REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. Estate Estate M anagemen anagemen t.
A ABANDONMENT Failure to occupy and use property; may result in loss of rights. ABATEMENT OF NUISANCE The act of ending or terminating a nuisance; a type of legal ac tion broug broug ht to end a nuisance. ABSENTEE OWNER A property holder who does not reside on the property and who u sually relies relies on a property m anager to supervise the the investm ent. ABSOLUTE ABSOLUTE OWNERSHIP SEE: Fee Simple Estate ABSTRACT
A brief brief sum mary.
ABSTRACTORS A person who, historically, searches out any thing af fecting the title title to re al property and summarizes the information in the findings.
An individual ACCRED ITED RESID ENT MANA GER (ARM who has completed IREM s educational program for resident manag ers of residential property. ACCELERATED COST RECOVERY SYSTEM (ACRS) Th e system for figuring depreciation (cost recovery) for depreciable real property acquired and placed into service after January 1, 1981 ACC ELERATED DEPRECIATION DEPRECIATION A method of cost write-off in which depreciation allowances are greater in the first few years of ownership than in subsequent years. This permits an earlier recovery of capital an d a faster tax write-o write-o ff of an as as set.
A clause in a deed of trust or ACCELERATION CLAUSE mo rtgag rtgag e giving giving the lende lende r the right to to call all sum s owing him or her to be immediately due and payable payable upon the occurrence of a certa certa in event. event. It is also also a clause that perm its a debtor debtor to pay off a loan before the due date. ACCEPTANCE 1. Agreeing Agreeing to the terms of an offer to enter into a contract, thereby creating a binding contract. 2. Taking
ABSTRACT OF JUDGMENT A summary of money judgme judgme nt. Th e sum sum ma ry is usually prepa red s o that that it may be recorded, thereby creating a (judgement) lien on real estate owned by the judgment debtor.
delivery of a deed. The act of agreeing or consenting to an offer.
ABSTRACT OF TITLE A sum mary of the instrum ents affecting title to a parcel of real property as shown by the public records.
ACCEPTANCE OF AN OFFER After acceptance of an offer, a broker may not return the buyer s deposit without authorization from the seller. An essential element of every contract, it is the consent to be bo und by by the offer. In deeds, it is the c onsent to accept a gran t of real property. property.
ABSTRACTION A method of valuing land. The indicated value value of the the imp roveme nt is is deducted from the s ale price. ABSTRACTION ABSTRACTION METHOD Method of appraising vacant land; allocation allocation of the appraised total value or sale price of the property between land and building either on a ratio basis or by subtracting a figure representing building value or price from the total appraised value or price of the property. Also called Allocation Method.
payable at ACCELERATE To make a note all due and payable one time. ACCREDITED MANAGEMENT ORGANIZATION (AMO) A professional designation awarded to qualified property management firms by the institute of Real
ACCESSION The acq uisition of title title to additional proper ty by its annexation annexation to rea rea l estate estate alrea alrea dy owned owned . An add add ition to property through the efforts of man or by natural forces.
The right of an owner to go into and ACCESS R IGHT out of his or her p roperty. A person who, without ACCOMMODATION PARTY receiving value, signs a promissory note to help another person borrow money or get credit. ACCOMMODATOR delayed exchange.
An intermediary who holds funds in a
ACCORD AND SATISFACTION An agreement to accept something different than (and usually less than) what the
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REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. 4840 square yards, 43,560 square feet, or a tract about 208.71 feet square.
original contract called for. The discharge of an existing contract by accepting the performance under a substitute contra ct. General ly, ly, consid eration under the the new contract is different from and of lesser value than under the original contract, and satisfaction is the performance of that contract; the combination discharges the original contract.
ACTUAL AUTHORITY Authority expressly given by the princ princ ipal ipal or given by the law an d not denied by the principal.
ACCRETION A gradual addition to land from natural causes; for example, from gradual act ion of ocean or river waters.
ACTUAL EVICTION Forcible removal of a tenant from a property by an officer after a judgement decree of possession has been issued in favor of the owner.
ACCRUE To increase or accumulate; interest on loans is said said to accrue daily. daily.
ACTUAL FRAUD An act intended to deceive a nother, e .g., making a false statement, making a promise without intending intending to perform it, suppressing the truth.
AC T
The difference between ACC RUED DEPRECIATION DEPRECIATION the cost of replacement of a new building, as of the date of the appraisal and the present appraised value.
An individual may be conscious of the ACTUA L NOTICE NOTICE circumstance s in which which the own er receive receive d title to the property and is at the same time is aware that the owner has not recorded the deed nor is he in possession of the property. There is no constructive notice, only actual notice as to the owner of the property.
Depreciation that has accumulated over a period of time. (1) The difference difference betw een the the cost of replacement new as of the date of the appraisal and the present appraised value. (2) The accumulated losses in value that has affected the im im provem ents on re re al property. property.
ADDENDUM An attachmen attachmen t to a purch purch ase agreement or to escrow instructions. Used to modify or make changes.
ACCRUED ITEMS OF EXPENSE Those incurred expenses which are not yet payable. The seller s accrued expenses are credited to the purchaser in a closing statement
ADJACENT property.
ACKNOWLEDGMENT When a person who has signed a document formally declares to an authorized public official official (usually a nota ry public) that he or she signed voluntarily. Th Th e official attests that th th e sign sign ature ature is
Blocks of fiber, mineral, or metal ACOUSTICAL TILE TILE with small holes or a rough-textured surface to absorb sound, used as covering for interior walls and ceilings. ACQUISITION The act or process by which a person procures prop erty. erty.
Under FHA . A loan is based ACQUISITION COST on acquisition cost, which is sale price or FHA value, whichever is lesser, plus nonrecurring closing costs the buyer is pa pa ying per FH FH A rules. ACRE
A measure of land equaling 160 square rods,
Located next to or near an object or parcel of
Located so as to touch an object or share a ADJOINING common property line. line.
ACCUSATION A written statement of rules violated, used in a prope rty right healing.
voluntary and genuine. A formal declaration before a notary public or qualif ied off icer that the person s igning the document is doing so voluntarily and using his or her legal nam nam e and signature; called notarizing. notarizing.
A statute
ADJUDICATION
A judicial or court decision.
The income tax cost basis basis of the ADJUSTED COST BASIS property with certain additions, such as acquisition costs and the cost of improvements, improvements, and certain certain subtractions, such as deprec iation iation in v alue. alue. The time between permitted ADJUSTMENT INTERVAL changes in the interest r ate or mo nthly nthly paym ents, typica typica lly six six months to one year, depending on the indexused. ADJUSTMENTS In appraising , a means by which charact eristics eristics of a residential property are regu lated by dollar dollar amount of percentage to conform to similar characteristics of another residential prop erty. erty. ADJUSTABLE-RATE-MORTGAGE A mortgage or deed of trust with a variable interest rate (an interest rate that changes periodically. This m ortgage tends to a ttract more people into the mortgage mortgage market. ADJUD ICATIVE METHODS The resolution of a dispute by mirror ing the judicial judicial proc ess in that a third party decides the
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REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. controversy much as a judge does in court. The adjusted basis is equal to ADJU ADJU STED BASIS the purchase price plus buying. ADJUSTABLE RATE MORTGAGE (ARM) A mortgage loan which bears bears interest at a rate subject to change during the term of the loan, predeterm ined or oth erwise. erwise.
interest ADJUSTABLE RATE NOTE A note whose interest rate i s tied tied to a flexible flexible index . ADMINISTRATIVE AGENCY A government agency that administrates a complex area of law, adopting an enforcing detailed regulations that have the force of law. ADMINISTRATIVE LAW LAW JUD GE A law judge that conducts hearings enforcing the detailed regulations that have the force of law, by a government agency. It is a complex area of law. ADMINISTRATOR A person appointed by the probate court to manage and distribute the estate of a deceased person when no executor is named in the will or there is no w ill. ill.
ADVANCE FEE AGREEMENTS. For DRE approval, an advance free agreement must state the total amount of advances fees to be paid. paid. An advance fee agreement may not include a guarantee the transaction will be completed.
titutional inves tor s ADVANCE COMMITMENT The ins titutional prior agreement to provide long-term financing upon the complet ion of construction; also known as a take-out loan commitment. ADVANCE FEES A fee paid in advance of any services rendered. Som etimes unlawfully charged in connec tion with with that illegal practice of obtaining a fee in advance for the advertising advertising of property or a business for sale., with with no intent to obtain a buyer, by persons representing themselves as a real estate licen licen sees, or repres entative of of a licensed licensed real estate estate firm. ADVERSARY the other.
Opponent, a person or a group that that opposes
ADVERSE INTEREST A purpose in opposition to the interest of another party(as for example, with a buyer and a seller)
For ta ta x purposes it is ADJUSTED COST B ASIS ASIS the cost of the the property plus improvements and minus depreciation, amortization, and depletion.
A method of acquiring ADVERSE POSSESSION POSSESSION property based on open and notorious possession, under a claim of right, color of title, continuous use for five years, and the payment of taxes. taxes. A method of acquiring acquiring property through through continuo continuo us use of that pro perty while while pa ying taxes taxes on it.
A person appointed by the ADMINISTRATOR probate court to administer the estate of a deceased person. His or her duties include mak ing an invento invento ry of the assets, managing the property, paying the debts and expenses, filing necessary reports and tax returns, and distributing the assets as ordered by the probate court.
.ADVERTISING (COSTS) Purchased spac e in a newspaper, magazine or other medium used to attract public attention to a commodity for sale or lease. They They should be based on projected vacancies, turnover market conditions. Where you advertise depends on who are the customers that you want to reach.
AD VALOREM
According to value
AD VALOREM LIEN tax.
Refers to General real estate
AD VALOREM VALOREM TAX
A property tax based upon value.
ADVANCES Transfer of funds from a lender to a borrower in advance on a loan. Money advanced by a beneficiary under a trust deed to pay real estate taxes or other items to protect the lender s interest under the trust deed. Also refers to additional funds loaned under an open -end trust deed or mortgage. ADVANCE FEE ACCOUNTS A verified copy of advance fee accounts must be sent to the owner of
advance fee funds every every quarter .
AFFIANT
One who makes an affidavit or gives gives evidence.
A statement or declaration reduced to writing, AFFIDAVIT sworn to or affirm affirm ed before som e officer officer who has authority authority to administer an oath or affirmation, such as a notary public or a commanding officer in the service. service. AFFIDAVIT OF TITLE A statement in writing , made under oath by seller seller or grantor, ack nowledged before a Notary Public in which the affiant identifies identifies hims elf or hers hers elf and affiant s marita l status certifying that that si nce the examinat ion of title title on the contract date there are no judgements, bankruptcies or divorces, no unrecorded deeds, contracts, unpaid repairs or improvements, or defects of title known to the affiant and that affiant is in in po ssession of the p roperty. AFFIRM
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To confirm, s wear, ratifying, ratifying, verity.
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. A solemn declaration by an individual AFFIRMATION who is adverse to take an oath. AFTER-TAX CASH FLOW
(Se e cash flow) flow)
AGE -LIFE METHO D OF DEPRECIATION DEPRECIATION Straight-line Method of Depreciation.
SEE:
A special relationship of trust by which which AGENCY one person (agent) is authorized to conduct business, sign papers, or otherwise act on behalf of another person (principal). An agent must use AGENCY AGREEMENT reasonable care and skill in carrying out the tasks dictated by the agency agreement. Th e AGENCY CONFIRMATION STATEMENT Agency Disclosure Disclosure Addendum will always be used by the selling broker whenever Agency Confirmation Statement is required. An A gency Co Co nfirm nfirm ation ation Stateme nt is required in a transaction involving the lease of one-topfour unit re re sidential sidential property for m ore than one year. AGENCY COUPLED WITH AN INTEREST When the agent has a personal interest in the subject of the agency; as when one co-owner co-owner has been authorized authorized by the others to sell the p roperty. AGENCY DISCLOSURE ADDENDUM This required when a broker is involved in negotiating the sale of oneto-fou r unit residential property property . This de fines a nd explains, in general terms, the words and phrases used to express the agency relationship of brokers to the parties of the reside reside ntial sale sale transaction. Refusals to sign the Agency Disclosure Disclosure Addendum could occur when: owners refuse to list with the broker FSBO seller s refusal to accept an offer and when buyers refuse to sign a deposit receipt offer presented for consideration.
One who represents another called a AGENT princ princ ipal an an d has authority to to a ct for the p rincipal rincipal in dealing dealing with third parties parties . The rela rela tionship tionship is referred to as an agency. Someone auth orized orized to act for another another (called the principal) in business matters.
An agent authorized to do everything AGENT AGENT , UNIVER UNIVER SAL that can be lawfully be delegated to a representative. AGENTS OF PRODUCTION Four factors that are combined to produce income; labor, coordination, capital, and land.
understanding or compact between AGREEMENT A mutual understanding parties. parties. Although often used a synonym synonym ous with c ontract, technically it denotes mutual promises that fail as a contract for lack of consideration. consideration. AGREED -UPON-COMPENSATION To rece ive this this compensation you must be the the procuring cause, must find a read read y, willin willing g and able bu yer, an an d m ust be the one that initially initially brought the third party into the contract.. AGREEMENT AGREEMENT FOR D EED
( Se e contract for deed)
(1) A written written contract betwee n AGREEMENT OF SALE a buyer and seller setting out the terms of sale. (2) An installme installme nt sales contract cove ring ring real pro perty, perty, espe cially cially a long-term long-term contrac t. AGRICULTURE (FLORIDA) Defined in Chapter 475,F.S., to mean property zoned as such, consisting of more than 10 acres. AIR LOT A parcel of property above the surface of the earth, not containing any land; for example , a condominium unit on the third floor. AIR RIGHTS The rights in real property to the reasonable use of the air space above the surface of the land. ALIENATE
Conveys title title to real property.
ALIENATION The transferring of property to another. Conveyance or transfer of title to real estate from one person to another person.
deed of trust or m ortgage, a ALIENATION CLAUSE In a deed provision that if the secured property is sold or transferred, the lender has the option of accelerating the loan and declaring the entire unpaid balanc e immedia tely due and payable. Also called a "due-on-sale" clause.
AGENT AGENT , GENERAL An agent autho rized rized to handle all of the principal s affairs in one area or in a specified area.
interest in ALIENATION, INVOLUNT ARY Transfer of an interest propert y against the will of the ow ner, or without the action of the owner, occurring through the operation of law, natural process, or adverse adverse possession.
AGENT , SPECIAL SPECIAL An agent authorized to do everything that can br lawfully delegated to a representative.
ALIENATION, VOLUNT ARY When an owner voluntarily transfers an interest to someone else. ALL-INCLUSIVE DEED OF TRUST P AGE 4
A financing device
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. whereby a lender makes payments on the existing existing trust deeds of a borrower and takes from the borrower borrower a junior trust deed with a face value in an amount equal to the amount outstanding on the old trust deeds and the additional amount of money borrowed. ALLOCATION ALLOCATION METHOD
SEE: Abstr action action Method.
ALLO DIAL DIAL SYSTEM A theory of land ownership that individuals may own land free of the rights of an overlord. ALLODIAL TENURE A real property ownership system where ownership may be complete complete except f or those those rights held held by the governm ent. Allodial Allodial is in co co ntrast to feudal tenure.
Soil that has been ALLUVION (ALLUVIUM) deposited by accretion on the shore of a river or body of water and that increa ses the real property. ALTA OWNERS P OLICY (A.L.T.A.) (A.L.T.A.) An owner s extended coverage policy that provides buyers and owners the sam e protec protec tion the the ALTA po licy gives gives to lenders. ALTA TITLE POLICY (Am erica erica n Land Title Ass Ass ocia ocia tion) tion) A type of title ins ins urance po licy issued issued by t itle insurance com com panies which expands the ris ris ks n ormally insured against under th e standa rd type policy to include include unrecorded mechanic s liens; unrecorded physical easements; facts a physical survey would show,; water and mineral rights; and rights of parties in possession , such as tenants and buyers buyers under unrecorded unrecorded instruments. ALTER EGO A doctrine which holds that a corporation is rea rea lly owned owned by sh areh areh older older s as their own p roperty, and therefore it should not be considered as a separate entity. Usually used to try try to hold hold shareho lders liable liable for corporate debts. ALTERN ATIVE ATIVE DISPUTE RESOLUTIO N (ADR) (ADR) The resolution of disputes by negotiation, mediation, and arbitration. ALTERNATIVE MORTGAGE INSTRUMENTS Nonstandardized financing loans.
Capable of being changed or AMBULATORY revoke d. In wills, wills, it refers refers to the co ncept tha t a will may be revoked or m odified odified at any time up to the tes tes tator's tator's death.
Improvements to property AMELIORATING WASTE that, that, w hile hile not dam aging aging the va va lue of of the property, technically qualif y as waste. For example, an apartment building constructed on property designated only for single-family structures is considered considered ameliorating ameliorating waste. AMENITIES As used in the real estate business, the features that make a piece of real property, especially a home, enjoyable. AMENDMENT A change made to correct an error or to alter or au au gm ent p art of of an ag ag reem ent without changing changing its principle principle idea or essence. AMER AMER ICAN INST INST ITUT ITUT E OF AR CHITE CHITE CTS (AIA) (AIA) A professional association of registered architects that publishes construction contract forms as one of its activities. AMERI CAN SO CIETY CIETY O INDUSTRIAL SECURITY A professional association of industrial security personnel that provides training leading to the designation of Certified Protection Professional (CPP).
This is the act that AMERICANS WIT H D ISABILI ISABILITIES TIES ACT set forth the requirement that landlords must make facilities accessible to the handicapped to the extent readily achievable. (1) The liquidat liquidat ion of a finan cial cial AMORTIZATION obligation on an installment basis, which includes both principal and interest. (2) Recove ry of cost or value over over a period of time. The method or plan plan for the payment payment of a debt, bond, deed of trust, etc., by installments or sinking fund. AMORTIZE
Pay of f a debt in installments. installments.
AMORTIZED LO AN (MORTGAG E) A loan to be repaid, interest and principal, by a series of regular payments that are equal or nearly equal, equal, with out any special balloon balloon pay ment prior to maturity. Also called a Level Payment Loan AMOUNT IN CONTROVERSY The amount of money at issue in a lawsuit; used as a limitation on the jurisdiction of some courts.
shopping ANCHOR STORE The most important store in a shopping center, the store that has the largest draw of customers. ANNEXATION Attaching personal property to land so that the law views it as part of the real property (a fixture). Annexation can be actual or constructive. ANNEXATION, ACTUAL property to land. P AGE 5
A physical attachment of personal
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. ANNEXATION, CONSTRUCTIVE When personal property is associated with real property in such a way that the law treats it as a fixture, even though it is not physically physically attached to the real property.
can sue in this matter, state attorney general, U.S. attorney general, and a tester. Are considered business APARTMENT OWNERS establishments subject to the Unruh Civil Rights Act.
ANNIVERSARY DATE Recurring every year; the date an insurance policy must be renewed to continue in effect.
The review or rehearing by a higher court of a APPEAL low (inferior) c ourt's decision. decision.
ANNUAL DEBT SERVICE The amount of money required each year for the payment of all all mortgage intere intere st and principal.
The party appealing appealing a court decisi on. Either APPELLANT party may appeal; hence, the appellant could have been either the plaintiff plaintiff or th e defendant in the tria l court. APPELLEE In an a ppeal , the party who did not file the appeal. Also known as the respondent.
ANNUA L PERCENTA PERCENTA GE RATE (APR) (APR) The cost of credit as determined in accordance with Regulation Z of the Board of Governors Governors of the Federal Reserve Reserve System for implementing the Federal Truth in Lending Act.
APPLICANT candidate.
A sum of money received or paid yearly ANNUITY or at other fixed periods.
An estimate and opinion opinion of value. value. An opinion opinion APPRAISAL or es es timate of the fair m arket value of a property.
ANN UITY UITY CAPITALIZATION CAPITALIZATION An income capitalization method providing providing for annuity recapture of invested capital; capital; also referred to as yield cap italization. italization. Disco Disco unts future income to an estimate of present present value.
There are two types of APPRAISAL APPRAISAL C ERTIFICATIO ERTIFICATIO N certif certif ication, ication, ge neral and residential.
ANSWER The document the defendant must file with the court in response to the p laintiffs laintiffs s com plaint. plaint.
A person who applies for something; a
Copies of current statistics and APPRAISAL PLANT publications kept by appraisers in their library or record room. APPRAISAL REPORT
Com mu nica nica tion o f a forma l appraisal. appraisal.
Affirms that ANT ICIPATION, PRINCIPLE OF value is created by the anticipated anticipated benefits to be derived in the future.
Estimated worth of a property APPRAISED V ALUE determined by someone qualified in valiation.
Advance notice of ANTICIPATORY BREACH intention intention to violate the term s of a contract.
One qualified by education, training, and APPRAISER experience, who is hired hired to estimate estimate the value of real and personal property on the basis of experience, judgment, facts, and use of formal appraisal appraisal processes.
ANT ICIPATORY REPUDIATION When one party in a contract informs the other before the time set for performance that he or she does not intend to perform as agreed.
APPRECIATION
ANTI-DEFICIENCY ANTI-DEFICIENCY RULES Laws that prevent a secured lender from suing the borrower for a deficiency deficiency judgement after foreclosure in certain circumstances.
Legislation that ANT IDEFICIENCY LE GISLATION GISLATION prohibits a lender from obtaining a judgement for money against a defaulting borrower under a deed of trust when the value of property foreclosed upon is not adequate to satisfy the de de bt. ANTI-DISCRIMINATIO ANTI-DISCRIMINATIO N VIOLATIONS
The following
Incre Incre ase in the v alue alue o f property. property.
APPROPR IATIVE RIGHT
SEE: Prior Appropriation Appropriation
APPROPRIATION OF WATER The taking, impounding or diversion of water flowing on the public domain from its natural course and the application of the water to some beneficial use personal and exclusive to the appropriators. APPURTENANCE That which belongs to something, but not imm emo rially; rially; all those those rights rights , privileges and impr ovem ents which belong to and pass with the transfer of property, but whic whic h are not nece ssarily a pa pa rt of th th e actual property. Appurtenances to real property pass with the real property to which they are appu rtena rtena nt, unless a con trary trary intention is P AGE 6
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. manifested. Typical appurtenances are right-of way, easem ents, wa wa ter rights, rights, and any prop prop erty improvements. Attached to or considered part APPURTENANT of land, because of being considered considered necessary and incidenta incidenta l to the use use of that land. land. C omm only applied applied to easements that are considered part of property. APPURTENANT RIGHT A right that belongs to the owners of one property that gives them the right to use another property (which they do not own) in a specific way that benefits their property (e.g., an easement). APPURTENANCE, APPURTENANCE, INTANGIBLE An appurtenant right that does not involve ownership of physical objects; for example, an easement (as opposed to mineral rights).
when the price paid for a comparable property is being used. AS IS CLAUSE A provision in a deposit receipt stating that the buyer accepts the property in its present condition.
The process process of co mbining mbining two or m ore ASSEMBLAGE contiguous parcels into one larger parcel which makes the one parcel m ore valua valua ble than than the separa te properties. Value placed on property as a basis ASSESSED VALUE for taxation. A va va lue us ed by the ta ta x as as sessor before July July 1978. It represe nted 25 percent percent of the the assessor' s fair fair market value. After After deducting deducting any exemptions from from assessed value, one applied the tax rate to the net figure to determine annual property taxes. ASSESSMENT The valuation of property for the purpose of levying a tax, or the amount of tax levied.
PERCENTAG E RATE AP R See: ANNUAL PERCENTAG third party who liste liste ns to ARBITRATION A neutral third each party s position and makes a final binding decision.
ASSESSMENT BOND An obligation to pay for costs of local improvements such as sidewalks, sewers, or street lighting.
ARBITRATOR A neutral third party who receives evidence and resolves the dispute.
ASSESSMENT OF REAL PROPERTY In a real estate transaction a sale of real property would create a new assessment of real property.
ARCHITECTURAL STYLE Generally the appearance and character of a building s design and construction. construction.
howing ASSESSMENT ROLL A list of all taxable property s howing the assessed value of each parcel; establishes the tax base.
AREA MANAGEMENT BROKER (AMB) A property manager who works directly directly for the Federal Housing Administration managing subsidized housing under contract.
ASSETS business.
AR M
Anything of real value owned by an individual or
The off icial who has th e respons respons ibility ibility of ASSESSOR determining the the assessed values.
An adjustable adjustable rate mortgage. ASSET MANAGEMENT The assembly, management and disposition of a portfolio of investment properties.
A transaction, such ARMS LENGTH LENGTH TRANSACTION TRANSACTION as the sale of property, in which all parties involved are acting in their own self-interest and are under no undue influence or pressure from the other parties.
ASSIGN another.
ARREARS That which is behind; used when describing payment of past due interest and loan payments. payments.
ASSIGNEE transferred.
ARTICLES OF INCORPORATION An instrument setting forth the basic rules and purposes under which a private corporation is formed.
transf er to another of an y property or or right. ASSIGNMENT A transf The transf er of one's ent ire interest in property property . General ly, ly, the term is limited to intangible personal property (that is, stocks, bonds, promissory notes) and to leasehold estates.
ART IFICIAL PERSON A person created by law, as distinguished distinguished from a natural person, a human being; usually refers to a corporation. ARM S LENGTH TRANSACTION
May be used
To transfer a right or an interes t in property property to
One to whom property is is assigned or
An assignment of future rents ASSIGNMENT ASSIGNMENT OF RENTS form property as security for a debt. ASSIGNMENT FOR RENTS CLAUSE A clause in a deed of P AGE 7
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. trust or m ortgage, providing th at in the the event of defa ult, all rents and income from the secured property will be paid to the lender to help reduce the outstanding loan balance.
ATTACHMENT Seizure of property by court order before judgm judgm ent, usually done to hav e it available available in the event a judgment is obtained in a pending law suit. suit. The actual or constructive seizure of prope rty by court ord ord er during during a lawsuit. lawsuit. The usual purpose is to hold the assets as security for the satisfaction of a judgment.
An instrument ASSIGNMENT OF A DEED OF TRUST that transfers the beneficial interest under a deed of trust from one lender to another.
ATTACHMENT LIEN A lien on p roperty arising arising b ecause of an attachment of that property.
A clause in a trust ASSIGNMENT OF RENT CLAUSE deed th at gives the ben eficiary eficiary the righ t under l imited circumstances to collect rents of the property if the borrower defaults. ASSIGNOR another.
ATTACHMENTS, ATTACHMENTS, NATURAL Things growing on a piece of land, such as trees , shrubs or crops.
One who assigns a right or an interest to (1) To affirm to be true or genuine. (2) An ATTEST offic offic ial act esta blishing blishing authenticity.
interests ASSIGNEES Those to whom property or interests therein shall have been transferred
ASSOCIATE
ATTACHMENTS, MAN MADE SEE: Fixture
ATTESTATION The act of witnessing the execution of an instrument (such as a deed or a will).
auth orized orized to perform certa certa in ATTORNEY-IN-FACT An a gent auth acts for another under a power of attorn ey. ey. (See Power of Attorney.)
Person working for a broker.
An organization of persons persons having a ASSOCIATION common interest interest..
AUTOMATIC EXTENSION CLAUSE a lease covenant providing that a lease w ill be ren ewed ind efinitely efinitely until one of the parties gives notice of the intent to terminate at the end of the lease term.
ASSOCIATION AGREEMEN AGREEMEN T Set of private condition condition s, covenants, a nd restrict restrict ions ions applying applying to all properties in a planned unit development, condominium, or other other c omm unity project.
AUTHORITY, ACTU ACTU AL Author ity act ually given to an agent by the principal principal , either express ly or by implication.
ASSUMPTION Acceptance of personal liability for another 's debt debt or obligation. obligation. In the the case of the sale of real estate estate , the buyer buyer persona lly accepts accepts and prom ises to pay off the existing deed of trust. ASSUMPTION FEE A lender s charge for changing over and processing new records for a new owner who is taking over an existing existing loan.
A contract by ASSUMPTION OF AGREEMENT which a person agrees to pay a debt or obligation owed by someone else. ASSUMPTION ASSUMPTION OF MO RTGAGE OR DEED DEED OF T RUST The taking of title to property by a grantee in which he or she assumes liability for payment of existing note secured by a mortgage or deed of trust against the property.
Shares one or more walls walls and ATTACHED HOUSE often invo invo lves a pa pa rty wall agreem ent.
AUTHOR ITY, APPARENT APPARENT
SEE: Agency, Apparent .
everything AUTHORITY, IMPLIED An agent s auth ority to do everything reasonably necessary to carry out the principals expressed orders. A service that enables AUTOMATED UNDERWRITING lenders to obtain a credit risk classification using applications software in the loan underwriting process. AVULSION The sudden tearing away or removal of land by the action action of water flo flo wing over or through it. AWARD
B P AGE 8
The decision of the arbitrator.
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. The replacement of excavated earth in a BACKFILL hole or against the side of a structure. Personnel property is transferred in trust BAILMENT for an accomplishment of a specific purpose. A possessory interes t in person person al pro pro perty. perty. A financial statement showing a BALANCE SHEET person's assets, liabilities, and net worth. BALLOON PAYMENT When the final payment on a note is greater than the preceding normal installments, the final insta insta llmen t is is terme d a balloon balloon payment. An installment promissory note providing for the last payment to be m uch large large r than any previous payme nt. By statute, any payment more than twice the smallest payment is a balloon payment, although in practice generally the term refers only to the last payment. BAND OF INVESTMENT Method of estimating interest and capitalization rates based on a weighted average of the mortgage interest rate (or other cost of borrowed funds) and the rate of return on equity required. BANKER S MONTH BANK ER S YEAR
30 days 360 days
BARGAIN AND SALE DEED Any deed t hat recites a consideration and purports to convey real estate; a bargain and sale deed with a covenant against the grantor s act is one in which the grantor warrants that grantor has done nothing to to harm or cloud title. title. BASE COSTS Average or typical costs of similar buildings, usually obtained from published cost manuals; used in the comparative comparative square foot method of estimating cost of construction.
Businesses that attract outside BASE INDUSTRIES money into the area, prim ary. the g over over nment survey system, system, a main BASE LINE LINE In the east-west line from which township lines are established. Each principal meridian has one base line associated with it. BASE RENT
SEE: Minimum Rent.
BASEBOARD A board that goes around the room against the wall and next to the floor. BASE MOLDING Molding used at the top of the baseboard.
(1 ) Cost Basis The dollar amount assigned to BASIS (1) property at the time of acquisition under provisions of the Internal Revenue Code for the purpose of determining gain, loss and depreciation in calculating the income tax to be paid upon the sale or exchange of property. (2) Adjusted Cost Adjusted Cost Basis The cost basis after the application of certain conditions for improvem ents, etc., and deductions for depreciation. BASE SHOW Molding used at junction of baseboard and floor, sometimes called a carpet strip.
BASIC MONEY SUPPLY checking accounts. BATNA
This consists of cash, coins, and
Best Alternative To a Negotiated Agreement.
Narrow strips of wood or metal used to to cover BATTEN joints on the in terior or exterior of a bu ilding; ilding; they ar e also used for decora tive effect. effect. BEAM A horizontal structural member supporting a load.
A wall or partition that BEARING WALL OR PARTITION PARTITION supports any vertica l load, in addition addition to its own w eight. BEFORE-TAX CASH FLOW (Btcf; Cash Throw off; Gross The resulting resulting amount when annual Spendable Income) debt service is subtracted from net operating income. BENCH MARKS marker by surveyors. surveyors.
A location indicated on a permanent
(1) One entitled to to benefit from a BENEFICIARY trust. (2) The lender on the security security of a note and deed of trust. The creditor (len (len der) und er a deed of trust. BENEFIC IARY ST ATEMENT BEQUEATH
(See Offset State State ment.)
To leave b y will. will.
BASE V ALUE SEE: Value, Base
Personal property that is given by the terms of BEQUEST a will. will. A gift of pers onal property by by w ill. ill.
BASE AND MERIDIAN Imaginary lines used by surveyors from which they find, measure, and describe the location of lands.
BETTERMENT An improvement on real property that increas increas es the value and is c onsidered a ca pital asset. asset.
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REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. BLACKTOP
A contract in which the BILATERAL BILATERAL CONTRACT consid eration given by each party is a promise: that is , a promise for a promise.
Asphalt paving used in streets and driveways.
BLANKET DEED OF TRUST A deed of trust binding more than one p arcel of pro pro perty perty as security. It is frequently encountered in subdivisions, where every lot in the subdivision is bound by the same deed of trust. As the lots are sold, sold, they are released from the deed of trust by a partial release provision.
BILATERAL ESCROW INSTRUCTIONS A single set of escrow instructions signed by both the buyer and the seller ; often signed at the opening of escrow, not at the end.
BLANKET MORTGAGE (LOAN) One mortgage or deed of trust that covers more than one piece of real property.
BILATERAL EXECUTORY CONTRACT A contract between the seller of a hom e and a r eal estate estate broker, whereby the seller agrees to pay the broker a commission if he procures procures a buyer ready, willi willing ng an d able to buy and the broker agrees to use due diligence.
The average trust deed or BLENDE-RATE BLENDE-RATE MORTGAGE mortgage covering more than one parcel of land. An area in which rea l property is BLIGHTED AREA declining in value because of destructive economic forces.
When a broker BILATERAL EXECUTORY contracts to perform certain services for a principal and in exchange the principal principal and in exchange the principal agrees to pay the broker a specific fee, their agreement would bilate bilate ral executory.
BLIGHT CORREC TION Rehabilitation of residential prop prop erties erties that have deteriorated significantly. BLIND ADVERTISEMENT Advertisement that does not contain the name of the broker.
BILL A proposed law, formally submited to a legislature for consider consider ation. ation.
referen ce to platted platted property, property, a g roup of lots lots BLOCK In referen surrounded y streets or unimproved land.
BILL OF SALE A written instrument given by the seller to the buyer to pass title title to personal pro perty. perty.
A written statement that binds the BINDER parties to an agreement until formal contracts can be drawn; an agreement to cover a down payment as evidence of good faith.
BLOCK BUSTING The practice on the part of unscrupulous or real estate agents of inducing panic selling of homes at below market value, especially by exploiting the prejudices of property owners in neighborhoods in which the racial make-up is changing or appears to be on the verge of change.
BIN DING DING A RBITRA RBITRA TION TION The decision of the arbitrator is fin al and n ot review able by the cou rts.
unit of measurement for lumber: one foot BOARD FOOT A unit wide, one foot long, one inch thick (144 cubic inches).
