GLOSSARY/DEFINITIONS OF REAL ESTATE TERMS
ABANDONMENT: giving up of premises by lessee without consent of lessor before lease expires; action does not break lease and does not relieve lessee of obligations of lease contract.
ABATEMENT: diminution of taxes.
ABSTRACT OF TITLE: a condensed history of legal title, summarizing all instruments in chain of ownership; provided by lenders attorney and paid by borrower.
ABUTTING: neighboring land with a common boundary.
ACCELERATION CLAUSE: a clause in Note protecting lender; upon default of terms of Note, balance of debt becomes due immediately instead of maturity date; prelude to foreclosure.
ACCEPTANCE: indication by signature of offeree that he is willing to be bound by terms of offer from offeror.
ACCESSION Acquisition by union. Alluvion (alluvium) soil that is deposited by action of water or wind.
ACCRETION: addition to one's realty by gradual deposit of soil through operation of natural causes, such as water flow.
ACCRUED DEPRECIATION: difference between cost of replacing property new as of date of appraisal and present value.
ACKNOWLEDGMENT: act of executing a legal instrument such as a deed, mortgage or discharge before a lawyer or other officer of state such as a notary public; this act declares signing to be free and voluntary; this is necessary before recording at registry.
ACRE: 43,560 square feet.
ACTUAL EVICTION: legal action originated by lessor whereby lessee in default is physically ousted by result of (pursuant to) court order.
ACTUAL NOTICE: actual and specific knowledge of a legal matter as opposed to constructive notice (recorded in registry of deeds).
AD VALOREM: tax assessment based on actual value.
ADJACENT: nearby or abutting.
ADJOINING: touching and contiguous.
ADJUSTABLE RATE MORTGAGE (ARM)--A mortgage in which the Interest rate is adjustable, meaning that the rate can go up or down according to prevailing financial market conditions.
ADJUSTMENTS: rents, insurance, fuel, taxes etc., apportioned or prorated between buyer and seller at closing of title (passing).
ADMINISTRATOR/ADMINISTRATRIX: person appointed by probate court to probate or prove and settle estate of person leaving no will.
ADVERSE POSSESSION: occupant's right to acquire legal title to a property held by title holder by deed if occupant holds land openly, notoriously, adversely and without permission for 20 years; also known as squatter's rights.
AFFIDAVIT: a sworn statement; written oath such as acknowledgment.
AFFIRMATION: a solemn declaration; a non-religious oath.
AGENCY: a contract by which one party undertakes to represent another in certain business situations, such as realty brokerage.
AGENT: a person (natural), corporation, society, association or partnership (legal persons) acting by authority of a principal in a realty transaction for compensation. Simple: The party that acts for another.
AGREEMENT OF SALE: a bilateral contract whereby buyer promises to buy and seller promises to sell by execution and delivery of deed; also known as Purchase and Sale Agreement (P&S). Agreement means the same as Contract.
AIR RIGHTS: ownership or lease of air space over a specific parcel of realty, such as a building over a turnpike.
ALIENATION CLAUSE: clause in mortgage giving lender right to accept or reject new owner of take-over mortgage.
ALIENATION: voluntary transfer of realty.
ALLUVIUM: soil deposited by accretion; also called alluvion.
AMENITIES: features of property making it desirable and thus adding value, such as scenic views, convenient shopping, schools etc.
AMORTIZATION: act of liquidating indebtedness by equal and periodic payments usually monthly; this direct reduction method means each payment remains constant but ratio of principal and interest changes with an increasing larger portion credited to reducing debt; savings and loan associations popularized method.
ANNUAL PERCENTAGE RATE (APR)--The TOTAL interest rate of a mortgage, including the stated loan interest as well as any upfront interest paid in securing the loan. The APR will invariably differ from the mortgage rate quoted due to the inclusion of these items.
APPRAISAL: An estimate of value of a Real Estate property by a professional third party. Virtually all non-owner financed mortgages will require an appraisal and is generally paid for by the buyer.
APPRECIATION: increase in value resulting from market forces such as demand stronger than supply.
APPROACHES TO VALUE: three methods used by appraiser to form an estimate of value such as cost, market and income approaches.
APPURTENANCE: a right, privilege or improvement belonging to and passing with a property such as having a right of way through adjoining property in order to reach a beach.
ARM'S LENGTH TRANSACTION: sale without duress on either party resulting in fair market value; an open and willing sale.
ASSEMBLAGE: The act or process of combining two or more lots under single ownership.
ASSESSMENT OR ASSESSED VALUATION: value given to realty by assessor's office for property taxation purposes; also called assessment; actual collection of tax comes from Tax Collector or Treasurer.
ASSETS: all real and personal property one owns; assets minus liabilities such as mortgages, equal net worth (equity).
ASSIGNEE: Party which receives rights.
ASSIGNMENT: A transfer to another of the whole of any property, real or personal; assignor gives and assignee receives. Rights may be assigned but never obligations.
ASSIGNOR: Party which transfers rights.
