Real Estate Glossary Abandonment Failure to occupy or use property which could result is losing the property Abrogate To repeal or nullify by formal action Absolute Fee See Fee simple Abstract of Judgment A document stating the provisions of a court judgment which creates a lien on the judgment debtor’s real property Abstract of Title A summary of the chain of title of a property including conveyance, legal proceedings and other pertinent documents Abut To border or touch a boundary of another property Acceleration Clause A clause in a mortgage or deed of trust which allows the lender to demand payment of the outstanding loan balance. The most common reasons for accelerating a loan is when the borrower defaults. Acceptance Agreeing to the terms of an offer or taking delivery of a deed from the grantor Access Rights The right of a property owner to have ingress and egress to their land via an adjoining property. Accession The adding of property by human causes (such as a fixture) or natural causes ( such as accretion) Accord and Satisfaction The settlement of an obligation. An accord is an agreement by a creditor to accept less than bargained for from a debtor. The creditor's acceptance of the accord satisfies the debt. Accretion Gradual addition to land by natural forces such as on an ocean shore Accrued Items of Expense Expenses that have been incurred but are not yet due of payable

Acknowledgement When a person voluntarily signs a document usually in front of a notary public Acquisition When a person procures property Acre An area of land which is equal to 43,560 square feet or 4,840 square yards or is approximately 208.71 feet x 208.71 feet. Actual Age The length of time that improvements have existed Actual Eviction A court order to remove the lessee from the property Actual fraud An act of making false statements with the intent of deceiving another person Actual severance When an item has been severed from land ADA Americans with Disabilities Act Addendum An attachment to a contract that usually contains additional clauses or changes Adjacent Next to or bordering a property Adjustable-rate mortgage (ARM) A mortgage in which the interest changes periodically, according to corresponding fluctuations in an index. All ARMs are tied to indexes. Adjustment basis The initial basis plus capital expenditures, less any depreciation Adjustment date The date the interest rate changes on an adjustable-rate mortgage (ARM). Administrator A court appointed person who manages the estate of a deceased person when there was no one appointed in the will or when there was no will.

Ad Valorem According to value and is usually used for property taxes Adverse Possession The taking of another person’s land without permission in a manner that is prescribed by state law Affiant One who makes an affidavit Affidavit A sworn statement that has been in writing and done before an officer who has the authority to administer the oath Affiliated licensee A licensee (e.g., associate broker, salesperson) who works on behalf of an employing broker. After acquired title Title that was acquired after it was transferred to another person Agency The relationship between a principal and an agent. In real estate transactions, usually the seller is the principal, and the broker is the agent: however, a buyer represented by a broker (i.e., buyer as principal is a growing trend. In an agency relationship, the principal delegates to the agent the right to act on his or her behalf in business transactions and to exercise some discretion while so acting. The agent has a fiduciary relationship with the principal and owes to that principal the duties of accounting, care, loyalty, and obedience. Agent One who has the authority to act for another Air Lot A parcel of property above the surface of the earth that does not contain land such as a condominium of the second story Air rights The right to use airspace above a parcel of land Alienation clause A clause in a deed of trust that allows the lender to declare the entire loan balance due if the borrower sells or transfers the property. It is also known as a due-on-sale clause Allodial Private ownership of property

Alluvion Land deposited along a river bank of shore. Also called alluvium Amendment A change to a contract after both parties have signed the original contract Amenities Features of a property that add to its beauty or convenience such as a gourmet kitchen, a swimming pool or a view. Amortization The reducing of a financial obligation through installments payments Amortization, negative When the unpaid interest on a loan is added to the principal balance, thus increasing the amount owed Annexation Additions to land that are man made Annexation, actual When personal property is physically attached to real property and then becomes real property Annexation, constructive Personal property that becomes associated with real property. Even though is it not attached, it becomes real property. An example would be a key to a lock on a door or a key that operated a gas fireplace. Annual percentage rate The total finance charge that the borrower will pay (including interest, loan fees, discount points etc) expressed as an annual percentage of the amount financed. Annuity Money received in payments at regular intervals Anticipation, principal of Anticipated benefits to be received in the future Anticipatory repudiation When a party to the contract informs the other party they will not perform as agreed before the time limit to perform is due. Antitrust laws Law that promote competition and prohibit restraint of trade such as conspiracies and monopolies Appeal

When one of the parties in a lawsuit seeks a higher court to hear a verdict that was produced by a lower court Appellant The party that files the appeal Appellee The party in an appeal who did not file. They are also known as the respondent. Appraisal An opinion or estimate of value of a property on a given date by an appraiser Appraiser An expert who is qualified to estimate the value of property Appreciation An increase in value Appurtenance Rights that go along with the ownership of property such a mineral, oil and gas rights and are usually transferred with the property. Appurtenances, intangible Rights that go with the property that are not physical such as an easement Appurtenant easement As easement that benefits on parcel of land called the dominant estate Arbitration A neutral third party conducts a hearing and makes a decision which is binding on the parties to a dispute. This is done out of court. Arm’s length transaction A transaction where the buyers and sellers act independently and have no relationship to each other. The concept of an arm's length transaction is to ensure that both parties in the deal are acting in their own self interest and are not subject to any pressure or duress from the other party.