Real estate loan payments BIWEEKLY PAYMENTS made every two weeks. A monthly payment is divided by two and paid 26 times per year.
BOMA CHART OF ACCOUNTS The standardized system of income and expenses accounting for office properties developed by the Building Owners and Managers Association International.
BIENNIUM (biennial)
A period of two tears. BONA FIDE
An agreement wherein both BILATERAL BILATERAL CONTRACT parties are legally obligated to each other to perform. A memorandum given subject to the writing writing BINDER of a formal contract for sale, usually acknowledging receipt of a portion of the down payment for purchase of real real p roperty. BRACKETING When using the sales comparison approach, selection of m arket data so that the subject is contained within a range of data.
In good faith; faith; ge nuine nuine
A purchaser who pays BONA FIDE PURCHASER (BFP) fair value for property in good faith, and without notice of adverse claims. obligation under seal. Real estate bonds are BOND An obligation issued o n the sec urity of a m ortgage or deed deed of trust. A certif certif icate icate repre senting a contract for the paym ent of mo ney, often used to repay certain loans or held as security to ensure the performance of a stated stated act. The type of investment made by p eople looki looki ng for fixed returns and a little little risk. risk.
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REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. operating costs. Insurance protection individuals individuals BOND COVERAGE or firm firm s against default in the the perform ance of their duties.
BREEZE WAY A covered porch or pa ssage, ope n on two ends, that connects the house and garage, or two parts of the house.
term which is the BOOK VALUE An accounting term difference between cost and the total amount of depreciation that has been taken.
A loan that bridges the gap between two BRIDG E LOAN LOAN other loans, usually for a short time.
A key set of books BOOK OF ABSTRACTS ma intained intained by a title title comp any.
BRIDGING joists.
BOOT In an exchange, any property that isn t trea ted as a like-kind for income tax purposes; for example, if a building building is trade for a va cant lot and a yacht, the yacht is boot.
An agent who earns income by arranging BROKER sales and othe r contra cts. A real estate broker is is an individual individual licensed by the state of California to arrange the sale or transfer of interests in real property for compensation.
The mortgagor; one who gives BORROW ER (Debtor) a mortgage as security for a debt.
BROK ER , ASSOC IATE One who is licensed as a real estate broker but works for another broker.
BORROWER S STATEMENT TO LEND ER Document prepared by the lender and signed by the borrower authorizing the lender to perform certain acts (complete a loan; etc.) Usually included in the loan package.
BROKERAGE
buyer s broker f ee by the BROKER FEE Mere payment of t he buyer seller does does not make the cooperating cooperating buyer s broker a dual agent. person is granted a brok brok er s BROKER S LIC ENSE W hen a person license it is valid for four years, unless suspended or revoked.
Boundaries
A business location other than the BRANCH OFFICE real estate broker s principal place of business. Frame lumber nailed at an angle in order BRACING to provide stability to the structure. The breaking of or failure of duty, either BREACH by omis omis sion or comm ission. Th e violation violation of or failure to perform an obligation. BREACH OF CONTRACT. A violation of the terms of a legal agreement agreement ; default. Breach of contract allows allows the non-breaching party to rescind the contract, sue for damages, or sue for perform perform ance of the contract.
contract important BREAC BREAC H MAT ERIAL ERIAL A breach of contract enough so that bit excuses the nonbreaching party from preforming his or her contractual obligations. BREAK-EVEN POINT Occupancy level at which gross income for a property equals the total fixed and variable
A broker s business
Agreement between the client BROKER S COMMI SSION SSION and the broker. This charged to the seller and not the buyer.
The perimeter or border of a peice of BOUNDARY land ; dividing line between one piece of property and another. BOUNDS
Wood or m etal pieces pieces used to brace floor
A statement signed signed and BROKERS LOAN STATEMENT received by the borrower at the time of a loan transaction, indicating the costs, deductions, including comm issions, of a loan negotiated by a real estate licensee. BROK ER S PR INCI PAL. PAL. In a real estate transaction the broker s princ ipal can be a: s eller, buyer, or landlord. BROKER-SALESPERSON RELATIONSHIP AGREEMENT A written agreement required by regulations of the Real Estate Comm issioner setting setting forth the material aspects aspects of the relationship between a real estate broker and each salesperson and broker performing licensed activities in the name of the supervising broker. BROWNFIELDS
Area wh ere soil is is co ntam inated.
therm al unit. The The quantity of of he at required required to B.T.U. British therm raise the temperature of one pound of water one degree degree Fahrenheit.
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REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. A strip of land separating one type of BUFFER ZONE land use from an other.
portion of it s stock-in-trade to someone other than customers. BUILT-INS the house.
BUILDING CODE A set of rules establishing minimum standards for construction construction methods and materials,
Cabinets and other features built in as a part of
allows BUMP CLAUSE A provision in a depo sit receipt that allows the seller to keep the prop prop erty on on the marke t until until a cond ition ition in the c ontrac t is fu lfilled. filled.
A good source to find out a BUILDING EXPENSES buildings buildings ex penses is the the utility utility comp any.
BUNDLE O F RIGHTS RIGHTS The rights that accompany the ownersh ip of real real esta te. Each stick is a right
Often called a setb ack line, line, a BUILDING LINE building line is is a lin e running running a certain distance from the stree t, in front of which an owner cannot build. These lines are s et by law. law.
BURDEN OF PROOF
BUILDING OWN ERS AND MAN AGERS ASSOC IATION An international INTER INTER NATIO NATIO NAL (BOMA) organization of office building owners and managers, which fosters professionalism through its educational programs, forums and publications. publications. BUILD ING OWN ERS AND MANAGE RS INSTITUTE An independent INTERN INTERN ATIONAL ATIONAL (B OMI). educational organization supp supp orted by BO MA. Its courses lead to the designations Real Property Administrator Administrator (RPA), Systems Systems Maintenance Technician (SMT), Systems Maintenance Administrator Administrator (SMA), and Facilities management Administrator (FMA).
SEE: Proof, Burden of.
BUNDLE O F RIGHTS RIGHTS An ownership concept that describes real pr operty by the leg al rights associated with owning the property. It specifies right such as the rights to sell, lease, use, occupy, mortgage, and trade the property, among others. These rights are typically purchased by the buyer in a sales transa ction unless spe cifically cifically noted or limited in the sa le.
Real estate licensees who engage in BUSINESS BROKER the sale, purchase or lease lease of a business. The sale, purchase, or lease of BUSINESS BROKERAGE businesses that provide goods and services. BUSINESS COMPULSION
A heavy waterproofed paper BUILDING PAPER used as sheathing in exterior walls, or in roof construction as insulation and protection against moisture.
increasing and BUSINESS CYCLE A wavelike movement of increasing decreasing economic prosperity consisting of four phases; expansion, recession, contraction and revival.
A clin ically diagnosed BUILDING RELATED ILLNESS condition that is caused by toxic substances or pathogens, that persists when an occupant leaves the building. building. Sym ptoms include hyperse nsitivi nsitivitt y, pneumonitis, asthma and certain allergic llergic reactions. BUILDING RESIDUAL TECHNIQUE Technique of income capitalization; the net income to the building (afte (afte r ded ded uctin uctin g the incom incom e required required for th th e land land ) is capita lized into an est imated value f or the building. building. BUILDING STANDARD The specific set of amenities and alterations a landlord is willing to make free of charge for an incoming commercial tenant. BULK PURCHASING A method of cutting operating costs for a property in which supplies are purchased in large quantities and stored for later use. Also called volume buying. BULK SALE
SEE: Duress
The real estate BUSINESS OPPORTUNITY BROKERAGE activity dealing in the sale, purchase or lease of a business. alloc ated to BUSINESS PARK A developm ent or subdivision alloc office-warehouse or similar use. Also known as an office park. An outgrowth of industrial parks. One of the 25 BUSINESS AND PROFESSIONS CODE California codes containing the laws passed by the state legislature. It contains the statutes statutes regulating the the conduct of real estate brokers and establishes the Department of Real Estate. A term used to describe a BUSINESS OPPORTUNITY business including its stock- in-trade, in-trade, fixtures , and goodwill. BUSINESS TRUST ( See Syndicate) BUYDOWN (See Subsidy Buydown)
The sale by a business of a major P AGE 12
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. used in the product product ion of income . Examp les would include include land, buildings, and equipment.
estate transac tion, (such BUYER If the buyer in a real estate as lease contract) needs assistance in deciding how to take option, he shou ld con con sult h is atto atto rney. rney. BUYER BROKERAGE AGREEMENT contract with a purchase.
An employment
The supply of available properties BUYERS MARKET exceeds the demand. BYLAWS Rules for the conduct of the internal affairs of corporations and other organizations.
C CALL PROVISION
The gain recognized for federal and CAPITAL GAIN state income tax purposes when a taxpayer disposes of a capital asset. repairs and CAPITAL EXPENDITURE Money expended on repairs improvements and repair or prolong its life; not deductible. COMP ARE ARE : Deduction, Deduction, Re pair pair In appraising, a method of determining CAPITALIZATION value value of pro perty perty by cons idering idering net incom e and and a reasonable percentage of return on the the investment.
SEE: Acceleration Clause
CAL-VET FINANCING The State of California holds the titles under Cal-Vet financing. CANCEL ESCROW written instructions.
CAPITAL-DEFICIT AREA A region where the total amount of savings is not sufficient to finance economic development already underway in that area.
CAPITALIZED INCOME INCOME AP PROACH Approach.
CAPITALIZED CAPITALIZED INCOME ME THOD OF DEPR ECIATION Method for estimating depreciation by com paring the subjec t s capitalized value to its replacement cost new.
To terminate escrow bu mutual
CAL-VET LOAN PR OGRAM ( CALIFORN CALIFORN IA VETER ANS LOAN) A program administered by the State Department of Veterans Affairs for the direct financing of farms and homes for veterans who qualify.
The percentage rate or rate of CAPITALIZATION CAPITALIZATION RA TE intere intere st consid ered ered a reason able r eturn eturn on the inve inve stment. It is is used in the capitalization method of determining value based upon net return. CAP R ATE
CANCELED A license ceases to exist, effective as of the date approved by the Comm ission , and does not involve disciplinary action . CANCELLATION Termination of a contract without undoing acts that have already been performed under contract. COMPARE; Rescission.
A lease clause granting CANCELLATION OPTION the tenant the option to cancel at the end of a predetermined term .````````````` CAP
A ceiling on interest rate increases.
CAPACITY Legal ability to perform some act, such as enter into a contractor execute a deed or will. CAPITAL An agent of production; construction and equipm equipm ent ent c osts osts ; investme investme nt money.
Se e LIFE OF LOAN CAP
C.A.R. Abbreviation for the California Association of Realtors.
California California A ssociation of Real Estate CARET Teachers; a division of the California Association of Realtors. CARP CARP ET STRIP
Se e Base Shoe
CARRYBACK LOAN
SEE: Loan, Carryback
CARRYOVER CLAUSE
SEE: Extender Clause
CASE LAW Rules of law developed in court decisions, as opposed to constitutional law, statutory law, or administrative regul ations. Als o called called de cisional law. law. CASH-ON-CASH Investment return based on actual cash inves inves ted; cash flow as a pe rcentage or ratio to equity. CASH RETURN TO EQUITY
CAPITAL ASSETS
SEE: Income
Assets of a permanent nature
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Equity dividend; cash flow.
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. by a local government verifying that a newly constructed building is in compliance with all codes and maybe occupied.
CASE OR CONTROVERSY REQUIREMENT REQUIREMENT A provis ion in the U.S. Const itution itution That limits judicial power to deciding actual, ac tive conflict conflict (a s oppo oppo sed to hypothetical questions). Declaratory relief is an exception to this rule.
CERTIFICATE OF SALE The document given to the purchaser of a mortgage foreclosure sale, sale, instead of the deed; replaced with a sheriffs deed only after the redemption period expires.
CASEMENT WINDOW Windows set in frames of wood or metal that swing outward.
CERTIFICATE OF REASONABLE VALUE (CRV) Th e Veterans Adm inistrations's written written appraisal of the value of a property.
The new CASH F LOW (Af ter ta x cash flow) flow) amount of cash a property produces when all cash income and other cash generated generated are added together and all cash expenses expenses and other cash paym paym ents are deducted.
written statement of CERTIFICATE OF TAXES DUE A written guaranty of the con dition of of the taxes on a certain property made by the County Treasurer of the county wherein wherein the property is located. Any loss resulting to any person from an error in a tax certificate shall be paid by the county which such treasurer represents.
A yearly financial financial report CASH FLOW STATEMENT showing the bottom-line return after taxes. CAUCUS Occurs when the mediator meets with each party s eparately. CAUSE OF ACTION an en forceable claim claim .
CERTIFICATE OF TITLE A written opinion by an attorney that ownership of the particular parcel of land is as stated in the certificate.
A legal legal right; facts giving ris e to
A Latin phrase meaning " let the CAVEAT EMPTOR buyer beware"; the legal maxim st ating that the buyer must examine t he goods or property property and buy at his or her own risk. CCIM
CERTIFICATE OF TITLE OPNION (Opinion of Title) A document signed by a title examiner ( attorney or title company agent) stating the judgement that, based on an examination of the public public re cords, the seller has good title to the property property being being conveyed to the buyer ( not to to be confus ed with title title insurance)
Certified Certified Commercial Investment Investment Member
Abbreviation for covenants, conditions, C.C. & R s and restrictions. restrictions. Often used synon synon ymously w ith genera l plan restrictions on a subdivision.
CERTIFIED APARTMENT MANAGER (CAM); CERTIFIED APARTM APARTM ENT PROPERTY SU PERVISOR PERVISOR (CAPS); CERT CERT IFIED IFIED APARTMENT M AINTEN AINTEN ANCE T ECHNICIAN Designations awarded by the National Apartment (CAMT). Association (NAA) for appropriate courses of study.
An action by a CEASE AND DESIST ORDER government agency to require a person business to stop an illegal or u nfair nfair pra ctice.
CERTIFIED APPRAISER APPRAISER
CENTRAL TOWN A town that performs a variety of services for the surrounding area.
A CERT CERT IFIED IFIED ASSOCIATION M ANAGER ANAGER (CAM) (CAM) designation awarded by the Comm unity Asso Asso ciation Institute for courses of study in the professional management community associations. associations.
CENSURE
(See State Certified appraiser)
An official official act of d isap isap proval.
The State CERTIF ICATE OF CLEARANCE Board of Equalization Equalization issu es that the seller has paid sales tax.
CERTIFIED PLANT ENGINEER (CPE ) A designa tion awarded for q ualification ualification in plant engine ering ering f acilities acilities management by the American Institute of Plant Engineers (AIPE)
CERTIF ICATE OF ELIGIBILITY ELIGIBILITY Issued by the Departm ent of Veterans Affa irs - ev ev idenc idenc e of of in in dividual dividual s eligibility eligibility to obtain a VA loan
CERTIFIED PROPERTY MANAG ER (CPM (CPM ) A property manager who has fulfilled the Institute of Real Estate Management s requirements for this professional designation.
CERTIF ICATE OF OCC UPANCY
A statement issued
CERTIFIED SHOPPING CENTER MANAG ER (CSM (CSM );
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REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. CERTIFIED MARKETING DIRECTOR (CMD). Designations granted to qualified shopping center managers and marketing directors who have sat isfied the requirements requirements and educational programs of the International Council of Shopping Centers.
Statements of alleged violations and the CITATIONS penalties imposed. The following people have CITY GROWTH PATTERNS done work on this subject, subject, Von Thunen, Burgess, Babcock and Hoyt.
The Suprem Suprem e Court CER TIORA TIORA RI, RI, WRIT OF order ind ind icating that that the court h as decided to ex ercise its its discre tion tion and accept a case offered on appeal. The court reviews only those select cases that it deems worthy of review.
One of the 25 California codes containing the CIVIL CODE statu tes passed passed by the state state legislatur legislatur e. The most importan t code relating to contracts and real estate, the Civil Code defines the nature and requirements for contracts and real estate transactions, among its many other provisions.
CHAIN A unit of measurement used by surveyors. A chain consists of a hundred links equal to 66 feet.
A system of jurisprudence, sometimes called CIVIL LAW Rom an law, wh erein all all the law law s are set forth in adva adva nce to regulate conduct conduct (as opposed to to common law, where the principles principles o f law develop on a c ase-by-case basis). In California the term also refers to the law relating to and between individuals, as opposed to criminal law.
A series of conveyances, CHAIN OF TITLE encumbrances, and other instruments affecting the title from the time original patent was granted, or as far back as records ar e available. available. A history of the recorded ownership of real estate and claims against title to real estate. CHATTEL
CIVIL RIGHTS Fundamental rights guaranteed to all persons by the law. law. T he term is primarily used in refe refe rence to constitutional and statutory protections against discrimination based on race, religion, sex, or national origin.
The old name for personal property.
A personal-property CHATTEL MORTGAGE mortgage. (S ee Sec urity Agreem ent.)
A federal law that CIVIL RIGHTS ACT OF 1866 guarantees that citizens of all races have the same rights as white citizens citizens to inher it, pur chase, lease, s ell, ell, hold and conve y real and personnel property.
In real estate , an estate less CHATTEL REAL than a f reehold reehold estate, such as a lease. (1) P ersonal prope rty. (2) T his term is CHATTELS sometimes used in a law to describe any interest in real or personal property other than a freehold.
CIVIL RIGHTS ACT OF 1968 reported reported to HUD .
CHECK A square measuring 24 miles on each side and representing the largest unit of measure in the
CLAPBOARD Boards that are used for siding and that are usually thicker at one edge.
government survey system.
CLAUSE
Violations of this act s hould be
A distinct provision in a written document.
CHOICE-OF AGENCY After a broker has confirmed his choice-of-agency, choice-of-agency, the choice cannot be corrected or modified at any time.
CLIENT attorney.
CHO SE IN IN AC TION TION A personal right to something not presently in owners , but recoverable by a legal action for possession.
when documents are CLOSE OF ESCROW (COE) The date when recorded and title passes from seller to buyer; on this date buyer becomes legal owner and title insurance becomes effective.
Something in possession possession CHO SE IN POSSESSION POSSESSION rather than the right of possession. An electrical device that CIRCUIT BREAKER automa tically interrupt interrupt s an electrical circuit when an overlo ad occurs. occurs. Circuit breake rs can be reset reset and today are used instead of fuses.
A person represented by a broker or an
parties to a real estate CLOSING (1) Process by whic h all the parties transaction conclude the details to a sale or mortgage. The process includes the signing and transfer of documents and distribution of funds. (2) Condition in description of real property by courses and distances at the boundary lines where the lines meet to include all the tract of land.
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REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. CLOSING COSTS The miscellaneous expenses buyers and sellers normally incur in the transfer of ownership of real property over and above the cost of the property. CLOSING STATEMENT An accounting of funds made to the buyer buyer and seller separate ly. Requ ired ired by la w to to be made at the completion of every real estate transaction. CLOUD ON TITLE A claim or document that affects title to real estate. The actual cloud ma y ultimately prove invalid, but its existence mars t he title.
CODE OF CIVIL PROCEDURE One of the 25 California codes that contain the statutes passed by the state legislature. It contains most of the procedural requirements for enforcing rights granted by other codes, including the procedures for evictions, foreclosures, and lawsuits.
That which appears to be a good title COLOR OF TITLE but, in fact, is not; for exampl e, a forged deed. A document that appears to conve y title, title, but in fact is ineffective, conv eying eying no title at all. l . It is one of the requirements for adv erse possession and easement by prescription. prescription. COMBED PLYWOOD A grooved building material used primari ly fo r interior finish.
COMMERCIAL BANK A financ ial institution chartered by the state or federal government to receive, lend and safeguard money and other items of value. They tend to loan money for construction construction loans, home improvement loans, and consumer loans.
An a mendm ent to to a will. will.
CODIFICATION Collection and o rganization of piecem eal laws laws into into a com prehensive code.
loan from a commercial COMMERCIAL LOAN A personal loan bank, usually usually unsecured and short term, for other than mortgage purposes.
A com com mon provision in COINSURANCE CLAUSE propert y insurance po licies that limits th e liability liability of the insurance company to that proportion of the loss that amount of insurance bears to a percentage of the value of the prop erty. erty.
COMMERCIAL PAPER in business.
A beam that connects the pairs COLLAR BEAM of opposite roof rafters above the attic floor. interest; COLLATERAL Property subject to a secu rity interest; property property used as security for a debt. (See Secu rity Agreement.) Another word for security. This held until the money h as been paid back. Refers to liens secured by other
Gross income from property CO LLECTIBLE LECTIBLE INCOM E minus the vacancy and other types of rent loss. Also called gross adjusted income.
COMMERCIAL ACRE A term applied to the remainder of an acre of land after the area devoted to streets, sidewalks, curbs, and so on has been deducted from from the acre.
CODE OF ETHICS A set of rules and principles expressing a standard of accepted conduct for a proffessio9nal group and governing the relationship of members to each other and to the organization organization
COLLATERALLY liens.
The transfer of property of COLLATERAL SECURITY other valuables to ensure the performance of a principal agreement; an obligation attached to a contract to guarantee its performance.
secret agreement between between two or m ore COLLUSION A secret persons wishing to defraud another for a wrongful purpose or to obtain an object forbidden by law.
insu rance policy issued to CLTA POL ICY The title insu hom eowners and n onins onins titutional titutional lend lend ers. T he init init ials ials stand for the California Land Title Association, an organization that regulates and standardizes the provis ions within title policies. policies.
CODICIL
The hypothec ating ating of property, COLLATERALIZATION usually usually pers onal, as security for a loa loa n.
Negotiable instruments used
A classification of real estate COMMERCIAL PROPERTY that includes income producing properties. When appraising a commercial property, the appraiser is most concerned with the sale price of com parable parable properties. Com mercial property usually must be zoned for business purposes. Reasons for rejecting rejecting a COMMERCIAL TENANT commercial tenant may be any one of the following; insufficient profit m argin to m aintain long-term rent, incom incom patible patible m ix with with existing tenants, and a large amount of physical alteration would be required to acco mm odate the tenant.
P AGE 16
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. The mixing of different funds so COMMINGLING that th ey can can no lon lon ger b e distingui distinguis s hed. In dome stic law it refers to the combination of separate property and community property, so that the separate property and community funds can no longer be distinguished; in such cases all property property is co co nsidered com mun ity property. property. For brokers it refers to the m ixing o clients' mon ey with the broker's separate bank accounts. COMMISSION An agent's compensation for performing the duties of his or her her agency agr eement. eement. In the real real estate business, it is usually a percentage of the selling price or a percentage of the lease or rents, for example. Demanding a commission or a discount based based on your status as a licensee after the terms of an agreement have been struck are unethical. COMMISSION S PLIT PLIT The previously agreed upon division division of money between a broker and a salesassociate when the broker has been paid paid a comm ission from a sale made by the associate. associate.
COMMON STOCK That class of corporate stock to which there is ordinarily attached no preference with respect to the receipt of of dividends dividends or the distribu distribu tion of assets on c orporate dissolution.
A COMMUN ITY ASSO ASSO CIATIONS CIATIONS INSTITUTE (CAI). professional organization offering educational programs for persons involved involved in homeowners , condominium, and cooperative associations
Political factor s should be COMMUNITY LAND-USE incorporated into the management plan because of this. All All property acqu ired by a COMMUNITY PROPERTY PROPERTY husband and wife living together, except separate property. (See Separate Prop Prop erty.) erty.) P roperty owned in in c ommo n by a husband and wife as a kind of marital partnership.
A pledge or a promise; a firm
COMMITMENT OF TITLE Sim ilar to a prelim inary title report; guarantees th at the the title title comp any will issue issue title insurance.
COMMUNITY REINVESTMENT ACT Federal law req uiring uiring financial institutions to lend in communities served, including low and m oderate-incom e areas areas , consiste consiste nt with with considerations of safety and soundness.
COMMON AREA An entire common interest subdivision except the separate interests therein.
a person who signs a note or trust deed CO-MORTGAGOR in addition to the borrowe r to give extra securit y to the loan. The co-mortgagor is jointly liable for the repayment of the loan.
The parts of multipleCOMMON ELEMENTS ELEMENTS ownership property not included in the units; units; those pa rts in which each individual owner holds an undivided interest.
A combined construction loan and COMBINATION LOAN permanent take-out loan after construction is completed.
COMMON GRANTOR A person who owned two or more adjacent properties and then sold them to different buyers. COMMON INTEREST SUBDIVISION Subdivided lands which inc inc lude a separate interest in real property combined with an interest in in common with other owners. The The inter intere e st in in com mon m ay be be through a m embership in an association. association. Examples are condominiums condominiums and stock cooperatives. cooperatives. COMMON LAW The body of law that grew from custom s and p ractices ractices developed and used in E ngland.
plaintiff in a COMMON LAW REMEDY Money a warded to a plaintiff civil lawsuit; lawsuit; damages. COMPARE: Equitable Remedy
A shopping center of about 100,000 COMMUNITY CENTER to 250,000 square feet (20to70 retail spaces) supported by more than 5,000 families. families.
COMMISSIONER S FINAL REPORT Maybe used in it s entirety by by a subd subd ivider ivider in his adver tisem tisem ent of his subdivision. COMMITMENT agreem agreem ent.
A body of unwritten law that developed in England from the general customs and usage. It was adopted adopted in the United United States and exercised by court decisions following the ancient English principles and the recodified law of a state.
consolidation of soil. W hen soil soil is is COMPACTION Packing or consolidation added to a lot to fill in low places places or to raise the level of the lot, it is often too too loose to su stain the weight of buildings. Therefore, it is necessary to compact the added soil so that it will carry the the weig ht of the building without danger of settling settling or cracking. COMPARABLE PROPERTY SALES Sales which have similar characteristics as the subject property and are used for analysis in the appraisal process. Commonly called Compar ables , they are rec ent se lling prices of p roperties
P AGE 17
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. similarly similarly situated in a sim ilar mark mark et. COM PARATIVE PARATIVE INC INC OME AND EXPE EXPE NSE AN ALYSIS ALYSIS A financial financial study of the projected incom e from a prope rty in as-is condition versus financial returns from that property if suggested capital improvements were implem ented. P roperty m anagers use the analysis to demonstrate to owners the return return on proposed capital capital expenditures.
One of COMPARATIVE MARKET AN ALYSIS ALYSIS (CMA) three methods in the the appraisal process. A means of com parin parin g similar type type prop erties erties , whic whic h hav hav e rec rec ently ently sold, to the the subj subj ect property.
COMPREHENSIVE ENVIRONMENTAL RESPONSE COMPENSATION AND LIABILITY LIABILITY ACT (CER CLA) A 1980 federal law created to impose liability on people or organiza organiza tions resp onsible onsible for environm ental dam age an an d to facilitate the financing of asbestos cleanup projects and property damage claims. COMPU TERIZED LOAN OR OR IGINATIONS (CLOs) (CLOs) Accessing lender loan program s via computer.
COMPARATIVE SQUARE FOOT METHOD Method of estimating construction costs using typical square foot costs for the type of construction being estimated. COMPARISON APPROACH A real estate comparison method which compares a given property with a similar or comparable surrounding properties; also called market comparison.
CONCEALMENT secret.
The act of keeping from site or keeping
A negotiable point in a lease, decide in the CONCESSION prospective tenant s favor. A trend in the property property CONCIERGE SERVICES management field that provides personal , secretarial, catering or other services to the occupants of office or residential buildings.
Anything Anything of v alue alue o r a va luable luable COMPENSATION conside ration, ration, di rectly or indirectly paid, promised or expected to be paid or received.
CONCLUSION The final estimate of value, realized from the facts facts , data data , experien experien ce and judgem ent, s et out in an an appra isal. isal. Appraiser s certified conclusion.
Positive factors that are COMPENSATING FACTORS considered by lenders to approve loans to otherwise marginal borrowers. COMPETENT
A statement of COMPREHENSIVE PLAN (Ma ster ster Plan) policies policies for the future physical developm ent of an area (e.g., city, county, region). region).
CONCLU SIVE PRE SUMPTION SUMPTION A legal assumption that cannot be rebutted, and is therefore accepted as true and binding on the courts.
Legally qualified or c apable.
COMP ETITION, PRINCIPLE OF Holds that profits tend to breed competition competition and excess profits tend tend to breed ruinous completion.
Work estimates submitted to the COMPETITIVE BIDS property manager by service contractors, suppliers, trades people or construction contractors. A person who makes an allegation allegation or COMPLAINANT a charge against another (the respondent). COMPLAINT A document a plaintiff files with the court to start a lawsuit. A formal allegation or charge.
Interest paid on the COMPOUND INTEREST original original principal and also on the accrued an d unpaid interest that has accumulated accumulated as t he debt matures.
CONCUR RENT RENT ES CROW CROW A real estate transaction procedure in which the closing of one escrow is dependent upon the closing of another one; also called a double escrow; commonly used in exchanges and in instances where where the buyer depends on funds he expects to get from the sale of another property.
Occurring simultaneously, at the same CONCURRENTLY time; real estate exchanges often must be recorded concurrently. CONCUR RENT OW NERSHIP Any form of ownership in which two or m ore people share title to to piece piece of pro pro perty, perty, holdin holdin g undivided undivided intere intere sts . Also called cotena ncy.
(1) The act of tak ing private p roperty CONDEMNATION for public public use by a political political subdivision. subdivision. (2) A declaration by proper g overnm ental auth auth orities that a structure is unfit for use. The taking of private property for public use through th exercise of the power of eminent domain.
P AGE 18
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. land. land. The ownership of an individual individual u nit in a m ulti-unit ulti-unit structure, combined with joint ownership of common walkways, land, land, and o ther p ortion ortion s of th e pro pro perty. perty. Eac h con con dom inium inium is owned separately in a fee simple estate. They generally offer more amenities than other types of residential rentals or ownership. Owners can obtain secondary secondary financing and cash out hi s or her equity, can se ll at a higher higher pr ice than paid, getting be be nefit from from increased value or can obtain financing.
A provision in a co ntract stating that the CONDITION contract will not go into eff ect or that it will terminate upon the occurrence of some specified future event. (1) A restriction added to a conveyance that, upon the occurrence occurrence or nonoccurrence nonoccurrence of a s ome act or eve eve nt, causes the estate estate to be defeated. (2) A contractual provision that upon the occurrence or nonoccurrence of a stated act or event, an obligation is created , destroyed, or defeated. CONDIT IONS, COVENA NTS, AND RESTR ICTIONS Recorded deed restrictions that run with the land, usually initiated by the original subdivider.
CONDOMINIUM ASSOCIATION The organization that manages the operation of a condominium, imposing assessments and arranging for for the maintenance of the commo n are are as. The association association me mbers are the unit owners., and they usually elect a board of directors.
A condition that must CONDITION PRECEDENT occur before an estate is created or enlarged, or before some other right or obligation occurs.
CONDOMINIUM DECLARATION The document which establishes establishes a condominium and describes the property rights of the unit owners.
A condition that, upon CONDITION SUBSEQUENT SUBSEQUENT its failure or nonperformance, causes the defeat or extinguishment of an estate, right, or obligation.
CONDUIT is installed.
Any entry of judgment CONFESSION OF JUDGMENT upon the debtor's debtor's voluntary admission or confession.
A loan CONDITIONAL COMMITMENT comm itment for a definite amount amount under ce rtain terms and c onditions. onditions. It is sub ject to an unknown purch aser's aser's satisf actory credit credit rat ing.
A court approval of the sale of CONFIRMATION OF SALE property by an executor, administrator, guardian, or conservator.
CONDITIONAL ESTATE Usuall y called, in California , Fee Simple defeasible. defeasible. An estate that is is granted subject to a condition condition subsequent. The estate is terminable on happening of the condition. CONDITIONAL FEE
Usually a metal pipe in which electrical wiring
When different parties parties each CONFLICTING CONFLICTING DEMANDS make claims that are inconsistent with one another. CONFORMING LOAN A loan that does not exceed Fannie Mae/Freddie M ac lim lim its. This limit change s annually. annually.
SEE: Fee Conditional
A contract for CONDIT IONAL SALE CONTRACT CONTRACT the sale of prop prop erty wh wh ereb ereb y the seller re re tains tains legal legal title until the con con ditions ditions of the contract have be en fulfilled. fulfilled. The buyer has an equitable equitable interes interes t in in the property. (See Security Agreem Agreem ent.) A contract for for the sale of property by which possessio n is delivere delivere d to the buyer, but title remains with the seller until full payment or the satisfaction of other stated conditions. relief CONDITIO CONDITIO NAL U SE PE PE RMIT An except ion to or relief from the application of a zoning ordinance, because of special authorization authorization g ranted by the zoning a uthorities. uthorities. The issuance rests on public policy benefits and prior authorization in the zoning ordinance. A system of individual ownership CONDOMINIUM of units in a multifamily structure, combined with joint ownership of common areas of the structure structure and the
CONSERVATION Minor repair, renovation and restoration of residential buildings that have substantial economic use remaining. Also called blight prevention.
Anything Anything of value value , or that is legally CONSIDERATION sufficien sufficien t, given to induce som eone to e nter into into a contract. The inducem ent fo r ente ente ring ring into a c ontra ontra ct; us us ually ually m oney, services, or a promise, although although it may consist of a legal benefit to the promisor or any legal detriment to the promisee. CONSIDERATION, ADEQUATE Consideration Consideration that is comparable in value to the consideration of the other party to the contract is giving. A contract is enforceable even if the consideration is inadequate, but a court can not order specific performance performance in th at case.
A factor re re presenting twelve tim tim es the month ly CONSTANT payment expressed as a percentage percentage of the original original loan amount. A short-cut to providing annual debt service.
P AGE 19
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. A homebuilder CONTEMPLATING AUCTIONING HOMES should consider the ability ability to quick ly liquidate liquidate developm ents after the initial sales mom entum has w orn off.
A fundamental document that that CONSTITUTION establishes a governments structure and sets limits on power. CONSTITUTIONAL 1. Pertaining to or based on a consti tution. 2. Not in violation violation of the U.S. cons titution titution or a state constitution. constitution.
The interpretation of an CONSTRUCTION amb iguous te rm or provision in a statute or agreem ent.
CONTINGENT Conditional, uncertain, conditioned upon the occurrence or nonoccurrence of some uncertain future event. CONTINGENCY A condition that must be met or an event that must happen before before a purchase contract contract becomes binding between the parties. CONTINGENCY CLAUSE
CON STRU CTION CLASSIFI CLASSIFICAT CAT ION Type of construction; a system that rates the basic frame, walls, and roof of a structure as to their relative fire resistance ( e.g., Class A, B, C, or D construction, construction, Class A being being the most fireproof).