ASSOCIATE BROKER: a broker who chooses to work as a salesperson for another broker (the employing broker).
ASSUMPTION OF MORTGAGE taking of title to property by grantee who assumes existing loan; however original mortgagor is not released and in event of foreclosure and deficiency, mortgagee can look to either
ATTACHMENT: a writ issued, beginning or during a legal action commanding sheriff to attach ("seize") property, rights and effects of defendant to satisfy possible, credit demands of plaintiff if judgment comes out in plaintiffs favor.
ATTEST: affirmation that something is true or authentic.
ATTESTATION: testimony or evidence given under oath.
ATTORNEY-AT-LAW: a lawyer employed by a party to manage a cause.
ATTORNEY-IN-FACT: anyone who is authorized in writing to perform certain acts for another under written power of attorney; valid only during lifetime of party giving this power.
AUCTION: public sale of property to highest bidder.
AVULSION: removal of land from one owner to another when water suddenly changes its channel.
BALLOON MORTGAGE: principal loan amount paid off in lump sum at end of term as
BANKRUPTCY: A legal condition that ends an agency relationship.
BENCHMARK: mark on stone or cement permanently fixed to ground; used as measuring point by surveyors.
BEQUEATH: to give personal property by will; bequest.
BETTERMENTS: improvements adding to value of realty, done by local government and paid for by gainers of value; sidewalks, streets etc.
BILATERAL CONTRACT: one person's promise in exchange for another person's promise such as purchase and sale agreement.
BILL OF SALE: a written instrument which is the evidence of transfer of one person's right in personal property to another.
BINDER: Deposit or earnest money given as evidence of good faith by buyer to secure property until sale takes place; more accurate use is in insurance - a memorandum of temporary coverage at passing of papers until formal policy of fire and casualty can be issued.
BLANKET MORTGAGE: a single mortgage instrument securing more than one parcel of property as security for the loan.
BLOCKBUSTING: The use of threats or suggestions that protected class is moving into an area; purpose is to persuade owners to hire agent. Also, employing fear tactics to induce panic selling or panic peddling in a neighborhood; illegal.
BONA FIDE: in good faith and without fraud.
BOND: guarantee by third party that it will make good any loss, up to certain amount, incurred by a party dealing with a broker not acting in good faith; bonding company is Surety and obligor and State is obligee. Broker bond is made payable to State.
BREACH OF AGENCY: An agency is a personal contract. The party who wrongfully breaches an agency agreement could be liable for damages. Parties: Principal and Agent.
BREACH: Failure to perform a duty or promise such as in a contract.
BUILDING CODE: regulations established by government setting forth minimum structural requirement; a police power.
BUILDING LINE: line drawn certain distance from lot lines; no building can be erected between building line and lot lines.
BUNDLE OF RIGHTS: all rights that go with ownership of realty.
BUYER'S AGENT: A Real Estate Agent that has made an agreement to represent the buyer exclusively, rather than the seller.
CAPITAL EXPENDITURES: investments of cash for improvements to remain competitive in a business.
CAPITALIZATION RATE: Profit expressed as a percentage that an investor expects from an investment on a yearly basis. A rate of return.
CAPITALIZATION: process of computing current value from expected future income by dividing annual net income by selected rate of return desired for that type of property; the cap rate.
CARRYING CHARGES: expenses necessary for holding property such as vacant land pending development or zoning changes.
CASH FLOW: profit after principal and interest are deducted from net operating income (NOI).
CERTIFICATE OF TITLE: A written opinion by an attorney or title company that certifies condition of title.
CERTIFICATE OF V.A. REASONABLE VALUE (CRV): instrument issued by V.A. denoting maximum value for guaranteed loan.
CHAIN OF TITLE: A record of past owners and history of property, tracing the conveyances back toward the original land grant.
CHATTEL: an article of personal property.
CLEAR TITLE: title free of encumbrances.
CLIENT: principal or owner who hires an agent; CUSTOMER is buyer.
CLOSING: The process that effects the final transfer of the deed from the seller to the buyer, as well as finalize all aspects of the mortgage of the property.
CLOSING COSTS: Funds needed at the time of closing (separate from and in addition to the down payment). Loan origination fees, discount points, Attorney fees, recording fees and pre-paids are some items that may be included. They often will total from 3% to 5% of the price of the home, payable in cash.
CLOSING STATEMENT: a written accounting of funds to seller and buyer at passing of papers.
CLOUD ON TITLE: A claim or interest revealed by title search that may affect the title, thus preventing the property from being used as collateral for a loan.
COLLATERAL: a security, such as a mortgage, given to protect debt.
COLLUSION: agreement between parties to defraud another.
COLOR OF TITLE: A title that appears to be good but, upon title search, is found to be defective.
COLOR OF TITLE: someone has instrument which appears to provide good title, but actually does not.
COMMINGLING: the mixing of funds held for the benefit of others with the broker's personal or business funds.
COMMISSION: money or other valuable consideration given to broker by principal for services rendered; amount is by agreement.
