOVER MORTGAGE

A type of mortgage that allows it to be rewritten at its maturity, andmay be at same or different rate or terms as the original.

ROW HOUSE

One of a series of individual homes having architectural similarityand a common wall between each dwelling unit.

RULE OF 72'S

A general rule of thumb used by investors that says, "If you dividethe number 72, by the rate of return, the investment will doubleaccording to the answer" (i.e., 72/12% = 6 years).

RULE OF 78'S

A way of computing the refund of unearned pre-computed financecharges, in proportion to monthly unpaid balances at the time ofrefund. The creditor gets 12/78's of total finance charge (on a 12month contract) for the first month, 11/78's for second month, etc. Ifpaid off after 4 months, the creditor would be entitled to 42/78's(12+11+10+9=42) the debtor would receive the difference (i.e., 78-42= 36/78's).

RUNNING WITH THE LAND

Anything which inures to the benefit and advantage of subsequentowners of the land, such as an easement appurtenant.

SALE AND LEASEBACK

A situation where the owner of a piece of property wishes to sell theproperty and retain occupancy by leasing it from the buyer.

SALES AND USE TAX

Tax on the sale of certain tangible personal property.

SALES COMPARISON APPROACH

A valuation method, in which the market value is estimated bycomparing the subject property, with similar properties which haverecently sold. The reliability of this technique is dependent upon thedegree of comparability of each sale property to the subject property,the quantity and quality of data available, and the skill and objectivityof the appraiser. See Valuation Appraisal

SALES CONTRACT

SALESPERSON, REAL ESTATE

A natural person, who for a compensation, or in expectation of(Salesperson) a compensation, is employed by a licensed real estatebroker to do one or more acts specified in the Real Estate Law.

SALVAGE VALUE

May only be used for pre-1981 properties, and constitutes theestimated amount an asset can be sold for at the end of its usefullife, made at the time of its acquisition.

SANDWICH LEASE

A leasehold interest, which lies between the primary lease and theoperating lease.

SATISFACTION

Discharge of mortgage or trust deed lien from the records uponpayment of the evidence of debt.

SATISFACTION OF MORTGAGE

A release or receipt for having satisfied a mortgage note. In the caseof a trust deed, Release of Deed of Trust is issued.

SATISFACTION PIECE

An instrument for recording and acknowledging payment of anindebtedness secured by a mortgage.

SAVINGS AND LOAN ASSOCIATIONS (S & L's)

Established to promote "thrift" and home ownership by loaning outthe depositors' deposits, in the form of residential home mortgages. See Finance

SCARCITY

An appraisal term that says the more scarce an item is, the greaterits value, if there is any demand for it.

An impression made to attest the execution of an instrument.

SEASONED LOAN

A loan with good payment record.

Securities & Exchange Commission.

SECOND FOOT

A measure of water quantity flow - l cubic foot per second.

SECOND MORTGAGE

A mortgage or deed of trust (trust deed) recorded in second position. Also refers to all junior mortgages, regardless of their recordedposition. See Closings - Recordkeeping - Settlement Closings

SECONDARY FINANCING

Junior trust deeds or mortgages.

SECONDARY MONEY MARKET

The marketplace for the sale and purchase of existing trust deedsand mortgages. Same as Secondary Mortgage Market.

SECONDARY MORTGAGE MARKET

Market place for the sale and purchase of existing trust deeds andmortgages. See also FNMA, GNMA, FHLMC, etc. See Finance

SECTION

Established by government survey, it is one square mile and contains 640 acres. See Real Property

SECURED

A specific property is available to satisfy a lien (if unpaid).

SECURED PARTY

The lender in whose favor there is a security interest.

SECURITY AGREEMENT

The agreement which creates or provides for a security interest. Theform used to give a lender an interest in the personal property that isbeing used to secure the loan.

SECURITY DEPOSIT

Money deposited with a landlord, by or for the tenant, to insureperformance of the lease and/or to compensate for damages.

SECURITY INTEREST

A term designating the interest of the creditor in the property of thedebtor in all types of credit transactions. It thus replaces such termsas the following: chattel mortgage; pledge; trust receipt, chattel trust;equipment trust; conditional sale; inventory lien; etc. See Contracts& Regs

SEIZIN

Possession of real estate by one entitled thereto.