A temporary loan to a home CONSTRU CTIO CTIO N LOAN LOAN buyer by the lender to pay the building building con tract or, or, either in installments or in one lump sum at the end of construction. CONSTRUCTIVE
A fiction imputed by law.
CONSTRUCTIVE EVICTION A breach of the landlord's warranty of quiet quiet enjoyment. Any acts by the landlord that s ubstantially ubstantially interfere with the tenant's us e and enjoyment of the premises. CONSTRUCTIVE NOTICE Notice given by the public records; that which is considered equivalent to acutal notice even though there is not actual notice. (1) Notice given given by a recorded docume nt. (2) Notice Notice imputed by a law because a person could have discovered certain facts upon reasonable investigation, and a "rea "rea sonable m an" in the sam e situation situation would have conducted such an investigation. CONSTRUCTIVE RECEIPT Control of the cash proceeds in a delayed exchange without the actual physical possession possession by the exchanger or his or her agent. CONSUMMATE
To com com plete.
A CONSUMER CREDIT PROTECTION PROTECTION ACT federal law that includes the truth-in-Leading Law. CONSUMER GOODS Goods sold or purchased primarily for personal, family, or household purposes.
Adjoining or touching upon , such as CONTIGUOUS properties touching each other.
SEE: Condition
CONTINUATION STATEMENT A statement filed to extend the time limit on a financing statement that had been filed earlier. CONTRACT. An agreement to do or not to do a certain thing. It must have four essential elements: capable parties, mutual consen t, a lawful lawful objec t, and consideration. A contract of real estate must also be in writing and signed by the party or parties to be cha cha rged with with perform ance.
A contract in which each party CONTRACT, BILATERAL prom prom ises to do som ethin ethin g. CO MPARE : Con Con tract tract , Unilateral Unilateral.. A contract in which both parties CONTRACT, EXECUTED have comple tely perform perform ed their co ntractual obligations. obligations. CONTRACT, EXECUTORY A contract in which one or both parties parties have not yet comp leted leted perf ormanc e of th eir obligations.
contrac t that has has b een put into CONTRACT, EXPRESS A contrac words, either spoken or written. CONTRA CT, INSTALLM INSTALLM ENT LAND
SEE: Contract, Land
in CONTRACT, LAND A contract for the sale of property in which the buyer pays in property immediately, but not taking title title until the purc hase pr ice has been pa id in in full. Also c alled alled an installment land contract, installment sales contract, land sales contract, real estate contract, and other names. CONTRACT, ORAL written one.
A spoken agreement, as opposed to to a
CONTRACT OF SALE (See Conditional Sale Contract.)
Average rate rate charged on ARM loans or CONTRACT RATE RATE fixed fixed -rate -rate loans loans by savings institutions institutions nationally. being paid under CONTRACT RENT Amount of rent being contractual commitments binding owners and tenants.
P AGE 20
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. performed CONTRACT SERVICES Maintenance tasks performed by outside laborers on a regular basis for a specified fee. CONTRACT, UNENFORCEABLE UNENFORCEABLE an agreement that a court would refuse to enforce; for example, it may be unenforceable because it isn t in writing, or because the statute of limitations has run out.
COOPERATIVE A building owned by a corporation, where the residents are shareholders in the corporation; each shareholder receives a pr oprie oprie tary lease on an ind ind ividual ividual unit and the r ight to use the common areas. COORDINATOR
CONTRACT, UNILATERAL UNILATERAL When one party promises to do something if the other party performs a certain an, but the other party does not promise to perform it; the contract if formed only if the other party does perform the requested act. COMPARE: Contract, Bilateral.
legally en forceable CONTRACT, VALID A binding, legally contract.
CO-OWNERSH IP(Concurrent or multipl multiple e o wnership) Title to real property held by two or more persons at the same time.
An abbreviated term meaning CORRESPONDENT mortgage loan correspondent. A mortgage banker who services loans loans as an agent for the owner of the mortgage. Also applies when a mortgage company originates a loan. CORNER LOT
isn t an CONTRACT, VOID An agreement t hat isn enforceable contract beca use it lack lack s a re re quired quired elem ent or is defenseve in some other respect.
An agen agen t of production; production; m anage anage ment.
Lot with frontage on two intersecting streets.
The increase in value of a p roperty CORNER INFLUENCE INFLUENCE because it is located on a cor ner lot. Cooperative in which legal CORPORATE COOPERATIVE ownership of a building is being held by a corporation created for that purpose.
A phase of the business cycle CONTRACTION characterized by decreasing production. CONTRACT, VOIDABLE A contract that one of the partie s can disaffirm without liability, iability, beca use of lake of capacity or a negative factor such as fraud or duress.
CORPORATION An association organized under strict rules, in which individuals purchase ownership shares; regarded by law as an artificial artificial person , separa te from from individual shareholders.
loa n that is CONVENTIONAL M ORTGAGE LOAN A loa made that is not federally insured or guaranteed.
CORPORATION NOT FOR PROFIT An a rtificial or fictitious fictitious person formed to conduct specified types of business activities.
CONVERSION The wrongful appropriation of another's goods to one's own use; to change from one character or use to another. (1) In tort, an unauthorized claim claim of ownership over a nother's personal property. (2) In property, the change of character of property from real to personal , or v ice versa.
The main difference in this type of COOPERATIVE ownership and a condominium condominium is that a cooperative cooperative has a blanket mortgage over the whole building.
CORPORATION, DOMESTIC A corporation doing business in the state where it was created. CORP ORATION , FORE IGN A corporation doing business in one state, but created in another state.
An ar tificial tificial or fictitious fictitious p erson CORPORATION SOLE formed by a n ecclesiastical body.
A loan that CONVERTIBLE- RATE LOAN (Mortgage) starts out as a adjustable-rate loan, then, at the option of the borrower during a des ignated period , is switched to a fixed-rate loan. (1) The transfer of the title title of CONVEYANCE real property from one to anothe r. (2) An instrument instrument that transfers an interest in real property from one person to another . The transf er of title to real estat e from from one person to another.
Actual repairs necessary to CORRECTIVE MAINTENANCE keep a property in good condition and operating smoothly. lines used in the CORRECTION LINES Adjustment lines government survey system to compensate for the curvature of the earth. They occur at 24-mile intervals (every fourth township line), where the distance between range lines is corrected to 6 miles. CORRELATION
P AGE 21
SEE: Reconciliation
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. The expenditure of monies necessary for the COST creation of improvements on a property.
COST
COST APPRO ACH TO VALUE (C ost-depreciat ost-depreciation ion A method in which the value of of the Approach) property is derived by estimating the replacement cost of the improvements, then deducting the estimated depreciation, then adding the market value of the land. This is most efficient when used estimating the cost of a new building. The information used in this approach is called Co Co st Data
The cost to the lender, expressed COST OF FUNDS as a percentage, to obtain funds for lending,. Includes interest paid to depositors, cost of borrowing, advertising, giveaways and other sales costs, administrative and overhead costs, reserves, etc. Anyone who shares ownership of a CO-TENANT piece of property with another; may be a joint tenant, a tenant in common, a tenant in partnership, or a spouse owning co mm unity unity property.
SEE: Replacement Cost, Reproduction Cost.
COST APPROACH One of the three classic approaches to value. It involves estimating the replacement cost new of the improvements, deducting deducting t he est imated accrued depreciation, and then adding the market value of the land. This is called the Summation Method. COST BASIS
Se e Adjusted Adjusted Cos t Bas Bas is .
COST MULTIPLIER Factor used in adjusting published construction cost figures to estimate current and local costs.
truct ion co ntrac ntrac tors in COST-PLUS A method of paying cons truct which the contractor furnishes a preliminary estimate for the proposed job and is paid the actual cost of the work plus a percentage of profit. Method of COST-TO0CURE METHOD OF DEPRECIATION estimating accrued depreciation (loss in value) based on the cost to cure or repair observed building defects. COUNTER FLASHING Flashing used on chimneys at roof-line to cover shingle shingle flash flash ing an d pre pre vent m oistu oistu re en en try.
joint ownership. CO-TENANCY Any form of joint Rejection of an offer to buy or COUNTER OFFER sell, with a simultaneous substitute offer.
The rejection of an offer by the COUNTER-OFFER submission of another offer, different in terms from the original offer. Any purport ed acceptance acceptance of an offer that introdu introdu ces new terms is a rejection rejection of that offer, offer, and amounts to a counter-offer.
COUNTY RECO RECO RDS A system for recording documents in permanent books at the county court house; maintained by each county and provided for by law; open to public examination COUNTY TAX RATE. The county tax rate is set annually by the County Treasurer.
This may be ordered by COURT-ANNEXED ARBITRATION the superior court when the the sum at stake is less less than $50,000 dollars.
COURSE A direction, stated in terms of a compass bearing, in metes and bounds description of property.
COURT PAPERS These papers cannot be served by the property owner or manager.
COURT-ANNEXED
COURTYARD HOME
A court mandated arbitration.
SE E Zero-Lot-Line Home .
COOPERA TIVE APARTMENT APARTMENT A form of ownership in which each individual apartment owner shares in a cooperative venture that entitles the owner to use, rent, or sell a specific apartment unit.
An agreement or a promise to do or not to do COVENANT a partic ular ular act. Covena nt: nt: A contr actual actual agreem ent whereby one of the parties promises to perform or to refrain from doing certain acts.
CORPORATION A group or a body of persons recognized by law as an individual person with rights and liabilities liabilities distinct distinct from those of the pers ons compr ising it. Since the corporation is created by law, it may continue for any length length of time that the law law prescrib es. An artificial entity given authority to conduct business and possess many of the rights rights of natural natural persons. One of the key characteristics is that of perpetual existence.
A promise t hat buyer buyer COVENANT OF QUITE QUITE ENJOYMENT or tenant s possession will not be disturbed by the previous owner, the lessor, or anyone else claiming an interest in the property. This index index is CPI (CERT (CERT ITFIED ITFIED PROPER TY INDEX) This commonly used for rent increases in office buildings
P AGE 22
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. while while driving, driving, hence curb appe al.
Certified Certified Property Manager; a member of the CP M Institute of Real Estate Property management of the National Association of Realtors.
CURBSTO NE APPR APPR AISAL AISAL A slang phrase, implying an informal valuation of a property based on observation and experience.
opening perm itting CRAWL HOLE Exter ior or interior opening access underneath a building, as building codes may require
CURTAIL SCHEDULE A list of the due dates and amounts by which the principal sum of an obligation will be reduced by partial payments.
CREATIVE FINANCING Any financing out of the ordinary, such as seller carrybacks and wrap-arounds.
CUSTOMER
CYCLICAL FLUCTUATION Se e business cycle
paym ent re ceiva ceiva ble as oppo sed to a de bi, CREDIT A paym which is a payment due. provided by t he CRED IT APPLICATION A statement provided borrower for a prospective lender in order to establish or exhibit financial stability. purchasing the CREDIT BID When a lien holder purchasing security pr pr operty at a foreclosure sa le is allo allo wed to apply the amount the borrower borrower owes him or her to the purchase, rather than having to pay the full amount of the bid in cash.
One who is owed a debt.
Compensatory damages.
DAMAG DAMAG ES, CONSEQ UENTIAL Damages compensating for loses that where not the direct result of the defendant s wrongful act, but which were foreseeable consequence of it. DAMAGES, EXEMPLARY
CRIMINAL LAW The body of law concerned with crimes, a n individuals individuals action aga inst s ocie ocie ty.
Punitive damages
parties to a DAMAGES, LIQUIDATED A sum that the parties contract agree in advance (at the time of entering into the contract) will serve as compensation in the event of a breach.
A dead end street.
CUL-DE-SAC LOT dead-end street.
The indemnity recoverable by a person who DAMAGES has sustained an injury to either his or her person, property, or rights through through the act or default of another. Compens ation ordered by the courts for the loss of or injury to one's person or property.
Damages intended to DAMAGES, COMPENSATORY compensate the plaintiff for harm caused by the defendant s an or failure to, including personal injuries (physical and mental), property damage and financial loss.
CREDITOR, SECURED A creditor with a lien on specific property, which enables him or her to foreclose or collect the debt from the sale proceeds if it is not otherwise paid.
CUL-D E-SAC
D DAMAG DAMAG ES, ACT ACT UAL
CREDIT REPORT Credit history of a person or business issued by a company in the credit reporting reporting business, used to help determine creditworthiness. CREDITOR
A prospective property buyer.
Lot located at or near the end of a
DAMAGES, PUNITIVE An award added to com pensatory pensatory damages , to punish the defendant for malicious or outrageous outrageous conduct and discourage discourage others from from similar acts.
CUR ABLE DEPRECIATION DEPRECIATION Items of physical deterioration or functional obsolescence that if repaired would add at least least as much of the market value of the property as the cost of repairs.
DATA PLANT estate.
An appraiser s file of information on real
de fault, fault, by paying paying m oney that is is CURE To reme dy a de overdue or fulfilling fulfilling oth er obligations. obligations.
An a rtificial horizo ntal ntal pl ane o f elevation, elevation, DATUM established in reference to sea level, used by surveyors as a reference point in determining elevation.
The impres sion gained, good or poor, CURB APPEAL of a property when it is first seen, usually from the street
DEALER
P AGE 23
A person who holds holds prop prop erty pr pr imarily for for s ale
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. to his or her customers in the ordinary course of his or her business.
A sin sin gle-fam gle-fam ily DECLARATION OF HOMESTEAD dwelling; a house situated on a two-acre parcel; a fourplex.
DEALER DEALER PROPER TY Property held for sale to custom ers rathe rathe r than as a long-term long-term investment; a developers inventory of subdivision lots, for example.
A form al instrum instrum ent filed filed by a DECLARATION OF TRUST business trust with the Department of State as a prerequisite for creating the trust.
A DEATH OCC URRING ON THE PROPERTY broker listing a property property for sale m ust disclo disclo se a death accruing on the property within three years before the sale.
A course of action declaring DECLARATORY DECLARATORY JUDGEMENT rights claimed under a contract or statute intended to prevent loss or guide performance by the party or parties affected. A court's decision on the DECLARATORY RELIEF rights of the parties in a question of law, without ordering anything to be done.
DEBENTURE Bonds issued without security, an obliga obliga tion not se cured by a spec ific lien lien on property. DEBIT A bookkeeping entry on the left side of an account, recording the creation of or addition to an asset or expe nse, o r reduct reduct ion or elimination of a liability liability or item of equity or revenue.
Net operating DEBT COVERAGE RATIO RATIO (DCR) income divided by annual debt service. Used by lenders when analyzing incom incom e property loans. Borrowers monthly DEBT-TO-INCOME RATIO RATIO payment obligations as a percentage of their income. (1) A party who "owns" the propert y that DEBTOR is subject to a security interes n teres t. (2) A person who owes a debt. DEBT SERVICE The sum of money needed each payment period to amortize the loan or loans. DECEDENT
A person who h as died.
SEE: Case Law
DEDICATION An appropriation of land by its owner for some public use and accepted for such use by authorized public officials on behalf of the public. public. A gift gift of privately owned land to the public or for public use . It may be voluntary voluntary or involuntary.
DEDUCTION An amount a taxpayer is allowed to subtract from his or her income before calculating the tax on the income.
The legal document that the DECLARATION developer of a condominium must file and record in order to to c reate a condom inium u nder sta sta te law. DECLARATION OF ABANDONMENT A document recorded by an o wner that voluntarily voluntarily releases a pro perty from homestead protection. protection.
SEE: CC&Rs
DECREE OF FORECLOSURE Decree by a court ordering the sale of mortgaged property and the payment of debt owing to the lender out of the proceeds.
law; DEDICATION, STATUTORY A ded ication required by law; for example , dedication of property for streets and sidewalks as a p rerequisite to subdivision approval.
DECK Usually an open porch on the roof or another part of the structure.
DECLARATION OF RESTRICTIONS
DECLIN ING BALA NCE DEPRECIATION DEPRECIATION A method of accelerated depre ciation ciation allowed by the IR S in certain certain circumstance s. Double Declining Declining Balance Dep reciation reciation is its most comm on form and is computed by using using the rate used for straight line deprecation
dedication, resu lting lting DEDICATION, IMPLIED Involuntary dedication, from an owners acquiescence to public use of his or her property for at least 5 years. Also called common law dedication.
Trees which shed their leaves at DECIDUOUS seasonal intervals. DECIS DECIS IONAL IONAL L AW
DECLINE PHASE Third phase in the cycle of a neighborhood, generally marked by delayed repairs and deteri oration oration of buildings. buildings.
reduction DEDUCTION, COST RECOVERY An income t ax reduction that a llows llows the ta xpayer to recover the cos t of depreciable property used for the production of income or used in trade or business. Formerly called a deprecation deduction.
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REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. An income tax deduction DEDUC TION, REPAIR REPAIR allowed allowed fo r expenditure m ade to keep prope rty in in ordinary, efficient operating condition, not allowed for a princ princ ipal residence or personal use property.
deeds of trust.
DEED A written instrument that when properly executed and del ivered ivered co nveys title.
DEED OF TRUST, SENIOR SENIOR A deed of trust with higher priority than another d eed of trust on a property. property.
A deed used to correct correct minor DEED CORRECTION mistakes in an earlier earlier deed, such as misspelled names or erro rs in in the legal description. description.
DEED RESTRICTION RESTRICTION
DEED OF TRU ST, JUN IOR A second ( or third, etc.) Deed of trust , with lower lower l ien ien prio rity rity t han han the first first t rust deed.
DEEMER PERIOD Refers to the way this state regulates rate filling fillings s by title title com panies, in other wor ds, how a pproval is obtain ed for rate fillings fillings by the regulatory authorities.
DEED, GENERAL WARRANTY A deed in which the grantor warrants the title against defects that might have arisen before or during his or her period of ownership. COMPARE : Deed, Special Special W arranty. arranty.
(1) Failure Failure to fulfill a duty or promise or to DEFAULT dischar ge an obligation. obligation. (2) Omissi on or or failure failure to perform any act. Failure Failure to perform a legal duty or to dischar dischar ge a promise.
porte d by a DEED, GIFT A deed that is not sup porte valuab le consid eration; often lists lists love and affection as the consideration. consideration.
A judgment obtained because DEFAULT JUDGMENT the defendant failed to appear and defend his case.
DEED, GR ANT Any d eed that u ses the word grant in its words of conveyance; carries two implied warranties and conveys after-acquired title. The most commonly used deed in California. COMPARE: Deed, Quitclaim.
DEFEASIBLE FEE Sometimes called a base fee or qualified fee; a fee simple absolute interest in land that is capable of being defeated or terminated upon the happening if a specified event.
inte rest in in DEED , QUITCLAIM A deed that con veys any inte a piec piec e of re re al property property the grantor has at the tim tim e deed is executed. Often used to clear up a cloud on the title. It contains no warranties of any kind, and does not convey afte r-acqu r-acqu ired title. COMP ARE Deed. Grant. DEED IN L IEU OF A FOR ECLOSURE To prevent a foreclosure from happening an owner may give give the mortgagor the deed to the property to stop the foreclosure proceedings.
deed that DEED OF TRUST, BLANKET 1. A t rust deed covers more than one parcel of real estate. estate. 2. A trust deed that covers an entire building or de de velopment , rather than an individu individu al building building or lot. DEED OF TR UST , FICTITIOUS FICTITIOUS A blank trust deed form filed for record to save recording costs on real
The clause in a mortgage or DEFEASANCE CLAUSE deed of trust that gives the borrower the right to redeem his or her property upon the payment of his or her property upon the payment of his or her obligations t o the lender. DEFEASIBLE Capable o f being being def def eated. A d efeasible estate is one that has a co ndition ndition attache d to the title, title, which if broken causes the termination of that estate. DEFECT
DEED OF RECONVEYANCE A legal instrument that conveys title from a trustee back to the borrower under a mortgage on on ce the m ortgage ortgage has be en paid paid o ut,
A security instrument DEED OF TRUST transferring title to property to a third person (trustee) as securit y for a debt or other o bligation. bligation.
A restrictive covenant in a deed.
(See Clou d on Title) Title)
laws uit; the party party DEFENDANT The party being su ed in a laws against whom an action is filed. DEFERMENT A right to defer payment of an obligation (such as payi ng taxes) taxes) until a later date. DEFERRED INTEREST
Se e Negative amortization
Maintenance and DEFERRED MAINTENANCE MAINTENANCE accumulated repairs that have been postponed to later dates DEFERRED PAYMENT OPTIONS The privilege of deferring income payments to take advantage advantage of statutes affording tax benefits. DEFICIENCY JUDGEMENT(Decree)
P AGE 25
A judgment given for
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. the unpaid balance of a debt remaining after the surety is sold. A co co urt de cree holding holding a de de btor p ersonally liab liab le for the shortage or insufficiency realized on the sale of secure d property. property. The debtor owes the differenc differenc e between the sale price of the property and the amount of the secured debt. DEFINE THE PROBLEM appraisal process.
The first step in the
Most inventories o f real estate DELAYED S ELLING are held back because the the owners expect the interest rates to drop. DELEGATION OF POWERS The conferring upon by an agent upon another of all or certain of the powers that have been conferred upon the agent by the principal. DELINQUENCY loan.
Failure to make timely payments on a
The unconditio unconditio nal, nal, DELIVER Y (OF A D EED) EED) irrevocable intent of a grantor immediately to divest (give up) an interest in real estate by a deed or other instrument.
security to ensure the the performance of a contract. The money is usually intended to be applied toward the purchase price of property, or forfeited on failure to complete the contract. The claim of the tenant to this money comes before any creditors of the landlord. The landlord must furnish a written statement showing the amount received and the amount disbursed to the tenant. All unused deposit deposit money must be returned returned to the tenant with proper accounting within two weeks after vacating premises. The formal, out of court testimony of a DEPOSITION winess in a lawsuit, taken before the trial; used as part of the discovery process, to determ ine the fan s of th th e case, or ifif or if if the witness will not be able to attend the trial. trial. A transcript of a depositio depositio n can be introduced as evidence in a trial. DEPOSIT RECEIPT The docum ent used for a prospective real estate buyers offer to a seller, which also serves as the buyer s receipt for deposit. If the s eller eller acce pts the receipt it becomes their contract; contract; also called an earnest money agreem agreem ent or purchase purchase and sale agreem agreem ent. DEPRECIATE
To decline in value.
DEMAND The desire to possess, plus the ability to buy; an essential element of value.
adjusting DEPRECIATED DEPRECIATED COST METHOD Method for adjusting com parable sa sa les; a djustme nts a re ca ca lculated lculated from an an an alysis alysis of the depreciated replacement cost for each differentiating feature.
Checking accounts or transaction DEMAND DEPOSIT deposit w ithdrawab ithdrawab le upon dem and, as o pposed to tim tim e deposit.
DEPRECIATION A loss in value fro fro m any cau cau se. T his loss in value to real property may be caused by age or physical deterioration, or by functional or economic obsolescence.
Transactions with a value less DEMINIMUS VALUE than a ce ce rtain rtain minimum amount.
Property that s eligible for DEPRECIABLE PROPERTY depreciation (cost recovery) deduction because it will wear out and have to be replaced.
DEMISE A transfer of an estate to another person for a specified specified perio perio d of years, f or life, life, or at w ill. ill. DENIAL DENSITY
A refusal or rejection. The number of homes or lots per acre.
DEPAR DEPAR TMENT OF HOUSING AN AN D URB URB AN A government agency DEVELOPMENT (HUD) authorized to construct and provide financial assistance to housing development development for low income tenants.
A DEPARTM DEPARTM ENT OF VET ERANS ERANS AFFAIRS AFFAIRS (DVA) government agency that guarantees approved lenders against foreclosure loss on loans made to eligible veterans. DEPOSIT (MONEY)
DEPTH
Distance from the frontage of a lot to the rear lot line.
Depth tables are used by appraisers DEPTH TABLES when determ ining ining value of busines s property th at var var ies in depth. DESCENT The passage of title to real property upon the death of the owner to his or her legal descendants. DESCRIPTION A reference to certain maps, plats, and other instruments that are recorded with the county and serve to make a positive property identification.
The to tal of rent, telepho ne, utilities, utilities, DESK COST advertising and other expenses divided by the number of desks found in a real estate office.
Money given to another as P AGE 26
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. DESIGN TYPE Classification of buildings based on the use for which a structure is designed. DEREGULATION An easing and relaxing of rules and regulations for lenders.
DICTU A written observation, remark, or opinion by a judge to illustrate or suggest an argument or rule of law not incidental to the case at hand, and which, therefore, although persuasive, is not binding binding on the judge. DIMIN ISHED UT ILITY
Two real DESIGNATED SALES SALES ASSOCIATES(FL) estate licensees designated to represent the buyer and the se ller ller as single agents in a nonresidential transaction. transaction. The buyer and seller must have assets of more than $1 million or more and sign disclosures stating their assets meet the required threshold.
capitalization DIR ECT CA PITALIZATION ITALIZATION METH OD Income capitalization technique; value is estimated by dividing net operating income by the overall capitalization capitalization rate.
DESIST AND REFRAIN ORDER An order that the Real Estate Comm issioner is is empowered by law and refrain from committing an act in violation of the Real Estate Law.
The process of gradual DETERIORATION worsening or depreciation. DETERMINABLE FEE An estate which may end on the happening of an event that may or may not occur. DETRIMENTAL RELIANCE Promissory
SEE: Estoppel,
cycle of DEVELOPMENT PHASE First p hase in the life cycle a neighborhood, consisting of the initial construction of improvements on vacant land. DEVELOPMENT STAGE development cycle.
The first stage in a
DEVELOPMENT METHOD (LAND (LAND D EVELOPMENT METHOD) Method of vacant land valuation; development costs are subtracted from estimated gross sales, and finally, developer s profits are accounted for. The results are an estimate of raw land value.
DEVE DEVE LOPMENT OF REG IONAL IONAL IMPAC IMPAC T(DR T(DR I) large project affecting more than one county.
DIRECT COSTS All of the cost s that are directly involved with the physical construction of the structure, including labor, materials and equipment, design and engineering, and subcontractors fees.
Expenses that can be DIRECT MANAGEMENT CO URSE attributed directly to the operation of a management firm or departm ent. DIRECT MARKET COMPARISON APPROACH Comparison Approach.
SEE: Sales
DIRECT MARKET MARKET METHO D Method of adjusting comparable sales; two or more comparable properties properties with one differing differing feature are are used to estimate the amount of the adjustment for that feature. (Also called the matched pair method.)
The direction in which the DIRECTIONAL DIRECTIONAL GROWTH residen residen tial sections sections of a city seem destined destined or determ determ ined to grow. DISABLED PERSONS A hotel or lodging house need not be designed to accommodate disabled persons if it contains fewer than 25 rooms. DISABLED TENANT A landlord may not charge an additional additional security deposit for a dis abled ten ten ant s guide d og. A landlord landlord m ay mod ify residential residential rental property to accommodate the needs of disabled disabled tenants.
A
To be one of DEVELOPER WHO PLANS WELL these a developer must anticipate risks and profits, survey the market and measure present needs. DEVISE
SEE: Accrued Depreciation. Depreciation.
A gift of real property property by deed.
DEVISEE
One who receives real property under a will.
DEVISOR
One w ho disposes disposes of real proper proper ty by by will. will.
Any physical or mental impairment that DISABILITY substantially limits limits one or m ore of an individual s major life activities, activities, including including carin for oneself, performing manual tasks, walking, seeing, hearing, speaking and working. DISAFFIRM contract.
To ask a court to terminate a voidable
The release of monies held in an escrow DISBURSEMENT account; usually on the day that escrow closes.
P AGE 27
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. If a real estate DISCLOSURE REQUIREMENT licenc licenc ee or seller seller willful willfully ly o r negligently fails fails to com ply with th e disc disc losu losu re req req uirem uirem ents he or she w ill be be liab liab le for any actual damages suffered by a buyer.
A broker DISCRIMINATORY BUSINESS PRACTICES engaging in discrim discrim inatory bus bus iness pr pr actices is is subject to DRE discipline .
A statement that the DISCLOSURE STATEMENT Truth-in-Lending Law requires a creditor to give a debtor showing the finance charge, annual percentage rate, and other required information. To sell a promissory note before DISCOUNT maturity at a price less than the outstanding principal balance of the note at the the time of sale. It may also be the amount deducted in advance by the lender from the face of the note. A specialized DISCOUNT DEPARTMENT STORES type of shopping ce nter or a larg larg e single sto sto re with emphasis on lower prices prices as a merchandising technique. The closed door discount house is open only to qualifying members; the open dis count house is is open to the general public. public.
decisions based on the agent s own judgement. Failure to advertise real estate DISCRIMINATION for sale in n on-English publications does not c onstitute onstitute unlawful discrimination if the property offered is in an area with a significant non-English speaking population. DISCOUNTED CASH FLOW (DCF) Technique of income capitalization; estimated future investment returns are discounted to a present value.
The sudden withdrawal of DISINTERMEDIATION substantial sums of money savers have deposited with savings and loan associations, commercial banks, and mutual savings banks. This term can also be considered to include life insurance policy purchasers borrowing against the value of their policies. The essence of this phenomenon is financial intermediaries losing within a short period of time billions of dollars as owners of funds held by those institutional lenders exercise their prerogative of taking them out of the hands of these financial institu institu tions. DISPOSABLE INCOME The after-tax incom e a house hold hold receives to spend on personal consumption.
To deprive one of the use of real estate.
DISPOSSESS PROC EEDI NGS A suit brought by a landlord to evict a tenant for defaulting in the terms of the lease. Also known as unlawful detainer actions. actions.
The interest rate that is charged DISCOUNT RATE on mone y borrowed by banks from the Federal Reserve Reserve System.
DISCRETIONARY DISCRETIONARY POWERS OF AGENCY Those powers conferred upon an agent by the principal which empower the age nt in certain certain circumsta circumsta nces to mak e
preferences.
DISPOSSESS
A fee charged by the lender DISCOUNT POINTS when making an FHA or VA loan to offset the lower lower interest interest rate the lende lende r will receive receive compa red with conven tional loan interest rates. rates. One point is is equal to 1 percent.
Tables used by lenders and DISCOUNT TABLES investors to show how much a given value is, called the discounted value, based upon various interest rates and terms of m aturity. aturity.
Use of the words DISCRIMINATORY PREFERENCE Restr icte d , E xclus ive and Priv ate ,, in real estate advertising should be avoided as they indicate discriminatory
DIS SOLU TION OF MARRIAGE District use.
A divorce.
A neighborhood that contains only one kind of land
The main trial court in the federal court DISTRICT COURT syste syste m and the lowest federal court. It has has jurisdiction jurisdiction in civil civil cases where the plaintiffs and defendants are from different states (diversity (diversity o f citizensh citizensh ip) an an d the am ount in controversy is over $10,000, and in cases involving a federal question. DIVESTMENT The elim ination or remov al of a right o r title, title, usually applied to the canc ellation ellation of an estate in land. DIVIDED AGENCY When a broker or an agent acts on behalf of both parties he is considered a divided agent See dual agent DOCTRINE OF CORRELATIVE USERS An owner may use only a reasonable amount of the total underground water supply for for h is or her beneficial use. DOCUMENTARY TRANSFER TAX A state enabling act allows a county to adopt a documentary transfer tax to apply to
P AGE 28
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. all transfers o f real property located in the co unty. unty. Not ice of payment is entered entered on the face of the deed or on a separat e paper filed filed with with the deed.
The right that a wife has in he r husband's DOWER estat e at his death. Dower has been abolished in California California . The difference between the sale price of DOWN PAYMENT the property and the the loan amount.
plicable to DOCUMENTARY (DOC) STAMPS Tax ap plicable property transfers and affixed to the grant deed; varies from c ounty to county, city to city; city; somet imes called called a transfer tax
Do not com pel a brok brok er to coopera te with other brokers by sharing prope rty information.
DRE Et hics Regulations Regulations
DOCUMENTARY STAMP TAX ON DEEDS, STATE Tax required on all deeds or other documents used as conveyances. The charge is based on the total purchase price.
DRAW Usually applies to construction loans when disbursement of a portion portion of the mortgage is made in advance, as improvements to the property are made.
DOCUMENTARY STAMP TAX ON N OTES, STATE Tax required on all promissory notes. The cost is based on the face value of the note.
Representing both principals in a DUAL AGENCY transaction. (Not a legal agency relationship in the state of Florida)
cycle of DEVELOPMENT PHASE First p hase in the life cycle a neighborhood, consisting of the initial construction of impro impro vements on vacant vacant land. instruments such as mortgages, DOCUMENTS Legal instruments contra cts, deeds, op tions, tions, wi lls, bills of sale, etc. DOMICILE
A person's permanent residence. residence.
The tenement obtaining DOMINANT TENEMENT the benefit of an easement appurtenant. That parcel parcel of land that benefits from an easement across another parcel of property (servient tenement). DONEE
The person to whom a gift is made.
DONOR
The person w ho makes a gift. gift.
A projection built out over the slope of a DORMER roof, use use d to hous hous e window window s on the upper floor to provide additional additional light and venti lation. DOUBLE D ECLINING ECLINING BALA NCE DEPRECI ATION (See DECL INING BALAN CE DEPRECIATION )
An e scrow that will clo clo se only DOUBLE ESCROW upon the the condition condition that a prior es crow is c onsum mated. The second escrow is contingent upon and tied to the first escrow. While double escrow is not illegal, illegal, unless unless there is full and fair disclosure of the second escrow, there there may be a p ossibility ossibility of fraud or oth er actionable conduct by the parties. A window consisting of two sashes DOUBLE-HUNG that move up and down in a pair of channels and are held open by tension springs.
intend to DUAL AGENT Even if the buyer s broker does not intend be a dual agent by of his conduct, the seller s deposit receipt agreement to employ him him mak es the seller seller his principal and client in addition to the buyer. Before a broker acting as a dual agent on the sale of one-to-four unit residential property may relay confidential pricing information to the party, the broker mus t have written written authority authority to release it. DUE-ON-ENCUMBRANCE CLAUSE A clause in a deed of trust or mortgage that provides that upon the execution of additional deeds of trust or other encumbrances against a secured parcel of property, the lender may declare the entire unpaid balance of principal and interest due and owing.
An acceleration clause that DUE-ON-SALE CLAUSE grants the lender the right to demand full payment of the mortgage or deed of trust upon sale of the property. A clause in a deed of trust or mortgage that provides that if the secured property is sold or transferred, the lender may declare the entire unpaid balance immedi ately due and payable. Its use has been severel y limite d by recent court deci sions. sions. Also called an alienation clause. DUN & BRADSTREET A credit-reporting agency that publishes credit ratings for many corporations and businesses.