Arrears Payment after an item is due.

Artificial Person A legal entity such as a corporation which the law treats as an individual. Assemblage Combining two or more adjoining properties into one ownership or tract

Assessment The value of property for tax purposes Assessor A local official who determines the value of property for tax purposes Asset Anything of value that an individual owns Assign To transfer rights of interests to another. An example would be contract rights. Assignee A person to whom the rights or interests have been assigned Assignor A person who has assigned the rights or interest to another person Assumption When a buyer has personal liability for paying off the seller’s existing deed of trust or mortgage. Assumption Fee A fee paid to the lender for an assumption of mortgage

Attachment When real or personal property of a party to a lawsuit is seized and retained in the custody of the court to entice an individual to make a court appearance or to furnish security for a debt or costs arising out of a lawsuit.

Attachment, man made

See fixture

Attachment, natural Natural growth on land such as plants, shrubs and trees Attorney general The legal advisor for state agencies Attorney-in-fact A person who is authorized to represent another via a power of attorney. This person is not necessarily an attorney at law Attorney state

A state where an attorney handles the closing of a real property transaction Auditing Examination of records of a business Authority, actual Authority actually given to a broker by the principal Authority, apparent Authority to represent another that a broker appears to have and the principal cannot deny, even though no actual authority has been given Authority, implied A broker’s authority to reasonably carry out the principal’s wishes. Automatic renewal clause A provision in a lease that allows for automatic renewal of the lease Avulsion A sudden loss of land caused by water such as a change in the course of a river or stream Back-up offer An offer that will only be accepted by a seller if a prior offer fails Balance sheet See financial statement Balloon payment A payment on a loan which is usually the final payment and is significantly larger than the regular installment payments Bankruptcy A legal action which allows the insolvent debtor relief from debts. Bargain and sale deed A deed that transfers title to real property without warranties Basis A figure used in calculating a gain on the sale of real property for federal income tax purposes. It is also known as cost basis Bearer The person who is in possession of a negotiable financial instrument Benchmark A monument used to establish elevations

Beneficiary A person who is entitled to the benefits of a trust, a person entitle to receive property under a will, a lender in a deed of trust Bequeath Personal property that is transferred by a will Bilateral contract A contract where both parties are equally obligated to perform Bill of sale A written document that transfers personal property Binder A document that provides immediate insurance coverage until the final policy is issued. Blind ad An advertisement placed by a real estate licensee that does not state the principal broker’s name. Blockbusting Inducing panic selling by telling owner that persons of a different race, color or religion are moving into the neighborhood Bona Fide In good faith and genuine Bond Evidence of a debt obligation by a corporation or the government. Boot In a tax-free exchange something that is given or received which is not like-kind property. Boundary The perimeter of a parcel of land or the diving line between parcels Bounds See metes and bounds Branch Office A brokerage office other than the main office Breach Violation of an obligation or duty such as failure to perform according to the terms and conditions of a contract

Buffer Zone Undeveloped land which separates two areas that are zoned for incompatible uses. Building codes Regulations which set the minimum standards for construction and materials Building restrictions Restrictions on buildings such as size, placement set-back lines. There may also be public restrictions such as zoning or private restrictions such as CC&Rs. Bundle of rights The rights of ownership in property, including the right to lease, encumber and will the property. Business opportunity A business that is for sale Buydown A payment made to the lender to reduce the interest rate. Buyer’s agent A broker who represents the buyer solely in a transaction Buyer’s Market When the housing supply is plentiful and the buyer is in a position to receive the most favorable price and terms Cap With an adjustable rate mortgage, the cap is the maximum percentage that the interest rate can increase each year. Lifetime cap The maximum total interest rate increase over the life of the loan Capacity The legal ability or competency to perform an act such as enter into a contract. It is one of the elements needed for a valid contract. Capital Money or other assets available to produce additional money.

Capital gain Profit from the sale of a capital asset. Gains can be short term (held for 1 year or less) or long term (held for 1 year or more). Capital loss A loss from the sale of a capital asset. Losses can be short term (held for 1 year or less) or long term (held for 1 year or more). Capitalization approach A method used by appraisers of real property by converting the anticipated net income from the property into the present value Capitalization rate A percentage used in capitalization (Net income= Capitalization Rate x Value). It is the rate that is considered a reasonable return on an investment. Carry over clause The broker is entitled to a commission if within a specific period after the listing expires, the seller sells the property to a prospect who became aware of the property through the broker’s efforts during the listing period. Also called an extender, holdover, protection or safety clause.  