SELLER’S DAY

In a real estate closing, the last day for which the seller will becharged expenses of ownership. See Closings

SEPARATE PROPERTY

Property acquired by either spouse, prior to marriage, or by gift ordevise after marriage. Opposite of COMMUNITY PROPERTY.

SEPTIC TANK

An underground tank, in which sewage from the house is reduced toliquid by bacterial action and drained off.

SERVICING

Generally, refers to the collection of, and accounting for, themortgage payments on a mortgage loan.

SERVIENT TENEMENT

Land burdened by an easement.

SET-OFF

A right which exists between two parties, each of whom, under anindependent contract, owes the other a certain amount of money,and in which they cancel their respective debt by way of a mutualdeduction.

SETBACK ORDINANCE

A law prohibiting the erection of a building within a certain distancefrom the curb.

SETTLEMENT STATEMENT

See CLOSING STATEMENT. See Closings - Recordkeeping -Settlement Closings

SEVERALTY OWNERSHIP

Ownership by one person only. Sole ownership. See Real Property

SEVERANCE DAMAGES

Loss in value suffered by remaining property after partial takingthrough right of eminent domain. See also CONDEMNATION.

"SHALL"

Legal term meaning that which is required, a "must".

SHARED APPRECIATION

Participation by the lender in the profits generated by the appreciatedvalue of a mortgaged property when it is sold.

SHEATHING

Structural covering; usually boards, plywood, or wallboard, placedover exterior studding or rafters of a house.

SHERIFF'S DEED

Deed given when property is sold by court order for payment of adebt after expiration of Redemption Period. Form of SPECIALWARRANTY DEED.

"SHOULD"

Legal term meaning that which is recommended, but not required.

The lowest part of the frame of a house, resting on the foundationand supporting the uprights of the frame. The board or metalforming the lower side of an opening such as a door sill, window sill,etc.

SINGLE FAMILY RESIDENCE

Any structure used as a single dwelling unit, as a private home. Typically, a free standing house.

SINKING FUND

A depreciation method that involves periodic investing in acompound interest bearing account for a specified time, at the end ofwhich, the principal and interest will be sufficient to replace theimprovements at the end of their economic life.

SITE OR SITUS

The area or the place of which anything is, has been, or is to belocated.

SIXTH PRINCIPAL (PRIME) MERIDIAN (6th PM)

Located near Lincoln, Nebraska and is 402 miles due east ofColorado Boulevard in Denver, Colorado.

SKY LEASE

Lease for a long period of time of space above a piece of real estate;upper-stories of a building to be erected by the tenant. Upontermination of the lease, the improvement belongs to the lessor.

SLANDER OF TITLE

A civil wrong (a tort), caused by false or untrue statements made bya person relating to the title of another's property, to their injury.

SOIL BANK

An Agriculture Department program where farmers are paid not togrow crops.

SOIL OR SOLE PLATE

A member, usually a 2" by 4", on which wall and partition studs rest.

SOIL PIPE

Pipe carrying waste out from the house to the main sewer line.

SOLDIERS' AND SAILORS' CIVIL RELIEF ACT

A Federal act, which provides protection against foreclosure to anindividual, while in the service, who contracted for an obligationbefore entry into the service.

SOLE PLATE

The support on the floor, on which the bottom of the studs rest.

SOLE PROPRIETORSHIP

Only one person owns and operates the entire business.

SPECIAL AGENT

The usual real estate agency relationship, where an agent is hired toperform a single task, such as selling the principal's home, or helpinga buyer to buy a home. See Contract Agency

SPECIAL ASSESSMENT

Lien assessed against real property by a public authority to pay costsof public improvements, which directly benefit the assessed property. See Government Controls - Closings - Recordkeeping - SettlementClosings - Practical Applications

SPECIAL IMPROVEMENT DISTRICT

Levied against a limited group of property owners for specialimprovements to their properties. See Government Controls

SPECIAL WARRANTY DEED

Grantor warrants only his own acts. See Real Property

SPECIFIC LIENS

Liens which attach to only a certain specific parcel of land or piece ofproperty.