A constitutional guarantee that DUE PROCESS O F LAW the governm ent will not not interfere with a person's p rivate property rights without following procedural safeguards prescribed by law. DURESS
Unlawful constraint by force or fear.
that DURESS, ECONOMIC Threatening to take some action that will be financially financially harmful to a perso n, to force him or h er to sign a document; for example, threatening to breach a
P AGE 29
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. contract. Also called called business compulsion.
the property, transferring the servient tenement but retaining the dominant tenement.
A special relationship of DUTIES OF AN AGENT trust by whic whic h one person (ag ent) is authorized to conduct business, sign papers or otherwise act. Department of V eteran Affairs, established established on DVA March 15, 1989 to succeed the Veterans Adm inistration. inistration.
An easement created EASEMENT BY IMPLICATION by law law (not by express grant) when a pa rcel o f land land is divided, divided, it there there is a lon lon g-sta g-sta nding nding , apparent use that is is reasonably necessary for for the enjoym ent of im plied easeme nt. COMPARE : Eas Eas ement by Necessity. Necessity.
E
EASEMENT BY NECESSITY A special type of implied easem easem ent; ent; w hen hen the dominant dominant teneme teneme nt would be be completely completely useless without without an easement, an easement exists even if it isn isn t a long-standing, apparent use.
de posit of m oney paid EARN EARN EST MONEY DEPO SIT A de by a buyer for real property as evidence of good faith. EARNEST MONEY AGREEMENT Receipt
SEE: Deposit
A right, privilege, privilege, o r intere st that one EASEMENT party has to to use the land of another. Exampl e: A right of way. A legal right to use anoth er's land fo r one one 's be be nefit nefit or the benefit of one's property (right-of-way). EASEMENT APPURTENANT An easement created for the ben efit of a particular parc parc el of of property. There is both a dom inant inant and a serv ient ient estate. The easeme nt is annexed to and pa rt of th e dom dom inant inant prop erty. erty. EASEMENT, IMPLIED
SEE: Easement by Implication. Implication.
prevents the EASEMENT, NEGATIVE An easement that prevents servient te te nant from using using his or or her own land in certain way (instead of allowing the dominant tenant to use it). Essentially the same thing as a restrictive covenant. allows the EASEMENT, POSITIVE An easement t hat allows dominant tenant to use the servient tenement tenement in a partic partic ular way. This brought EASEMENT BY PRESCRIPTION about by open and notorious use over a long period of time. EASEMENT, PRESCRIPTIVE by prescription.
An easement acquired
An easement that benefits a EASEMENT IN GROSS particular particular individual, individual, not a parcel o f pro pro perty. perty. Involves Involves on ly a servient estate. A public utility easement is an example. EASY MONEY board.
Loose money policy of the federal reserve
EAVES The lower projecting edge of a roof over the wall.
An analysis analysis of em ploym ploym ent in in ECONOMIC BASE STUDIES the primary industries of the region. The remaining useful life of an ECONOMIC LIFE improvement or structure; that period during which an improvement will yield a return on the investment. The loss in value to ECONOMIC OBSOLESCENCE property due to external causes such as zoning or a deteri orating orating neighborhood. It is also also referred to as social obsolescence. ECONOMIC OVERSUPPLY A market condition condition in which available rental space is pr iced bey ond th e financia financia l capabil ities of potential tenants.
rental expectancy if the ECONOMIC RENT The reasonable rental property were available for renting at the time of its valuation. ECONOMIC TREND Pattern of related changes in some aspect aspect o f the economy. EE R
Means Energy Efficient Ratio
EASEMENT BY EXPRESS GRANT An easement granted to anothe anothe r in a deed or other d ocum ent.
A prov ision ision in a listing listing c ontract requiring EFFECT A SALE the broker to obtain a signed contract from a ready; willing and able buyer on the terms specified.
EASEMENT B Y EXPRESS RESERVATION RESERVATION An easement created in a deed when a landowner is dividing
The number of years EFFECTI VE AGE OF IMPROVEMENT of age that is indicated by the c ondition ondition of the str ucture, distinct from chronological age. P AGE 30
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. paymen t of just compen sation to the the owner. The constitutional constitutional or inherent right of a government to take private property for public good upon the payment of just compensation.
EFFECTIVE DA TE OF VALUE (APPRAISAL) (APPRAISAL) Th e specific day the conclusion of value applies. EFFECTIVE GROSS RENT Gross rent, minus an allowance for vacancy and credit losses.
direction and EMPLOYEE Someone who works under the direction control of another. COMPARE: Independent Contractor.
EFFEC TIVE TIVE INTEREST R ATE The percentage of intere st that is actual ly being paid paid by th e borrower for the use of the money, distinct distinct from chronological chronological age. EFFECTIVE GROSS INCOME The amount of net income that remains after after the deduction deduction from gross income of bad debt vacancy factor and credit losses. EGRESS property.
E.I.R.
EMPLOYER another.
The individual who hires the services of
Older parents parents whose housing needs EMPTY NESTER change after their children have moved away.
Exit; the act or avenue or leaving
EIGHTEE N YEARS YEARS estate license
EMPLOYMENT AGREEMENT An agreement between broker and salesman must be kept by both broker and salesman for three years from date of termination.
The projection projection of a structure structure onto t he ENCROACHMENT land of an adjoining adjoining owne r. A structure or natural object that unlaw unlaw fully fully extend s into another's prop erty. erty.
The legal age for getting a real
Abbre Abbre viation for Environm ental Im pact Re Re port.
An estate defined as consisting of ELECTIVE SHARE 30 percent of the decedents s personal property and Florida real property, except homestead exempt property claims.
ENDORSEMENT
ELEMENTS OF COMPARISON Four categories of information about sales: terms of sale, time of sale, location elements, and physical elements.
See Indorsement.
prohibit an an, or command performance of an ENJO ENJO IN To prohibit an, by court order; to issue an injunction.
ELEMENTS OF VA LUE Four prerequisites that must be present for an object to have value: utility, utility, scarcity, dem and, and transferability.
EQ A The California Environmental Quality Act. ENVIRONMENTAL IMPACT REPORT A report that must be prepared whenever any agency or individual considers a project that may have a significant impact on the environment, as directed by the California Environmental Quality Act.
The use of a ELECTRONIC DATA PROCESSING computer to co mpile mpile a nd process information. ELLWOOD TECHNIQUE capitalization.
Any Any c laim laim , intere intere st, or right in ENCUMBRANCE (CLAUSE) property possessed by another that may diminish the true owner's rights or value value in the estate. estate. Examp les include include mortgag es, e aseme nts, o r restriction restriction s of a ny kind. A c laim laim , lien, lien, or cha rge on pro perty. perty.
A mortgage/equity mortgage/equity method of
Drawings of the front and side ELEVATION SHEET views of the finished homes.
ENVIRONM ENVIRONM ENTAL ENTAL PROT ECTIO ECTIO N AGEN AGEN CY (EPA) A federa l organiza organiza tion tion created by The Nationa l Environme Environme ntal Policy Act. The EPA s purpose is to centralize governments s environmental responsibilities.
EMBEZZLED FUNDS Are reportable as income for tax purposes.
Federal law prohibiting EQUAL CREDIT CREDIT OPPORTUNITY OPPORTUNITY discrim discrim ination in in the e xtension xtension of credit.
Things that grow on the land EMBLEMENTS require annual planting and cultivation.
EQUAL PROTECTION The Fourteenth Amendment to the U.S. Con stitution stitution and similar pro pro vision vision s in th th e California Constit ution ution req uire uire each citizen to receive equa l protec tion tion of the laws. T here are n o m inim inim um standards of p rotec rotec tion; tion; all equally equally situated individuals individuals mus t simply be treated eq ually. (The due process claus e of th e Constitu Constitu tion im poses certain minim um s tandards of protection.)
The right of the government and EMINENT DO MAIN MAIN certain oth oth ers, such as pu blic utilities, utilities, to acqu acqu ire prope prope rty for public or quasi-public use by condemnation, upon
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REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. EQUILIBRIUM
When supply equals demand.
ERROR, HARMLESS A mistake by a trial judge that did not affect the final judgment in the case.
EQUITABLE REMEDY A judgment granted to a plaintiff that is something other than an award of money (damages); an inj inj unction, quiet title, title, resc issio issio n, and spe cific cific performance are examples. COMPARE: common Law Remedy.
ERRO ERRO R, PRE PRE JUDIC JUDIC IAL a mistake by a trial judge that may have affect ed the the final judgmen t in the case. Also called reversible error (because it s grounds f or reversing reversing the trial court s decision).
EQUITABLE TITLE SEE: Title, Equitable.
ESCALATION The right reserved by the lender to increase the amount of the payments payments and/or interest interest upon the happening of a certain event.
(1) The interest or value that on owner EQUITY has in real property over and ab ove the lien lien s against it. (2) A par par t of our jus jus tice system system by which c ourts seek to supplement the strict terms terms of the law to fairness under the circumstances, rather than on fixed legal principles or statut es. (3) Ownership in in property, determ ined by calculating the fair market value less the amount of liens and encumbrances. EQUITY BUILD-UP The increase of the owner's equity due to mortgage principal reduction and value appreciation.
ESCROW (ACCOUNT) The deposit of instruments and f unds with a third neu tral tral part y with instructions to ca rry out the provis ions of an agreem ent or contract. contract. A complete or perfect escrow is one in which everythin everythin g has been deposited to enable c arrying out the the instructions. The n eutral third pa rty (stakeholder) who holds deeds or other docum ents pursuant to instructions for delivery upon completion or occurrence of certain conditions.
EQUITY FINANC ING Lender financ financ es hig hig h-ratio loan in exchange exchange for a percentage percentage of ownership and the right to share in the property s cash flow. flow. EQUITY PARTICIPATION PARTICIPATION A mortgage transaction in which t he lender, in addition addition to r eceiving a fixed rate of on the loan acquires an interest in the borrower s real property, and shares in the profits derived from the property.
ESCROW AGENT The neutral third party holding funds or something of value in trust for another or others.
EQUITY OF REDEMPTION The right to redeem proper ty during the foreclosure period. In California the the mortgagor has t he right right to redeem within within 12 months after the foreclosure sale.
The wearing away of the surface of the EROSION land by the act ion of wind, water, and glaciers glaciers , for example.
A clause in a contract that provides ESCALATOR CLAUSE for the upward or downward adjustment of certain items to cover the spec ific contingencies set forth. forth. A clause clause in a promissory note, lease, or other document that provides that upon the passage of a specified time or the happening of a stated event, the interest rate shall increase. ESCHEAT The reversion of property to the state when there are no devisees or h eirs capable of inheritance. Reversion of property to the state upon the death of an owner who has no he irs able to inherit. inherit.
EQUIT Y C APITALIZATION PITALIZATION RATE RATE Factor used to estimate the value of the equity in the equity-residual technique of capitalization and other mortgage and equity techniques; the equity cash flow divided by the equity value.
EQUITY R ESIDUAL ESIDUAL TE CHNIQUE Technique of income capitalization; The net income remaining to the equity position (after mortgage payments) is capitalized into an estimate of the value of the equity.
A lease clause providing that rental ESCALATION CLAUSE rate will increase or decrease according to selected index of economic conditions, conditions, such as the consumer price price index.
ESCROW COMPANY When an escrow company acts as escrow, it must be licensed by the Commissioner of
Corporations. A course of ESCROW DISBURSEMENT DISBURSEMENT ORDER (EDO) action for determining the disposition of a c ontested deposit. Lending institutions and attorneys can ESCROW HOLDERS act as escrow, as can brokers. Brokers can act only as escrow holders in a transaction if he charges the fees provided by law. ESCROW INSTRUCTIONS
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The document that authorizes
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. an escrow agent to deliver items deposited in escrow once the parties have complied with specified conditions. The escrow memo contains the ESCROW MEMO names of the buyer and the seller. It also contains information , is a form, and helps with the escrow instructions. ESCROW NUM NUM BER The file number assigned to an escrow by the escrow officer for identification purposes.
year or an y fraction fraction of m ultiple ultiple thereo thereo f. It has a definite beginning and ending date, and hence a known and definite duration. ESTATE IN FEE SIMPLE
SEE: Fee Simple .
ESTATE IN REMAINDER
SEE: Remainder.
ESTATE IN REVERSION
SEE: Reversion.
ESTATE IN SOLE
known as a n escro escro w agent, ESCROW OFFICER Also known someone qualified to perform all the steps necessary to prepare and carry out escrow instructions.
Real property owned by a corporation.
An estate that may go to the ESTATE O F INHERIT INHERIT ANCE heirs of the the deceased . All freeho ld estates estates are estates of inheritance, inheritance, except life estates.
The degree, quantity, nature, and extent ESTATE of the interest that that a person has in in real property. (1) Owners hip interest in real real estate. (2) The quality and quantity of rights in property. property.
ESTIMATE value.
A preliminary opnion opnion of value. Appraise, set a
(yea rs) itit ESTIMATED REMAIN ING LIFE The period of tim e (yea takes for the improvements to become useless.
ESTATE AT SUFFERANCE An estate arising when the tenant wrongfully holds over after expiration of the term. The landlord has the choice of evicting the tenant asa trespasser or accepting such tenant for a similar term and under the condition of the tenant s previous holding. Also called a tenancy at sufferance.
ESTOP
The occupation of real property ESTATE AT WILL by a tenant for an indefinite indefinite period. It may be terminated at will by one or both par ties. ties. A leaseho ld tenanc y, which at common law could be terminated by either party at any time, without advance notice. Thirty days' notice are now required to terminate this type of estate in California. ESTATE BY THE ENTIRETIES A tenancy created by the husband a nd wife jointly owning real property with instant and complete right of survivorship.
A freehold estate whose ESTATE FOR LIFE duration is measured by and limited to the life or lives of one or more persons. ESTATE FROM PERIOD TO TO PERIOD PERIOD A leasehold tenancy that continues indefinitely for successive periods of time, until terminat ed by proper proper notice. When the periods are one month in duration, it is often called a month-to-month tenancy.
To ban, stop, or impede.
a notice served on the owner of ESTOP NOTICE prop prop erty or custodian of fu nds. It requests requests , with with c ertain ertain penalties for noncompliance, that any funds due to a general contractor be paid to the claimant, laborer, or materialman. A doctrine whereby one is forbidden to ESTOPPEL contradict or deny his or her own previous statement, act, or position. The doctrine that prevents a person from exerc ising a legal right, because that person previously acted in an inconsistent inconsistent manner, so that a third person detrimentally detrimentally relied on the earlier acts. ESTOPP EL CERTIFICATE CERTIFICATE A written statement that bars the signer from making a claim inconsistent inconsistent with the instrument instrument (comm only used with a mortgage assumption). ESTOPPEL, PROMISSORY A doctrine applied when som eone h as made a technically unenforcea ble prom prom ise to another, and the other person has act ed in reasonable reliance reliance on the promise. If the person who relied on the promise will suffer harm unless it is enforced, a court may enforce it. Also called the doctrine of detrimental reliance. ET AL Abbreviation meaning and others (other person).
ESTATE TAXES These are a form of taxes that are paid off by the estate of the deceased. ESTATE FO R YEARS YEARS A lease lease that will expire expire a t a definite definite time or date. A leasehold tenancy of a fixed duration, being a definite and ascertainable period of a
A standard of conduct that all members of a ETHICS given profession owe to the public, public, clients or patron s, and to other members of t hat profession profession ET UX Abbreviation meaning and wife. P AGE 33
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. seller, finds a buyer, the broker has earned the commission. Dispossession by legal process, as in EVICTION the termination of a tenant's right to possession through re-entry or other legal proceedings. EVICTION, EVICTION, ACT UAL Physically forcing someone off of property (or preventing them from reentering), or using the legal legal process process to make someone leave. COMPARE: Eviction, Constructive. EVICTION, CONSTRUCTIVE When a landlord s an (or fa ilure ilure to an) interferes w ith the tenant s quiet enjoyment of the property, or makes the property unfit for its intended use, to such an extent that the tenant is forced to move out.
A landlord s legal notice to a EVICTION NOTICE tenant explaining the tenant s default under the terms terms of the lease and informing him or her of a pending eviction suit.
A written EXCLUSIVE-RIGHT-TO-SELL L ISTING agreem ent giving giving o ne agent the exc lusive right right to sell property for a spe cified period of time time . The ag ent may collect collect a commission if the property is sold by anyone, including the owner, during the term of the listing agreeme nt. An exclusive right to sell listing can best be identified as an Executory Unilateral Contract. When a broker EXCLUSIVE AGENCY AGREEMENT receives an exclusive agency agreement from the seller, he owes a fiduciary relationship to the seller. A contract EXCLUSIVE EXCLUSIVE RIGHT TO SELL AGENCY hiring the the broker a s the only person au thorized to s ell property. property. If any one, including including the seller, finds finds a b uyer, the brok er earns the commissions.
EVICTION, RETALIATORY When a landlord evicts a tenant in ret aliation aliation for requesting repairs , filing filing a complaint against the landlord, or organizing or partic ipating in a t enants rights group. group. EVICTION, SELF-HELP When a landlord uses physical physical force, a loc loc kout, or a utility shutoff to ge ge t rid of a tenant, instead of using the legal process. EVICTION, WRONGFUL When a landlord evicts a tenant in violation of the tenant s rights.
A provision in lease s and EXCULPATORY CLAUSE other instr instr uments seeking to relieve relieve one party party o f liabili liability ty for his negligen ce and and other acts. In residential leases such clauses are invalid, and in other leases the courts have limited the landlord's ability to es cape l iability for intentional acts, and fo r acts of affirmative negligence. EXECUTE To complete, make, perform, do or to follow out. To sign a document, intending intending to make it a binding binding instrument. The term is also used to indicate indicate the performance of a contract.
All relevant information, facts, and EVIDENCE exhibits adm issib issib le in a tr tr ial. ial. EXCEPTIONS Conditional items listed on a preliminary title title repor t and e ffectin g the the title,; would be exc luded from cove rage by the the title insuran insuran ce com pany. EXCESS RENT The amount by which the total contract rent rent exc eeds eeds m arket arket re nt.
Land above and beyond what is EXCESS L AND needed for the highest and best use of the site.
A written agreement EXCLUSI VE AGENC Y LISTING LISTING giving one agent the exclusive right to sell property for a specified specified period of tim tim e, but reserving the right of the ow ner to sell the prope rty himself o r herself without liability liability f or the payment of a commission.
EXECUTED CONTRACT performed by both parties.
Com plete plete d and fully
process in which a court orders an EXECUTION The legal process official (such as a sheriff) to seize and sell the property of a judgment debtor to satisfy a judgment lien
A reciprocal transfer of properties EXCHANGE between two or more parties. parties.
A lien arising because of an execution EXECUTION LIEN on property. A judgment is not not self-executing; however , when a writ of execution has been obtained, the sheriff will levy (seize (seize ) prop prop erty, erty, which creates a lien on the prope rty.
prope rty EXCLUSION General affecting title to real prope excluded from coverage of a title title insuranc e policy. policy.
he ad of a governm ent, such as president, EXECUTIVE The he governor, or mayor.
hiring the broker as EXCLUSIVE AGENCY A contract hiring the exclu sive sive agent for the seller. seller. If anyone, ex cept the
related t o the EXECUTIVE POWER (FR EC)(FL) EC)(FL) Duties related education of the licensees, the regulating of professional P AGE 34
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. practices, and the publishing of materials.
statistics for office properties classified by type of building, area and such
A pe pe rson nam ed by t he testator of a w ill EXECUTOR to carry out its provisions as to the disposition of the estate. A persona l representative representative appointed in in a w ill to to administer a decedent's estate.
produced for EXPORT PRODUCTION Goods and services produced sale or use outside the town or area in which they ar produced. EXPRESS Stated in words, spoken or written. COMPARE: Implied.
EXECUTOR/EXECUTRIX A person nam ed in a will will to carry out its provisions. If it s a man, he s an executor; if it s a woman, she s an executrix. COMPARE: administrator. EXECUTORY EXECUTORY CO NTRAC preformed.
A contract contract whos e elements EXPRESS CONTRACT are s tated either either orally or in writing. writing. To take by public authority through the EXPROPRIATION power of eminent domain.
A cont ract that is yet to be
Property that has been decreed EXEMPT PROPERTY to be excluded from taxation or claim by others. A provision provision holding holding tha t a law or rule EXEMPTION doesn t apply to a particular person or group. For examp le, a person entitle entitle d to a property tax exem ption ption is not required to pay property taxes. An exemption can be full or partial.
EXTENDED POLICY
An extended insurance policy.
EXTENDER CLAUSE A clause in a listing agreement providing that f or a specified period af ter the listing listing expires, the broker will still be entitled to a commission if the property is sold to someone the broker dealt with during the listing term. Also called a carryover clause or safety clause.
EXHIB EXHIB IT 1. Documentary or physical evidence subm itted in in a trial. trial. 2. An attachm ent to a docum ent.
F
By only one party or side. For example, EX PARTE an injunction obtained by evidence presented by only one side, without notice to the other parties.
FACADE The face of a building, especially the front face.
EXPANDIBLE HOUSE A home designed for expansion and additions in the future.
A FACILITY FACILITY MANAGEM ENT AD AD MINISTRAT MINISTRAT OR (FMA) designation awarded by BOMI based on the curriculum for commercial property specialists who are responsible for real property as a corporate asset.
A phase of the business cycle EXPANSION characterized by increasing production.
FACSIMILE (FAX)
A fiber strip strip u sed to s eparate EXPANSION JOINT units of concrete to prevent cracking due to expansion as a result of temperature changes. EXPANSION OPTION A lease clause granting a tenant an option to lease additional adjacent space after a specified period of time.
The right to use another s land for a EXPEDIENTES specific purpose , sometimes known as the right -of-way.
EXPENSES Certain items which appear on a closing statement in connection with a real estate sale.
An annual EXPERIENCE EXCHANGE R EPORT B O M A publication containing income and expense
An exact c opy.
A resource pool representing the four FACTOR MARKET major elements of production that are bought and sold. FACTOR S OF VALUE VALUE The least important factor in figuring present value is the o riginal cost. cost. FAILURE OF PURPOSE When the intended purpose of an agreement or arrangement can no longer longer be achieved; in most cased, this releases the parties from their obligations. FAIR HOUSING ACT (TITLE VIII VIII OF THE CIV IL RIG HTS ACT A federal law that prohibits discrimination in the sale, 1968) rental or financing of housing based on race, color, religion, sex, handicap, familial status or national origin. One of the regulations of this act is that hallways, doorways and common areas are accessible for the width of wheel chairs.
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REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. FAIR MARKET VALUE The amount of money that would be paid for a property offered on the open market for a reasonable length of time with both the buyer and the seller knowing all uses to which the property could be put and with neither party being under pressure to buy or sell. See market Value.
An agency of the federal government that insures mortgage loans. Federal agency FEDERAL H OUSING OUSING FINAN CE BOARD that regulates the 12 Federal Home Loan Banks.
FAMILIAL STATUS For the purposes of fair housing laws is not synonymous with marital status.
A FEDERAL INSURAN INSURAN CE CONTR IBUTIO IBUTIO NS ACT ACT (FICA) (FICA) federal regulation requiring employers to pay retirement fund taxes (social security) for employees.
National Mortgage FANNIE MAE The Federal National Association Association (FNMA). Does conforming loans.
FEDERAL LAND BANK SYSTEM Federal government agency making long term loans to farmers.
A selected and limited geographical FARM AREA area to which a sales associate devotes special attention and study; to farm an area neighborhood.
FEDE FEDE RAL NAT NAT IONAL IONAL M ORTGAGE ASSOCIATION (F NMA) A federal corporation that provides lenders with a s econdary mortgage m oney market.
FARMERS HOME ADMINISTRATION An agency of the Departme nt of Agric Agric ulture. Prim ary responsibility is to provide financial assistance for farmers and others living in rural areas where financing is not available on reasonable terms from private sources.
involv ing th e U.S. FEDERAL QUESTION A leg al issu e involv constitution, a treaty, or a federal statute. Federal courts hav e jurisdiction to hear federal question cases, but they may also be decided in state court.
A method under FASTTRACK CONSTRUCTION which construction of a building begins under a negotiated contract before all plans and specifications have become final. Construction Construction proceeds as plans come off drawing board.
FEDERAL RESERVE SYSTEM The federal banking system of the United States under the control of a central board of govern ors (Federal Reserv e Board). It involves involves a central bank in eac eac h of 12 geo graphical districts, districts, with broa d powers in controlling credit and the amount of money in circulation. They are the primary government regulator in monetary policy activities.
FEASIBILITY FEASIBILITY S TUDY A report on the potential potential profitability profitability of a propose real e state state pr oject. It includes includes considerations such as land area, physical features of the land, land, requirem ents of th e projec projec t and estim ated co co st. FEDE RAL RAL DEPO SIT INSU INSU RANCE CORPORAT ION A federal corporation that insures deposits in comm ercial banks (FDIC). (FDIC). FEDE FEDE RAL FAIR FAIR HOUSING LAWS enforced by the Department of Justice
FEDERAL SAVINGS AND LOAN INSURA INSURA NCE A federal corporation that CORPORATION (FSLIC) insures deposits in savings and loan associations. FEDERAL STATUTES Bankruptcy proceedings are initiated under Federal statutes.
A federal agency FEDERAL TR ADE COMMISS ION (FTC) that investi gates and elimina tes unfair deceptive deceptive trade trade practices.
Are not
FEDE FEDE RAL UN EMPLOYMEN T TAX TAX ACT (FUTA) A regulation requiring employers to file federal unemployment tax returns for employees.
A FEDERAL H OME LOAN BANK (FHLB) district district bank of the Federal Federal Home Loan Bank System that lends only to savings and loan associations who are members. FEDERAL FEDERAL HO ME LO AN M ORTGAGE CORPOR ATION A federal corporation that provides (FHLMC) savings and loan associations with a secondary mortgage money market for loans. It is is also known as Freddy Mac.
Any sale FEDERALLY RELATED TRANSACTIONS TRANSACTIONS transa ction ction tha t ultimately involves involves a f ederal agency in either either the primary or secondary mortgage market. Under FIRREA, state certified or state licensed appraisers must be used for certai n loans loans in federally related related t ransac tions. FE E
An estate of inherit inherit ance in real property for life. life.
FEDERAL HOUSING ADMINISTRATION (FHA) FEE ABSOLUTE P AGE 36
SEE: Fee Simple.
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. Title that m ay be t erm inated inated by a FEE, FEE, CO NDITIO NDITIO NAL Title former owner if conditions stated in the deed are not met. The only type type of defeasible fee that s recogn ized in in California now. Also called fee simple subject to a condition condition s ubsequent. SE E: Power of termination. termination. FEE SIMPLE An estate in real property by which the owner h as the gr eatest po ssible po wer ove ove r the title. In modern use it expressly establishes the title of real propert y with the owner without limitati m itati on or end. He or she may dispose of it by sale, trade, or will, as he or she chooses. In modern estates estates the terms "Fee" and and "Fee Simple" are substantially synonymous.
FIDUCIARY FIDUCIARY DUTY That duty owed by an agent to act in the highest good faith toward the principal and not to obtain any advantage over the latter by the slightest misrepresentation, concealment, duress or pressure. FIDU FIDU CIARY CIARY RELA RELA TION TION SHIP SHIP a relationship of trust and confidence, where one party owes the other (or both parties parties owe each othe r) loyalty and and a higher stand ard of good faith than they owe to third parties. For example, an agent is a fiduciary in relation to the principal; husband and wife are fiduciaries in relation to each other.
A fee FEE SIMPLE DEFEASIBLE (QUA LIFIED) simple estate to which certain conditions or limitations attach, such that the estate may be defeated defeated or terminated upon the the happening of an act or event. event. Also called a fee simple subject to a condition subsequent estates. FEE SIMPLE DETERMINABLE A defeasible fee that is terminated automatically if certain conditions occur. No longer recognized in California; now treated as a conditional fee. FEE S IMPLE ESTATE The greatest interest that one can have in real property. An estate is unqualified of indefi nite dur ation, ation, f reely transfera ble ble and inheritable.
FEUDAL TENURE A real property ownership system in which ownership rests with a sovereign who may grant lesser inte inte rests rests in retu retu rn for service o r loyalty. loyalty. This is in contrast to allodial tenure.
Corporation; FHLMC Federal Home Loan Mortgage Corporation; also known as Freddie Mac. SEE: Seconda ry Marketing. A recorded deed of FICTITIOUS DEED OF TRUST trust that discloses all the terms of the trust deed but
insurers in m ost states file rate FILE AND USE Title insurers schedules, policy policy forms, and end orsem ent form form s with the state insurance department; they may then use those rates and forms after a specified waiting interval; rates so filed are mandatory. FILTERING DOWN The process whereby higher-priced properties properties become available available to lower income buyers. FINAL ORDER
FEE SIMPLE SIMPLE SUBJECT TO A CONDITION CONDITION SUBSEQUENT A fee simple defeasible estate that requires th th e hold hold er of of the fu fu ture interes t to ac ac t prom prom ptly to terminate the present interest, in order for that interest to be terminated.
Federal Housing Administration.
FIDELITY BOND A security posted for the discharge of an obligation of personal services.
A person in a position of trust and confidence, FIDUCIARY as between principal and broker. broker. A fiduciary fiduciary may not make a profit from h is or h er position without without first first di sclosing sclosing it to the beneficiary.
The highest estate FEE SIMPLE ABSOLUTE known at law. A freehold estate of indefini indefini te duration, incapab incapab le of being being defeated by cond itions or limitations. limitations. Sometimes simply called called fee or fee estate. estate.
FH A
does not relate to a specific transaction and is used for reference only. only.
A decision decision made by FREC .
borrower is assessed, FINANCE CHARGE Any charge a borrower direct ly or indirec tly, tly, in connect ion with the loan. FINANC IAL INSTITUTIONS REFORM , R ECOVERY , AND ENFO ENFO RCEMENT AC T OF 1989 (FIR (FIR REA) Federal legislation to liquidate, consolidate, and recover the assets of troubled savings and loan organizations. FINANC IAL INTERMEDIARY Financia l institutions such as banks, savings and loan a ssociations, ssociations, mutual savings banks and life insurance companies which receive relatively small sums of money from the public and invest them them in the form of large sums. A considerable portion of these funds are loaned on real estate. FINANCING PROCESS The systematic 5 step procedure followe d by majo r institutional institutional len ders ders in an alyzing alyzing a proposed loan, which includes ---- filing filing of application by a borrower ;lender s analysis of borrower and property; property; processing of loan documentation; closing (paying) the loan; and servicing
P AGE 37
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. (collection and record keeping).
lend on a specified property to a specified borrower for a certai n length length o f time.
FINANCING CONTINGENCY The buyer must use reasonably diligent efforts to secure financing.
The instrument filed to FINANCING STATEMENT perfect the security agreement and give constructive notice of the security interest interest , thereby protecting the interest of th th e secu secu red parties. (See Se curity Agreement ; Security Security Interest; Interest; and Secured Party .) The securi ty intere st in persona l propert y. It is is analogou s to a mortgage on real property, except that it secures personal property. U nder the U CC, it ma ma y be be filed filed in Sacramento with the secretary of state. FINANCING R EAL ESTATE Securing a loan by giving real property as collate collate ral for paym paym ent of the debt.
FIRST AMENDMENT The constitutional amendment guaranteeing guaranteeing freedom of speech, press, assembly, and religion. FIRST LIEN POSITION The spot held by the deed of trust with highest lien priority, when there s more than one deed of trust on the the property. property. SE E: Deed of Tru st, First. FIRST FIRST MORTGAG E A legal document pledging collateral for a loan (See mortg age )) tha t has first priority priority over all other claims against the property except taxes and bonded indebtedness. That mortgage is superior to any other. FIRST TRUST DEED of being c ollected ollected first.
A prov ision ision in a listing listing c ontract FIND A PURCHASER requiring requiring a broker to produ ce a ready, willing willing and a ble buyer or offer on the terms specified.
Programs by the federal government government that FISCAL POLICY are intended to influence economic activity by making changes in government expenditures and taxation implemented by the U.S. Treasurey.
FINDER'S FEE Money paid to a person for finding som eo ne interested in in selling selling or buying pr operty. To conduct any negotiations of sale terms, the finder must be a licensed broker or he violates the law.
FIVE YEARS YEARS date.
The final covering on the floor, FINISH FINISH F LOOR such as wood, linoleum, cork, or carpet.
FIXED EXPENSES An expense item in a property s operating budget that does not fluctuate with rental income. FIXED (INTER (INTER EST) RATE RATE MO RTG AGE A mortgage with an interest rate that does not change over the life of the loan.
bid on a piece of FIRST CH OICE OICE Anybody may bid property, there are no priorities.
FIXED TERM
Smoke detectors and fire extinguishers FIRE SAFETY are required by law, but most insurance companies also require them.
The loan of first priority; it FIRST DEED OF TRUST takes precedence over junior loans loans and encumbrances. Also called senior primary lien. FIRST TIME HOME BUY ERS with two or less bedrooms. FIRM COMMITMENT
Generally buy homes
The am ount lenders lenders agre e to
Comm issioner s Final Public Report Expiration
A long-term. projection of FIVE-YEAR FORECAST estimated income income and expense for a property based on predictable changes.
FIRE INSURAN INSURAN CE REQUIREMENT FORM A form includ includ ed in loan pa pers that a borro wer m ust sign, in which the borrower agrees to obtain fire insurance coverage to protect the property and insure the lender.
FIRE STOP A solid, tight closure of a concealed space placed to prevent the spread of fire and smoke through the space.
The deed with the highes t position
A period of time with a definite ending date.
FISCAL POLICY Programs by the federal government that are intended to influence economic activity by making changes in government expenditures and taxation. FIXED EXPENSES Operating costs that are more or less permanent and that vary little from year to year. FIXITY OF LOC ATION The physical characteristic of real estate that subjects it to the influence of its surroundings.
An item of personal property that has been so FIXTURE attached to real property as to be considered part of that real property. FIXTURES P AGE 38
Items that were originally personal property but
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. that have become part of the real property, usually because they are attached to the real property more or less permanent ly. ly. Exampl es: Store fixtures built into the the property and plumbing fixtures.
satisf y a debt. A mortgag e or involuntary lien lien must be sold by a court-ordered sale; a sale under a deed of trust may be either by court action or through a private trustee's sale.
with FLAG LOT Rear lot, behind other house s or lots, with a long, narrow ac cess road (like a flagpole).
FORECLOSURE , JUDICIAL JUDICIAL A lawsuit filed by a mortgagee or deed of trust beneficiary to foreclose on the security property when the borrower has defaulted.
FLASHING Sheet m etal or sim ilar mate mate rial used used to protect a building form water seepage.