Cash flow The net income that is generated by a property for business after deducting operating expenses and debt service Caveat emptor From the Latin phrase ”let the buyer beware”. The buyer is expected to examine the property carefully instead of relying on the seller to disclose issues. The phrase has lost much of its strength in residential real estate with increased laws requiring seller’s disclosures. CC&Rs Rules governing covenants, conditions and restrictions usually recorded by a developer of a subdivision or condominium complex. Cease and desist order

An order or request to halt an activity (cease) and not take it up again later (desist); or else face legal action. The recipient of the cease-and-desist may be an individual or an organization. Also referred to as a C & D.

CERCLA Comprehensive environmental response, compensation and liability act (CERCLA) is a federal law concerning the liability and clean-up of property that has been environmentally harmed. Certificate of eligibility

Issued by the Department of Veterans Affairs for the eligibility of obtaining a VA loan Certificate of occupancy Issued by local government agencies verifying that a newly constructed home meet all building standards and may be occupied. Certificate of reasonable value (CRV) A Veterans Administration’s appraisal Chain of title A history of conveyances and encumbrances affecting the title from the time the original patent was granted, or as far back as records are available, used to determine how title came to be vested in current owner. Charter An instrument granting a right of franchise Chattel Personal property Chattel mortgage Personal property used to secure a loan Chattel real Personal property that is associated with real property such as a lease Civil Rights of 1866 A federal law providing all citizens of the US the right to purchase, lease, sell, convey and inherit property without regard to race or ancestry. Civil Rights of 1964 A federal law prohibiting discrimination based on race, color, national origin or religion. It applies to housing and other programs where the government provides financial assistance. Civil Suit A lawsuit between private parties (as opposed to a criminal suit where an individual is being tried by the government). Closed end mortgage A loan that has a fixed amount. Adding additional funds would require a new mortgage and note. Closing The final stage in real estate transaction where the buyer is given the deed and the seller receives the money from the purchase and title is transferred. Also known as settlement.

Closing costs The costs involved in the transfer of real estate over and above the cost of the property such as a loan origination fee, title insurance, flood determinations and an appraisal. Closing Statement A detailed statement of all debits and credits of funds for the buyer and the seller for a real estate transfer. Cloud on a title A claim, encumbrance or apparent defect on title that can make it unmarketable. Code of Ethics A set of principles stating a standard of accepted conduct for a professional group. Codicil A revision or addition to a will Collateral Anything of value that is used as security for a debt Community property A form of ownership by husband and wife which is recognized in community property states such as Arizona, California, Washington, Idaho, Wisconsin, New Mexico, Texas, Nevada, Louisiana and Puerto Rico Compensatory damages The amount ordered by the court to be paid to the injured party which would cover the actual amount of their loss when a party breached a contract Concurrent Ownership Ownership of property by two or more owners Condemnation The act of taking private property for public use Conforming loans Loans that conform to the rules and guidelines of Fannie Mae and Freddie Mac Conservator A person appointed by the court to handle the affairs of another who is incapable of handling their own affairs. Consideration Anything of value given by a party to induce them to enter into a contract Construction lien

A lien placed on real property for the non-payment of construction work of materials Contingency A clause in, or addenda to, a contract which must be satisfied before the contract is binding. Contract for deed A transfer of real property where the seller (vendor) retains title to the property until the buyer (vendee) has paid off the loans in full. Also know as a land contract, real estate contract or an agreement for sale. Conveyance The transfer of title of real property from one person to another by means of a wriiten instrument, usually a deed. Cooperative A building that is owned by a corporation. The residents are shareholders of the corporation and each shareholder receives a proprietary lease. Corporation An entity organized according to certain laws which is treated by the law as an artificial person, separate from the shareholders who own it. Cost approach The cost approach estimates the value of a property based on the replacement cost, less depreciation plus the land cost. Creditor A person who the debt is owed to. Criminal law Law under which the government can prosecute individuals as opposed to civil law where each both the plaintiff and the defendant are private parties. Damages A sum of money the defendant is ordered to pay in a civil lawsuit. Debtor A person who owes money to another Debt-to-income ratio A person’s debt service in relationship to their income expressed as a percentage Dedication Voluntary or involuntary giving of land by a private party to the public Deduction

The amount a taxpayer is allowed to deduct from their income before taxes are paid Deed A written instrument that transfer title ownership of real property from the grantor to the grantee Deed in lieu of foreclosure (DIL) A deed given to the lender from the borrower to avoid foreclosure Deed of partition Deed used by concurrent owners of real property to divide up the property so that they can each own their share solely. Deed of trust A voluntary lien where the property becomes security for a loan. Deeds of trust will normally foreclose non-judicially through a clause in the deed of trust called a “power of sale”. Deed restrictions Restrictions on a deed that limit the use of the property. Default Failure to fulfill a duty or obligation. Known as breach. Defeasance Clause

A clause in a mortgage that gives the mortgagor the right to redeem his or her property upon the payment of the mortgagor’s obligations to the mortgagee.