SPECIFIC PERFORMANCE

A doctrine of contract law, by which a party is compelled by the courtto perform his agreement. See Practical Applications

SPECULATOR

One who buys property, not for his use, but with only the intent to sellas a profit.

SPENDABLE INCOME

The money remaining from the gross income after deductingoperating expenses, principal and interest payments, and the incometax attributable to income.

SPLIT-FEE FINANCING

A joint venture, usually between a lender and a developer, whereinthe lender buys the land and leases it to the developer, and then alsoprovides the funds for the construction of the improvements.

SPOT LOAN

A loan on a particular property, usually a condominium unit, by alender who has not previously financed that particular condominiumproject.

SPOT ZONING

Allowing a particular use of property that is different from the zoningof the surrounding properties.

SQUARE FOOTAGE

Multiplying the length times the width expressed in feet. See Math

Member of the Appraisal Institute holding a residential designation.

STANDARD DEPTH

Generally, the most typical lot depth in the neighborhood.

STANDARD FORM

Basic policy form of title insurance, which is usually issued to thepurchaser of real property.

STANDARD TOWNSHIP

See TOWNSHIP.

STANDBY COMMITMENT

The mortgage banker frequently protects a builder by a "StandbyAgreement", under which he agrees to make mortgage loans, at anagreed price, for many months in the future. The builder deposits a"Standby Fee" with the mortgage banker for this service. Frequently,the mortgage banker protects himself by securing a Standby from along-term investor for the same period of time, paying a fee for thisprivilege.

STATUTE

A law enacted by legislation, as opposed to common law or judicialdecision.

STATUTE OF FRAUDS

Law which requires certain contracts to be in writing to beenforceable. See Contracts & Regs - Contract Agency

STATUTE OF LIMITATIONS

The law that specifies the time limits in which legal action must beinstigated to be enforceable in court.

STATUTORY DEDICATION

See DEDICATION.

STATUTORY RIGHT OF REDEMPTION

See REDEMPTION PERIOD.

STATUTORY WARRANTY DEED

A short form warranty deed, which warrants by inference that theseller is the undisputed owner, and has the right to convey theproperty, and that he will defend the title if necessary. This type ofdeed protects the purchaser, in that the conveyor covenants todefend all claims against the property. If he fails to do so, the newowner can defend said claims and sue the former owner.

STEERING

Illegal channeling of home-seekers to particular areas, to create aspeculative situation. See also DISCRIMINATION.

STOCK COOPERATIVE PROJECT

Improved multiple-unit property owned by a corporation.

STRAIGHT LEASE

See FLAT LEASE.

STRAIGHT-LINE DEPRECIATION

A method of replacing the capital investment of income property, byreducing the value of the property by a set amount annually, over theeconomic life of the property. See Valuation Appraisal

STRAIGHT NOTE

A note in which the principal is paid in one sum. See Finance

STRAWMAN

Someone who buys property for another, in order to keep theiridentity secret.

STRINGER

The enclosed sides of stairs that support the risers and treads, alsomay be horizontal beam connecting uprights in a frame.

STRICT FORECLOSURE

A proceeding in which a court gives a mortgagor in default a specifictime period to satisfy the debt to prevent transfer of the title to themortgaged property to the lender.

STRUCTURE

Any man-made building or edifice.

STUDS OR STUDDING

Vertical supporting timbers in the walls and partitions.

SUBAGENT

Under the uniform or common law, employed licensees are agents oftheir employing broker, and subagents for sellers listed with theircompany, and if they act upon or expressly agree to and accept anoffer of subagency from another broker. In Colorado, as of 1/1/94, alicensee is deemed to be a subagent of their employing broker, and ifin agreement with their office policy, they accept and act upon anoffer of subagency offered by another brokerage office. However,they are agents of all buyers and sellers listed with their office. SeeContracts & Regs

SUBCHAPTER 'S' CORPORATION

A corporation which, for tax purposes, has elected to be treated asan individual or a partnership.

SUBDIVISION

Any property or improvement that is divided into two or more parcelsor units, including "time shares".