COMPARABLE MARKET ANALYSIS (CMA)--A comparison of the prices of similar houses in the same general geographic area. A CMA is used to help determine the value of a property, either for a seller or a buyer.
CONDEMNATION: Acquiring private property by government (law of eminent domain).
CONDITIONAL CONTRACT: a contract in which owner retains title until buyer has met all SALES terms and conditions; a familiar device in land sales; also called land contract or installment contract. Buyer acquires "equitable title" until final payment; after delivery of deed, buyer has "legal title".
CONDITIONAL SALE CONTRACT: Contract for sale of real estate in which possession is delivered to buyer but title (ownership) to remain vested in seller until all conditions of contract have been fulfilled. A frequent device in land sales paid by installment payments. Also known as contract for deed.
CONDOMINIUM: Condominium--Housing made up of individually-owned units with separate deeds and shared ownership of common areas. Housing where the owner owns only the unit in which the live--from the interior walls inward, generally.
CONSIDERATION: Anything of value to induce another to enter into a contract. It may be money, services or a promise.
CONSTRUCTION LOAN: progressive payments to builder during stipulated stages in erection of building.
CONSTRUCTIVE EVICTION: Defense by lessee against the landlord who alleges failure to comply with terms of tenancy.
CONTINGENCIES: These are conditions--or "safety valves" written into Real Estate offers and contracts to prevent a buyer from being forced to buy a house that is unsatisfactory--either structurally or financially. Examples of contingencies are "This contract is subject to the buyer obtaining a satisfactory whole house inspection." or "Subject to the buyer being able to obtain a mortgage."
CONTRACT: a legal instrument between two parties to do or not to do something; in realty, it must be in writing to be enforceable.
CONVEY: to transfer and grant; to convey as a transfer of legal title in land by an instrument in writing such as deed.
CORPORATION: a legal person created according to state law consisting of an association of individuals; corporation has separate and distinct entity from those individuals and must be licensed and bonded; at least one officer of corporation must be licensed as broker but all members of the corporation involved or engaged in realty must be licensed also.
COST OF REPRODUCTION: cost of exact duplication of property using similar materials.
COUNTER-OFFER: Original offer is not accepted by offeree (seller) and a counter-offer is presented. Original offer is now void.
COVENANT OF QUIET ENJOYMENT: A legal understanding that the lessee will enjoy the premises in peace and without disturbance by landlord.
COVENANT: a promise or guarantee usually found in a deed.
COVERT: hidden or concealed defect in the title.
CUBAGE OR CUBIC CONTENT: length X width X height of interior.
CUL DE SAC: A road with one outlet, usually ending in a circle.
CURTESY: rights of husband to share in wife's realty upon her death only; DOWER is rights of wife to share in husband's realty upon his death; both these rights are life interests only.
DAMAGES: estimated monetary damages for breach of contract.
DEBENTURE: an unsecured note as opposed to mortgage Note.
DEBT TO INCOME RATIO--The ratio of a borrowers total of debt as a percentage of their total gross income.
DECEDENT: deceased person.
DEDICATION Devotion of land (fee simple or easement) by owner with intent it be accepted for public use.
DEED OF TRUST (TRUST DEED): in states such as California, this is the name of instrument used instead of a mortgage deed.
DEED RESTRICTION: provision in deed controlling use of land.
DEED: The document that, when recorded with your local government, determines ownership of a property. Transferred from seller to buyer at closing.
DEFAULT: non-performance of a duty under a contract.
DEFEASANCE CLAUSE: clause in mortgage which defeats mortgagee interest if loan is repaid according to Note; this clause makes mortgage deed only a conditional transfer of property.
DEFENDANT: party sued.
PLAINTIFF: party initiating suing action.
DEFICIENCY JUDGMENT: court award to lender if sale at public auction does not equal mortgage debt.
DELINQUENCY: a loan in default or overdue.
DELIVERY: irrevocable transfer such as with deed.
DEMISE: to lease.
DENSITY: number of dwellings and commercial units per acre.
DEPRECIATION: Loss in value due to any cause.
Descent and Distribution - law governing distribution to heirs.
DESCENT Intestate - no will. Administrator(trix) appointed by court.
DESCRIPTION: world and capable of being ascertained by survey.
DEVISE: a gift of realty by will; deceased is devisor.
DIRECT REDUCTION MORTGAGE: amortized debt repaid by installment payments; each payment credited first to interest and then to principal; each payment remains the same for entire term.
DISINTERMEDIATION: outflow of funds from one investment instrument such as thrift institutions to another such as U.S. Treasury instruments in order to gain a higher yield. This means "tight $".
DOMICILE: place where one has permanent residence, no matter where one is currently living.
DUPLEX: a home designated for two families.
DURESS: unlawfully forcing someone to do something against their will.
EARNEST MONEY: deposit or binder given with Agreement to Buy.
EASEMENT IN GROSS: A personal right to use another's land.
EASEMENT: A right to use the land of another. A burden on that land.