Defects in title The imperfections that could affect the marketability of a title.  

Deferred Gain The gain that does not have to be reported for tax purposes in the current tax year and gets deferred to a subsequent year(s).  

Deferred Maintenance

Additional damage caused to a structure by not promptly repairing defective items Depreciation 1. Loss of value caused by deferred maintenance, functional obsolescence or external obsolescence 2. Spreading the cost of an asset over a period of time for income tax purposes Deficiency In a foreclosure sale, those funds still needed to completely release the defaulting borrower.

Demand note

A note which is payable on the demand of the lender or holder. Devise A gift or disposal of real property by a will Devisee A person who receives real property by a will. Divisor A person who disposes of real property by a will. Discharge A release of the performance of a contract or other obligation. Disclosure statement A statement required by law in most states in which the sellers of certain types of real property must reveal specified information to potential buyers. Discount points One point equals one percent of the original principal loan amount which a borrower or a seller may pay to a lender in order to get a loan at a stated lower interest rate. Down payment The upfront cash paid by the buyer. It makes up the difference between the sales price of a property and the loan amount. Down zoning

An action by a local government that reduces the allowable density for subsequent legal developments. Dual Agency The broker acts for both the buyer(s) and seller(s) at the same time in the same transaction. Due on Sale Clause Provision in a mortgage or deed of trust calling for the payoff of the loan balance when there is a sale or transfer of title to the secured real property Earnest money A deposit from the prospective buyer to the seller to show good faith and that their offer is Bona Fide. Easement A property interest which one person has in land owned by another allowing the holder of the interest to limited use of the other's land.

Egress A way of exiting a property. Usually associated with an easement. EIS Environmental impact statement. A report which includes a detailed description of a proposed development project with emphasis on the existing environment setting. Emblements Growing crops (called "fructus industriales"),such as rice and beans, which are produced annually. Eminent Domain The right of government to take private property for public use, with just compensation paid to the owner. Encroachment An unauthorized invasion or intrusion of a fixture, wholly or partly upon another's property. Encumbrance Any claim, lien, charge or liability attached to the property that will not necessarily prevent transfer of title. Enjoin To prohibit an act or require performance of an act. A court would order an injunction. Equity An owner's equity is normally the monetary interest over and above the mortgage indebtedness. Errors and Omissions Insurance Insurance which covers liabilities for errors, mistakes and negligence in a real estate brokerage. It does not cover fraud. Escheat The reversion of property to the state when a decedent dies intestate and there are no heirs or when the property is abandoned. Escrow The process by which money and/or documents are held by a disinterested third person until satisfaction of the terms and conditions of the escrow instructions. Estoppel A legal doctrine by which a person is prevented from asserting rights which are inconsistent with a previous position or representation he had made by his act, conduct or silence. Executed contract

A contract where all parties have performed their duties and obligations as stated in the terms and conditions of the contract. Executory contract A contract in which one or both of the parties have not yet performed their duties and obligations specified in the contract. Fannie Mae An nickname for Federal National Mortgage Association (FNMA). Federal Deposit Insurance Corporation (FDIC) Agency of the federal government which insures deposits at commercial banks, savings banks and savings and loans. Federal Housing Administration (FHA) A federal agency that insures private mortgage loans for financing of new and existing homes and home repairs. Federal reserve system (FED) The federal banking system of the United States under the control of central board of governors (Federal Reserve Board) involving a central bank in each of twelve districts with broad powers in controlling credit and the amount of money in circulation and the reserves that each bank must maintain. Fee simple deafeasible An estate subject to the occurrence of a condition where the estate may be terminated. Fee simple estate The greatest interest that one can have in real property. Fiduciary A person in a position of trust and confidence, as between principal and broker. The broker, as fiduciary, owes certain duties to the principal. Financial statement A summary showing the financial condition of a business including assets and liabilities. Also know as a balance sheet, FIRPTA FIRPTA (Foreign Investment in Real Property Tax Act) is a United States tax provision that imposes income tax on foreign persons selling United States real property interests Fixtures Appurtenances attached to the land or improvements, which usually cannot be removed

without agreement as they become real property. Flood Insurance Insurance that compensates for physical property damage resulting from flooding. It is required for properties located in federally designated flood areas. Foreclose Procedure whereby property which was pledged as security for a debt is sold to pay the debt in event of default in payments or terms by the borrower Fraud The intentional deception, meant to cheat or deceive another person whereby that person acts upon it. Fully Amortized ARM An adjustable-rate mortgage (ARM) with a monthly payment that is sufficient to amortize the remaining balance, at the interest accrual rate, over the amortization term. Functional Obsolescence A loss of value due to adverse factors from within the structure which affect the utility of the structure, and can affect value and marketability. Garnishment A creditor's seizure, to satisfy a debt, of property belonging to the debtor. An example would be the seizure of money from your bank account, or your wages (wage garnishment). General warranty deed A deed that guarantees the quality of title to property conveyed and will defend that title and to pay damages if the title is defective.