SUBJACENT SUPPORT

The right of land to be supported by the land which lies under it.

"SUBJECT TO" CLAUSE

A clause in a deed, stating that the grantee takes title "subject to" anexisting mortgage. The original mortgagor, alone, is responsible forany deficiency, should there be foreclosure of the mortgage. Differsfrom an "assumption" clause, whereby the grantee "assumes andagrees to pay" the existing mortgage.

SUBJECT TO MORTGAGE

Method of taking over a loan, without taking on the responsibility of adeficiency judgment.

SUBLEASE

A lease given by a lessee for part of the premises or less than theremaining term.

SUBORDINATE

Lower in priority.

SUBORDINATION AGREEMENT

An agreement, by which the lender relinquishes his priority to asubsequent mortgage or trust deed. It benefits the borrower.

SUBPOENA

A process to cause a witness to appear and give testimony.

SUBROGATION

The substitution of one person in the place of another, with referenceto a lawful claim, so that he who is substituted succeeds to the rightsof the other. See also HOLDER IN DUE COURSE.

SUBTRACT

To take one number from another. See Math

SUBSTITUTION OF ELIGIBILITY

The assumption of a VA loan, where the new veteran buyersubstitutes their VA eligibility for the original vet's eligibility, therebyfreeing up the original vet's eligibility, which is then available to beused again.

SUBSTITUTION OF MORTGAGOR

An agreement signed by the lender on a loan that is being assumedby the buyer, whereby the lender relieves the original borrower ofliability.

SUBSTITUTION, PRINCIPLE OF

An appraising principle holding that when two or more properties,with substantially the same utility, are available, the one with thelower price receives the greatest demand. See Valuation Appraisal

SUCCESSION

The taking of property by inheritance.

SUCCESSOR

One who follows or comes after (i.e., the buyer of a business is theone who comes after the seller and is, therefore, referred to as thesuccessor).

SUCCESSOR'S LIABILITY

The liability of a purchaser of a business that may arise for non-payment by the prior owners.

SUFFERANCE

See ESTATE AT SUFFERANCE.

SUPER REGIONAL SHOPPING CENTER

A large shopping center with 250,000 to l,000,000 square feet ofstore area, serving 200,000 or more people.

SUPPLY AND DEMAND, PRINCIPLE OF

Affirms that price or value varies directly, but not necessarilyproportionately with, demand; and inversely, but not necessarilyproportionately, with supply. See Valuation Appraisal

SURETY

One who guarantees the performance of another: Guarantor.

SURFACE RIGHTS

Surface of the earth.

SURFACE WATER

Water resulting from rains and melting snows that is diffused overthe surface of the ground, until it reaches some well defined channelor reaches some permanent lake or pond.

SURPLUS PRODUCTIVITY, PRINCIPLE OF

Affirms that the net income is that which remains after the propercosts of labor, organization and capital have been paid; whichsurplus is imputable to the land, and tends to fix the value thereof.

SURRENDER

The giving up of a lease or right prior to its expiration.

SURVEY

The process by which a parcel of land is measured, and its area isascertained.

SUSPENSION

A temporary cancellation of a license.

SWEAT EQUITY

Equity created in a property by the performance of work or labor bythe purchaser. Directly increases the value of the property.

SYNDICATE

A combination of individuals formed to carry out some projectsrequiring large sources of capital, which, individually, none couldundertake.

TACKING-ON

Combining of successive periods of real property usage to establisha plan of adverse possession.

TAKE-OUT-LOAN

A long-term loan that replaces the interim construction loan.

TANDEM PLAN

A mortgage assistance program, whereby the FNMA and GNMA canjoin forces in times of tight money and high discount rates.

TANGIBLE PROPERTY

Can be handled manually (stock-in-trade).

TAX(ES)

A compulsory payment of a percentage of income, property value,sales price, etc., for the support of a government. See Closings -Government Controls

TAX BRACKET

The percentage of income tax which one pays, based on tax tables.

TAX CREDIT

An amount of money that may be deducted from a tax bill to arrive atthe net amount of tax due

TAX CERTIFICATE

See CERTIFICATE OF TAXES DUE.