FORECLOSE, NONJUD ICIAL ICIAL Foreclosure by a trustee under the power of sale clause in a deed of trust.
FLAT FEE A property management fee expressed as a dollar amount per year or month.
FOREIGN TRADE ZON E (FTZ) (FTZ) An area designated under federal law that permits manufacturing, shipping or storage of goods duty-free. duty-free.
FLAT LEASE
SEE: Straight Lease . inte rest, or title by default. FORFEITURE Loss o f a legal right, inte
building or open are a in wh ich FLEA MARKET A large building space is sold to individuals for the sale of merchandise, usually used or o f a collectible nature.
FORM REPORT Written appraisal report presented on a standardized form form or chec chec klist.
FLOOR AREA RATIO METHOD A Flexible method of limiting the size of a building in relation to the size of a lot; used in some zoning ordinances as an alternative to strict size and coverage limits.
FORMAL APPRAISAL An estimate of value that is reached by the collection and analysis of relevant data. A formal apprai sal is usually usually repo rted rted in w riting. riting.
An outline of charges against a FORMAL COMPLAINT licensee licensee that must be ans wered within the statu statu tory time lim it.
F N M A Federal National Mortgage association; also known as Fannie Mae. SEE: Secondar y Marketing. Marketing.
The base or bo bo ttom of a found ation ation wall, FOOTING pier. or column. A term describing industries that are FOOTLOOSE capable of being located almost anywhere. What a sales associate does after a FOLLOW-UP sale to maintain customer contact and goodwill. FORCIBLE DETAINER Wrongful retention of property by actual or constructive force.
Entry into property without the FORCIBLE ENTRY consent of the owner, by acts acts that constitute constitute more than mere trespass. Any arrang ement th at delays FORBEARANCE Any foreclosure action. FORECASTING Taking the past asa guide to the future, together with with judgements from t he projections projections of the future.
A legal proceeding to enforce a FORECLOSURE lien on such as a mortgage or deed of trust. trust. The process by which secured property is seized and sold to
Any agreement that contains all the FORMAL CONTRACT essent ials ials of a contra ct, ct, including that it is is in wr iting iting and under seal; a contract dependent on a particular form. FORMAL HEARING
(See Hearing)
A will signed by the testator in the FORMAL WILL presence of two or more witnesses, who must themselves sign the will. FOUR UNITIES
SEE: Unities, Four.
FOUNDATION That part of a str ucture or wall wholly or partly below the surface of the ground that is the base or support, including the foo tings. tings. FOURTEENTH AMENDMENT The constitutional amendment that directs that no state can deprive a person of life, liberty ,or property without due process or equal protection of the law. FRANCHISE A specified privilege awarded by a government or business firm which awards an exclusive dealership.
Deception that deprives another person of his FRAUD her rights or injures injures him or her. False False represen tation or concealment of material facts that induces another justifiably to rely on it to his his detrimen t. P AGE 39
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. FROST LINE
Frau d that me ets certain certain FRAUD, AC TIONABLE TIONABLE Frau criteria, so that that the victim victim can succe ssfully sue. The victim/plaintiff usually must prove that the defendant concealed a material fan or made a false false statement (intentionally (intentionally neg ligently) ligently) with the in tent to in duce the victim to enter a transaction, and that the victim was harmed because he or she relied relied on the misrepresentation.
Fruits , crops, and other plants. If the FRUCTOSE vegetation is produced by human labor, such as crops, it is called fructus industrials; veget ation ation gro wing n aturally aturally is called fructus naturales. naturales. FRUCTUS INDUSTRIALES Plants planted and cultivated by people, such as crops ( fruits fruits of indust ry ). ).
FRAUD , ACTUAL ACTUAL Intentional misrepresentation or concealment, or negligent misrepresentation, which is making a false statement without reasonable grounds for believing it is true. FRAUD, CONSTRUCTIVE A breach of duty that misleads the person the duty was owed to, without an intention to deceive.
FRUITS AND NUTS return per acre.
Nat ura lly lly occ urr ing pla nts ( fru fru its of
Usually bring the highest monetary
FULL CASH VALUE SEE: Value, Full Full Cash.
related to adjustable rate FULLY INDEXED NOTE RATE As related mortgages, the index value at the time of application plus the gross margin states in the note.
Title to prope prope rty that is absolute
An estate of fee. fee. An estate in real FREEHOLD propert y that is either a life estate or an estate in fee.
FUNCTIONAL OBSOLESCENCE A loss value due to adverse factors from within the structure which affect the utility of the structure, value and m arketability. arketability.
FREEHOLD ESTATE An estate of indeterminable duration, e.g., fee simple or life estate.
FUNCTIONAL UTILITY The combination of the usefulness usefulness and attractiveness o f a property. property.
lenders to FRONT-END R ATIO The ratio used b y lenders qualify a borrower for a loan, determined by adding the principal, interest, taxes, insurance, and mortgage insurance on the new loan and by diving by the borrower s gross mon thly income. income.
FUNDING The release of loan funds from a lending institution to the escrow company, generally on the closing day of escrow or recordation. recordation. FUNDING LETTER Written request to a lender for the release of loan funds; also called request for loan proceeds.
Property m easurem ent fo r sale sale FRONT FOOTAGE or valuation purpos purpos es. T he prope rty m easurem ent is along the street line, and each front foot extends to the depth of the lot. lot. It is usually usually used in con nection w ith com me rcial rcial p roperty.
A provision in a deed containing a FURTHER ASSURANCE covenant or warranty to perform any further acts the grantee (buye (buye r) m ight ight re quire quire to perfect title to the pro perty. perty.
FRONTAGE A term used to describe or identify that part of a parcel of land or an improvement on the land that faces the street or a body of water. The term is also used to refer to the lineal extent of the land or the improvem ent that is parallel to and fa fa cing the street, e.g., a 75 f oot frontage. FRONT MONEY The minimum amount of money necess ary to initiate a real estate venture, to get the transaction underway.
FRUCTUS NATURALES natur e ). ).
FSBO (For Sale Sale B Y Ow ner) Property offered for sale typically without the use of a real es tate broker.
FRED FRED DIE M AC ( See FEDERAL HOME LOAN MOR MOR TGA TGA GE CORPORATION.) FREE AND CLEAR and unencumbered.
The depth of fr ost penetration in the soil.
FURRING Strips of w ood or m etal fasten fasten ed to wall to even it, form air space, or to give the wall greater thickness.
(addition al) loans loans m ade by a FUTURE ADVANCES Future (addition lender and sec ured ured under the original deed of trust . The advances may be either optional or obligatory, but the deed of trust trust or mortga ge must p rovid rovid e in the sec urity urity ins ins trument that it will cover any such future advances. FUTURE APPRECIA APPRECIATION TION as savings value.
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This appreciation is referred to
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. FUTURE BENEFITS BENEFITS The anticipated benefits the present owner will receive from the property in the future.
An estate that does not or may FUTURE INTEREST entitle one to possession or enjoyment until a future time. FUTURE VALUE The estimated lump-sum value of money or property at a date in the future.
Common term for loans guaranteed by the G.I. LOANS department of veterans Affairs for qualified veterans. Also known as DVA loans. GIFT
A voluntary transfer of property without consideration.
A deed for which there is no material GIFT DEED consideration.
G
GINNIE MAE
A profit, benefit, or value gain
GAIN, CAPITAL A gain realized on the sale of a capital asset. Re al est est ate is is considered a ca pital pital asse t if it is income property, or property used in a trade or business.
A curb roof, having a steep GAMBREL ROOF lower slope with a flatter upper slope above.
One of the major things that builders like GOLF COURSES to build close to or around.
GOOD FAITH IMPROVER Someone who makes an improvem ent on land in the mistaken belief that he or she owns the land. Also called called an innocent improver
An assurance of clear title.
A representative authorized by the GENERAL AGENT principal principal to perform only acts acts related to a business or to employment of a particular nature. GENERAL LIEN
The worth of a business, GOING CONCERN VALUE VALUE includ includ ing re re al est est ate, goodwill and and earning capac ity.
A part y s honest intent to transact business; GOOD FAITH free from from any intent intent to defraud the other pa pa rty, each pa rt s faithfulnes faithfulnes s to one s duty or ob ligations ligations se t forth by con tract.
A legal process to seize a GARNISHMENT debtor's property or money in the possession of a third party. GUARANTEE OF TITLE
The GNMA.
A beam used to support other beams, joists, GIRDER and partitions.
GABLE ROOF Pitched roof with sloping sides. GAIN
ownership.
A lien on all the property of the debtor.
An association of two or GENERAL PARTNER SHIP SHIP more persons for the purpose of jointly conducting a business, each being responsible for all the debts incurred in the conducting of that business. GENERAL PLAN A long-term, comprehensive plan for the development of a city or county, used as a guide in preparing zoning ordinances.
Covenants, GENERA L PLAN PLAN RESTRI CTIONS CTIONS conditions, and restrictions placed on a subdivision or other large tract of land, designed to benefit and burden each lot in the tract.
GOODWILL An intangible but salable asset of a business derived from the expect ation ation of continued continued public patronage.
vided GOVERNMENT LOT A parcel of land that can t be di vided into a regular section in the government survey, because of the convergence of range lines, or because of a body of water or som e other obstac le or irregularity. GOVERNMENT NATIONAL MORTGAGE ASSOCIATION A federal corporation that assists in financing (GNMA) specia l assistance assistance progr ams for federally federally aided housing. The corporation is also known as Ginny Mae. GOVERNMENT SPONSORED ENTERPRISE (GSE) Collective title for the secondary market consisting of the FNMA, FHLMC; and GNMA.
In order to combat inflation GOVERNMENT SECURITIES the Federal Reserve will buy government securities on the open m arket. arket.
GENERAL WARRANTY DEED A deed in which the grantor warrants the title against defects might that might have arisen before or during his or her period of
specifying the GOVERNMENT SURVEY A method of specifying location of a parcel of land using prime meridians , base line, standard parallels, guide meridians, townships and sections.
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REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. GRADE
agricu ltural land.
Ground level at t he foundation.
GRADUATED LEASE Usually a long-term lease that provides for adjustments in the rental rate on the basis of some future determination. determination. For example, example, the rent may be based upon the result result of appraisals appraisals to be made at predetermined times in the future.
A GRADUATED PAYMENT MORTGAGE (GPM) land loan for which periodic payments increase at a stated period period of time and then then level off for the remainder of the term of the loan. (1) To transfer. transfer. (2) A deed. (3) When GRANT used in a deed , a technical term implying ce ce rtain rtain warrant ies. A transfer or conveyance of real estate. estate. GRANT DEED In California, a deed in which t he word grant is used as a work of conveyance and therefore by law implies implies certain warrantees, deed used to transfer propert y in California. By statute it impliedly contains only two limited warrant ies. GRANTEE made.
GRID A chart used in rating the borrower, property, and neighborhood.
A method of measuring industrial GROSS FLOOR AREA space i n which the area is the total of all floor space w ithin the exterior walls of the building, with no allowance made for structural projections and with a required minimum ceiling height of 7½ feet. GR OSS OSS INCOME deducted.
Total income before expenses are
GROSS INC INC OME MU LTIPLIER LTIPLIER (G (G IM) The ratio of the selling price (or appraisal value) to the gross income of a property. property. M ay be multiplied by the gross incom e of a pro pro perty to produce an estimate estimate of the property property s value. Also known as the gross rent multiplier (GRM).
A common residential lease under which GROSS LEASE the tenant pays a fixed ren tal an an d the landlo landlo rd pays all operating expenses for the property.
The buyer; a person to whom a grant is GROSS M ARGIN ARGIN With regard to an adjustable rate mortgage, an amount expressed as percentage percentage points, points, stated in the note which is added to the current index value on the rate adjustment date to establish the new note rate.
GRANTING CLAUSE Words in a deed that indicate the grantor s intent to transfer a n interest in in property.
The seller; one who signs a deed. The GRANTOR seller or person who executes a grant.
GROSS NATIONAL PRODUCT The total value of all goods and services produced in an economy during a given period of time.
recorded GRANTOR/GRANTEE INDEXES Indexes of recorded documents, with each document listed in alphabetical alphabetical order according to the last name of the grantor (in the grantor/grantee grantor/grantee index) and grantee (in the grantee/grantor index). The recording number of each document is given, so that they can be located in the public record. record. COMPARE: Tract Index.
A number that reflects the GROSS RENT MUTIPLIER ratio between the sales price of a property and its gross month ly rents. rents. It is is used in the income n come appr oach of appraising property.
GRATUITOUS AGENT A person not paid by the principal for services on behalf of the principal, who cannot be f orced to to act as an agent, but who becomes bound to act as an agent, but who becomes bound to act in good faith faith and obey the principal s instructions once he or she undertakes to act as an agent. GREA T DEPR ESSION During this period one of the facts is that even though the economy slumped the population grew.
Legislation that auth orizes orizes GREENBELT LAW (FL) county property appraisers to assess land used for agricultural purposes according to its current value as
The total sa sa les made by a reta il tenant tenant at a GROSS SALES leased premises. A proportion of gross sales is charged as rental consideration under a percentage lease. Total income from GR OSS OSS SCHEDU SCHEDU LED INC OME investment property before deducting any expenses. An agreement leasing land only, GROUND LEASE without improvements, ordinarily with the understanding that improvem ents will be p laced on the land by the tenant. (1) Earnings from the ground ground only. GROUND RENT (2) Earnings of improved property after after an allowance allowance is made for earnings of im provem ents. (3) A perpetual rent rent that a grantor in some states may reserve to himself or herself and his or her heirs when he or she conveys real property.
P AGE 42
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. estate and all tha tha t goes with it as being incidental. A right granted a sales associate GROUP LICENSE or broker associate to work various properties owned by affiliated entities under one owner developer.
HIGHER LAND COSTS This generally leads to the lot sizes of the homes being decreased.
Loan with fixed GROWING EQUITY MORTGAGE intere intere st rate rate and sche duled duled annu annu al increas increas es in in m onthly payments , resulting in shorte r ma turity. turity.
An appraisal phrase that HIGHEST AND BEST USE means that use of real property that is most likely to produce the greatest net return on land or buildings, or both, over a given period of time. Qualifies as the highest and best use.
GUARDIAN A person appointed by a court to administer the affairs of a minor or an incompetent person. GUIDE MERIDIANS
To be able to come out at the HIGH FARM FARM LAND COST S end of the year with a profitable statement some cattlemen have had to plant fruits and vegetables.
SEE: M eridians, eridians, Guide.
The type of area tha t will will HIGH LOCAL UNEMPLOYMENT except businesses that have high employment, but create noise and dust.
H
HIP ROOF
Loan usually from a private HARD MONEY LOAN lender . Actual money loaned loaned and secured by a trust deed as opposed to a loan carried back by a seller, in which no money passes.
A pitched roof with sloping sides and ends.
HISTORIC COST Cost of a property at the time it was constructed or purchased.
Persons afflicted with HIV are not protected under HIV federal fair housing laws.
hold clause HABENDUM CLAUSE The to have and hold which may be found in a deed.
HAZARD HAZARD COMMU NICATION NICATION STANDARD PLAN PLAN An OSHA-mandated plan to be compiled by property managers detailing protective measures to be implemented when handling handling hazardous chemicals. chemicals. See Occupational Safety and Health Administration
One who has taken a HOLDER IN DUE COURSE negotiable note, check, or bill of exchange in due course (1) before it was past due; (2) (2) in good faith; faith; (3) without knowledge that it has been previously dishonored and without notice of any defect at the time it was negotiated to him or her; (4) for value. value. Someon e who acquires acquires a negotia ble ble instr ument in good faith and without any actual or constructive notice of defect. T he acquisition m ust occur before the note 's ma turity. Such a holder takes the note free from any personal defenses (such as failure of consideration, fraud in the inducement) that may be available against the mak er.
HAZARD INSURANCE Insurance that protects the owner and lender against physical hazards to property such as fire and windstorm damage.
HOLOGRAPHIC WILL A will that is entirely written, written, dated, and sig ned by the testator in the the testator's handwriting. handwriting. No witnesses are needed.
HEADER A beam placed perpendicularly to joists joists and to which joists are nailed in the framing of openings such as windows, doors, and stairways. stairways.
HOLDOVER TENANT Tenant who remains in possession of leased property after the expiration date of the lease.
A session in which testimony and HEARING arguments are presented, especially before an official.
1986 HOME EQUITY LOANS Due to the Tax Reform Act of 1986 these loans have become very popular due to their tax advantages.
As defined in the Fair Housing HANDICAP STATUS Act, Act, a physic physic al or m ental impairm ent th th at substantially substantially limits one or more major life activities.
HEIRS Persons who s ucceed to the estate of someone who dies intestate (without (without a will). It somet imes indicates anyone who is entitled to inhe inhe rit a de de cedent's property. HEREDITAMENT
HOMEOWNER S ASSOCIATION ASSOCIATION A nonprofit association made up of homeowners in a subdivision subdivision responsible responsible for enforcing the subdivision s CC&Rs and managing other community affairs. affairs.
A term usually referring to real P AGE 43
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. HOMEOWNERS ENDORSEMENT An addition to a policy of of title insura insura nce that extends the norm al policy policy to cover items other than those stated in the standard policy; may include such items as mineral rights and mechanics liens.
HU D FORM FORM A final accounting of closing costs, itemizing the buyer s and sellers closing costs separately; a consumer protection form.
A retail business HUNDR ED PERCENT PERCENT L OCATION OCATION location considered the best available for attracting business.
HOMEOWNE R'S R'S EXEMPTION An exemption or reduct ion in in real p roperty taxes available to those who reside on their their property property as of March 1. The current amount is $70 off the normal tax bill otherwise due.
HYPOTHECATE (HYPOTHECATION) To give something as security without giving u p pos pos session of it. it. T o pledge pledge property; to pledge a security interest in property without the transfer of possession. An example is a trust trust deed.
The leader in home HOME PUR CHASE CHASE LOAN purchas e lending is saving institutions.
I
which the owner or HOMESTEAD (1) A home upon which owners have recorded a Declarati Declaration on of Homest ead, as provided by California statutes, that protects the home against judgments up to a specified amount. (2) A probate homestead is a similarly protected home property set aside by a California probate court for a widow or minor children. children. A special, special, limited exempt ion against certain judgments available to qualified homeowners.
An agreement that gives the ILLUSORY CONTRACT appearance of a contract, but in fact is not a contract because it lacks one of the essential elements. IMMIGRATION R EFORM AND CONTRO L ACT OF1986 The act must be adhered to by all American employers.
Real property that is owned by a unit of IMMUNE government and is not subject to taxation.
HOTEL MANAGEMENT Property managers usually attend a college course which is part of a major in hotelrestaur restaura a nt ma nagem nagem ent.
In som e jurisdictions, jurisdictions, a HOMESTEAD EXEMP TION reduction in the assessed value allowed for one s principal residence.
The following three IMPERFECT REAL ESTATE MARKET factors help to make the real estate market imperfect, (1) Imperfect knowledge, (2) Production time for new units, and (3) Must s ell and will sell s ellers. ellers.
One individual , or a group of HOUSEHOLD individuals, living in dwelling unit.
Not expressed by words, but presumed from IMPLIED facts, acts, or circumstances.
HOUSING AND URBAN DEVELOPMENT (HUD) DEPARTMENT. A U.S. government agency established to imple imple men t certain certain fed fed eral housing and comm unity developmen t program s. This fe deral age ncy attem pts to assure decent, safe, and sanitary housing for all Americans, and investigates complaints of discrimination in housing.
IMPL IMPL IED BY LAW Required by law to be part of an agreement; read into an agreement even if it contradicts the express terms the parties agreed to.
HOUSING FINANCIAL FINANCIAL DISCRIMINATION ACT (1977) Prevents discrimination in the purchase, construction, rehabilitation, improvement of housing accommodations because of conditions, characteristics, or trends in the neighborhood.
IMPLIED CONTRACT An agreement that has not been put into wo rds, but is implied implied by the actions of the parties. parties.
An employment contract contract that arises IMPLIED LIS TING TING from the c onduct of the broker and the seller seller and may be enforceable even though not clearly spelled out in words. IMPLIED WARRANTY
HU D The department of housing housing And Urban development which is responsible for the implementation and administration administration of U.S. government housing and urban development programs. programs.
SEE: Warranty, Implied.
IMPLIED WARRANTY OF H ABITABILITY ABITABILITY A warranty implied by la la w in every residential leas leas e, that the p roperty is safe and fit for habitation.
A trust account established by IMPOUND (ACCOUNT) the lender to pay property taxes and hazard insurance.
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REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. IMPROVEMENTS Man-made additions to real property. Generally increa sing the value of the p rope rope rty. INCOME capital.
"Unearned increment" is used in this connection since the values increased without effort on the part of the owner. Status of a license when it is is inactive or has INEFFECTIVE been suspended.
Amount earned or gained, not return of
INDEMNIFY
A mo nthly nthly INCOME AND EXPENSE REPORT finan finan cial report s howing the inco inco me from property, operating expenses expenses and t he amount remitted to the owner.
Compensation to a person who has INDEMNIFICATION already sustai ned a loss. For example, insuran insuran ce payment for a loss loss under polic polic y.
INCOME APPROACH (Income Approach Approach to v alue alue ) An appraisal technique used on income produc ing properties. properties. Also known as the Capitalization Approach. INCOME FORECAST
INDEMNITY a guarantee against loss; a building contractor may , for exam ple, give give a title co co mpa ny an indem nity agreement that renders the title company harmless against any liens that may arise due to the contractor s failure to pay his or her bills.
Gross or net income estimate. perso n who contracts contracts to INDEPENDENT INDEPENDENT CONTRACTOR A perso do a job for another another but maintains control over how he or she will carry out the task, rather t han following following det ailed ailed instructions. instructions. COMPARE: Employee.
INCOME (PRODUCING) PROPERTY Property that generates rent (or other income) for the owner, such as an apartment building. Most of this property is owned by individuals. INCOME RATIO The monthly payment on a loan (including principal, interest, taxes and hazard insurance) divided by thr borrowers monthly gross income.
INDEX a number used by a lender to measure interest rate changes over time; used as a guide for resetting resetting rates of adjustable rate loans. INDEX LEASE
A summary of all income and INCOME STATEMENT expenses of a business for a stated period of time. INCOME S TREAM TREAM earnings over time.
Actual or estimated flow of net
Someone incapable of INCOMPETENT managing his or her own affairs by reason of age, disease, weakness of mind, or any other other cause. Any increase. (1) A term frequently use d to refer to the increased value of land because of INCREMENT population growth and increased wealth in the community. A building located in an INCUBATOR SPACE indust rial rial park and divided into small un its of varying sizes to accommodate young, growing companies that want to combine office and industrial space at one location. INCURABLE DEPRECIATION Building defects or problems that would cost more to repair than the anticipated anticipated value increase from such repair. INDEBTEDNESS
To make a payment for a loss.
A lease containing an escalation clause.
INDEX METHOD Method for estimating construction costs; adjusts original original co sts sts to t he cur rent co st level by a multiplier obtained from a published cost index. INDICATED VALUE Value estimate calculated/produced by an appraisal approach. INDIRECT INDIRECT C OSTS All of the time and money costs involved in a construction pro ject that are not directly directly involved with construction itself. Examples are loan fees, interest, legal fees, and marketing costs. INDIRECT LIGHTING A method of illumination in which the light is reflected reflected from t he ceiling or other object outside the fixture.
Expenses in the budget INDIRECT INDIRECT MANAGEMENT MANAGEMENT COSTS of a re al estate estate agen cy or p arent com pany that a re pa pa rtially rtially attributable to the operation of the management department. When an individual INDIVIDUAL BUSINESS OWNER owner rents office space both the husband and the wife should sign.
A debt or obligation.(2) P AGE 45
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. INDIVIDUAL LENDER Seller, third party, or real estate other than agent ; any person or group of persons other institutional lende rs.
INGRESS
The act of or avenue for entering property.
INHERIT
To take property through a deceased's estate.
(1) Th e act act o f signi signin n g one's INDORSEMENT name on the back of a check or a note, with or without without furth er qualification. qualification. (2) The signatu re describe describe d above. The title insurance policy usually has on e of these.
INITIAL MOVE-IN FEES order or certified check.
A subur ban ind ustrial subdivision INDUST RIAL RIAL PARK designed to off off er co co mparatively small firm firm s land land in outlying areas with good accessability to transportation now often often called called a business business park.
This fee should be paid by money
INJUNCTION An order issued by a court to restrain one or more parties to a suit or proceeding from from performing an act deemed inequitable or unjust in regard to the rights of some other party or parties in the suit or proceeding. Movement into a community or region by IN-MIGRATION new residents.
The following should be INDUSTRIAL LEASE contained in this type of lease; what happens if a indus indus trial trial tenant violates pollution pollution laws, wh at happens if there is a strike and picket lines block other tenants access and is the storage of hazardous materials allowed on the premises.
INNOCENT IMPROVER
INDU STRIAL REAL ESTATE Properties that include (1) sites in industrial parks or subdivisions, (2) redeveloped industrial parcels in central areas, (3) industrial acreage. It is commonly owned by the com pany occ occ upying it.
INSTALLMENT INSTALLMENT NOTE A note that provides that payments of a certain sum or amount be paid in more t han one one payment on the dates dates specified specified in the instrum instrum ent.
INQUIR Y NOTICE NOTICE INSTALLMENT series of payments.
SEE: Good Faith Improver.
SEE: Notice, Inquiry. A partial payment of a debt due in a
A method of reporting INSTALLMENT-SALE(Method) capital gains by installments for s uccessive tax years to minimize the impact of capital gains tax in the year of the sale.
Increase in prices for goods and services INFLATION resulting from too much money in circulation or rising costs of services and material.
INSTALLMENT SALES CONT RACT RACT agreem ent of sale or a land land c ontract.
INFLATION ENDORSEMENT Coverage that may be added to the standard owner s polic polic y of title title insurance ; it adjusts the amount of coverage according to cost-ofliving index.
Also known as an
INSTITUTE OF REAL ESTATE MANAGEMENT (IREM) A subsidiary group of the National Association of Realtors, founded in 1933 to encourage professionalism in the field of proper property ty m anagemen anagemen t.
INFOR MAL AP PRAISAL An estima te of value that is reached by using intuition, past experience, and general knowledge.
Lenders who make a INSTITUTIONAL LENDER substantial number of real estate loans, such as banks, savings and loan associations, and insurance companies.
INFORMAL HEARING A respondent who does not dispute allegations of material fact in the administrative complaint may request an informal hearing before the FREC for the final action complaint.
Office buildings owned and INSTITUTIONAL PROPERTY occupied by the same corporation.
A system of fiber INFORMATION SUPERHIGHWAY optic optic cable cable s that will allow allow rapid rapid trans trans fer of electronic data of all different ty pes(text, voice, video, etc.).
INSTRUMENT A written legal document created to affect the rights of the parties. parties. A document that transfe transfe rs title, title, create s a lien, or or gives a right to paym paym ent, such as a deed, deed of trust, or contract. (SEE: (SEE: N egotiable egotiable Instrume nt.)
The man-made physical features features INFRASTRUCTURE of urban area, such as roads, highways, highways, sewage and drainage system s and utility facilities facilities necessary to support a concentration of population.
title that a title title insur ance INSURABLE TITLE TITLE A prope rty title company is willing to insure. A provision in a mortgage that INSURANCE CLAUSE requires the mortgagor to obtain and k eep current a hazard
P AGE 46
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. insurance policy.
lender for the use of the lender s m oney. COMPARE : Princ Princ ipal ipal..
Are the most conservative INSURANCE COMPANIES income property owners. They make the policies payable to the insured and the lender.
erest in property that that will or may INTEREST, FUTURE An int erest become pos sessatory at some point in in the future. future. SE E: Remainder; Reversion.
INSURANCE, INSURANCE, HOMEOWNER S Insurance against damage to the real property and the homeowner s personal prop erty. erty.
A straight non-amo rtizing rtizing loan, in INTER INTER EST-O EST-O NLY LOAN which on ly intere st is paid. Interes t can be paid pe riodically riodically or at maturity , when principal is paid in a lump sum.
INSURAN CE, TITLE, TITLE, EXTENDED COV ERAG E Title insurance that covers problems problems that should be discovered by an inspection of the property (such as encroachments and adverse possession) in addition to the problems covered by standard coverage policies.
Intere st on a new loan loan th at must b e paid paid INTE INTE REST REST , PREPAID Intere at the tim tim e of closin closin g; covers covers the interes interes t due for th e first month of the loan term. Also called interim interest. INTEREST INTEREST R ATE charged for its use.
INSURANC E, TITLE, STANDARD COVERAGE Title insurance that protects against latent title defects (such as forged deeds) and undiscovered undiscovered recorded encumbrances, but does not protect against against problems that would only be discovered by an inspection of the property.
The percentage of a sum of money
INTEREST, UNDIVIDED A co-tenant s interest, giving him or her the right to possession of the whole property, rather than to a particular section of it. SEE: Unity of Possession. INT ERIM FINAN FINAN CING CING Any short-term financing, such as a Swing Loan or a loan used to finance construction, due at the completion of the construction. Usually paid off with h the proceeds of a Take-out loan loan
INTANGIBLE ASSET Something of value value lacking physical su bstance; existing only in connection with something else(e.g., the goodwill of a business).
INTERIM OCCUPANCY When title and possession possession do not transfe r at the the sam e time, the real e state state licens licens ee sh sh ould prepare an interim occupancy.
INTANGIBLE PROPERTY Rights to something other than tangible or physic physic al property. property.
Ta x INTANGIBLE TAX ON MORT GAGES, GAGES, STATE required prior to a mortgage being recorded. The costs is based on the value of the mortgage. INTEGRATION CLAUSE A provision in a contract document stating that the document contains the entire agreement between the parties. INTEGRATIVE NEGOTIATION Goals of the parties are mutual g ain, ain, w in-win in-win
INTERIOR LOT
Lot with frontage on only one street.
Financi al institution that acts as a goINTERMEDIARY between for savers, depositors, and investors. The process whereby financial financial INTERMEDIATION midd midd lema lema n consolidate consolidate m any small savings savings accou accou nts belon belon ging t o individual individual depo sitors sitors and in in vest those fun ds in large, diversified projects. Temporary short-term short-term INTERMEDIATE-TERM LOANS loans, ordinarily ordinarily three to ten years, that inc lude hom e improvement loans, consumer loans loans or loans for the purpose of perm itting itting a deve loper loper to delay long-term long-term finan finan cing until until more favorable loan conditions.
The conc entra tion tion of a ctivity ( pede strian INTENSITY and vehicular traffic) used as a means of designating land for commercial zones. zones. intention; INTENT, OBJECTIVE A person s manifested intention; what he or she appears to intend, wh ether or not that is what he or she actually intends.
INTERMEDIATE INTERMEDIATE THEORY THEORY STATE A state in which the security of the mortgage is based on the title theory or deed of trust ; but requires the lender to fo reclose to obtain legal title. title.
INTENT, SUBJECTIVE What a person actually intends, whether or not that is is apparent to others.
INTERMINGLE
INTEREST 1. A right or share in something (such as a piece of real estate). 2. A charge a borrower pays to a
INTERNAL RATE OF RETURN The rate of return generated by an investment over the holding period; considers all future P AGE 47
See See Comming Comming le
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. benefits, discounting them to equal the present value.
The outlay of money in the anticipation of INVESTMENT income or profit; the sum risked or the property property purchase.
INTERN ATIONAL ATIONAL COU NCIL OF SHOPPING CENTERS An organization of shopping center owners, (ICSC) managers and major tenants that function function as a medium for the interchange of information about shopping center operations. INTERN ATIONAL ATIONAL F ACILITY ACILITY MA NAGEMENT NAGEMENT as sociation created in ASSOCIATION ASSOCIATION (IFM A) An as 1980 to provide support to facility management professionals through career development, education and research programs. programs.
A course of action when two INTERPLEADER contesting parties parties c annot re re ach an arbitrated arbitrated agreem ent, A legal proceeding whereby the broker, having no financ ial ial interest in the disputed funds, deposits with the court the disputed escrow deposit so that the court can determine who is the rightful claimant. A court proceeding initiated by a stakeholder, such as a broker or escro escro w agent. INTERROGATORIES Written questions submitted to the opp osing p arty arty in a lawsuit during discovery, which he or she is required to answer in writing and under oath.
Fee simple possession , for INTERVAL INTERVAL OWNER SHIP SHIP the limited time purchased (one or more week s), of a time-share un it, com com plete plete with deed , title title an an d equ equ ity.
INTESTATE
A person who enters another's land because INVITEE of an express or implied social invitation, such as a social guest. The term term also covers certain certain government workers who enter someone's land, such as police officers and firefighters. Classification of such status was revoked by a recent court case. INVOLUNTARY ALIENATION Title to real property may be acquired or transferred by operation of law or court order.
The loss of real INVOLUNTARY CONVERSION property due to destruction, seizure, condemnation, foreclosure sale, or tax sale.
Incapable of being recalled or IRREVOCABLE revoked; unchangeable. unchangeable.
A person who dies w ithou ithou t a will. will.
Distribution of the property INTESTATE SUCCESSION Distribution of a person who died intestate to his or her heirs.
INVER INVER TED PYRAMID PYRAMID A way of visualizing visualizing own ership of real property; theoretically, a property owne r owns all the earth, water, and air enclosed by a pyramid that has its tip at the center of the earth and extends up through the property boundaries out into the sky.
A person who holds property primarily for INVESTOR future appreciation in value for federal and state income tax purposes.
INVOLUNTARY LIEN Any lien imposed on property without the consent of the owner.
See time sharing
INVERSE CONDEMNATION ACTION A court action by a private landowner against the government, seeking compensation for damage to property that resulted from government action. action.
property held as an INVESTMENT INVESTMENT PROPERTY Unimproved property investment because it is appreciating in value. The worth of a property to a INVESTMENT VALUE particular investor based on his or her desired rate of return, risk tolerance, etc.
The license status that results INVOLUNTARY INACTIVE when a license is not renewed renewed at the end of the license license period.
is a INTER VIVOS TRUST A living trus t; inter vivo s is Latin expression expression meaning amo ng t he li ving . INTERVAL INTERVAL OWNER SHIP SHIP
A type of sec urity urity using th e sale INVESTMENT CONTRACT of real property as the investm ent.
IRRIGATION DISTR ICTS Quasi-political districts created under special laws to provide for water services to propertyowners in the district. district.
A set of guidelines on good IREM CODE OF ET HICS HICS business conduct for professional property managers. IR S
Internal Revenue Service.
ISSUE A person s direct descendants: children, grandchildren, great-grandchildren, and so on.