  

Good faith estimate An estimate from a lender that shows the costs a borrower will incur, including loan-processing charges, appraisal and inspection fees.

Graduated-payment mortgage (GPM) A mortgage that requires a borrower to make larger monthly payments over the term of the loan. The payment is unusually low for the first few years but gradually increases until year three or five, then remains fixed.

Grantee A person conveyed an interest in a piece of property.

Granting clause

Words in a deed that relate the grantor’s intent to sell the property

Grantor The person who conveys an interest in property to another person.

Gross income The total income before taxes or expenses are subtracted.

Guardian A party lawfully appointed by a court who is vested with the power and duty to care for and manage the affairs of a person who is legally incompetent and unable to do so himself.

Guarantee mortgage A loan guaranteed by a third party, such as a government institution

Habendum Clause

The "to have and to hold" clause which may be found in a deed that describes the extent of the interest conveyed and explains any partial interest. Hazard insurance Insurance that protects against certain risks such as from fires or storms. Heir A person who inherits property of a person who has died intestate or without a will. Highest and best use The most profitable and likely use of a property selected from reasonably probable and legal alternative uses, which are found to be physically possible and financially feasible to result in the highest possible land value. Holographic will A will written by a testator with his own hand on a blank piece of paper. Home equity loan A loan sometimes called a "line of credit" where an owner uses his or her residence as collateral for a loan which permits them to withdraw of funds up to a predetermined amount. Homestead law A state law that provides limited protection on real property against certain creditors and judgments. Homeowners Association An organization of homeowners in a particular development formed to handle the maintenance of common areas and to enforce any building restrictions or covenants.

Hypothecate To pledge something as security without giving up its possession Implied Not expressed in words, but understood through actions. Impound Account An account established by lenders for the accumulation of borrowers funds to meet periodic payment of taxes, FHA mortgage insurance premiums, and/or future insurance policy premiums, which protects the lenders security. Improved Land A parcel of land which has been converted from its natural state through the creation of roads,sidewalks, buildings or other structures. Imputed knowledge A legal doctrine stating that a principal is considered to have the notice of information that their broker does, even if the broker never passed that information on to the principal, Income approach The process of estimating the value of property by analyzing the present value of a stream of income generated by the property. Independent Contractor A person who acts for another but sells final results and whose methods of achieving those results are not subject to that person's control. Industrial Park An area where land is developed specifically for industrial purposes. Ingress A place or means of entering a property. Usually associated with easements. See Egress. Insolvent A person or business that does not have sufficient assets to pay its debts Instrument A written legal document such as promissory notes, mortgages, trust deeds, installment sales contracts, listing agreement and leases that are created to affect the rights of the parties, to give formality to a legal act or agreement. Interest

The cost for the use of money for a period of time. It is usually quoted as an annual percentage of the loan amount. The percentage can be either fixed of adjust over the life of the loan. Interim loan A temporary or short-term loan that is also called interim financing. It is secured by a mortgage which is used until permanent financing is available and then paid off from the proceeds of permanent financing as in a construction loan. Interpleader A court action initiated by someone with no direct interest or ownership in a property, such as an escrow agent, for the purpose of having the court decide which of the claimants is legally entitled to the earnest money. Interstate Land Sales Full Disclosure Act (ILSFDA) A federal law administered by HUD to control the sale of large, unimproved residential subdivisions and which requires certain disclosures and advertising procedures when selling land to purchasers in other states.

Inverse condemnation

An action brought by a property owner seeking just compensation for the use or value of land being so diminished due to the public use of adjacent property when the taker has not done so through an eminent domain proceeding. Involuntary Alienation A loss of property due to nonpayment of taxes, judgment or loan delinquency, etc. Joint Tenancy 1. An equal undivided ownership interest of a property by two or more natural persons each of whom has the right of survivorship, upon the death of one joint tenant. Nothing passes to the heirs. Joint Venture Where two or more individuals or business firms participate as partners to share in the losses and profits of only one single specific project rather than as a continuing business relationship. Judgment

1. A determination of a court of a matter presented to it.

or

2. A money judgment is awarded to compensate for damages or to provide for the payment of a claim presented to the court.

Judgment creditor A party who has received a decree or judgment against a debtor from the courts. Judgment debtor A party who has been issued a judgment by the court to pay the money owed. Just compensation A payment to a person that is fair.