TAX DEED

Deed given when property is sold, due to tax delinquency, and afterexpiration of Redemption Period.

TAX DEDUCTIBLE

An amount of money that may be deducted from gross income inarriving at net taxable income before depreciation, if any. SeeGovernment Controls

TAX DISTRICT

An area over which a governmental body has authority to levyproperty taxes; may contain one or more assessment districts.

TAX-FREE EXCHANGE

A method of deferring capital gains by exchanging real property forother like property. A misnomer, actually, tax-sheltered or tax-deferred. See Government Controls

TAX & INSURANCE RESERVE

See IMPOUNDS.

TAX PAYABLE

In investment, the tax payer's net amount of money owed on therecognized gain of an investment activity.

TAX RATE

Traditionally, the ratio of dollars of tax per hundred or per thousanddollars of valuation. Modernly, has come to be expressed as apercentage of valuation.

TAX SALE

Sale of property after a period of non-payment of taxes.

TAX SHELTER

A general term, used to include any property which gives the ownercertain income tax advantages, such as deductions for propertytaxes, maintenance, mortgage interest, insurance, and especiallydepreciation.

TAXABLE GAIN

The amount of profit subject to tax (recognized gain). SeeGovernment Controls

TENANCY

The estate of a tenant, as in a joint tenancy, a tenant for years, etc.

TENANCY FOR YEARS

See ESTATE FOR YEARS.

TENANCY IN COMMON

Ownership by two or more persons who hold an undivided interest,without right of survivorship. See Real Property - PracticalApplications

TENANCY IN PARTNERSHIP

See UNIFORM PARTNERSHIP ACT.

TENANCY BY THE ENTIRETY

Under certain state laws, ownership of property acquired by ahusband and wife during marriage, which is jointly owned. Upondeath of one spouse, it becomes the property of the survivor.

TENANT

A holder of property under a lease or other rental agreement.

TENANT AT SUFFERANCE

See ESTATE AT SUFFERANCE. See Contract Agency - RealProperty

TENANT AT WILL

See ESTATE AT WILL.

TENDER

The offer of performance, not performance itself, and which, whenjustifiably refused, places another party in default and permits partymaking tender to exercise remedies for breach of contract. An offerof money. See Contract Agency

TENEMENTS

All rights in land, which pass with a conveyance of the land.

TENURE IN LANDS

The mode, or manner, by which an estate in lands is held.

TERMINATION STATEMENT

The form that is prescribed by the Uniform Commercial Code to beused to remove a previously filed Financing Statement or SecurityAgreement from the files.

TERMITES

Insects, similar to ants, which feed on wood, causing destruction towooden structures.

TERM MORTGAGE

One that requires the mortgagor to pay interest only during themortgage term with the principal due at the end of the term.

TESTAMENT

The written declaration of one's last will.

TESTATE

Leaving a will upon death.

TESTATOR

One who makes a will.

TESTATRIX

A female testator.

TESTIMONY CLAUSE

The introduction in a legal document "In Witness Whereof...".

THRESHOLD

A strip of wood or metal, beveled on each edge, and used above thefinished floor under outside doors.

A row of townships, running east and west, lying between any two(2) consecutive township lines, comprising an area six (6) mileswide.

TIGHT MONEY MARKET

A period of time, in which available loan funds are scarce andinterest rates and discount points are high.

"TIME IS OF THE ESSENCE"

One of the essential requirements to the formation of a bindingcontract; contemplates punctual performance. Contract is VOID iftime of performance is not met. See Contracts & Regs - PracticalApplications

TIMESHARING

A number of tenants-in-common hold legal title to a particular condoor other real estate, entitling each to use of the property for aspecified time each year.

TITLE EVIDENCE

The evidence one has showing right to possession of land.

TITLE BY ADVERSE POSSESSION

Acquired by occupation, and recognized as against the paper titleowner.

TITLE COMMITMENT

A preliminary report of the current record title to a property. A titlecommitment (or title report) shows only the current state of the titlealong with the recorded objections to clear title such as unpaidmortgages and easements. The title insurance policy is issuedbased on the title report.