ECONOMIC LIFE: Period over which property may be profitably utilized or period during which improvement contributes to value of land.
EFFICIENT AND PROCURING CAUSE: Criterion used to identify the earning agent the commission; agent must manage sale by an uninterrupted sequence leading-to the passing of papers (property is sold).
JECTMEENT: legal action to regain possession of realty with damages payable for its unlawful retention.
EMBLEMENTS: crops growing which require annual or semi-annual planting and cultivation; normally personal and belonging to tenant.
EMINENT DOMAIN Right of government to take private property for public use with just compensation. Condemnation is the process or taking.
ENCROACHMENT: physical trespass of a property on that of another such a s overhang; the discovery is by survey.
ENCUMBRANCE: Anything which burdens (limits) the fee title to property, such as a lien, easement or restriction of any kind.
EQUITY PARTICIPATION: a further return on investment which the lender requires in addition to interest received from financing a realty project; part ownership with lender.
EQUITY: The financial interest in property after payment of all liens; the difference between value and indebtedness on property; down payment.
EARNEST MONEY: Money that is submitted with an offer to purchase which indicates a buyer's seriousness and good faith. In virtually all cases, earnest money will need to be submitted at the time of the offer and remains in escrow until the time of closing, at which time it becomes part of the downpayment.
EROSION: wearing away of land by nature.
ESCALATOR CLAUSE: A device in a lease which regulates the rent up or down depending upon agreed-upon standards such as cost of living index.
ESCHEAT Reversion of title of land to state where deceased left no will and no heirs. Abandoned property may follow this route.
ESCROW: the holding of something of value by a person (escrowee or escrow agent) for the benefit of other parties.
ET AL.: A term meaning "and others."
ET UX: A term meaning "and wife."
EVICTION: the depriving of a person's possession of realty.
EXECUTOR(M)/EXECUTRIX (F): person named in will to execute or probate the will.
EXTERNAL OBSOLESCENCE: Loss in value due to outside forces, such as zoning changes and neighborhood deterioration; not curable.
FAIR HOUSING ACT OF 1988 AMENDMENTS: Families with children and the handicapped are added to protected classes.
FEDERAL HOME LOAN MORTGAGE CORP. (FHLMC): known as "Freddie Mac," it is a secondary market government operation that buys conventional mortgages from lenders to keep market for mortgages fluid.
FEDERAL HOUSING ADMINISTRATION (FHA): part of U.S. Dept. of Housing and Urban Development (HUD) which insures mortgage loans originated by qualified and approved lenders with the home buyer paying loan insurance premium.
FEDERAL RESERVE BOARD: U.S. central bank composed of Governors with Chairman; establishes and regulates monetary policy.
FEE SIMPLE: largest possible estate or interest person can have in a parcel of realty; least limited estate.
FIDUCIARY: A party holding a position of trust to advance the interests of a principal: example is a real estate agent.
FINDERS FEE: fee to broker for arranging loan for client; can also mean fee to broker for locating a property for client.
FIXED RATE MORTGAGE: A mortgage loan where the interest rate is established at its origination and continues unchanged through the life of the loan.
FIXTURE article that was once personalty but is now realty because it is permanently attached.
FORCIBLE ENTRY: legal action to recover possession of premises unlawfully held.
FORECLOSURE: legal remedy or procedure whereby collateral (property) is sold to pay debt as described in Note contract because terms were not met such as non-payment.
FORFEITURE: loss of money or anything of value due to failure to perform according to terms of contract.
FRAUD: intentional, deception in which injured party has loss.
FREEHOLD: an interest in realty of not less than a life estate.
FRONT FOOT: The frontage measurement of a property; the linear distance of the width from one corner to the other facing the public street.
FRONT FOOT: number of feet of frontage on street side.
FSBO (For Sale By Owner): Real Estate that is sold without the assistance of an Agent. FSBO can refer to both the individual selling the property "They are a FSBO," or the property itself "that house is a FSBO."
FUNIONAL OBSOLESCENCET: CLoss in value due to out-of-date, poorly designed or old-fashioned fixtures or equipment; may be curable.
GENERAL LIEN: A lien on any and all property of debtor such as: judgment, decedent's debts, inheritance taxes, state tax liens, IRS liens.
GOVERNMENT NATIONAL MORTGAGE ASSOC. (GNMA): known as "Ginnie Mae," this is a secondary market government corporation that buys federally-backed mortgages to help fluidity and encourage low-cost housing.
GRANTEE: Buyer
GRANTOR: Seller
GROSS LEASE: owner receives rent and pays out expenses such as in apartment leasing.
GROUND LEASE: Lease of ground only by lessee. A device used when owner will not sell or when lessee wishes to spend capital on improvements only.
HABENDUM CLAUSE: "to have and to hold" clause in deed which defines or limits quantity of estate granted.
HERIDITAMENTS: Inheritable property, real and personal.
HIGHEST AND BEST USE: Use of a property that produces greatest net income.