Laches, doctrine of An established legal doctrine under which, apart from any question of statutory limitation, courts discourage delay in the enforcements of rights or negligence in asserting one's legal rights, will refuse to try suits. Latent Defects  

The physical flaws or construction defects not noticeable even after a reasonable inspection of the property. Lateral support The support that the soil on a parcel of property must receive from the adjoining owner's property. Lawful object An object in a contract that does not violate the law and is possible to perform Lead based paint Paint that that is no longer manufactured which is potentially poisonous. The possibility of its presence must be disclosed to buyers and tenants residing in a property built before 1978. Lease A conveyance of a leasehold estate from the owner to the tenant. The tenant gets possession of the property and the landlord gets rent. Lease with an option to purchase A lease in which the lessee (tenant) has the right to purchase real property under certain conditions such as a stated price or within a stated time frame either during or at the end of the lease term. It is considered a unilateral contract. Leaseback A transaction in which the buyer leases back the property to the seller for a stated period of

time. Legacy The distribution of money or personal property by a will. Legal description A description of land recognized by law by which property can be positively located by reference to government surveys or approved recorded maps such as Lot, Block, and Tract; U.S. Government Survey; and Metes and Bounds. This is not the same as a common street address. Lessee The party referred to as the tenant who has the right to possession and use of real estate for a stated time under a lease agreement. Lessor A landlord who has a lease agreement and granted a tenant possession and use. License 1. Official authorization to do something. 2. A personal revocable privilege to perform some act or series of acts upon the land of another without possessing any estate therein. Lien A nonpossessory interest in real property giving the lienholder the right to foreclose if the debt is not paid.

Lien theory states A legal theory followed by certain states that places a lien on mortgaged property as security for the debt and in which the title to the property remains held by the borrower. See also title theory states. Life estate A possessory estate or interest in real property being held for the duration of the life of a named person who could be the person holding estate or of the life of another. Life tenant A person who is in possession of a life estate Limited liability A restriction of a party's personal liability for a business loss only up to the amount invested. Limited partnership A partnership consisting of one or more general partners plus limited partners where the

general partners manage and control the business affairs of the partnership and where the limited partners are essentially investors who have funded the partnership and do not have control of the daily operations of the business. Liquidated damages A sum agreed upon by all parties up front to be the full and the final amount of damages received if a certain event occurs. This usually is related to a breach in a contract. Lis pendens A notice that means a lawsuit is pending. It gives constructive notice to warn all persons that the title or right to the possession of the real property is in litigation. Listing contract An employment contract between an owner and a real estate broker for the purpose of the broker providing services to find ready, willing and able buyer. Littoral The land bordering non-flowing water such as a lake or sea as opposed to land bordering on flowing water such as a stream or river. Loan application An application which a lender bases a decision about granting a loan. It specifies the loan amount, type of loan, repayment terms, the name of the borrower, place of employment, salary, bank accounts and credit references. Loan commitment A lender's commitment to grant a loan based on the appraisal and final underwriting. Loan origination fee A fee charged by the lender for the administrative costs of processing and creating a mortgage loan which is usually computed as a percentage of the loan amount. It is often expressed in points. Loan-to-value The comparison of the amount owed on a mortgaged property to its fair market value. Lot A parcel of land usually in a subdivision Lot and block description A type of legal description used for platted property. It refers to a plat map which states the lot number, block number and the name of the subdivision. Majority, age of

The age when a person becomes legally competent Maker A person who signs a promissory note and promises to pay the payee of the note Margin In an adjustable rate mortgage, it is the difference between the index and the rate that the borrower is charged Market comparison approach See sale comparison approach Marketable title A title that is free and clear of objectionable liens, clouds, or other title defects. A title which allows an owner to sell his property freely to others.

Master Plan A comprehensive plan, usually by local government, to be used as a guide to long term development. Material fact Any fact that would affect the decision making of a person in giving his or her consent to enter into a transaction to buy. Metes and Bounds A legal way of describing the boundary lines of land that sets forth all the boundary lines along with their terminal points and angles. Metes is the length or measurement and bounds means the boundaries. Mineral rights The legal right to the benefits of any minerals located below the surface of a parcel of land. Misrepresentation A false or misleading statement not in accordance with the facts in words or by conduct. Mortgagee A lender who is the receiver of a mortgage. Mortgagor A borrower who gives a mortgage on his or her property to a mortgagee to secure a loan. NAR National Association of Realtors Navigable waters A body of water that can accommodate vessels used for commerce

Negligence Conduct that is below the standard of care for a reasonable person. Negotiable The capability of being assigned or transferred. NEPA National Environmental Protection Agency requires an environmental impact statement before any government work can be done which might affect the environment Net Income The profit remaining after expenses have been deducted from income. Net Lease Where a tenant pays specific property expenses in addition to the lease amount such as maintenance, insurances or taxes Net Listing A listing where the licensee may retain any monies over the net listing price. It is illegal in many states. Net operating income

Net Operating Income (NOI) is arrived at by subtracting all of a business' operating expenses except income taxes and financing expenses from its gross income.