TITLE INSURANCE

Insurance against loss, resulting from defects of title, to a specificallydescribed parcel of real property. See Closings - Recordkeeping -Settlement Closings - Practical Applications - Real Property

TITLE INSURANCE REISSUE RATE

A reduced premium on title insurance, issued within a short period oftime from a previous policy date.

TITLE PLANT

A duplication of pertinent records filed with the county recorder'soffice, and maintained at a title company.

TITLE REPORT

A report, which discloses condition of the title, made by a titlecompany, preliminary to issuance of title insurance.

TITLE THEORY

Mortgage arrangement, whereby title to mortgaged real propertyvests in the lender.

TOPOGRAPHY

Nature of the surface of land. Its contour and elevation as shown bylines on a map.

TORRENS CERTIFICATE

In states that convey title according to the Torrens System aRegistrar is used to register via a Torrens Certificate (not record) titleand liens for real property.

TORRENS TITLE INSURANCE

State system of land registration.

A negligent or intentional wrong, acted on by another, where the lawwill grant money damages in a civil action. A private wrong.

TOWN HOUSE

Originally, a house in a city, as opposed to a country estate. Morerecently, the term is applied to certain types of row houses, whetherplanned unit developments or condominiums.

TOWNSHIP

A unit of land containing thirty-six (36) square miles, and is six (6)miles long on each side, constituting a Standard Township. SeeMath

See EXCHANGE and TRADE-IN.

An area of land.

TRADE-IN

A method of guaranteeing an owner a minimum amount of cash on thesale of his present property, permitting him to purchase another. Ifproperty is not sold within a specified time, the broker agrees topurchase the property at an agreed upon discount.

TRADE FIXTURES

Articles of personal property annexed to real property, but which arenecessary to carry on a business; and are removable by the owner ofthe fixture. See Real Property

TRADE NAME

The name under which a company carries on business.

TRANSACTION-BROKER

A licensee who assists the buyer or seller or both in a real estatetransaction, without being an agent or advocate for either one of them,thereby relieving them of any liability they would have had for the actsof an agent (same as Facilitator). See Contracts & Regs - CurrentLegal Issues - Practical Applications

TRANSACTION PRICE

The price actually paid for property.

TRANSFERABILITY

One of the four essential elements of value.

TREASURER'S DEED

A deed given after Redemption Period expires for property sold atpublic sale by the county, for non-payment of taxes owed by the owner.

TREND (APPRAISAL)

A series of related changes, brought about by a chain of causes andeffects.

TRESPASS

Unlawful entry on the land of another.

TRIPLEX

A building comprised of three dwelling units.

TRUE POINT OF BEGINNING (TPOB)

The description always identifies an enclosed area by starting at anorigination point called a true point of beginning or TPOB, and returningto the TPOB at the end of the description. See Real Property

TRUST ACCOUNT

A special account, where money is deposited by an agent for theaccount of a principal, and is to be kept. Also referred to as escrow ortrustee account. See Closings - Recordkeeping - Settlement Closings -Practical Applications - Current Legal Issues - Contracts & Regs

TRUST DEED

A deed, by which a trustor conveys bare legal title to the trustee assecurity for the payment of a debt.

TRUST LEDGER

A record of all trust funds received (cash, checks, or others), whetherplaced in the broker's trust account, given to the seller, or placed inescrow.

TRUST MORTGAGE

A single loan made by several lenders under a trust agreement.

TRUSTEE

One who holds bare legal title to property for a special purpose, withoutbeing the actual (beneficial) owner. A trustee is one of the parties toevery trust deed. See also PUBLIC TRUSTEE.

TRUSTEE'S DEED

Deed given by the trustee when property is sold under the power ofsale in trust deed and after expiration of Redemption Period. Form ofSPECIAL WARRANTY DEED.

TRUSTOR

Owner who is the borrower in a trust deed. He deeds his property to atrustee as security for a loan in a trust deed transaction. See alsoGRANTOR.

TRUTH-IN-LENDING

The Federal Reserve Board's "Regulation Z", which requiresdisclosure of certain loan terms to the borrower, before the obligation iseffective. See Finance

TURNOVER

The number of times a given amount of inventory sells over a givenperiod of time.