HOMEOWNERS ASSOCIATION: An owners group, whether in a condominium, townhouse or single family subdivision that establishes general guidelines for the operation of the community, as well as its standards.
HOMESTEAD LAWS: laws designed to protect homeowner from forced sale of home to satisfy certain debts.
HYPOTHECATE: To pledge property as security for an obligation without giving up possession; to mortgage.
IMPOUNDS: Reserves such as tax payments made under a mortgage and held by mortgagee and to be distributed to municipality on tax dates.
INFRASTRUCTURE: network of public facilities of an area.
INGRESS/EGRESS: entering and leaving
INJUNCTION: an order of court to restrain one or more parties to a suit from doing an inequitable or unjust act in regard to the rights of some other party to the suit.
INSPECTION: A whole house inspection of a home being considered for purchase which looks for defects in the property.
INSTRUMENT: a formal written document.
INTEREST: That portion of a mortgage payment that is the "charge" for using the lender's funds.
INTERIM FINANCING: development loan such as construction money used during creation of realty investment.
INTESTATE: no will or a defective will by the deceased.
INVESTMENT: total value of property; down payment (equity) and mortgage loan (debt).
INVOLUNTARY ALIENATION Operation of law forcing sale to satisfy: Delinquent municipal taxes Defaulted mortgage liens Court judgment Bankruptcy Suit for partition of property held in co-ownership Forfeiture of title in defeasible fee estate
IRREVOCABLE: unchangeable.
JUDGMENT: The final determination of a court of a matter presented to it. Also, A court action describing indebtedness of one to another.
JUNIOR MORTGAGE: Any mortgage next in priority, such as a second mortgage.
LACHES: Failure or inexcusable delay in asserting one's rights; action commenced within legal time limit, but court refuses to grant relief if it works injustice on other party.
LAND CONTRACT: typical method of financing land sales: Buyer makes down payment, then monthly payments until final price is paid. Buyer does not receive deed until final payment.
LAWFUL OBJECT: An object or purpose which is permitted by law.
LEASE: A legal instrument transferring use and possession but not ownership. LESSOR: Party which owns rental property and gives a lease.
LEASE: contract between lessor (landlord) and lessee (tenant) for exclusive possession of realty for specified period under specific terms after which property reverts to lessor.
LEASEBACK: the purchase of improved property and the leasing of it back to seller; creates capital and favored tax treatment for seller.
LEASEHOLD: the interest which a lessee has in realty.
LEGAL method of describing property no matter where it is in the
LESSEE INSURANCE: Coverage to protect the tenant for claims arising within the leased premises.
LESSEE: The tenant who receives the instrument of possession from lessor.
LESSOR INSURANCE: Coverage to protect the landlord from common areas liability.
LEVERAGE: maximum use of borrowed money and minimum use of cash in the purchase of realty.
LICENSURE IDENTITY: Agent must identify business role in advertising in order to inform public that seller is represented by agent.
LIEN: A legal claim against a piece of property that can prevent it from being sold unless the lien is satisfied (paid off). Liens can be filed by unpaid contractors or other debtors in a legal process so that they will be paid when a property is sold.
LIFE ESTATE: estate or interest held during a certain person's life; noninheritable; lowest of freehold estates.
LIQUIDITY: a person's cash position.
LIS PENDENS: A recorded notice by plaintiff of pending litigation affecting title (ownership) to property (not a lien).
LISTING: A real estate term denoting a "hiring" by an owner or lessor of an agent to sell or lease real estate.
LITIGATION: a contest in court of law between two parties to determine who is in the right.
LITTORAL: shoreline of large body of water.
LOAN ORIGINATION FEE: A charge imposed by the lender, payable at closing, for processing the loan. See Points.
LOCK IN: An agreement by the lender at the time of mortgage application or shortly thereafter, to write the mortgage at a specific interest rate, whether rates rise or fall up to the date of closing. Obviously a good move if rates are rising, not so good if they are falling. Lock-ins have specific expiration dates, such as 30, 60 or 90 days in the future.
LOT LINE: legal line separating lot from another lot.
LTV (Loan to Value)--The ratio of the amount of the mortgage as a percentage of the value of the property.
MARKET DATA: One of three approaches to value by which valuation of a property is based on comparison with previously sold properties with similar characteristics; also known as sales comparison approach.
MARKET VALUE: The price for which realty can be sold on the open market if there is a willing seller, a willing buyer and a reasonable time to make the sale.
MARKETABLE a title which buyer would accept as being good performance
MASTER DEED: basic title document in creation of condominium; it defines individual fee units and common interests.
MECHANIC'S LIEN: A statutory lien on a specific property for labor and material contributed to a work of improvement of realty.
MEETING OF MINDS: an offer and acceptance; an agreement or contract.
METES AND BOUNDS: boundaries of land described in directions and distances.
MONUMENT: A visible marker, natural or artificial used to establish a land boundary.
MORATORIUM: action by government temporarily halting public activities such as 'freeze" on apartment construction.