INVESTING The two main reasons for investing are income and profit. P AGE 48
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. as a result of a judg men t in a lawsuit. lawsuit.
J
JUDGMEN T DEBTOR DEBTOR A person who has an unsatisfied money judgm ent levied against him or her.
A screen or shutter consisting of JALOUSIE overlapp overlapp ing horizon horizon tal slats that that is used on the exterio exterio r to keep out sun and rain while admitting light and air. JAMB The side post or lining of a doorway, window, or other opening.
A decis decis ion by an appellate JUDGMENT REVERSED court disagreeing with an inferior court's decision and modifying tha decision to conform with its findings.
JOINDER JOINDER REQUIREMENTS The rules requiring both husband and wife to consent to and sign agreements and conv conv eyances concerning com munity pro pro perty. perty.
JUDICIAL FORECLOSURE
between the adjacent adjacent surfaces of two JOINT The space between components joined and held together by nails, glue, or cement, for example.
Joint ownership by two or more JOINT TENANCY persons wit h right right of survivor survivor ship. Four unities unities must be present: time, title, interest, and pos session. Property held by two or more people with right of survivorship.
priority or rank t han ano ther or JUNIOR LIEN A lien lower in priority other l iens. JUNIOR MORTGAG E A mortgage second in lien to a previous mortgage.
A deed that gives title to
JUNIOR TRUST DEED trust deed.
A trus t created jointly by
Any trust deed which is not a forst
JURAT Certificate f an officer, such as notary public or magistrate, who has witnessed someone s signature to a sworn document; also, that part of an affidavit stating by whom, where, when, and before whom it was sworn.
In legal effect it is a par tners tners hip JOINT VENTURE for a limited limited , specific business project. project. One of a series of parallel beams to JOISTS which the boards of floor and ceiling laths or plaster boards are nailed and supported in turn by larger beams, girders, or bearing walls.
The authority of a court to hear and JURISDICTION decide a particular type of case. The power of a court to hear and decide a case or issue. JURI SDICT ION, APPELLATE The authority to hear an appeal (as opposed to to conducting a trial). trial). Compar e: Juris diction, Or iginal.
A court of competent jurisdiction' jurisdiction's s f inal JUDGMENT determ ination of a matter presented to it. it. The final final decision by a court in a lawsuit, motion, or other matter.
power to JURI SDICT ION, DIVERSITY DIVERSITY The federal cour ts power hear cases in which a citizen of one state sues a citizen of another state (or country).
A decision by an JUDGMENT AFFIRMED appellate appellate c ourt reaffirming, approving , and agreeing with an inferior court's decision. JUDGMEN T CREDITOR CREDITOR
A sale of property by court proceedings to
JUMBO LOAN Amount of loan exceeding the maximum purchased by FNMA and FHLMC. Also called called a Nonconforming Loan.
title insur ance po licy JOINT PROTECTION POLICY A title insuring the interest of both owner and lender.
JOIN JOIN T TR TR USTEESH USTEESH IP husband and wife.
SEE: Foreclosure, Judicial.
JUDICIAL REVIEW When a court considers whether or not a statu statu te or regu lation lation is constitutio constitutio nal. JUDICIAL SALE satisfy a lien.
JOINT NOTE A note signed by two or more persons who have equa l liability liability for paymen paymen t.
JOINT TENANCY DEED grantee as joint tenants.
A money judgment that, because it JUDGMENT LIEN has been recorded, has become a lien against against the judgment judgment debtor's real property.
A person who is owed money
diction is not JURISD JURISD ICTION ICTION , GENERAL When a court s juris diction limited to specific specific types of cases.
P AGE 49
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. JURISD JURISD ICTION ICTION , ORIGINAL The authority to conduct a trial (as opposed to hearing an appeal). COMPARE: Jurisdiction, Appellate. JURISD JURISD ICTION ICTION , PERSONAL A court s authority over a partic ular ular individual; usually obtaine d by service of process JURISDICTION, SUBJECT MATTER The types of cases a particular court has authority to hear. COMPARE : Juris Juris dicti diction on General. JUST COMPENSATION COMPENSATION JUST VALUE
LABOR-ORIENTED LABOR-ORIENTED INDUSTRY loca loca te near a low-cost labor po ol.
a business that tends to
Unreasonable delay in asserting one's legal
LACHES rights. LAFCO
Local Agency Formation Commission.
SEE: Eminent Domain. Allow to act; noninterference by LAISSEZ-FAIRE governm ent in in trade trade , indu indu stry, stry, an d individual individual action gene rally. rally.
The fair market value.
LAND The surface, the soil and rocks beneath, and the airspace above that the landowner can reasonably use and enjoy.
K
LAND CONTRACT(of sale) A contract used in the sale of real real p rope rope rty whe whe n the seller wishes to retain retain legal legal title until all or a c ertain ertain part of the purchase price is paid paid by the the buyer. It is is also referred to as an installment sales contract or an agreement of sale.
KEY LOT Lot that has several other lots backing onto its sideyard.
A major department store store in a KEY TENANT shopping center. Also called anchor store.
A definite LAND D ESCRIPTION ESCRIPTION (LEGAL DESCR IPTION) and pos itive itive writ ten ident ification of a sp ecific parcel of land and its location without ad ditional ditional oral testim ony.
Payment of money from someone other KICKBACK than the buyer or se ller assoc assoc iated with with the real estate estate business. KIOSK
A business with a high LABOR-INTENSIVE LABOR-INTENSIVE INDUSTRY concentration concentration of employees per acre.
Property totally surrounded by other LANDLOCKED property with no means of ingress ingress or egress.
A sm all sales sales sta ll in a shopp ing mall.
LANDLORD the property.
KITING Also known as ballooning, an unethical and fraudulent act in which dual contracts are made, one at the true purchase price and the second at a higher price, with the hope of duping the lender into granting a higher loan
L LABOR An agent of production; cost of all operating expenses expenses and wage s exce exce pt management.
A business with a LABOR -EXTENSIVE -EXTENSIVE INDUSTR INDUSTR Y low concentration of employees per acre.
The person who leases property; the owner of
LAND SALES CON TRACT Contract for for Deed) A contract for the sale of property, by which possession is delivered to the buyer, but title title rema ins wit h the the sell er until full paymen t or t he satisfaction of other stated conditions. LAND RE SIDUAL SIDUAL TEC HNIQUE Technique of income capitalization; the net income remaining to the land (after income attributable to the building building has been deducted ) is capitalized into an estimate of value for the land. LANDS, TENEMENTS, AND HEREDIT AMENT Inheritable lands or interest. LARGE PARCEL Total parcel of property from which a governmental body is acquiring only a portion through condemnation. LATE CHARGE
P AGE 50
A charg charg e made by a lend lend er agains agains t a
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. borrower who fails to make loan installments when due.
insuran ce, and repairs ), in ad dition dition to the ren t paid to the landlord.
The support that the soil of an LATE SUPPORT adjoining owner gives to his or her neighbor's land.
LEASE OPTION OPTION A lease in which the lessee is given the option to purchase the property at a specific price and under the term term s set ou ou t in the the lease lease option ag reem ent..
LATENT DEFECTS Defens that are not visible or apparent; hidden defects.
LEGACY LATERAL SUPPORT
LATH A building material of wood, metal gypsum, or insulating board fastened to the frame of a building to act as a plaster base.
The building owner may own and LAUNDRY ROO ROO M service the machines, outside outside vendors may own and handle the machines themselves themselves or the machines may be operated on a card instead of a coin. LAWFUL OBJECT
A gift gift o f mo ney by will.
SEE: Support, Lateral. Legal advice is not some thing that that a LEGAL ADVICE real estate agent gives. Refer the client to a lawyer. The process server must br LEGAL DOCUMENT SERVICE at least 18 years of age and the person receiving the service must be at least 18 years of age. LEGAL DESCRIPTION A description recognized by law; a description by which property can be definitely located by reference to government surveys or approved recorded recorded maps.
A legal purpose.
LAW OF FIXTURES Five tests to determine whether an object is a fixture or p ersonal property.
A complaint that co ntains fac ts LEGALLY SUFFIC IENT (FL) indicating indicating that a violation has occu rred of a Florida statue, a DBPR rule, or a FREC rule.
One not belonging to or connected LAY MEMBER with a particular particular profession.
LEGATEE Someone who receives personal property (a legac legac y) under a w ill. ill.
LEASE A contract between owner and tenant, setting forth conditions upon which the tenant may occupy and use the property and the term of the occupancy.
governmen t that has primary LEGISLATURE The arm of a governmen responsibility for making new laws.
A tran tran saction whereby a LEASE ASSUMPTION proerty owner agrees to take over the balance of payments on a prospective tenant s current lease if he or she rents spac e in the own er s property. LEASED FEE property.
LEASE, FIXED A lease lease in w hich the rent is set at a fixed amount, and the landlord pays most or all of the operating expenses (such as taxes, insurance, and repair costs). Also called a flat lease, gross lease, or straight lease.
Title insurance issued for LENDER S TITLE INSURAN INSURAN CE the u npaid mortga ge am am ount to pro pro tect th e lend lend er against title title defects.
LEASE, GRADUATED A lease in wh ich it is is agreed that the renta l paym paym ents will increas increas e at int int ervals by an agreed amount or according to an agreed formula.
leas e requiring requiring the tenant to pa y all LEASE, NET A leas the costs of maintaining the property (such as taxes,
, and the action taken by the lender on the loan application. LENDERS ESCROW INSTRUCTIONS A lender s instruction to an escrow company giving specific conditions that must be met before escrow can close close or the deed of trust can be recorded.
Property owner s interest in leased
LEASEHOLD ESTATE The estate of a tenant under a lease. (Se e Estate for Years.)
LENDER A lender with assets of more than $10,000,000 per year must not disclose to the public the race, sex and income of the loan applicant s , the amount of loans loans requested
A tenan tenan t; the person who is e ntitled to LESSEE possession of property under a lease. LESSOR lease.
A landlord; the property owner who executes a
LESS-THAN-FREEHOLD ESTATE LE T
P AGE 51
A leasehold estate.
The temporary use of property to be rented.
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. suspended or revoked license license has been reinstated. reinstated.
Letter from a bank ask ing that LETTER OF CREDIT the holder be allowed to withdraw money from the recipient bank or agency that will be charged back to the first bank. exp ression of intent to invest, LETTER OF INT ENT An exp develop, or purchase without creating any firm legal obligation to do so. LETTER REPORT One-to five-page written report summarizing the appraisal and its conclusions.
A method of amortizing amortizing a LEVEL-PAYMENT LEVEL-PAYMENT P LAN mortgage whereby the borrower pays pays the same amount each month.
LIEN, MATERIALMAN S Similar to a mechanic s lien, but based on a debt owed to someone who supplied materials materials (as opposed to labor) for a project. LIENOR another.
LEVERAGE Use of borrowed funds to purchase property, with the expectation of increasing the rate of return to equity; sometimes called trading on the equity. An example example of using using m aximum c redit. redit.
One who has a claim claim or charge on the property property of
LIEN PRIORITY The order in which liens are paid off out of the proceeds of a foreclosure sale. LIEN, LIEN, PROPERTY T AX A specific lien on property to secure payment of the property taxes.
LEVY To execute upon; to seize and sell property to obtain m oney to sa tisfy a judgm ent.
ches only to a par ticular ticular LIEN, LIEN, SPECIF IC A lien that atta ches piece of property (as opposed to a general lien, which attaches to all of the debtor s property).
The claim of creditors against a business.
Debts or claims that creditors have LIABILITIES against assets.
LIEN, TAX
A lien on property to secure the payment of taxes.
LIEN THEORY STATES States in which the mortgagor (borrower) retains legal title to the property; lender (mortgagee) has a lien on the pro perty asa security for the debt.
Insurance protecting a LIABILITY LIABILITY INSURANCE property owner owner or manger in case of damage damage to the person or property of another due to the owner s or manager s negligence. Personal, nonassignable authorization to LICENSE enter and perform certain acts on another's land. Under the law before 1968, which LICENSEE classified persons who entered upon others' land, a licensee was someone who entered entered upon land with with the owner's express or implied permission for a business purpose. Referring to real estate licensee he may be given disc disc iplinary iplinary action for being incomp etent.
One whose property is subject to a claim or charge LIENEE by another. LIEN EQUIT ABLE A lien arising as a matter of fairness, rather than by agreement or by operation of law.
Used in finance to express the payment where LEVEL the monthly sum of principal and interest is always the same.
LIABILITY
LIEN A lien makes the debtor's property security for the payment of a dept or or the discharge of an obligation. obligation. A charge or claim against property as security for payment of a debt or obligation.
LIFE ESTATE An estate in real property that continues for the life life of a particular particular person. The life involved may be that of the own own er or that of of som e other other person. A n estate estate in property property whose duration is limited to and measured by the life of a natural person or persons. LIFE-ESTATE LIFE-ESTATE PUR AUTR AUTR E VIE A life estat e for the life of another , where the measuring life is someone other than the life tenant.
Certification as a licensee; the granting LICENSURE by the state of a license to practice real estate estate .
A business that collects a LIFE INSURANCE COMPANY pers pers on s savings by selling selling con tract tract s (policies (policies ) often paid through periodic periodic premiums to provide provide cash payment upon death.
LICENSE, RESTRICTED A real estate broker s or salesperson s licen se that includes includes li mitations on the licensee s right to do business; usually issued after a
A trend in property LIFE SAFETY SAFETY AND SECURI SECURI TY management that provides for the management of the total physical physical pro tection of of te nants. Atypical life safety safety an d security P AGE 52
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. program consists of prevention, detection, containment and counteraction.
or derived from ancestors.
A security center LIFE SAFETY CONTROL CENTER found most often in large complexes, responsible for handling various emergencies impacting complex workers. LIFE T ENANT ENANT Someone who owns a life estate; estate; the person entitled to possession of the property during the measuring life. Ceiling for rate increas es over life of LIFETIME LIFETIME C AP an ARM, expressed as a particular particular percentage percentage rate or as so many points over or under the initial rate. Rights to shoreline property on a LITTORAL LITTORAL R IGHTS large body of water, such as an ocean or lake.
An agreement LIQUIDATED DAMAGES CLAUSE between the parties that in the event of a breach, the amount of dama ges shall shall be liquidated liquidated (set o r fixed). fixed). T he am ount is set before the breach, usually at the time of making the contract, on the assumption that the exact amount of damages is difficult to determine because of the nature of the contract. The process of determining liabilities and LIQUIDATION apportioning the assets in order to discharge the indebtedness of a business to be sold. LIQUIDITY into cash.
When exercising the LIMITED APPRAISAL REPORT departure provision you are usu ally working unde r this this provision.
The ease with which property can be converted
The ease in which LIQUIDITY OF INVESTMENT investments can be quickly turned into cash.
LIMITED LIABILI LIABILITY TY COM PANY A business entity where each ow ner has the limited liability of a corpora corpora te shareholder and the tax advantages of a partner.
LIS PENDENS A notice of pending litigation recorded to give constr uctive notice of a suit that that has been filed. A recorded notice that a lawsuit is pending, the outcome of which may affect title to to property.
A partnership LIMITED LIMITED LIABIL LIABILITY ITY PARTNERSHIP composed of some partners whose contribution contribution and liability liability are limited. There must always be be one or m ore general partners with unlimited liability liability and one or more limite d partne rs with with limited limited liability. liability. A special partnership com posed of limited limited and general partne partne rs. The gene ral par tners h ave unlimited liability liability and total management, whereas the limited limited partners have to voice voice in the management and their only financial exposure is to the extent of their investment. In some ways t he limited limited partners' interest is similar to that of stockholders in a corporation. LINEAL
A horizontal board that supports the load over LINTEL an opening such as a door or window.
An employment contract between a broker and LISTING his principal (client). An employment contract LISTING AGREEMENT authorizing a broker to sell, lease, or exchange an owner's property. LITIGANT LITIGATION
A party to a law law suit; a plaintiff plaintiff or defenda nt. A civil civil lawsu it; a judicial controv ersy. ersy.
Legal rights related to land abutting an ocean, LITTO LITTO RAL sea, or lake, usually extending to the high-water mark.
The line of ancestry or a straight line line
LINEAR FOOT A measurement meaning one foot or 12 inches in length as contrasted to a square foot or a cubic foot.
The ratio of rentable space to usable space LOAD FACTOR on a multiple-tenancy floor of an office building.
LIN EAR REGRESSION Statistical technique for calcu latin g sale s adjustm adjustm ent; line line of best fit for two variables.
LOAN APPLICATION APPLICATION A lender s initial source of information on a bo rrower /applica nt and th e collateral involve involve d; stipulates stipulates the amount of money r equested equested and the repayment repayment terms.
oth er ins ins trument tra nsferring title in LINK Each deed or oth history of ownership of a parcel of the chain o f title title , the history real estate.
A lender may consider a loan LOAN APPLICANT S AGE applican applican t s age w hen making a determ ination ination of the the applican applican t s credit worthiness.
LINEAL
Descended in a direct family line; relating relating to
LOAN ASSUMPTION
P AGE 53
In a loan assumption setup the seller
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. and buy er are liable liable under the loan.
LOAN-TO-VALUE LOAN-TO-VALUE -RATIO (LTV) Percentage of a loan to a propert y s appraised value; expressed in in terms as to how much the lender will lend. lend.
LOAN ASSUMPTION FEE A fee a lender charges a buyer in retu retu rn for granting the buyer perm ission to assume an existing loan.
LOAN TRUST FUND ACCOUNT Account.)
When all conditions of the loan have LOAN CLOS ING been met , the loan officer authorizes the recording of the trust deed and disbursement of funds. The comm ittee in a lending lending LOAN COMMITTEE institution that reviews and approves or disapproves the loan applications recomm ended by a loan officer. LOAN COMMITMENT A lender s agreement to lend a specified amount of money; must be exercised exercised within a certain time limit.
(See Impound
The process of approving approving or LOAN UNDERWRITING disapproving loan applications. LOAN VA LUE The lender's appraised value of the property. LOCAL ACCESS NETWORK A method of linking together personal computers within the same office to allow communication between the computers.
produced for LOCAL PRODUCTION Goods and services produced sale or use in the town or area in which they are produced.
LOAN, CONSTRU CTION A loan made to cover the cost of construction of a building, usually arranged so that the money is advanced in installments as the work progresses.
LOCK-IN CLAUSE A clause in a promissory note or land contra ct that that prohibits prepayment prepayment befor e a specified specified date, or prohibits it altogether. altogether.
LOAN, CONVENTIONAL Loan with only the property as security, without the government insuring (FHA) or guaranteeing (VA) the loan.
Form Form al com com mitm mitm ent ent to lend lend a specific specific LOCK-IN LOCK-IN RAT E am ount or at a specific rat rat e, gu gu aranteed for a s pecific tim e period.
A loa loa n agent us ually ually LOAN CORRESPONDENT used by distant lenders to help the lender make real estate loans.
A low- rent , multistory building located located in the central LOFT business district, originally used for a combination of manufacturing, office and storage storage space.
LOAN FEE
A loan origination origination fee.
LOAN, GUARANTEED A loan in which someone (the VA, for example) guarantees repayment; repayment; so that if the borrower defaults, the guarantor reimburses the lender for some or all of the loss.
Steps involved in the loan LOAN ORIGINATION process, from application to close of escrow. LOAN ORIGINATION FEE A fee a lender charges a borrower in exchange for issuing a loan; also called a loan fee. LOAN PACK AGE A group of documents prepared along with a loan application to give the prospective lender complete details details about the proposed loan.
LON G-LIVED, G-LIVED, INCURABLE PHYSICAL DETERIORA DETERIORA TION TION Loss in value attributable to the major components of a building, when age is the major contributing factor and the cost of repair would exceed the value that would be added to the structure by the repair. LOSS, CAPITAL A loss taken on the sale of a capital asset. Real estate is cons idere idere d a capital asset if it s income property, investment property, or property used in a trade or business. LOSS FACTOR The ratio of rentable space to usable space on a sin gle-tenancy floor of an of fice fice build ing. LOSS, PASSIVE A loss taken in connection with income property. property. SEE: Passive Income. LO T
the borrower LOAN, PURCHASE MONEY 1. A loan the uses to buy the security property (as opposed to a loan secured by prope rty the borrow borrow er already owns). 2. A carryback loan.
A parce l of land; espe cially, cially, a parcel in subdivision.
LOT AND BLOC K DESCRIPTION DESCRIPTION The type of legal description used for platted property. The description states only the propert y s lot number and block number in a particular subdivision. subdivision. To find o ut the exact location of the p roperty s P AGE 54
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. boundaries you consult the plat map for that subdivision at the county recorder s office.
This letter MANAGEMENT CONFIRMATION LETTER contains: where where the owner has moved to, why he or she she did not sell an d his or her curre nt goal in re re nting nting the property.
A short title company report LOT BOOK REPORT providing the property owners name, the vesting, the property s legal description, description, an d a plat map.
The financial and operational MANAG MANAG EMENT PL PL AN strategy for the ongoing management of a property. It is based on the market analyses, a property analyses and the owners goals and consists of an operating budget, a five year forecast and sometimes a comparative income and expense analysis. analysis. Future data very im portant.
An opening with a series of horizontal LOUVER slats set at an angle to permit ventilation without admitt ing rain, sunlight, or vis ion. Payment of the entire principal amount LUMP SUM due at maturity on a straight note.
A method of MANAGEMENT PRICING WO RKSHEET computing management fees by itemizing itemizing management activities, calculating the direct cost to the firm and add ing a percentage for profit.
LUMP-SUM DOLLAR ADJUSTMENT Type of sales adjustment; specific dollar amount is added or subtracted for each differing feature.
A court decree ordering ordering a MANDAMUS,WRIT OF lower court judge, public official, or corporate officer to perform an act acquired of that office.
M
MANDATE
Direc Direc tive from h igher igher authority to a lowe lowe r body.
MARGINAL LAND working working or using it.
A term that designates a person who is a MAI member of the American Institute of Appraisers of the National Association of Realtors.
Land which barely pays the cost of
The amount added to the index rate determined a MARGIN borrowers adjusted interest rate on a adjustable loan.
MAILBOX RULE An acceptance of a contract offer is effective as of the moment it is mailed, even though the other pa rty hasn t received it yet.
The difference between between the MARG IN OF SECURITY SECURITY amount of secured loan(s) on a property and its appraised value.
A provision in a mortgage MAINTENANCE CLAUSE agreem ent that that requires mortgago rs (borro (borro wers) to maintain mortgaged property in good condition.
MARKET APPROACH (to value) Approach.
May be MAINTENANCE STAFF OR PERSONNEL either employees or independent contractors. They should report the number of people living in a residential unit, the use of extension chords and the the storage of flammable products.
SEE: Sales Comparison
A regional and neighborhood studies MARKET ANALYSES of economic. Demographic and other information information made by the property manager to determine the supply and demand, market trends and other factors important in leasing and operating a specific property.
MAJ ORITY, AGE AGE OF The age at which a person gains legal capacity; in California, 18 years old. COMPARE: Minor.
A business that tends to MARKET-ORIENTED MARKET-ORIENTED INDUSTRY locate near industrial users and consumers of its products.
note; the MAKER A person who signs a promissory note; borrower who promises to repay the debt.
MARKET D ATA APPROACH Analysis.)
Mere membership in an MLS by a broker creates creates ML S a dual agency with the principals of other broker member s of the MLS. (Multiple Listing Listing Service) Service) The comm itting of of an unlawful act, MALFEASANCE especially by a public official.
(See Comparative Market
MARKET EXPOSURE Making a reasonable number of potent ial buye rs of a proper ty is av ailable ailable for sale. MARKET METHOD OF DEPRECIATION Method of Depreciation. Depreciation. MARKET PRICE
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SEE: Sales Data
The price paid regardless of
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. pressures, motives, or intelligence. incom e the property co co uld MARKET RENT The rental incom command if placed for rent on the open market as of the effective d ate of the appra isal. isal. Two forces the tend to affect MARKET TREN D DATA value in this outlook are social and economic, and governmental and environmental. (1) The price at which a willi willing ng MARKET VALUE seller would sel l and a w illing illing buy er would buy, neither being under abnormal abnormal pressure. (2) As defined by the courts, it is the highest price estimated in terms of money that a property will will bring if exposed for sale in in the open market, allowing a reasonable time to find a purchaser with knowledge of the property's use and capabilities for use. MARKETABLE TITLE Title free and c lear of reasonable objections and doubts; also called merchantable title.
real pr operty and is is not paid, that pers on is ent itled to a lien against the property a s a m eans of s ecuring p ayment. C ertain ertain statutory steps must be taken to file, record, and foreclose the lien. Mem o to set: set: A docum ent filed in a law suit which asks to be pla pla ced on the wa iting iting list list ("doc ("doc ket") ket") for the next availa availa ble court date. MEDIATION The act of having a third party attemprt to reconcile a dispute between two parties. MEDIATION CLAUSE A clause in a contract requiring mediation in the even of a dispute.
parties reach a MEDIATOR A person who helps the parties voluntary voluntary agreem ent. MEETING OF MINDS
SEE: Mutual Consent .
which MEGALOPOLIS A heavily populated urban area which includes many cities. cities. MENACE
A threat to use du du ress. (Se e Duress.) Duress.)
MERCHANTABLE TITLE MASTER IN CHANCERY the court.
A fact that would be likely to MATERIAL FACT affect a person's decision in determ ining whe whe ther to enter into a particular transaction. materials for MATERIALM MATERIALM AN Someone who supplies materials a construction project. SEE: Lien, Materialman s. COMPARE: Mechanic. MATURE PHASE
SEE: Stable Phase.
MATURITY DATE The date by which a loa n is supposed to be paid off in full. full.
A type of MAXIMUM PERCENTAGE LEASE percentage lease that sets a ceiling on the amount of rent to be paid. MEASURING LIFE
(See Marketa ble Title.) Title.)
An appointed assistant to
SEE: Life Estate. Estate.
Someone who perform perform s work MECHANIC Someone (construction, im im provem ent, o r repa repa irs) on rea l property. property. SEE: Lien, Mechanic s. s . COMPARE: Materialman. A lien given given b y statute to MECHANIC'S LIEN persons supp lying labor, labor, materials, or o ther serv serv ices to improve real property. W henever a contractor, laborer, or materialman provides labor or materials to improve
An organization of shopping MERCHANTS ASSOCIATION center s tenan ts inten ded to facilitate joint advertising, promotion and other activities beneficial to the center. MERGER Uniting two or more separate properties by transferring transferring ownership ownership of all of them to one person.
The combination of two two estates. Also MERGER OF TITLE refers to the joining of one estate burdened by an encumbrance and another estate benefitted benefitted by the encumbrance. Whenever a benefit and a burden burden are merged, the encumbrance is extinguished. Imaginary north-south lines that intersect base MERIDIANS lines to form a starting point for the measurement of land. MERIDIAN, PRINCIPAL In the government survey system, the main north-south line in a particular grid, used as the starting point in numbering the ranges. California has the Humboldt Meridian, the Mt. Diablo Meridian, and the San Bernardino Meridian. METES
Measurements.
Terms used METES AND BO UNDS DESC RIPTION to desc ribe the bounda ry lines of land, setting forth all the boundary lines together with their terminal points and angles. Metes means measurements Bounds means boundaries.
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REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. An intermediary who merely brings two MIDDLEMAN parties together.
An intentional or negligent MISREPRESENTATION suggestion or statement of a material fact in a false manner with the intent of deceiving someone into taking a course of action he would not otherwise normally pursue.
A taxation measurement equal to one tenth of MILL one percent ($.001).
MIST MIST AKE, M UTUAL When both parties to a contract were mistaken a bout a fan o r a law.
MILLAGE A tax expressed as the number of mills to be applied.
MIST MIST AKE, UNILATER UNILATER AL When only one of the parties to a contract was mistaken about about a fan or a law.
MINERAL RIGHTS Rights to the minerals located beneath the surface of a piece of property.
Facts or circumstances that tend to justify or MITIGATION excuse an act or course of conduct.
A MINIMUM-GUARANTEED PERCENTAGE LEASE type of percentage lease that requires the tenant to pay either a fixed minimum rental or a percentage of gross sales, whichever is greater.
MIS
The U.S. economic system system is a MIXED CAPITALISM prime example. Many different types of businesses abound in the U.S. giving it st st rength econo mically.
MINIMUM RENT Base rent that is the fixed minimum amount paid under a percentage percentage lease.
A budget motel that has been MINIRESORT transformed into a desirable weekend vacation spot by capita lizing on local recreational areas and points of interest.
MIXED-USE DEVELOPMENT (MXD) A development in the use of pro perty perty c om bining bining retail, retail, office-res idential idential or indus trialtrialoffice residential development.
Small, secure sto rage units rented to MINISTORAGE individuals individuals and s mall busin busin esses. Rent is usually established after surveying similar spaces to determine market rents rents . (1) A person under the the age of m ajority. MINOR (2) In California California all persons persons under eig hteen hteen years of age - the age of majority majority in in California. Someon e under age 18 . MINOR, EMANCIPATED A minor who is or has been married, is on active duty in the armed forces, or has a declaration of of emancipation from from a co urt. An emancipated minor has legal capacity to contract. MINUS CASH FLOW An event that takes place when there is not enough cash to cover expenses and service the mortgage debt.
Any crime punishable by fine or MISDEMEANOR imprisonment other than a penitentiary. MISFEASANCE unlawful manner.
A lawfu l act do ne in a negligent or
MISPLACED IMPROVEMENT A building that is functi onally onally obso lete bec ause it is the w rong type or use for its location; an example of functional obsolescence.
Mortgage Information System
MOBILE HOME PARK The property manager of thid type of rental must offer a one-year lease to all tenants.
Building composed of modules MOD ULAR HOME Building constructed on an assembly line in a factory. MONETARY POLICY Programs by the Federal Reserve System that increase or decrease the supply of or demand for money in an effort to achieve designated economic goals. A lease of property for MONTH-TO-MONTH TENANCY a month at a time, under a periodic tenancy that continues for successive months until terminated by proper notice, usually 30 days. MONTHLY MORT GAGE PAYMENTS PAYMENTS A specified amount of money that is paid every month to reduce the amount of the mortgage.
A sta sta tiona tiona ry, non non motorized veh icle icle MOB ILE HOME designe d and equipped equipped for human habitation. It may be transported to a ho mes ite by special equipment. MOLDING Usually patterned strips used to provide ornamental variation of outline or contour, such as cornices, bases, window and door jambs. MONUMENT A fixed object and point established by surveyors or others to establish land locations. MORAL TURPITUDE P AGE 57
An act of corruption, vileness, or
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. moral depravity; a disgraceful action or deed. The temporary suspension, suspension, MORATORIUM usually by statu statu re, of the e nforcemen t of liability liability for debt.
MORTGAGE YIELD The rate of return for a buyer of an exiting loan tha t takes into considera tion tion the interest interest rate, discount rate, loan servicing fees and the term of the loan.
in strum strum ent by which pro perty perty is MORTGAGE An in hypothecated to secure the payment of a debt or obligation.
MORTGAGOR One who gives a mort gage on his his or her property to secure a loan or assure performance of an obligation; the borrower under a mortgage. (See Debtor.) A borrower (property (property owner) of money under a mortgage.
Investment MORTGAGE-BACKED SECURITIES securities similar to bonds representing an interest in a pool of mortgages. Use their own funds to MORTGAGE BANKERS make loans, sell loans to investors and service loans that they have made. Differ from mortgage MORTGAGE BROKERS bankers in that they invest no capital; their prime function is to bring together borrowers and lenders, for this they are paid a fee. A mortgage loan company MORTGAGE COMPANY that originates, services, and sells loans to investors.
MORTG AGE/EQUITY AGE/EQUITY ANAL YSIS YSIS A technique used to analyze the debt and equity return requirements of an investment.
FH A MORTGAGE INSURANCE PREMIUM (MIP) insures lenders against loss on FHA loans;. The premium can be paid up front or financed as part of the loan.
A computer system or program that utilizes MULTIMEDIA data in several different forms (i.e., text, voice , music and video) MULTIPLE LICENSES more real estate firms.
Licenses held by a broker in two or
A listing, usually an exclusive-right-t exclusive-right-t oMULTIPLE LISTING sell, taken by a member of an organization organization composed of real estate brokers with the provisions that all members will have the opportunity to find an interested client; a cooperative listing listing . A listing taken by a broker and shared with ot her brokers throug h a spe cialized cialized distribution service, usually provided by the local real estate board. Generally, such listings are exclus ive right to sell listings. listings.
MUNICIPAL COURT An infer ior tr ial cou rt having jurisdiction in cases involving up to $15,000 in money damages and in unlawful detainer actions in which the rental value is under $1,000 per month.
do cument a MORTGAGE, SATISFACTION OF The do mortgagee gives the mortgagor when the mortgage debt has been paid in full, acknowledging that the debt has been paid and the mortgage is no longer a lien against the property. property. COMPARE: reconveyance.
MORTGAGE GUARANTY INSURANCE
Acce Acce ss from freeways freeways or highways MOTELS AND HOTELS is a very important factor of doing business.
MULTIPLE REGRESSION Statistical technique for calculating sales adjustments for more than one feature.
MORTGAGE LOAN DISCLOSURE DISCLOSURE STATEMENT A statement that informs the buyer of all charges and expenses related to a particular loan.
MORTGAGEE One to whom a mortgagor gives a mortgage to secure a loan or performance of an obligation: the lender under a mortg age. (See Secured Party .) A creditor (lender) under a mortgage. A lender who holds a mortgage on a specific property as security for the money loaned to the borrower.
Insurance against financial loss available to mortgage lenders from the Mortgage G uaranty Ins urance Corporation, a private company organized in 1956.
An agreement between the parties in a MUTUAL ASSENT contract. The off er and a cceptance of a contract. MUTUAL CONSENT When all parties freely agree to the terms of a contract, without fraud, undue influence, duress, menace, or mistake. Mutual consent is achieved achieved through offer offer and accept ance; itit can be referred referred to as a meeting of the minds. MUTUAL MISTAKE
SEE: Mistake, Mutual .
MUTUAL SAVINGS BANK A savings bank originated in the New England states in which depositors place their savings with the right to borrow money for home loans. There are no P AGE 58
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. mutual saving banks in California.
promissory note that meets specified statutory requirem requirem ents and is therefore easily transferable in somewhat the same manner as money. The negotiable negotiable instrument can be passed by endorsement and delivery (or in some cases by mere delivery), and the tra nsfere e takes title title fre e of certain real defenses (such as failure of consideration, fraud in the inducement) that might exist against the original original maker of the negotiable instrument. You are not responsible dor this if it has been forged or altered altered
MUTUAL WATER COMPANY A water company organize organize d by or for water-use rs in a given district, with the objec objec t of securing an am ple water water s upply at at a reasona ble rate. rate. Stock is issued s sued to users.