UNAMORTIZED LOAN

A loan with only periodic interest payments. Note: No principalreduction occurs. See also AMORTIZATION.

UNDER IMPROVEMENT

An improvement, which, because of its deficiency in size or cost, is notthe "highest and best use" of the site.

UNDISCLOSED AGENCY

The failure to disclose who you are representing or working for in a realestate transaction to a party, or the parties, to the transaction.

UNDIVIDED INTEREST

The interest of co-owners in the entire property, which interest isindistinguishable.

UNDUE INFLUENCE

Taking any fraudulent or unfair advantage of another's weakness ofmind, distress or necessity.

UNEARNED INCREMENT

An increase in the value of property, not anticipated by the owner, dueprimarily to the operation of social forces (i.e., increase in population).

UNIFORM COMMERCIAL CODE - (UCC)

The law, which established a unified and comprehensive scheme forthe regulation of security transactions in personal property and BulkSales Laws.

UNIFORM CONSUMER CREDIT CODE (U.C.C.C.)

Relates to disclosure and right of rescission under Truth-in-Lending;however, the U.C.C.C. also establishes finance charge rate limitationsas they apply to consumer credit related loans. Also, anyone whoextended credit five (5) times in the previous, or the current, year isclassed as a creditor.

UNIFORM PARTNERSHIP ACT

Legally establishes the ownership of property by a partnership, byproviding that real estate may be held in the name of the partnership.

UNIFORM RESIDENTIAL LANDLORD AND TENANT ACT

Law intended to provide some uniformity regulating the relationship oflandlord and tenant.

UNILATERAL CONTRACT

A promise for an act. Only one party is bound to perform (i.e., Option).

UNIMPROVED PROPERTY

Raw land.

UNINTENTIONAL AGENCY

An agency relationship created by the wrongful acts of an agent to thethird party, when the agent was originally the agent of the principal.

(1) One of any group. (2) An apartment, condominium, house in asubdivision, etc.

UNIT-IN-PLACE-METHOD

The cost of erecting a building by estimating the cost of eachcomponent part (i.e., foundations, floors, walls, windows, ceilings,roofs, etc.), including labor and overhead.

UNITIES OF TITLE

Time, title, interest and possession.

UNLAWFUL DETAINER ACT

Lawsuit to evict a tenant who unlawfully remains in possession of realproperty.

UNSECURED

No specific property is available to satisfy a lien.

URBAN PROPERTY

City property.

USEFUL LIFE

(1) In appraisal for sale purposes, the true economic value of abuilding in terms of years of use to the owner. (2) For tax purposes,the life set for depreciation. At any time during that period, a new lifecould begin for a new owner.

USUFRUCTUARY RIGHT

A limited right to use and profit from property owned by another,provided the user doesn't change the substance of the property.

Charging more than the legal rate of interest for the use of money.

UTILITIES

Public utility companies under the control of the Public UtilitiesCommission, such as the telephone, gas, and electric companies. SeeClosings - Recordkeeping - Settlement Closings

UTILITY

The ability to give satisfaction and/or excite desire for possession.

See VETERANS ADMINISTRATION.

VACANCY FACTOR

The estimated percentage of vacancies in a rental project. May bebased on past records of the property, or a professional guess if a newproject. Surrounding area buildings, if similar, may be used forcomparison. See Valuation Appraisal

Legally sufficient and authorized by law.

VALID CONTRACT

An agreement that is legally binding and enforceable.

VALLEY

The internal angle, formed by the junction of two sloping sides of a roof.

VALUABLE CONSIDERATION

A legal term, meaning any amount of consideration supporting acontract that has monetary value.

VALUATION

SEE APPRAISAL

Worth of a thing in money or goods. What it can be exchanged for.

VARIABLE RATE MORTGAGE

A loan where interest may change, depending upon the fluctuations ofthe indicator or index to which its rate is tied.

VARIANCE

Usually refers to zoning, and is government permission to a use notallowed under current zoning laws.

VENDEE

Receiver of a thing being vended (sold) BUYER.

VENDOR

Owner of thing being vended (sold) SELLER.