Net worth The value of a business or a property that remains after all debts and obligations have been subtracted Nominal interest rate The interest rate stated in a promissory note. Known as the note rate. Not the APR Non conforming use The use of land for purposes that are not consistent with zoning. This often happens when there are zoning changes after a property is in use. Nonpossessory use An interest in property that does not include possession. An example might be an easement or a lien. Non-judicial foreclosure Non-judicial foreclosures are carried out without court intervention. Non-Judicial foreclosures have a "Power of Sale" clause in the or deed of trust.

Note

A written, signed, unconditional promise to pay a certain amount of money. A written promise to pay money that is often used as a means to borrow funds or take out a loan.

Notice of default (NOD) A notice sent by the lender informing the borrower that they are in default. Notice to Quit A notice from a landlord to a tenant requesting that they vacate the property Novation When one party to a contract withdraws and another party is substituted. This relieves the first party of obligation. Obsolescence A loss in value due to a reduction in usefulness or desirability. Offer When a party (the offerror) makes an offer to another party (the offeree). Option

A right given for a consideration to purchase or lease a property upon stated terms and within a stated time period and placing no obligation on the party receiving the option to purchase the property.

Optionee The person to whom the offer is given Optionor The person who gives the option Ordinance A regulation by local government on the use of land within its jurisdiction. Ownership, concurrent When two or more individuals own property Ownership, in severality When a single individual owns property Panic selling See blockbusting

Personal Property Any property that is not real property and is moveable and not attached to land Physical life The time that a building will remain structurally sound. Planned unit development A development that has more open spaces than a traditional subdivision would have Plat a survey map of a subdivision Plottage The increase in value from combing two or more lots Police power The power of the government to enforce law for the well being and protection of the public Power of attorney An instrument that authorizes one person (the attorney-in-fact) to act on behalf of another person. Prepayment Paying off all or part of a loan before it is due. Price fixing The setting of prices by competing firms. This is a violation on Anti-trust laws. Primary mortgage market Where loans are originated Probate A court proceeding where the validity of a will is assessed. Procuring cause The real estate broker who is primarily responsible for bringing about a sale Property The rights of ownership such as the right to possession, transfer and encumberance Property manager A person hired by a property owner to manage properties. This might include maintenance, collection of rents, obtaining renters, advertising etc. Puffing

When a broker makes statements about a property to make it sound better then it is and if should not be considered fact. Purchase and sale agreement A contract where the seller agrees, in writing to sell the property and the buyer agrees in writing to purchase the property. The agreement must be acknowledged by both parties to become a contract Quantity survey method A method of appraisal where the replacement cost of the structure is estimated. Quiet title action An action to determine who has title to a property or to clear a cloud on a title. Quitclaim deed A deed that conveys any interest a person may have on property, without warranty. Real estate investment trust (REIT) A real estate investment trust with at least 100 investors Real Property Land and everything that is attached to land Receiver A court appointed person who manages property and funds involved in litigation Recording The filing of documents in the county recorder’s office to give constructive notice to the public Redlining The refusal of a lender to make a loan in certain areas because of the racial make up of the area. Regulation Z The regulation that implements the Truth in Lending Act Reliction When a body of water gradually recedes exposing land that was previously under water Remainderman A person who holds an estate in remainder Rescission A contract that is terminated and each party is restored to their original position

RESPA Real Estate Settlement and Procedures Act. A federal law that requires lenders to disclose information to the borrower about closing costs. Restriction, private A restriction on property placed on a deed by a previous owner restricting the use of the land Restriction, public A law of regulation by the government restricting the use of land on a deed Reversion When an estate reverts back to the grantor such as in a life estate Rezone An amendment to zoning that usually changes the use that is allowed. Riparian land Land that is adjacent to a body of water. Sale comparison approach One of the three methods of appraisal where the sales price of comparable properties is used to estimate the value of the site property Secondary mortgage market A market that purchases mortgages from primary mortgage originators such as Fannie Mae, Freddie Mac and Ginnie Mae) Seisin Actual ownership and possession of a property Seller disclosure statement A form that the seller gives to a buyer disclosing information about any issues or problems associated with the property Sherman act A federal law relating to Antitrust that promotes competition and prohibits restraint of trade such as price fixing and the conspiracy to boycott. Special assessment A tax that is imposed upon certain properties that benefit from a public improvement. Specific performance A court order placed upon the breaching party to actually perform according to the contract as agreed upon, as opposed to paying damages for the breach Statute of Frauds