MORTGAGE BROKER: a party who, for a fee, brings together an investor and borrower
MORTGAGE COMMITMENT: a written notice from lender promising a future loan under certain conditions and terms.
MORTGAGE: a legal instrument conveying conditional title to lender in order to secure the repayment of the debt described in Note.
MORTGAGEE: Lender
MORTGAGEE-IN-POSSESSION: lender legally takes over from defaulted party the possession of property and collects income from lessees. Unless mortgagor can become current, foreclosure is next.
MORTGAGOR: Borrower
MULTIPLE LISTING SERVICE (MLS): A service of NAR providing a clearing house of shared listings available to members.
MUNICIPAL LIEN CERTIFICATE: a document from municipality to ascertain status of taxes, water, sewerage, betterments etc. This is a required document at closing of title.
MUNICIPAL TAXES: The first and paramount lien against all taxable realty.
MUTUAL CONSENT: Both parties approve or assent to terms of contract freely.
NATIONAL ASSOC. OF REALTORS (NAR): a national private business organization with state and local chapters; a trade association whose members are called REALTORS.
NECESSARIES: essentials of existence: food, clothing, shelter.
NET INCOME: Also known as the net operating income (N.O.I.); effective gross income minus operating expenses and property taxes produces net income.
NET LEASE: Lessee pays rent plus some or all operating expenses. Also known as net-net lease and triple net lease.
NET LISTING: A compensation method by which owner receives a specific and agreed amount for the property and the broker receives the difference between that amount and the actual selling price. Since this difference may be unacceptably high to the seller at the time of an actual sale, it encourages litigation. Net listings are against the law.
NET WORTH: value left after liabilities are deducted from assets.
NOMINAL CONSIDERATION: something of value bearing no relation to real value.
NOTE: promissory instrument given by borrower to lender as evidence of debt; I.O.U.
NOVATION: Substitution by agreement of a new obligation for an existing one with intent to extinguish latter. Original party (lessee, mortgagor) avoids all liability.
OBSOLESCENCE: loss of value from any source other than wear and tear.
OFFER: statement of intent by offeror; ALL offers must be presented by agent to principal.
OFFEREE: Party who receives the offer.
OFFEROR: Party who makes the offer.
OPEN LISTING: An agency hiring practice that allows a hired agent to earn a commission upon bringing the seller a buyer according to the terms of the hiring. Seller reserves right to find a buyer.
OPEN-END MORTGAGE: mortgage written to enable borrower to re-borrow back to original indebtedness.
opposed to amortized direct reduction method.
OPTION: A contract that buys time for a potential buyer or lessee; it is an instrument which prevents the owner from selling or leasing to another for the period of time covered in the option.
ORDINANCE: law by local government body.
original mortgagor or new grantee or both.
OVERT: openly known.
OWNERSHIP: title; an estate in realty to the exclusion of others.
PACKAGE MORTGAGE: a loan secured by a mortgage both on real and personal property.
PANIC PEDDLING: A term used with blockbusting whereby agent creates impression in neighborhood that values may be slipping and that now is the time to sell.
PAROL: oral, as distinguished from written.
PARTITION: a legal action to divide realty owned by tenants in common or joint tenants.
PARTY WALL: wall or fence on common boundary for benefit of both parties; both parties are responsible for maintenance.
PAYMENTS: money payments to be made at future date.
PERCENTAGE LEASE: A typical shopping center lease whereby major tenants pay base amount each month plus a percentage of gross sales.
PERCENTAGE a lease contract in which rental is based on a percentage of
PERCOLATION TEST: a soil test designed to measure rate of water absorption and drainage such as for septic systems.
PHYSICAL DEPRECIATION: Loss in value resulting from wear and tear.
PLANNED UNIT DEVELOPMENT: a housing concept with high density of dwellings with maximum open spaces.
PLAT BOOK: public record of recorded plans or maps.
PLAT: A plan or map of a parcel, such as one showing the various lots of a proposed subdivision.
PLOT PLAN: A diagram showing the existing or proposed use of parcel of land. This will show improvements on land.
PLOTTAGE VALUE: increase in the value of land by assemblage of smaller lots into one ownership.
PLOTTAGE: The increase in value from the act of assemblage. Also known as plottage increment.
PMI (Private Mortgage Insurance)--Required on virtually all conventional loans with less than 20% downpayment. Although the payments for PMI are included in your mortgage payment, it protects the lender should you default on the loan. On FHA loans, you will pay a MIP (Mortgage Insurance Premium) which accomplishes the same purpose.
POINT OF BEGINNING (P.O.B.): The starting point in a metes and bound description of property, either from a monument or a reference point on the street; the description begins and ends at the p.o.b.
POINTS: one-time charge by lender to increase yield on investment; paid at passing; one point equals 1 % of loan amount.
POLICE POWER: right of government to enact building codes, zoning bylaws and license laws for the public interest.
POWER OF ATTORNEY: A written and recorded instrument which allows a person to hold forth as an attorney-in-fact acting in place of another. Not to be confused with an attorney-atlaw (lawyer).