N NAR
Loan is capable of being sold on the NEGOTIABILITY secondary secondary m ortgage ortgage market. National Association of Realtors.
NEIGHBORHOOD An area whose occ upants and users share some comm on ties or characteristics. characteristics.
National Association of Real Estate NAREB Boards . This trade trade organization is is now known as the National Association of Realtors.
A shopping center of about NEIGHBORHOOD NEIGHBORHOOD CENTER 30.000 to 100.000 square feet (15 to 20 retail spaces) catering to 1,000 families or more.
NARRATIVE REPORT A detailed formal written report of the appraisal and the value conclusion.
NEIGHBORHOOD CYCLE The process of neighborhood change, involving involving four phases of change: developm ent, maturity, decline, and renaissance. (SEE: Principle of Change.)
NATION AL ASSOCIATION OF INDUSTRIAL AND A professional OFFICE PARKS (NAIOP) association association for developers, developers, owners and managers of office/business/industrial parks.
NEPA Abbreviation for the National Environmental Protection Act, a federal statute requiring all federal agencies to prepare an Environmental Impact Statement and meet other requirements whenever a major federal action is anticipated that could significantly significantly affect the env ironment.
NATION AL ASSOC IATION O F REALTORS (NAR) Has a professional organization of property managers called the Institute of Real Estate Management. NATIO NATIO NAL EN EN VIRON VIRON MENTAL POLICY ACT (NEPA) A federal act passed in 1970 that requires the processing of environmental impact disclosures for major federal action aff ecting the environm ent. NATURAL PERSON A human being, an individual (as opposed to an artificial person, such as a corporation).
Occurs when normal NEGA TIVE AMOR TIZAT TIZAT ION payments on a loan are insufficient to cover all interest then due, so that unpaid interes interes t is added added ro principal. principal. Thus, even though payments payments are timely made, the principal principal grows with each paym ent. failure to act as a reasonable, NEGLIGENCE Either the failure prudent person, or th e per per formanc e of a n act act that would not be done by a reasonable, prudent person. NEGOTIABLE Capable of being assigned or transferred transferred by endorsement; checks, drafts and notes are a ll negotiable. negotiable. NEGOTIABLE INSTRUMENT (NOTE) A check or
NE T This type of adjustment is the net sum of positive and negative adjustments. NET AREA
SEE: Useful Area.
NET INCOM INCOM E Gross annual income less income lost due to vacancies and uncollectible rents, less all operating expenses. NET INCOME RATIO RATIO NET LEASE expenses.
Net income divided by gross income.
Lease under wh ich the less less ee pays all property
The resulting amount NET OPERATIN OPERATIN G INCOM INCOM E (NO (NO I) when all operating expenses are subtracted from effective gross gross incom e. listin n g that provides that the age nt may retain NET LI STING STING A listi as compensation for his or her services all sums received over and above a stated net price to the owner. An employm ent agreement that entitles the broker to a commission only in the amount, if any, that the sales price of the property exceeds the listing price. No implied or expressed warranties.
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REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. This the discounted cash flow NET PRESEN T VALUE VALUE approach to capital budgeting. Net operating income NET SPENDABLE INCOME less vacancies, uncollectible rents, and other operating expenses.
outlined outlined by the statutes a nd the requirem ents in the security instru ment, which inc lude a no tice o f defaul t, right to reins tate, publication of sale, and trustee's sale. An inte rest in property that that NONPOSSESSORY INTEREST does not includ includ e the right right to poss ess and occu py the the property; an enc enc umbrance, umbrance, s uch as a lien or an easem ent. ent.
NEUTRAL DEPOSITORY An escrow business conducted by someone who is a licensed escrow holder.
NON-RECURRING CLOSING COSTS Fees and costs that are paid only only once usually at closing, such a s title insuran insuran ce or points.
NEW CAR DEA LERS LERS The best location fora new car dealer is with other different new car dealers.
A plea plea ding ding o f no contest by a NOLO CONTENDERE defendant; a plea in a crim inal inal action not ad mittin mittin g guilt guilt but subjecting the defendant to punishment as if it were a guilty plea. NOMINAL INTEREST INTEREST RA TE A state (or contract) rate of interest. May not correspond to the true or effective annual percentage rate (e.g., when payments are made monthly).
A type of variable NONRECURRING VARIABLE EXPENSE prop prop erty ex pense (e.g.; ca ca pital pital improv em ents) that that occu rs on on ly once. sion in t he income income NONRECOGNITION PROVISION A provi sion tax law that allows a taxpayer to defer recognition and taxation of a gain until a later time or later transaction. An individual individual licensed by the state to NOTARY PUBLIC charge a fee for acknowledging signatures on instruments.
NONBINDING ARBITRATION The decision of the arbitrator arbitrator is re view able by the court.
A lease NONCOMPETING TENANT RESTRICTIONS RESTRICTIONS clause granting a retail tenant an exclusive right to operate without com petition petition on the prope rty. NON-CONFORMING LOAN A loan for an amount that exceeds the Fannie Mae/Freddie Mac guide lines for a conforming loan. The limit is adjusted annually. Also known as a jumbo loan.
NOTE A signed written instrument prom ising payment of a stated sum of money . Shortened Shortened name for a promissory note. A note may contain all the following clauses, request for notice, prepayment penalty and late charges. NOTE, DEMAND A promissory note that is due when-ever the holder holder of the note dem ands payment. NOTICE, ACTUAL Actual knowledge of a fan, as opposed to knowledge imputed by law.
A notice recorded after NOTICE OF COMPL ETION termination of work on improvements, limiting the time in which mechanic's liens can be filed against the property.
NONCONFO NONCONFO RMING USE A property use that doesn t conform to current zoning requirements, but is allowed because the property was being used in that way before the present zoning ordinance was enacted.
NOT ICE OF CESSATION CESSATION A notice recorded by a property owner when construction on the property has ceased, although the project hasn t been completed; it limits the period in which laborers and suppliers can file mechanics liens.
Loan sources such as NONFIDUCIARY LENDER individuals who owe no agency duty, because they lend their own funds rather than invest on behalf of other lenders.
This NOTICE OF CHANGE OF TERMS OF TENANCY notice may be used for rent increases, to notify tenant of new property m anager and to notify tenants that they must begin to pay fo r certain utilities, utilities,
A lease tenancy. tenancy. (See NONFREEHOLD ESTATE under Estates for the four types of leasehold estates.) Lenders on real NONINSTITUTIONAL LENDER estate loans other than banks, insurance companies, and savings and loan associations. Foreclosure and NONJUDICIAL NONJUDICIAL FORECLOSURE sale of property without resort to court ac tion, by private private sale. For deeds of trust the foreclosure provisions are
notice th at is recorded in the county NOTICE OF DEFAULT A notice recorder's office stating that a trust deed is in default and that the holder has chosen to have the the property sold. The trusto trusto r (property owner) has three months after the date of recording to reinstate the loan loan . Recorde d notice notice that a trusto trusto r has defaulted on his secured debt. The correct name for this is request for notice .
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REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. obstructs the free passage or use, in the customary manner, of any navigable lake or river, bay, stream, canal, or basin, or any public park, square, street, or highway . A legal wrong arising arising from acts or us us e of o ne's ne's property in in a way that unreas onably interf interf eres eres with a nother's use of his pr pr operty.
NOTICE, INQUIRY When there were circumstances that should have alerted someone to a possible problem and caused him or her to investigate further, he or she may be held to have had notice of the problem.
To sell under bulk NOT ICE OF INTENTION transfer law would be recorded in the county where the business is located.
The am am ount of of m oney a property NUISANCE RENT RAISE manager can raise current rents without causing a vacancy based on the theory that the tenant will pay rather than suffer the trouble trouble and expense of moving.
NOTICE OF LEVY A notice recorded by the receiver after a court has issued a decree of foreclosure.
O
Issued by the NOTICE OF NONCOMPLIANCE (FL) DBPR in the case of a minor rule violation that does not endanger the p ublic hea hea lth, safety safety and welfare. welfare.
OBJECTIVE INTENT
SEE: Intent. Objective.
Disbursements of m oney that that OBLIGATORY ADVANCES the lender is required to make, under terms of the loan, over the period of the construction loan.
A notice NOTICE OF NONRESPONSIBILITY provided by law designed to relieve a property owner from responsibility for the cost of work done on the property or materials furnished for it when the work or materials were ordered by a person in possession. Notice relieving relieving an an owner from possession . Notice relieving an owner from mechanic's liens for work on property not ordered by that owner.
A promis or; a person to w hom another is is OBLIGEE bound by a promise or another obligation. OBLIGOR
NOTICE TO PAY REN REN T OR QUIT QUIT A notice to a tenant to vacate rented rented property. Also called a three-day three-day notice . Notice given to a tenant tenant in default default of his his lease terms or on his rent, which directs him either to cure the default or to vacate the premises. This should only be used when there is an existing lease. NOTICE OF SALE A notice issued by a trustee (or by the receiver after a decree of foreclosure) foreclosure) setting the date for the foreclosure sale.
A borrow borrow er or m ortgagor. ortgagor.
OBSERVED CONDITION METHOD OF DEPRECIATION SEE: Cost-to-Cure Method of Depreciation.
Loss in value due to reduced OBSOLESCENCE desirability and usefulness of a structure because its design and construction construction become obsolete; loss because of becoming old-fashioned and not in keeping with modern needs. OCC UPATIONAL SAFETY SAFETY AND H EATH ADMINISTRATION ADMINISTRATION a federal organization empowered to prescribe and (OSHA) legislate the use of potentially toxic chemicals and compounds, and other safety rules for the workplace.
The acceptance of a new contract in NOVATION substi tution for the old contract, with the intent that the new contract will exting exting uish the original contra contra ct. Sometimes encountered in transfers of deeds of trust, where the new owner assumes the debt and the lender, through novation, releases the former owner from any liability under the original promissory note and deed of trust.
A proposal to create a contract, which signifies OFFER the present intent of th e offeror to be legally legally b ound by his proposal.
Negotiable order of withdrawal, an NO W ACCOUNTS interest bearing checking account permitted for the first time by savings and loan associations associations and banks as of 1982. Anything that is inju rious rious t o heal th or NUISANCE indecent or offensive to the senses, or any obstruction to the free use of property so as to interfere with the com fortable en en joym joym ent of life or or property or or unlaw unlaw fully fully
Any offer to purchase received OFFERS TO PURCHASE prior to the closing of a sale must be presented by the broker unless instructions stating otherwise are received from the seller. OFFEREE
A person to whom an offer is made.
OFFEROR
A person who m akes an offer.
OFFICE BU ILDINGS about 11%.
P AGE 61
Have had a national vacancy rate of
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. A branch OFFICE OF THRIFT SUPERVISORS (OTS) of the United States Treasury Department that replaced the Federal Home Loan Bank Board as regulator regulator of the thrift industry.
OPERATING STATEMENT W ritten reco rd of a pro perty s gross income, expenses, and resultant resultant net income for a given period of time.
OFFICE PARK PARK Se e business park
This contains objectives OFFIC OFFIC E POLICY M ANUAL ANUAL of the business enterprise, employee and personnel policies and safety regulations, and job descriptions and benefits.
OPINION
An agent s opinion is not a sueable matter.
statement of a OPINION, JUDICIAL A judge s W ritten statement decision in a court case, outlining the fans of the case and explaining the legal basis for the decision.
OFFICIAL OFFICIAL RECORDS A master set of books kept by the county recorder in which copies of all recorded documents in t hat county are stored; may be microfilmed.
An attorney s written evaluation of the OPINION OF TITLE condition of title to a real property, based upon careful examination of the abstract of title.
OFF-PRICE CENTER A specialized type of shopping center recognized by the Urban Land Institute; a variation on the discount departm ent store store conce pt. OFFSET STATEMENT Statement by owner of a deed of trust or mortgage against the property, setting forth the presen t status of the debt and lien. Also called a beneficiary statem statem ent.
Because they have large tracks of OIL COMPANIES land and are ample funded these companies are suited to develop large tracts of land.
An estimate of a property s worth OPINION OF VALUE given by a licensee for the purpose of a prospective sale. OPTION CONTRACT A right to have an act performed in the future; a right given for a consideration to purchase or lease a property property u pon specified term s within a sp ecified tim e; a contract to keep an offer o pen for a particular particular period of tim e. The right of a person to buy or lease property at a set price at any time during the life of a contract.
A lease provision giving the tenant OPTION TO RENEW the right to extend the lease for an additional period of time on specified terms.
ON -SITE JOB PROG RAM Employment of tenants occupying low-cost residential buildings to perform maintenance work in these buildings. OPEN-END OPEN-END MORTGAGE OR DEED OF TRU ST A mortgage containing containing a clause that (CLAUSE) permits the mortgagor or trustor to borrow additional mon ey without without rewriting the m ortgage or deed of trust. OPEN MARKET MARKET TRANSACTION TRANSACTION Transaction in which both b uyer and seller act willingly, willingly, with full knowledge of all details of the property and transaction, and under no pressure.
An authorizatio authorizatio n given by a OPEN LISTING LISTING property-owner to a real estate agent in which the agent is given the the nonexclusive right to secur e a purchaser. Open listings may be given to any num ber of agents without liability to compensate any except the one who first secures a buyer ready, willing, and able to meet the terms of the listing or who secures the acceptance by the seller of a satisfactory offer. OPERATING BUDGET A projection projection of income and expense for the operation of a property over a one-year period.
required to run a OPERATING EXPENSES Expenses required property. Includes fixed, variable, and reserves for replacement.
OPTIONEE
The person to whom an option is given. given.
OPTIONOR
The person who gives an option.
A listing that also includes an option, OPTION LISTING permitting the broker to buy the property at the stated price at any time during the listing period. OPTION ON PROPERTY Allows the buyer to buy within certa certa in res res trictions trictions but does not make buyer buyer obligated obligated to buy.
giving t he optionee the OPTION TO PURCHASE An opt ion giving right to buy property owned by the optionor at an agreed price during a specified period. ORAL CONTRACT to writing.
A verbal agreement, agreement, one not reduced
ORDINANCE A law pass ed by a political subdivision of the state (such as a town, city, or county).
ho use on its lot with regard to ORIENTATION Placem ent of a ho its exposure to the rays of the sun, prevailing winds, privacy from the street, and protection from outside noises. P AGE 62
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. Unexplained overages overages in trust trust accounts may OVERAGES not be used to offset shortages.
ORIGINATION FEE Fee paid to the lender for originating and closing closing the loan; typically typically 1% of th e loan loan amount.
OVERLAPPING TRUST DEED or Mortgage
A simple prepayment clause OR-MORE CLAUSE that permits the borrower to make a normal payment or any larger amount, up to and including the entire outstanding balance, without a prepayment penalty.
All profits earned by a broker OWNER OF THE FUNDS through misuse of trust belong to the owner of the funds. OWNERSHIP The right of a person to use and possess property to the exclusion of others.
OSTENSIBLE That authority which a person reasonably believe an agent possesses because of the acts or om issions issions of the principal. principal.
ingle OWNE RSHIP IN SEVERALTY SEVERALTY Ownership by a s ingle individual. COMPARE: Concurrent Ownership.
An agency implied by OSTENSIBLE AGENCY law because the princip princip als int int entio entio nally nally or inadverten tly caused a third person to believe som eone to be his agent, and that third person acted as if that other person was in fact the principal's agent.
Title insurance issued for OWN ER S TIT LE INSU INSU RAN CE the t otal purchase price of the property to protect the new homeowner against unexpected unexpected risks.
P
OSTENSIB OSTENSIB LE PARTNERSH IP One or more parties cause a third party to be dece ived into into believing that a business relationship exists when no such relationship exists.
Loan secured both by real PACKAGE LOAN (MORTGAGE) and personal property, usually appliances and other fixtures.
Took over the responsibilities of the disbanded O TS Federal Home Loan Bank Board. OUSTER One co-tenant refuses to allow occupancy by the other co-tenant. OUTLAW
A trust deed PACKAGE TRUST DEED DEED OR MORTGAGE secured by both rea l prop prop erty an an d personal property. (Applianc (Applianc es, furnitur furnitur e etc.) PAPER
The Statue of Limitations Limitations has expired.
Notes in lieu of cash.
PANIC SELLING
Two things caused by overbuilding OVERBUILDING are lower rents and increased vacancy factor. OVERAGE A percentage of gross sales over a certain amount paid to an owner in addition to a minimum base rent; often required in percentage leases.
SEE: Bllockbusting. Bllockbusting.
The face amount of a loan with with no premium or PA R discount. PARCEL A lot o r piece o f real estate, particularly a specif ied part of a larger tract. PAROL
OVERAGE RENT Amounts paid over and above the base rent, under a percentage lease.
Oral or ver bal. bal.
PAROL CONTRACT OVERALL CAPITALIZATI CAPITALIZATION ON R ATE ( OAR) OAR) Th e relationship between net income and value for the total property. Used to capitalize income.
The part of the roof that extends beyond OVERHANG the walls and that shades buildings and covers walks. An im provem ent that is OVER IMPROVEMENT not th th e high high est and best us e for the site on which it is placed, by reason of excessive size or cost.
Se e Blanket Deed of Trust
An oral or ve ve rbal contr contr act.
A rule of courtroom evidence PAROL EVIDENCE RULE that once the parties make a written contract, they they may not then introduce oral agreements or statements to modify the terms of that written written agreement. An exception exception exists for fraud or mistake, wh ich will will permit the parties to offer evide evide nce to vary the terms of the writing. PARQUET FLOOR patterns.
Hardwood flooring laid in squares or
PAR TIAL TIAL EVICTION
A situ ation ation in w hich hich the landlord landlord s
P AGE 63
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. partne rship, all partne rs have unlimited liability liability and, absent other agreements, share equally equally in the management and profits of the business.
negligenc negligenc e renders all or part of the prem ises ises unusable to the tenant for the purposes intended in the lease. In a deed of PARTIAL RECONVEYANCE (DEED) trust or mortgage, a clause that perm its release of a parcel or part of a parcel from the effects and lien of that securi ty instru ment. The release usually occurs upon the paym paym ent of a sp ecifi ecifie e d sum sum of money. A clause in a trust PARTIAL RELEASE CLAUSE deed that provides for the release of pert of the property from the lien lien of the the trust trust d eed upon paym ent of a specific specific portion of the debt.
partnership in which each PARTN PARTN ERSHIP, GENERAL A partnership mem ber has an equal right right to mana ge the business business and sh are in the p rofits, as well as an equal resp onsibility onsibility for the partnership s debts. All All of the partners are general partners. partners. PARTNERSHIP, LIMITED A partnership partnership made up of one or more general partners and one or more limited limited partners.
PARTIAL TAKING Governmental agency acquiring only a portion of a property through condemnation.
PARTNERSHIP PROPERTY All property that partners bring into their bu sine sine ss at the outse t or late late r acquire fo fo r their their business; property owned as tenants in partnership. SEE: Tenancy in partnership
When a lending institution sells a PARTICIPATION part i nterest nterest in a block of loans to a nother institution or agency.
PARITY WALL A wall erected on the line between two adjoining properties that are under different ownership for the use of both owners.
Proof of PART ICIPATION C ERTIFICATE ERTIFICATE membership in a trust cooperative granted in a particular amo unt , usually with right to occu occu py a unit in prop prop erty owned by trust.
PASSIVE INCOME Income (rents) received from income property, as opposed to wages, salaries, interest, dividends, or royalties. An IRS term.
PARTITION ACTION A legal action by which coowners seek to sever their their joint joint ownershi p. The physical division of property between co-owners, usually through court action. PARTITION, JUDICIAL A court action to divide up a property among its co-owners, so that each owns part of it in severalty, or (if it s not practical to divide th e property physically) each gets a share of the sale proceeds.
(1) Conveyance of title to government land. PATENTS (2) A n ambiguous legal description description.. Dee ds used by the U.S. government when confirming or transferring ownership to private parties. PATIO HOME PAYEE note.
PARTITION, VALUNTARY When co-owners agree to terminate their co-ownership, dividing up the property so that each own s a pie pie ce of it in severalty. severalty. PARTN PARTN ER, GE NERAL NERAL A partner who has the authority to manage and contract for a general or limited limited partnership, and who is personally liable for the partnership s debts.
artne rship rship PARTNER, LIMITED A partner in a limited p artne who is primarily an investor and doe s not participate in the management of the business, and who is not persona lly lly liable for the partners hip hip s debts. An association of two or more PARTNERSHIP persons to unite their property, labor or skill, skill, or a ny one or combination thereof, in prosecution of some joint business, and to share the profits in certain proportions. An agreement of two or more individuals jointly to undert ake a business business enter prise. prise. If itit is a general
Certificates pledging a PASS-THROUGH SECURITIES group (pool) of existing existing government-backed mortgages used for the purpose of channeling funds into housing markets.
SEE: Zero-Lot-Line Zero-Lot-Line Home.
The person entitled to payment under a promissory
A provision in a promissory note, deed PAYMENT CLAUSE of trust, or mortgage, permitting the debtor to pay off the obligation obligation b efore m aturity. aturity. PAYOFF CHECK Final disbursement check to a lender to pay off a loan in fu ll.
PAYOR
Person who pays the sum on a note note due to a payee.
A provision in a mortgage that requires PENALTY CLAUSE that r equires equires th e buyer to pay a penalty in money if the mortgage payments are made in advance of the normal due date or if the mortgage is paid in full ahead of the due date. The term, as applied to nails, that serves as a PENNY measur e of nail length length and is abbreviated by the letter e tter d .
P AGE 64
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. PERCENTAGE ADJUSTMENT Type of sales adjustment; the estimated difference difference between the comparable sale and the subject is first calculated as a percentage of the sale price of the comparable, and then applied as an upward or downward adjustment to the price. PER-UNIT-COST-METHOD A method of computing management fees based on the managem ent firm s capabilities and the direct cost of managing a specific number of units.
Administrator for a
Personal prop erty. erty.
PERSONAL USE PROPERTY Property that a taxpayer owns for his or her own use (or family use), as opposed to income property, investment property, dealer property, or property used in a trade or business.
with the c ourt when a party PETITION TO CONFIRM Filed with refuses to comply with the arbitration award.
PERCENTAGE LEASE A lease on property, the rental for which is determined by the amount of business business done by the tenant, usually a percentage of gross receipts from the business , with with provision fo fo r a m inim inim um rental.
PER DIEM expenses.
PERSONAL REPRESENTATIVE deceased person s estate. PERSONALTY
A property management fee PERCENTAGE FEE expressed as a percen tage of the the gros s collectible collectible income from a pro pro perty. perty.
PERCOLATION
real property. property. (See Real Property.) Property.) Property that that is movabl e, as opposed to real property, which is immovable; also includes intangible property and leasehold estates.
A request to a court of appeal PETITION TO R EVIEW asking to exam ine the record of the proce eding eding s in a spec ific case.
The ability of t he soil to absorb water.
PETITIONER A person who petitions the court on a special proceeding or a motion.
By the the d ay; an an allowance allowance for da da ily When evaluating PHYSICAL CONDITION OF PROPERTY the physic physic al condition condition of a building it is also important to no te the num ber and size of the u nits and th e staff size size .
Point w hen a party or parties to a PERFORMANCE contract fulfill the prom prom ises or obligations in the the contract.
Th e PHYS ICAL DETERIORATION OR DET ERIOR ATION loss of value from all causes of age and action of the elements. Loss in value brought about by wear and tear, disintegration, use and actions of the elem elem ents.
A bond furnished to PERFORMANCE BOND guarantee that a b uilder will will perform in ac cordance with the contract terms and that the property at completion will be free of mechanic s liens.
structural PIER A column of masonry used to support other structural members.
Baseboard heating or PERIMETER HEATING any system in which the heat registers are located along the outside walls of a room, especially under the windows.
PITCH The incline or rise of a roof. PITI The monthly payments necessary to cover principal, interest, interest, taxes, and insuranc e.
A type of fixed property expenses PERIODIC COST that occurs on a regular but infrequent basis. PERIODIC TENANCY A leasehold estate that continues indefinitely indefinitely for su ccessive periods of time, until terminated by proper notice. notice. When the periods are one mon th in duration, duration, it is often called called a mo nth-to-month lease. PERMANENT FINANCING
Se e Take-out Loan
PERSONAL INJURY A term com monly used in tort (e.g. negligence cases) indicating an injury to one's being or body (for example, cuts or broken bones) as opposed to inju inju ry to his prop prop erty. erty. PERSONAL PERSONAL PRO PERTY
Any proper ty that is not
The party who initiates a lawsuit; the person PLAINTIFF who sues another. PLANNED UNIT DEVELOPMENT(PUD) A development (usually residential) with small, clustered lots designed to leave more open space than traditional subdivisions have. Each individual lot is substandard, has inadequate parking, and has equity that often increases at a faster pace than other association housing. PLANNING goals.
Devising ways and means for achieving desired desired
PLANNING COMMISSION A local government agency responsible responsible for preparing preparing the community s general plan for P AGE 65
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. development. SEE: General Plan.
The starting (and ending) POINT OF BEGINNING BEGINNING (POB) place in a land survey using the metes-and -bounds method of property description.
Architectural and PLANS AND SPECIFICATIONS SPECIFICATIONS engineering drawings and specifications for construction of a b uilding uilding , includin g description description of m ateria ls and manner in which they they are to be applied.
Any means by which POINT OF CONTACT INFORMATION to contact the brokerage firm or individual licensee including mailing address, physical street address, e-mail address, telephone numbers, and fax machine numbers.
PLANT DEPARTMENT Department in a title company where research materials and copies of official docum docum ents are kept. PLATE BOOK A large book containing subdivision plats, kept at the county recorder s office. PLATE A horizontal board placed on a wall or supported on posts or studs to carry the trusses of a roof or rafters directly; a shoe or base member, as of a partition or other fram e; a sm all flat board board placed on or in a wall to support girders girders and rafters, rafters, for example.
The right of the state to enact laws POLICE POWER and regulations and its right to enforce them for the order, safet y, health , morals , and general welfare of the public. public. The power of the state to prohibit acts that adversely affect the public hea lth, welfare, safety, or morals. morals. (Zoning and building building codes are examples of exercise of the police power.) The notebook of written rules and POLICY POLICY MAN UAL regulations that set desired standards and procedures in an office.
PLAT PLAT M AP Map of land subdivision or housing development.
POORER NEIGHBORHOODS the most during a recession.
Deposition of perso nal pr pr operty by a PLEDGE debtor with a creditor as security for a debt or engagement.
PORTFOLIO LENDER A lender that keeps loans for its own portfolio, rather than selling the loan on the secondary market to Freddie Mac or Fannie Fannie Mae.
One who is given a pledge as security. PLEDGEE (See Sec urity urity Party)
This type of framing is larger-sized POST POST AND BE BE AM lumber used so that the framing members can be spaced farther ap ap art.
PLEDGOR (See Debtor)
These neighborhoods suffer suffer
One who gives a pledge as security. POSSESSION 1. The holding and enjoyment of property. 2. Actu Actu al phys phys ical ical oc cupation of rea l prop prop erty. erty.
PLOTT AGE or ASSEMBLAGE INCREMENT (VALUE) The app reciat ion in u nit value c reated by joining smaller ownerships into one large single ownership.
POSSES SION D ATE Day when the buyer actually moves on to the property; property; may be different from the close of escrow or recording date.
(1) Laminated wood m ade up in panels. panels. PLYWOOD (2) Several thicknesses of wood glued together with grains at different angles for strength. Private mortgage insurance. P M I Private insurance.
erest in property that that POSSESSORY INTEREST An int erest includes the the right to possess and occupy the property; not necessarily ownership.
See mortgage POTABLE
Water suitable for drinking.
POINT OF BEGINNING BEGINNING (POB) The sta rting rting poin t in in a metes and bounds description; described by reference to a monument.
The total annual income a POTENTIAL POTENTIAL GROSS INCOME property would would produce with with 100% occupancy and no collection or vacancy losses.
to 1% POINT In the context of a loan, a poin t is equa l to of the loan amount and would be included in the loan costs.
An instrument authorizing a POWER OF ATTORNEY person to act as the agent of the person granting granting it. it. A special power of attorney limits the age nt to a particu particu lar or specific act, as a landowner may grant an agent special power of attorney to convey a single and specific parcel of property. Under a general power of attorney, the agent may do almost anything for the principal that the principal co uld do him self or he rself. A document authorizing a person (an attorney-in-fact) to act as
POINTS
(See Discount Points) Points)
The final estimate stated in a POINT ESTIMATE single dollar amount.
P AGE 66
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. an agent.
of a note before before it actually actually becomes due . A fee or charge imposed upon a debtor who desires to pay off his loan before its m aturity. aturity. Not a ll prepayment clauses provide for a p enalty, and in many real estate transactions the law regulates the amount of penalty that may be changed.
POWER OF SALE CLAUSE A clause in a deed of trust trust giving giving the tru tru stee the right to fo reclo reclo se nonjud icially icially (sell the debtor s prope rty without a court ac tion) tion) if the borrower defaults.
The future interest POWER OF TERMINATION TERMINATION created whenever there is a grant of a fee simple subject to a condition condition subseque nt estate. estate. The future future interest matures into a present interest estate only if the holder timely and properly exercises his right upon a breach by the current holder of the fee estate. judicial opin ion tha t serves PRECEDENT A publi shed judicial as authority for determining a similar issue in a later case. SEE: Stare Decisis
PREEMPTION
PRESENT VALUE Current value or the discounted value of some future income or benefits. benefits.
An agent s predictions are not
That which may be assumed without PRESUMPTION proof. A conclusion conclusion or assump tion that is is binding in in the absence of sufficient proof to the contrary.
SEE: Right of Preemption.
A house manufactured, PREFABRICATED HOUSE and sometimes partly assembled, before delivery to the building site.
The amou nt of incom incom e available available to PR E-T AX CASH FLOW the owner after the mortgage lender has been paid its portion of the net operating income.
An attachment PREJUDGEMENT ATTACHMENT ATTACHMENT of property made before the trial, with the intent of holdin holdin g that property as sec urity, urity, to have an as set to sell if the c ourt ju dgm ent is is favorable to the attaching party. PRELIMINARY REPORT A report showing the current statu statu s of a prop erty an d the condition under whic h a title title company is willing to insure title as of a specific date. PREM ISES SECTION
(See Granting Clause)
Interest PRICE PRICE LEVEL ADJUSTED M ORTGAGE (PLAM) rate is fixed, but outstanding loan balance and monthly payments vary according to changes in some price index.
PREPAID ITEMS Expenses paid by borrower-buyer at closing, such as taxes, insurance, and interest.
Paying off part or all of a loan loan before
A provision in a mortgage PREPAYMENT CLAUSE that allows the mortgagor to pay the mortgage debt ahead of schedule without penalty. PREPAYMENT PENALTY
Penalty for the payment
A program of reg reg ularly ularly PREVENTI VE MAINT ENANCE ENANCE scheduled maintenance activities and routine inspections of the interior and exterior of the buildings, equipment and grounds. Its objectiv objectiv e is to pres erve the p hysic hysic al integrity integrity of the p roperty, eliminate corrective maintenance costs and ensure uninterrupted service to the tenants. PRICE The amount of money or ot her considerati consideration on given for a property; agreed upon between buyer and seller; also called purchase price or sales price.
An amoun t, usu usu ally ally meas ured ured in points, points, in PREMIUM excess of the loan balance owing, paid for the purchase of a note and a trust trust deed.
PREPAYMENT payment is due.
Securing of an PRESCRI PTION, EASEMENT BY easement by open, notorious, and uninterrupted use, adverse to the owner of the land for the period required by statute, which, in California, California, is is five years. years. A method of obtaining an easement by adverse use over over a prescribed prescribed period of time. PRESENT INTEREST An estate in land that gives the owner the right to occupy his property immediately; as opposed to a future interes t, which grant s only the right to occup y the premises at some future date. date.
PRECEDE NT, BINDING BINDING A precedent that a particular court is req uired to follow. follow. PREDICTIONS asueable asueable ma tter.
Allows borrower borrower to make extra PREP AYMEN T PRIVILEGE PRIVILEGE payments on the principal payment without penalty.
PRIMA FACIE (1) Presumptive on its face. (2) Assumed correc t until until overcome overcome by further proof. Facts , evidenc e, or or documents that are taken at face value value and presumed to be as they appear (unless proven otherwise).
A constr uction supervisor who PRIME CONTRACTOR contracts with the property manager to oversee a job and then sublets the work to various skilled trades people. PRIMARY LENDER P AGE 67
Financial institution that makes
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. mortgage loans directly to borrower.
proximity with lower-valued properties.
A source for the purchase of a PRIMARY MARKET mortgage by a borrower.
PRINCIPLE OF SUBSTITUTION When a property can be easily replaced replaced by ano ther, the value of suc h property tends to be set by the cost of a cquiring cquiring a n equally desirable desirable su bstitute property.
The market in PRIMARY PRIMARY MORTG AGE MARKET The which loans are made directly to the borrowers. PRIME R ATE customers.
PRINCIPLE OF SUPPLY AND DEMAND Prices and rent levels tend to increase when demand is greater than supply and tend to decrease decrease when supply exceeds demand.
Interest Interest rate banks charge preferred
The employer of an agent. agent. Someone PRINCIPAL who hires an agent to act on his his behalf. The term also refers to the amount of an outstanding loan (exclusive of interest). Imaginary lines running PRINCIPAL MERI DIANS DIANS north and south and crossing a base line at a definite point; used by surveyors for reference in locating and describing land under the government survey system.
PRINC IPAL RESIDENCE RESIDENCE PR OPERTY Real property that is the owner s hom e, his his or he he r main dwelling. dwelling. A person can o nly have one principal residence at a time. The term is most often used in connection with the income tax laws.
PRINCIPLE OF ANTI CIPATION CIPATION Value is the present worth of future benefits, both income and intangible amenities.
PRI OR A PPROPR PPROPR IATION A system of allocating water rights. Under this system, a person who wants to use water from a partic ular ular lake or river is is requi red to apply for an appropriation permit. It is not necessary to own property beside the body of water in order to ac quire an appropriative right. COMPARE : Riparian Riparian R ights. ights.
PRINCIPLE OF CHANGE Real estate values are constantly changed by social, economic, and political forces in society. (SEE: Neighborhood Cycle.) PRINCIPLE OF COM PETITION PETITION Market demand generates profits and profits generate competition; competition stabilizes profits.