A statute that requirescertain contracts be in writing to be enforceable Statute of Limitations A statute which requires certain lawsuits be filed within a certain time Steering The routing of buyers or tenants to or away from certain areas based on their race, national origin or religion Subdivision Land that is divided up into two or more parcels Subordination clause A provision in a mortgage or deed of trust that allows a later mortgage to take lien priority. Succession Acquiring property via a will or by inheritance Support, lateral The support that land receives from the land adjacent to it Support, subjacent The support that the surface of the land receives from land beneath it Syndicate A business formed to operate an investment business Tax, ad valorem A tax levied on a property according to its value Tax, excise A tax that is levied when real property is sold Tax, special assessment See special assessment Tax Credit A credit that is deducted from the amount of taxes owed as opposed to a deduction Tenancy Possession of real property Tenements Everything that belongs with land and is usually transferred with real property such as building and mineral rights or air rights

Testate A person who dies and left a will Testator A person who makes a will Time is of the essence A clause in a contract that states that failure to perform the terms of the contract on time is a breach Title Ownership of property or the deed that is evidence of ownership Title, color of Title that appears to be valid, but was based on a defect such as an invalid deed Title theory states The theory that a mortgage or deed of trust gives the lender legal title to the property until the debt is satisfied Tort Any wrongful act that does not involve a breach of contract such as a civil wrongdoing or private injury. Trade Fixtures An item that is attached to real property by a tenant in running of a business. The tenant is allowed to remove the fixture at the end of their lease. Trust account A bank account that is used to hold other individual’s money. It must be separate from other business or personal accounts Trustee A person appointed to manage a trust or a neutral third party appointed in a deed of trust to handle the non-judicial foreclosure process when there has been a default. Underwriting The process of evaluating a loan application to determine risk Unilateral contract A contract where only one party promises to do something Unity of interest Where each co-owner has an equal share of ownership in the property Unity of possession

Where each co-owner is equally entitled to the possession of the entire property Unity of time Where each co-owner acquired title at the same time Unity of title Where each co-owner acquired title through the same deed Unlawful detainer A legal action to regain possession of a property such as a landlord against a tenant Useful life The span of time which a property can be used and provide benefits to the owner Usury Charging an interest rate that exceeds the limits set by the law VA Department of Veterans Affairs VA entitlement The amount of guarantee that the veteran is entitled to VA guaranteed mortgage A mortgage to a veteran not an amount in excess of the appraised value of the property Vacancy factor The percentage of a complex or building’s space that is not rented Valid A classification of a contract evidencing that it has all of the elements required by law and has a binding force. Valuation See appraisal Variable interest rate An interest rate that fluctuates with the current cost of money; subject to adjustment if the going rate moves up or down. Variance An approval generally granted by a Board of Zoning Appeals to improve or develop a specific property in a manner that is not authorized by the current zoning ordinance.

Vendee A buyer under an installment contract Vendor A seller selling under an installment contract Vested That which is bestowed upon or secured by someone such as the title to property. Vicarious liability A legal doctrine stating that a principal can be held liable for their broker’s action Void Something that has no legal effect and is invalid Voidable Something that is capable of being void in a court of law but which is not unless and until some action is taken to have it declared void. Waiver A voluntary act to intentionally give up a known right. Warranty deed A deed used to convey real property that contains warranties of title and quiet possession and where the grantor agrees to defend the property against the lawful claims of third persons. Water rights The rights to a water supply or a guarantee of access to nearby body of water. Water table The level at which water can be found. This applies to surface or underground Will A person’s wishes on how their estate should be disposed of after death. Will, formal A will that must be in writing and signed in the presence of at least two witnesses Will, holographic A handwritten will by the testator and not witnessed. It is not recognized in some states Will, nuncupative An oral will made on the deathbed of the testator

Without recourse A without recourse endorsement especially refuses to assume any responsibility to subsequent holders for the payment of a debt instrument that gets transferred by endorsement. Wraparound financing A loan arrangement whereby the existing loan is retained and a new loan is added to the property. Full payments on both mortgages are made to the wraparound mortgagee, who then forwards the payments on the first mortgage to the first mortgagee. Writ of attachment See attachment Writ of execution A legal term that describes a court order that is granted in order to satisfy a judgment awarded to a plaintiff in a court of law. If a court issues a writ of execution, usually a local sheriff is charged with taking possession of property owned by the debtor. The property can then be sold in a sheriff's sale, with the proceeds from the sale given to the plaintiff to satisfy the terms of the judgment. Writ of restitution

A court order issued after an unlawful detainer action requesting that the tenant vacate the property within a specified period of time. If the tenant does not vacate within the specified time, then this writ allows for removal of the tenant by the sheriff Yield The return on investment stated as a percentage of the investment Zone An area of land set aside for a particular use Zoning Local government regulations on the uses of property Zoning amendment See rezone