PRE-PAIDS: Paid for (in cash) at closing for such items as homeowners insurance for one year and real estate taxes for several months.
PREPAYMENT PENALTY: penalty for pay-off of loan before maturity date; no such penalty allowed in V.A./F.H.A. backed loans.
PREQUALIFICATION: The first stage of a mortgage application where the lender will run a basic credit report and determine your debt to income ratio in order to see how much mortgage you qualify for.
PRESCRIPTION: A method of obtaining an easement by adverse use for a period of years, hostile to owner's wishes.
PRIMA FACIE: on first view; on face of it; an obvious fact.
PRIMARY MORTGAGE MARKET: Market where loans are made directly to borrowers.
PRIME RATE: lowest interest rate charged by commercial banks to most credit-worthy customers such as major corporations. The DISCOUNT RATE is rate charged to these banks by Federal Reserve.
PRINCIPAL: The amount borrowed for a mortgage loan. Your monthly mortgage payment will be applied to both the interest and the principal (be assured, though, that the lions share will go to the interest portion in the first years of the loan).
PRINCIPALS ONLY: Owner is not using an agent; wishes to sell directly to buyer.
PRIVATE RESTRICTION: A restriction placed on realty by grantor (seller) at time of sale imposed on immediate and subsequent owners.
PRO FORMA STATEMENT:a projection of future income and expenses.
PROCURING CAUSE: the effort of broker who produced buyer.
PROMULGATE: to publish or make known such as license law.
PROPERTY MANAGER: Special agent for the income property owner (lessor).
PROPERTY TAX: An annual or semi-annual tax paid to one or more governmental jurisdictions based on the amount of the property assessment. Generally paid as part of the mortgage payment.
PRORATE: term used to describe proportional adjustment of monies between seller and buyer at closing such as fuel, rents etc:
PROSPECTUS: an advertisement to set forth objects and nature of a particular offering to the public with invitation to buy.
PUBLIC RESTRICTION: Government law or regulation restricting the use of real estate.
PURCHASE MONEY as part payment of purchase price, the buyer (grantee) gives a MORTGAGE (PMM): Note and mortgage Deed back to seller.
QUIET ENJOYMENT: right of owner or tenant to possession without interference.
QUIET TITLE ACTION: Action in Land Court to either establish title or to remove a cloud on title.
QUIETING TITLE: court action to establish true owner and title.
QUITCLAIM DEED: written instrument releasing interest of grantor.
RATIFICATION: The confirmation of a previous act which was voidable; formal approval by principal of acts done by a person without authority from principal or acts of true agent who acted in excess of authority.
READY, WILLING AND ABLE BUYER: A party who is ready now, without conditions, on the owner's terms and has the financial ability to complete the deal.
REALITY OF CONSENT: agreement to a contract must be real and free from fraud, duress, undue influence, misrepresentation and error.
REALTOR: A member of the National Association of Realtors (NAR).
RECIPROCITY: mutual exchange of privileges.
RECORDING: The act of entering deed and/or mortgage information into public record with your local government jurisdiction.
RECTANGULAR method of describing and locating land by Government Survey
REDLINING: An illegal lending practice whereby certain streets or neighborhoods are excluded from a lender's trading area.
RESCISSION OF CONTRACT: the un-making, annulling or abrogation of contract by mutual consent.
RESCISSION: All parties released from obligations and returned to original positions held before the contract.
RESPA (REAL ESTATE SETTLEMENT PROCEDURES ACT): A law requiring full disclosure of closing costs to buyer and seller.
RESPONDEAT SUPERIOR: A principle of agency law which states that principal is responsible for actions of agent hired by principal.
RESTRICTIVE COVENANT: clause in deed limiting certain realty use.
REVOCATION OF OFFER: Withdrawal of offer at anytime by offeror (buyer) before acceptance by offeree (seller). Offer is void.
REVOCATION: a recall or cancellation.
RIGHT OF FIRST REFUSAL: The right of a person to buy or lease after the owner has received a bona fide offer from another party.
RIGHT OF WAY: right of one person to pass over estate of another; a form of easement.
RIPARIAN: belonging to or relating to banks of a body of water.
SALE/LEASEBACK: Owner deeds property to new owner who immediately executes a lease back to former owner. Former owner goes from being an owner to a lessee with the cash from the sale.
SATISFACTION PIECE: Recorded instrument which acknowledges satisfaction or discharge of mortgagor's debt; a release.
SECONDARY FINANCING: Junior mortgages, not to be confused with secondary mortgage market.
SECONDARY MORTGAGE MARKET: Marketplace for the sale and purchase of existing mortgages which originated in primary market.
SECURITY DEPOSIT: money of tenant deposited with landlord to offset damages beyond reasonable wear and tear done by tenant.
SEISIN: possession of realty with a freehold claim in it.
SEPARATE PROPERTY: property owned by married person in own right.
SETBACK: distance from curb or other established line within which no building may be erected.
SEVERALTY: sole ownership; owned by one person only.