VERIFICATION

Sworn statement before a duly-qualified officer as to correctness ofcontents of an instrument.

VETERANS ADMINISTRATIONS (VA)

Federal government agency, which administers GI (VA) loans.

VICARIOUS

Taking the place of another. Endured or performed by one person inplace of another. Shared in by imagined participation in another'sexperience.

VICARIOUS LIABILITY

To be responsible for the acts of another, such as a principal for theacts his agent. See Contracts & Regs - Current Legal Issues -Practical Applications

VIOLATION

Breach of any law or agreement.

To have no force or effect. Never existed legally. See ContractAgency

VOIDABLE

That which is capable of being void, but is not void, unless action istaken to make it so.

VOLUNTARY

With consent of the owner, such as “voluntary lien” etc.

VOLUNTARY ALIENATION

The transfer of title freely by the owner.

VOLUNTARY LIEN

Any lien placed on property with consent of, or as a result of, thevoluntary act of the owner.

To relinquish or abandon; to forego a right to enforce or requireanything.

WAIVER

The intentional or voluntary relinquishment of a known right, essentiallya unilateral act.

WAREHOUSING

Interim loans by a commercial bank to nonbank lenders made onsecurities being underwritten by the nonbank lender, while the issuesare being prepared for sale and distribution to individuals and financialinstitutions; who buy them for their investment portfolios.

WARRANTY DEED

Deed which contains five specific covenants (covenant of seizin,covenant of quite enjoyment, covenant against encumbrances,covenant of warranty forever, and covenant of further assurance)written warranties (guarantees) of title. See also SPECIALWARRANTY DEED and GENERAL WARRANTY DEED. See RealProperty - Practical Applications

The destruction, or material alteration or injury to premises by a tenant.

Is considered to be real property when in its natural state and, inColorado, must be transferred by deed. It does not run with the land.

WATER TABLE

Distance from surface of ground to a depth at which natural groundwater is found.

The disposition of property effective upon the maker's death.

WITHHOLDING

The process of holding back money earmarked for the payment oftaxes. See Closings - Recordkeeping - Settlement Closings

WITHOUT RECOURSE ENDORSEMENT

See ENDORSEMENT.

WITNESSED WILL

A formal written will, signed by the maker in the presence of witnesseswho also sign.

WORDS OF CONVEYANCE

Wording in a deed demonstrating the definite intention to convey aparticular title to real property to a named grantee.

WRAP-AROUND MORTGAGE

Involves the borrower entering into a second mortgage. Thisarrangement represents the means by which he can add to hisdevelopment, without refinancing the first mortgage at substantiallyhigher current rates. See Finance

WRIT OF EXECUTION

A process of the court to carry out a judicial decision (judgment).

3 feet; 36 inches.

Ratio of income from an investment to the total cost of the investmentover a given period of time.

(YOUR STATE) ASSOCIATION OF REALTORS

The State Association of real estate personnel, whose goal is theprofessional advancement of the real estate industry, and whosemembership is comprised of the local real estate boards.

The area set off by the proper authorities for specific use; subject tocertain restrictions or restraints.

ZONING

The division of a city or county by legislative regulations, into areas(zones) specifying the uses allowable for the real property in theseareas.

ZONING ORDINANCE

Exercise of police power of a municipality in regulating and controllingthe character and use of property. See Government Controls

inclusive). Be sure to indicate "start page-last page" with no spaces3. Check the box "Reverse Pages" if you want the pages to print back to front so you don't

have to collate.4. Press "Ok" and your choice will print.

TEST TAKING

The program will indicate whether your answer is right or wrong. If wrong, an excerpt from thetext appears which will be the clue to answer the question correctly. Click on “Try Again” andselect another answer until you get the correct answer. You will have to answer each questioncorrectly before the next question will be available. When you have selected the correct answer,click on “Next” to go to the next question. After the last question, click on“Go to your nextCourse”. After you have completed all progress tests in all courses using this procedure you willhave access to the exam prep questions and answers with instant grading and explanation for yourfinal review practice.

4-3-2-1

A rule for computing depth factors.

Colorado Real Estate Pre-Licensing Course

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