SHERIFF'S DEED: an instrument drawn under court order to convey title to property sold to satisfy a judgment.
SINKING FUND: money set aside from property income which, with accrued interest, will eventually pay for replacement of improvements.
SPECIAL AGENT: Broker who is hired by a principal to sell a property or by a principal (buyer) to find a property.
SPECIFIC LIEN: A lien on a particular property such as: mortgage, municipal taxes, mechanic's lien, attachment, special assessment, condominium association fees.
SPECIFIC PERFORMANCE: a court decision ordering one party to comply with terms of contract.
SPOT ZONING: permitted use inconsistent with zoning in area.
SQUARE FOOT: The front foot measurement multiplied by the depth.
STATUTE OF FRAUDS: A law which requires certain contracts, such as real estate contracts, to be in writing to be enforceable and binding in a court of law.
STATUTE: an act of legislature.
STEERING: A fair housing term describing the steering of potential buyers to certain areas or away from certain areas.
SUBAGENT: Salesperson who is hired by a special agent. A subagent is also a cooperating broker (co-broker) under a Multiple Listing.
SUBDIVISION: tract of land legally divided into lots for residential construction; recorded in plat book.
SUBORDINATION: willingness of lien holder such as a junior mortgage, to accept payment behind another later lien holder.
SUBSTITUTION: When two or more like properties are for sale, the one with the lowest price attracts the greatest demand.
SURETY: one who guarantees performance of another.
SURRENDER OF LEASE: Mutual cancellation by lessor and lessee before expiration of lease.
SURVEY SYSTEM: A section is smallest land unit (A section is a square, 1 mile by I mile, which is a square mile or 640 acres).
SURVEY: act of establishing legal description of property.
SWING LOAN: Short term loan used to enable buyer to purchase new property on strength of equity in property buyer is trying to sell. Also known as bridge loan.
SYNDICATION a joining of mutually interested parties to accomplish a joint venture.
TAX RATE: municipal rate multiplied by assessment to produce annual tax; rate is given in per $1, per $100 or per $1000.
TAX SALE: sale of property by public auction to satisfy delinquent taxes.
TAX TITLE: title or ownership acquired at tax sale.
TENANCY AT SUFFERANCE: a tenancy arising when tenant remains in possession after lease expires and without owner's permission.
TENANCY AT WILL: a tenancy which is subject to termination at will of either landlord or tenant.
TENANCY BY THE ENTIRETIES: joint tenancy of husband and wife only.
TENANCY IN COMMON: holding of title by different persons, under different titles, eachperson having equal right to occupy all of property involved.
TESTATOR: A deceased person who has left a will to be probated.
TIME IS OF ESSENCE: exact and punctual performance of contract.
TITLE INSURANCE: Protects your title--your ownership rights--from claims against it. Paid at closing, title insurance may be the responsibility of the buyer, the seller, or both, depending on what is traditional in your locality.
TITLE REFERENCE: book and page number stamped on deed to indicate where recordation may be found at registry of deeds.
TITLE SEARCH: examination of registry records to determine chain of title and possible defects.
TITLE: on part of seller; a good deed by grantor.
TOPOGRAPHY: nature or contour of land surface. TORRENS SYSTEM: procedure of registering titles in land.
TRADE FIXTURES: personal articles used in business and affixed to realty; necessary for trade and are removable.
TRUST DEED: see DEED OF TRUST.
UNEARNED INCREMENT: Increase in value, not anticipated by owner, due primarily to outside forces rather than personal efforts of owner. For example: population growth and inflation.
UNIMPROVED PROPERTY: land without buildings or other improvements.
UNLAWFUL DETAINER: A court action by lessor to regain possession after lessee allegedly breached terms of lease.
USURY: charging higher rate of interest than law allows.
VALID: Legally sufficient and authorized by law. VOID: Has no force or effect; unenforceable.
VARIABLE INTEREST: Loan originates at one rate but fluctuates according to an agreed index; also may be described as adjustable rate mortgage (ARM).
VARIANCE: permission from city to use land in exception to zoning laws.
VENDEE: Buyer
VENDOR: Seller
VOIDABLE: That which is "able" to be made "void," but is not void unless action is taken to make it so.
WARRANTY: Covers either most of the house in a new home, or selected items (for example the heating and air conditioning system or the water heater) in a used home. Warranties can vary widely and are optional in used homes (paid for by either the buyer or the seller).
WILL: An instrument (testament) used to dispose property accumulated by a person upon death. Testate - Executor (trix) is named in will by testator to represent the estate. Devise - to give real property by will to devisee (heir). Bequeath - to give personalty by will to legatee (heir). Called a bequest or legacy. Codicil - an addition or amendment to a will. Holographic - a will in handwriting of testator.
WRIT OF EXECUTION: A legal writing issued to enforce a judgment or court decree.
ZONING: Laws that govern specifically how a zoned area can be used. For example, an area may be zoned for single family residential, condominiums, commerical or retail, or a mix of two or more uses.