That which com es first in point of time or right. PRIORITY superior, higher, or preferred rank or position. P ri ri va va te te re re st st ri ri ct cti on on s A r e no nor m al al ly ly f ou ou nd nd in in t h e C C& C& R .
PRINCIPLE OF CONFORMITY Maximum value results when prope rties rties in a neig hborhood are relatively relatively similar in siz e, style, style, qua lity, lity, use and/or t ype.
PRIVATE MORTGAGE INSURANCE Insurance
See Mortgage
When there is a federal deficit, the PRIVATE SECTOR treasury covers the short fall by issuing interest-bearing securities securities to inve inve stors stors , in doin doin g so, the governm ent is is actually borrowing money from the private sector.
Both land and PRINCIPLE OF CONSISTENT USE improvements must be appraised for the same use. PRINCIPLE OF HIGHEST AND BEST USE Maximum market value of a given parcel of land, vacant or improved, is cre ated by developm ent or utilization utilization at at its highest and best use.
PRIVITY relationship.
PRINCIPLE OF IN CREASING AND AND DEC REASING REASING RETURNS Income and other benefits available from real estate may be increased by adding capital improvements only up to the point of balance in the agents of production, beyond which the increase in value tends to be less than the increase in costs. PRINCIPLE OF PROGRESS ION AN D REGR ESSION Lower-valued properties generally benefit from close proximity to many properties of higher value and highervalued properties tend to suffer when placed in close
PRINCIPLE OF SURPLU S PRODUC TIVITY, BALANCE BALANCE AND CONTRIBUTION Income that is available to land, after the other economic agents have been paid for, is known as the the surplus of productivity; a proper balance of the agents maximizes the income available to land; the value of any agent is dete rmined by its co ntribution ntribution to the whole. whole.
Closeness or mutuality mutuality of a contractual
PROBABLE CAUSE prosecuting.
Reasonable grounds or justification for
Court supervision of the collection and PROBATE distribution distribution of a deceased person's estate. estate. PROBATE COURT A court that oversees the distribution of property under a will or by intestate succession. PROBATION A suspended sentence during good behavior, usually under supervision.
P AGE 68
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. The law of how to present and PROCEDURAL LAW proceed with legal rights (for example, laws of evidence, enforc ement of judgment s). It is is the opposite opposite of substantiative law.
PROPERTY. Everything capable of being owned and acquired lawfully. The rights rights of ownership. ownership. The right to use, possess, enjoy, and dispose of a thing in every legal way and to exclude everyone everyone else from interfering with these righ righ ts. Property is classified into two groups, personal property and real estate.
Preparation of loan application and PROCESSING supporting documents for consideration for by a lender or an insurer.
PROPERTY ANAL ANAL YSIS YSIS A study made to familiarize a property manager with the nature and condition of a building, its position relative to comparable properties and its estimated income and operating operating expenses.
PROCURING CAUSE That event originating from another series of ev ents that, without a break in continuity, continuity, res ults in an agent's prod ucing a final buyer.
PROPERTY HELD FOR PRODUCTION PRODUCTION OF INCO INCO ME Income Property.
A business PROFESSIO PROFESSIO NAL ASSO ASSO CIATION CIATION (PA) corporation consisting of one or more individuals engaged in a primary business that provides a professional service.
One way to increase property income PROPERTY INC OME in a large metropolitan area is to rent garages and storage space s eparately. eparately.
The amount one mak es over and above above PROFIT one one s cosy.
PROPERTY INSURANCE
A n annual PROFIT AND LOSS STATEMENT financial report of a property s actual net profit before taxes.
The principle that states the value of PROGRESSION an inferior inferior p roperty is en en hanced by its asso ciation with with superior properties of the same type.
PROPERTY MANAGEMENT FEES For many real estate offices property management fees are a more steady source of income than commissions.
A broker acting as a property PROPERTY PROPERTY M ANAGER manager may not legally refuse to rent an apartment to an unmarried couple. The property manager must make sure the property m anagem ent c ontra ontra ct gives gives him or her the s pecific right to display signs on the property. Some of hid duties are ; preparing a tweleve month statement, forecasting projected monthly dues and creating budgets and handling expenses.
PROMISEE Someone who has been promised something; someone who is supposed to receive the benefit of a contractual promise. PROMISOR Someone who has made a contractual promise to another.
SEE: Estoppel,
PROPERTY PROFILE PROPERTY TAX
PROMISSORY NOTE
(See Hazard Insurance)
A branch of the real estate PROPERTY MANAGEMENT profession that seeks to preserve or increase the value of an investment property while generating income for its owners. The portion of the real estate business involving the operations, maintenance maintenance and marketing of income-reducing property
An estimate of the PRO FORMA STATEMENT economic results of a proposed project; a projected incom incom e statement.
PROMISSORY ESTOPPEL Prom issory.
SEE:
Shows the way title was taken.
SEE: Tax, Property .
Se e Note
PROOF, BURDEN OF The responsibility for proving or disproving a particular issue in a lawsuit. In most cases, the plaintiff has the burden of proof. PROOF, STANDARD STANDARD OF The extent to which the plaintiff or prosecutor must have convinced the jury or judge judge in order to win the case. In mo st civil suits, suits, a preponderance of the evidence must support the plaintiff s case. In a criminal action, the prosecutor s case must be proven beyond a reasonable doubt.
Property PROPERTY USED IN A TRADE OR BUSINESS such as business sites and factories factories used in one s trade or business. The initiative measure passed in 1978 PROPOSITION 13 that led to maj or revisions in C alifornia alifornia s property tax laws. Allows a senior citizen to purchase a PROPOSITION 90 new hous e in a d iffere iffere nt county and k eep his or her old tax bill. bill. PRORATION The process of dividing something (especially a sum of m oney or an expense) propor tionately. The bankers
P AGE 69
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. rule. (360 days)
Editorial space in a newspaper, magazine or PUBLICITY Editorial other medium that is not paid for but serves to a ttrac ttrac t public atten atten tion to an ind ind ividua ividua l, firm firm or comm odity. odity.
The right of a member of a PROPRIETARY LEASE cooperative to occ upy a unit in the building building subject to certain conditions.
A form of development that contains contains a m ixture of PU D building types and land use. PUFFING Superlative statements about a property that shouldn t be c ons idered ass ertions of fact. The best buy in tow n, or It s a fabulous location are examples of puffing. Puffing is not a sueable matter.
PROFIT A PRENDRE An easement coupled with a power to consume resources on the burdened property.
written prom ise to to pay a PROMISSORY NOTE A written designated sum of money at a future date.
PUNITIVE DAMAGES Money awarded by the court for the sole purpose of punishing the wrongdoer, and not designed to compensate the injured injured party for his damages.
Anything that may be owned. Anything PROPERTY of value in which the law permits ownership.
PUR AUTRE VIE
To divide or assess proportionate shares PRORATE of charges and credits between buyer and seller according to their individual period of ownership.
PURCHA SE AND AND INST ALLMENT SA LEBACK Involves purchase of the property upon upon completion of construction construction and immediate saleback on a long-term installment contract.
PRORATIONS Adjustments of interest, taxes, and insurance, etc., on a pro rated basis as of the closing or agreed upon date based on a 30 day month.
PURCHASE OF LAND , LEASEBACK AND AND LEASEHOLD land is purchased purchased MORTGAGES An arrangement whereby land by the lender and leased back to the developer with a mortgage negotiated on the resulting leasehold of the income property constructed. The lender receives an annual ground rent, rent, plus plus a perc perc entage of incom e from the pro perty. perty.
Division of the taxes PRORATION OF TAXES equally or propor tionately between buyer buyer and seller on the basis of time of ownership. PROVISIONAL TITLE the title title provisiona provisiona l.
SEE: Life Estate Estate Pur Autre Vie.
PURCH ASE AND LEASEBACK LEASEBACK Involves Involves the purchase of property by the buyer and immediate leaseback to seller.
A condition in a deed makes
PROXIMATE CAUSE That cause of an event which, in a natural and continuous sequence sequence unbroken by a new cause, produced that event, and without which the event would no t have ha ppened. Also, Also, the procurin procurin g cause. A broker is the proc uring cause of a s ale if his or he r efforts set in motion an unbroken chain of events that resulted in the sale. sale. PUBLIC ACCOMMODATIONS Places of public public accom modations con structed for first occupancy before August 26, 1990 are required to remove architectural barriers which limit limit access by disabled persons.
A mortgage or deed PURCHASE MONEY INSTRUMENT of trust that does not permit a deficiency deficiency judgment in the event of foreclosure and sale of the secured property for less than the amount due on the promisso promisso ry note. It is is called purchase purchase money since the deed of trust and mortgage was used to buy all or or p art of the p roperty. PURCHASE-MONEY MORTGAGE OR PURCHASE-MONEY A mortgage or deed of trust DEED OF TRUST (PMM (PMM ) given as part or all of the consideration for the purchase of property or given as se curity curity for a loan to obtain mone y for all all or part of the purchase price. price. PURCH ASE AND AND SALE AGREEMENT A contract in which a seller seller prom ises to convey tit tit le to re re al pro pro perty perty to a buye buye r in exchange for the purchase price. Usually called a deposit receipt in California. SEE: Deposit receipt.
PUBLIC RECORDS Records which by law impart constructive notice of matters relating to land.
PUBLIC TRUSTEE The county official whose offices has been created by the statute to whom title to real property in certain states, e.e, Colorado, is conveyed by trust deed for the use and benefit of the beneficiary, who usually is the lender.
PURCHASE PRICE
Q
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Se e price
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. Quarter; any of the four quarte rs into QUADRANT which something is divided. The process of reviewing prior to QUALIFICATION the approval (of a buyer s housing needs and financial abilities, abilities, of a borrower s mortgage loan application, or of an application for licensure.(Underwriting) QUALITY OF CONSTRUCTION Classification or rating based on basic structural integrity, materials, finishes, and special features.
high ly technical process process in QUANTITY SURVEY A high arriving at a cost estimate of new construction and sometim es To in the building trade as the price take-off method. It involves a detailed estimate of the quantities of raw material. Used as well as the current price of the ma terial terial and installatio installatio n costs. T hese fac tors a re all all added together to a rrive rrive a t the cost of a structu re. It is usually used by contractors and experienced estimators. QUARTER ROUND A molding molding whose profile resembles a quarter of a circle. QUASI Almost as if it were.
A contract implied by law; that QUASI-CONTRACT is, t he law w ill ill imply and cons ider ce rtain re lations hips hips as if they were a contract. QUASI-LEGISLATIVE QUASI-LEGISLATIVE (FL) Powers delegated to the FREC to enact rules and regulations, decide questions of pra ctice ctice , and validat validat e rec ords. ( imp rint rint with with FRE C s seal).
Powers delegated to the QUASI- JUDICIAL (FL) FREC to discipline real estate licensees for violations of of real estate license law and FREC administrative rules. QUAS QUAS I PARTNERSHIP
QUIET TITLE ACTION A lawsuit designed to remove any clouds on a title title to proper ty. ty. It forces forces the claimant of an advers e interest in property to prove his his righ t to to title; otherwise he will will be forever barred from asserting asserting it.
A deed to relinquish relinquish any inte inte rest in QUITCLAIM DEED property tha tha t the grantor may h ave, but implying no warranties. A deed that transfer s only whatever right, title, title, o r inter inter est, if if any, the grantor owns, without implying any warranties. The minimum number of persons who may QUORUM lawfully transact the business of a meeting.
R RACE/NOTICE RULE When the same property has been sold to two different buyers, it the second buyer records his or her deed before the first buyer, the second buyer has good title to the property - as long as he or she did not have notice of the first buyer s interest. RADIANT HEATI NG A metho d of heating, usually consist ing of coils or pipes placed in th e floor, wall, wall, or c eiling. eiling.
One of a series of boards of a roof designed to RAFTER support roof loads. A strip strip of land six m iles iles wide, determ ined b y a RANGE government survey, running in a north-south direction. A series of government RANGE LINES (SUBMERIDIANS) survey lines lines running north and sou th at six-mile inter inter vals staring with the principal meridian and forming the east and west boundaries of town ships. The appraiser s estima te of th th e range in RANGE VALUE which the property s value is most likely to be.
(See Ostensible Partnership)
QUESTION O F FACT FACT In a lawsuit, a question about what actually occurred, as opposed to a question about the legal consequences of what occurred ( a question of law).
RATE ADJUSTMENT DATE With respect to an adjustable rate mortgage, the date the borrower s note range may change.
QUESTION OF LAW In a lawsuit, a question about what the law is on a p articular articular po int; what the legal rights and duties of the parties were.
The adoption or approval of an act RATIFICATION perform ed on behalf of a person without previous auth orization. orization. Approval and confirmation of a prior act performed on one's behalf by another person witho witho ut pre pre vious vious authority. authority.
QUIET ENJOYMENT The right of an owner to the use of property without interference with his or her possession or use.
lish title title QUITE TITLE A court action b rought to estab lish and to remove a cloud from the title.
RATIFIED
Approved
The relationship in quantity, size or amount between RATIO two things; proportions.
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REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. REAL ESTATE
members consist primarily of real estate brokers and salespersons.
(See Real Prop erty) erty)
REAL ESTATE SALES ASSOCIATE The same as a real estate salesperson, holding a real estate license and employed by a broker.
Real estate estate debt has been REAL ESTATE DEBT rapidly increasing over the past two decades. A sequence of strengths strengths and REAL ESTATE CYCLE weaknesses that occurs in the real estate segment of the general business economy; phases of the cycle are influenced by, but are not identical to, those of the business cycle. REAL ESTATE SETTLEMENT PROC EDURES ACT requiring the disclos disclos ure to (RESPA) A federal law requiring borrowers of settlement (closing) procedures and costs by means of a pamphlet and forms forms prescribed by the United States Department of Housing and Urban Development.
READY, WILLING, AND ABLE BUYER A purchaser of propert y, who i s willing willing to b uy on terms acce ptable to the seller, and who further possesses the financial ability to consummate the sale. Producing Producing such a buyer sometimes earns the broker a commission, even though a sale is not forthcoming.
Land, including the air above and the REAL ESTATE earth below, plus any permanent improvements affecting the utility of of the of the land; real prope rty; pro pro perty perty th at is not personal property.
A rea rea l estate agent is REAL ESTATE AGENT require d to to use d iligence, iligence, care a nd skill in in the performance performance of his dut ies. ercia l activity activity in REAL ESTATE BUSINESS A comm ercia which the sale, purchase, leasing rental or exchange or management of real property is conducted by qualified and licensed parties acting either for themselves or for compensation. REAL ESTATE BOARD
An organization whose
REAL ESTATE CYCLE Periodic pattern of changes in the amo unt of co nstruction nstruction and volum volum e of sales sales in the real es tate market.
lized REAL ESTATE INVEST INVEST MENT T RUST(REIT) RUST(REIT) A specia lized form of holding title to property that enables investors to pool their resources and pur chase p roperty, while s till receiving receiving considerable tax advantages, without being taxed as a cor poration. oration. Also Also known as REI T. The comm issioner has the REAL ESTATE LICENCE right to suspend a real estate a real estate licence when a licensee licensee : makes a se cret prof prof it, acts for m ore than than one par ty without the con sent o f each and is d erelict erelict in his duty. A license license is not required when an owner rents or manages his or her own property.
REAL ESTAT E SYNDIC SYNDIC ATE An organization of investors usually in the form of a limited partnership who have joined together for the purpose of pooling capital for the acquisition of real property interests.
All references to age in REAL ES TATE TATE ADVE RTISING RTISING All real estate advertising are prohibited.
sale REAL ESTATE CONTRACT 1. A purchase an d sale agreement. 2. A land contract. 3. Any contract having to do with real pro perty. perty.
REAL ESTATE LICENSEE M ALFEASANCE ALFEASANCE (CA) Th e special fund established by the legislature to help compensate victims of real estate licensee malfeasance a Recovery Account Fund.
A profession requiring REA L ESTATE ESTATE P ROFESSION knowledge of real estate values, experience in dealing with the public, plus exceptional personal integrity and character as qualifications to act as advisors and agents for members of the public. REAL REAL ESTATE RECO VERY VERY ACCOUNT (CA) Awards of attorneys fees, and punitive damages, may be recovered from the Real Estate Recovery Account. An individual s recovery from the Real Estate Recovery Account is not limited to $50,000 per transaction.
Is the agent of the REA L ESTATE SALESPERSON employing broker. A real estate salesperson is the special agent. In California a real estate salesperson must be licenced by the Department of Real Estate. (DRE) Real e state activ ities involving REAL ESTATE SERVICES compensation for performing the activities for another. A special arrangement under REAL ESTATE TRUST federal and state law whereby investors may pool funds for investments in real estate and mortgages and yet escape corporation corporation taxes.
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REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. inapplicable by the introduction of contradictory contradictory ev idence.
Land and anything affixed, REAL PROPERTY incidental, or appurtenant to it, and anything considered immova ble under the law. law. Land, buildings, buildings, and other immovable property permanently attached thereto.
RECAPTURE (1) The rate of interest necessary to provide for the return of an investme investme nt. (2) A provision provision in in tax laws that that reduces certain certain benefits from claiming depreciation. depreciation.
Must be REAL ESTATE ESTATE PURCHASE CONTRACT made by parties with legal legal capaci ty to do so, must be an offer made on definite terms and with a lawful objective, and must include acceptance of the terms by all parties and some form of consideration. consideration.
A provision in a percentage lease RECAPTURE CLAUSE that grants the landlord the right to terminate the lease at the end of a certain period if gross sales have not reached the level anticipated during negotiations.
A REAL PROP ERTY ADMINISTRATOR (RPA) property manager who has successfully successfully completed BOMI s educational program and fulfilled other requirements for this professional designation.
A clause within an assignment RECAPTURE PROVISION and subletting lease lease clause giving the landlord the right to recover any space that the tenant is unable to occupy or sublease.
RE AL P ROP ERTY LOAN LAW Article 7 of Chapter 3 of the Real Estate Law under which a real estate licens licens ee negotiating loan s s ecured b y real p roerty within within a specified range is required to give the borrower a statement disclosing the costs and terms and which also limits the amount of expenses and charges that a bborrower may pay with respect to the loan.
A neutra neutra l third party, appo appo inted by the court to RECEIVER collect the rents and profits from property, and distribute them as ordered by the court. Often used as a remedy when mere damages are inadequate.
REAL PROPERTY SALES CONTRACT CONTRACT An agreement to convey title to real property upon satisfaction of specified conditions which does not require conveyance within one year of formation of the contract. The buyer does not take title.
The peak in the business cycle; the point at RECESSION which the supply supply equals and begins to surpass demand.
REAL PROPERTY TAXES. Unpaid real property taxes consti tute a lien lien prio r to to a mor tgage lien. lien. REASONABLE REASONABLE TIME In the real estate business 30 day s is considered a reas onab le time time ..
or profit is REALIZATION The point at which a g ain or actually obtained; for example, the value of a piece of property has been increasing steadily, but the owner s profit won t be realized until sh sh e sells sells the property. A real estate broker holding active REALTOR membership in a real estate board affiliated with the National Association of Realtors. Membership in a trade organization organization for brok brok ers or salespe ople ople is optio optio nal. nal. REALTY
Real prop erty. erty.
A variable period of time, which REASONABLE REASONABLE TIME may be affected by market conditions, desires of the owner, supply and demand, fluctuations of values, or an offic ial de cision. REBUTTABLE PRESUMPTION A presumption that is not conclusive and that may be contradicted by evidenc e. A presumpt presumpt ion that applies applies unless unless proven
A provision provision in a mortgage, RECEIVERSHIP CLAUSE related to income producing property, that is designed to require that that income derived derived shall be used to make mortgage payments in the event the mortgagor (borrower) defaults.
When you divide a number into one, the RECIPROCAL result is a re cipro cipro cal. RECIPROCAL OF THE CAPITALIZATI CAPITALIZATION ON RA TE and factor are the reciprocals.
Multiplier
A determination by an RECOMMENDED ORDER administrative judge that includes findings and conclusions as well as other information required by law or agency rule to be a final order. is ta xed (which is RECOGNITION The point at which a g ain is ordinarily in in the year it was realized, but may be later if a nonrecognition provision applies). RECONCILIATION The process by which the appraiser reviews and considers the indicated values developed by the applied approaches to arrive at a final value conclusion. RECONSIDERATION A request by the Department of Real Estate or the respondent made before the effective day of the hearing decision. RECONVEYANCE (DEED OF) A conveyance to the landowne r of the legal title title held b y a trustee un der a deed of trust . The transf er of propert y back from a lender who holds holds an intere st as securi ty for the payment of a debt. In a deed of P AGE 73
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. trust, the beneficiary reconveys property upon satisfaction of the promissory note. RECONVEYANCE DEED trustor to trustee. trustee.
RECURRING VARIABLE EXPENSE A type of variable property expense (e.g., redecorating costs) that occurs repeate dly on an ir regular basis.
Convey s title from from REDEEM
RECONVEYANCE, PARTIAL A reconveyance that releases some parcels from the lien of a blanket deed of trust, usually recorded when the borrower has paid off a certain am ount of the the debt.
Filing of instruments for RECORDATION (RECORD) record in the office of the count y record er. The act of having a docum ent filed for record in the county recorder's office. Once recorded, the instrument gives gives constructive notice to the world. RECORDED LOT, BLOCK AND TRACT Legal description of a parcel of land by means of reference to a recorded plat of a subdivision. RECORDING The process of placing placing a document on file with a design ated ated publ ic official for pub lic lic noti ce.
To buy back; repurchase; recover.
REDEMPTION Buying back one's property after a judicial sale. The repurchasing of one's proper ty after a judicial sale. REDEMPTION, EQUITABLE RIGHT OF The right of a borrower to redeem property prior to the foreclosure sale. REDEMPTION PERIOD Period of time in which the borrower may redeem his or her property. REDEMPTION, STATUTORY RIGHT OF The right of a mortgagor to redeem property after a foreclosure sale.
Existing structures are destroyed anew REDEVELOPMENT ones are built im me diately. diately. Is the failure or refusal by the lender to provide REDLINING financing in certain communities. Redlining does not include any consideration of the market value of the real estate intended to secure the loan. A licensee is required to report any institution that he knows that is taking part in this activity.
RECORDING RECORDING NUM BER The numbers stamped on documents when they re recorded, used to identify identify and locate the documents in the public record. (Each page is stamped with a consecutive consecutive number, but an entire document is oft en referred referred to by the number on the first page.)
REFINANCING The paying-off of an existing obligation ans assuming a new obligation in its place. To finance anew, or extend or renew existing financing. REFORMATION A legal action to correct a mistake in a deed or other document.
RECOVERING ADDICTS Are considered handicapped persons and are protected under the Federal Fair Housing Act RECOVERY RECOVERY F UND UND . Generally administered by the Real Estat e Commis sion. Requires license es to to contr ibute, ibute, then reim reim burses aggrieved persons who are una una ble to collect from brokers for wrongdoings. Real Estate Commissio ner. The public official official charge d with enforcing the real estate laws as the y apply to license es, subdivisions, subdivisions, an d real estate r elated elated a ctivities. ctivities.
REGIONAL CENTER A large shopping center containing from 70 to 225 stores and more than 400,000 square square feet of leasable area.
For th th is type type of m ail to to be successful it REGIONAL MAIL must encompass a surrounding population population of over150,000 people within a 15-mile radius.
The assigned t ime over which RECOVERY PERIOD property is depreciated for tax purposes.
Author ization by the state state t o place place an REGISTRATION applican t on the register (record) of of ficially ficially recognized individuals or businesses.
System for legal RECTANGULAR SURVEY SYSTEM description of property based on principal meridians, baselines, and a grid system.
REGRESSION The principle that states that the value of a superio superio r property is adversely affected by its assoc iation with with an inferior property of the same type.
RECURRING COSTS impound account.
Any item that requires an
Costs and fees that RECURRING CLOSING CLOSING CO STS will br paid mont hly hly or an nually such such a s fire, insuranc e, interest, interest, property property taxes and mort gage insurance.
A type of fixed property REGULARLY REGULARLY R ECURRING ECURRING C OSTS expense (e.g. cleaning costs) that occurs consistently each month. REGULATION 1. A rule adopted by an administrative agency. 2. Any governmental order having the force of law. P AGE 74
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. Board s REGULATION Z The Federal Reserve Board regulation that implements the Truth in Lending Act. An estim estim ated breakdo wn of costs that will be be incurred in obtain ing a lo an; given to the b orrower orrower b y an institutional institutional lender before the loan is taken out; a consumer protection form. REINSTATE a trust deed.
To cure adefault under a note secured by
pooling investment money using using the REIT A method of pooling trust form form ownership. RELATION BACK A legal doctrine that allows a court to rule that a party acquired title at some point before he or she actually received the deed. Applied in cases involving involving escrow or the exercise of an option to
RELIGIOUS ORGANIZATIONS May limit sales or rentals of dwellings for noncomm ercial purposes to members of the same religion.
An agreement by the lender to RELEASE OF LIABILITY LIABILITY terminate the personal obligation of the buyer.
A right available available to an yone REINSTATEMENT under an accelerated promissory note secured by a deed of trust trust or m ortga ortga ge on property. If a deed deed of trust is foreclosed by trustee's sale, the the debtor m ay have up to three three months from the record ing of the notice of de fault fault to pay the amount in arrears plus interest and costs, thereby completely curing the default (reinstating) without penalty. REGIONAL REGIONAL ANALY ANALY SIS Includes economic conditions, conditions, physical attributes and population growth.
Return of savings to thrift REINTERMEDIATION institutions from previously higher paying investment outlets. is a business REIT A Real Es tate Investment Trust is trust which deals principally with interest in land ---generally organized to conform to the Internal Revenue Code. REJECTION Refusal to accept an offer. Repudiation of an offer automatically terminates the offer.
Th e RELATIVE RELATIVE COMPARISO COMPARISO N ANALYSIS adjustment terms are expressed in terms terms of value (superior, inferior, inferior, etc.).
RELEASE CLAUSE A stipulation in a deed of t rust or mortgage that that upon upon the payme payme nt of a specific sum sum of money to the holder of the deed of trust or mortgage, a particular lot or area shall be removed from the blanket lien on the whole area involved. RELEASE DEED An instrument executed by the mortgagee or the trustee reconveying to the mortgagor or trustor the real estate which secured the loan after the debt has been paid in full.
purchase.
The restoration of property to REHABILITATION satisf actory condition without without drastically drastically chan ging the plan, form or style of architecture.
To give up or abandon a right. The release of RELEASE rights may be voluntary, as when one voluntarily discharges an obligation obligation under a co co ntrac ntrac t. The relea relea se m ay be in volun volun tary, tary, by operation of the law; for example, one's wrongful conduct may ba ba r him him from asserting his his rights. In dee dee ds of of trus trus t a partial release clause frees certain property from the security of the deed of trust upon t he payment of specified specified sums of money.
RELICTION watermark.
The gradual lowering of water from the usual
REMAINDER An estate that vests after the termination of the prior estate, such as after after a life estate. Ex amp le: A life life estate estate may be granted to Adam s, with the remain der gran gran ted to Baker. Most commonl y, an estate (future interest) that arises in favor of a third person after a life estate.
The possible future loss in a REMA INDE R DEPRECIATION DEPRECIATION value of an improvement to real property. REMAINDERMAN The person who has an estate in remainder.
property left to the REMAINDER PARCEL The portion of a property owner when there has been a partial taking by eminent domain. REMAND action.
To send back to a lower court for further
The means by which a right is enforced, REMEDY preserved, or compensated. Some of the more common remedies are damages, injunctions, rescission, and specific performance. To change the f loor plan or architectural architectural REMODELING style of the improvements. RENAISSANCE Fourth phase in the cycle of a neighborhood, the transition to a new cycle through the demolition, relocation, or major renovation of existing buildings. P AGE 75
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. criticism with a formal warning included.
RENEGOTIABLE RATE MORTGAGE A loan secured by a long term mortgage which provides provides for renegotiation, at pre-determined intervals, of the interest rate (for aa maximum variation of five percent over the life of the mortgage).
REPRODUCTION REPRODUCTION CO ST The cost of replacing the subject improvement with one that is the exact replica, having the same quality of workmanship, design and layout, or cost to duplicate the asset.
consideration paid by a tenant for RENT The consideration possession of property under a lease. According to to BOMA. The floor RENTABLE SPACE area of an office building minus allowances for stairs, elevator elevator s haft, duct work a nd other areas n ot available available to the tenant.
REQ UEST FOR NOT ICE OF D EFAU LT AND NOTIC E OF A recorded notice notice made by anyone requesting that he SALE or she be notified in the event that a Notic Notic e of Defau lt is recorded. RESCIND
To annul, cancel. Repeal or terminate.
This agreement should be a RENTAL AGREEMENT bilateral, bilateral, executory con tract. All parties parties should g et a signed copy.
RESCISSION The unmaking of a contract, and the restoring of each party to the same position each held before the contract arose.
The demand for rental housing RENTAL HOUSING are produced by , the price of the home, the volume of sales and the future housing supply.
RESCISSION OF CONTRACT The cancelling of a contract by either mutual consent of the parties or legal action.
A right o r intere st retain ed by a gr antor RESERVATION when conveying property; also called an exception.
These adds that give RENTAL PROPERTY ADS phone numbers should have a recorded recorded message so that there is no doubt about what they hears.
RESERVE ACCOUNT
RENUNCIATION When someone who has been granted something or has has accepted something later later gives it up or rejects it; as when an agent withdraws from the agency relationship. elationship. COMPARE: Revocation.
Rent co ntrol of rental property RENT CONTROL will usually decrea se inve sting sting in rental pro perty. Places the government s burden of supporting the poor on the shoulders of private property owners. RENT MULTIPLIER
subdivisions, an RESERVES (1) In a common interest subdivisions, accumulation of funds collected from the owners for future replacement and major maintenance of the common area facilities. facilities. (2) With regard to mortgage loans, an accumulation of funds, collected from the borrower by the lender as part of each monthly m ortgage payment payment , an amount allocated to pay property taxes and insurance when they are due. RESERVES FOR REPLACEMENT Annual allowances set up for replacement of building components and equipment.
SEE: Gross Incom e Multiplier. Multiplier.
RENT ROLL Total of all scheduled rental amounts for tenant space, services and parking. RENTAL LOSS METHOD OF DEPRECIATION Capitalized Capitalized I ncome M ethod of Depreciation. Depreciation.
The cost to replace REPLACEMENT COST METHOD a stru cture with one having utility utility equivalent equivalent to that bei ng appraised, but constructed constructed with modern materials and according to current standards, design and layout. This method uses the three following items; the square foot method, the unit -in-place m ethod an d the qua ntity survey m ethod. An off icial icial act of oral and/or written
There are more square feet of RESIDENTIAL PROPERTY this type of property to be managed than any other type. The type of prop prop erty that peo peo ple live in in or rent. The majority of loans from RESIDENTIAL REAL ESTAT E savings and loans are used for this type of real estate.
SEE:
To abandon an acquired acquired right RENUNCIATION without transferring that right to another.
REPRIMAND
SEE: Impound account.
The sale of improved residential RESIDENTIAL SALE property of four or fewer units, the sale of unimproved residential property intended for use as four or fewer units, or the sale of agricultural property of ten or fewer acres. RESIDUAL TEC HNIQUES O F CAPITAL CAPITAL IZAT ION Income approach to valuation methods that separate income attributed to components of the property, such as land or building , or debt or equity, for purposes of analysis.
That portion of a person's estate that that has not RESIDUE been specifically devised.
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REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. RES JUDICATA JUDICATA The legal doctrine holding that once a lawsuit between two parties has been tried and a final judgment has been issued, neither one can sue the other over the same dispute dispute again.
Three methods RESOLUTION OF A CONTRACT of resolving resolving a contract are negotiation negotiation and compromise, arbitration and default. The end result of contract negotiations. RESPA
This La tin phrase, "let RESPONDEAT SUPERIOR the master answer," means that an employer is liable for the to to rtuou rtuou s acts of a n em ployee, ployee, and a prin prin cipa cipa l is liabl liable e for the acts of an agent. To be liable, liable, the acts must be within the "course and scope" of the agency or employment. For example, an employer would would not be liable for the acts of an employee while at home and not doing work for the employer. RESPONDENT The person against whom an appeal is taken; the oppo site of an appellant. RESTITUTION Restoring something to a person that he or she was unjustly deprived of.
This report may only be used RESTRICTED REPORT by the client and for one particular purpose. A limitation limitation on the use of real prop erty RESTRICTION arising arising from a c ontract ontract or a recorded recorded instrument. An encumbrance on property that limits the use of it; usually a covenant or condition. condition.
RESTR ICTION , PRIVATE A restriction imposed on property by a previous owner, or the subdivision developer; a restriction covenant or a condition in a deed.
A lice nse with restrictions restrictions
Profit Profit from an inv inv estm ent; th e yeild yeild
General rule of return on RETURN ON INVESTMENT investment and risk, is the greater the return on the investment the greater the risk. REVENUE STAMPS
SEE: Tax, Documentary Transfer.
lo wer court s dec ision on app eal, REVERSE To overtu rn a lo ruling in favor of the appellant. COMPARE: Affirm. Stream of monthly REVERSE ANNUITY ANNUITY MORTGAG E paym paym ents ents provided to homeo wners wners through through an annu annu ity purchased by a loan against the owner s accum ulated ulated equ ity in their home. The right a grantor keeps when he or she REVERSION grants someone an estate that will or may end in the future. Exampl es: The interest remaining with with a landlord landlord after he or she grants a lease, or the interest an owner of land has after he or she grants someone someone a life estate. Any futur e interes interes t (esta te) left in in the grant or. or. The resid ue of an estat e left left in the grantor after the termination of a lesser estate. REVERSIONARY INTEREST The interest which a person has in lands or other property, upon the termination of the preceding estate. A future interest.
am endme nt to a zoning ordinance, usually REZONE An am changing the uses allowed in a particular zone. Requires the approva l of the loc al legislative bod y. Als o called a zo ning ning amendm ent. COMPA RE: Zo Zo ning, ning, Spo Spo t.
REST REST RICT RICT ION, ION, PUBL IC A law o r regulation regulation limi ting or regulating regulating the use of real real prope rty.
RESTRICTED LICENSE attached.
The value of the property as of a
REVOCATION Withdrawal of an offer or other right, thereby voiding voiding and destro ying that that offer or right. It is a rec rec all with with intent to resc ind.
A restrictive covenant in a
RESTRICTIVE COVENANT A promise to do or not do an act relating to real property; usually an owner s promis e to not use propert propert y in a particular particular way. May or may not run with with the land. Sometimes between the owner and the neighboring owner.
RETROSPECTIVE VALUE previous date. RETURN
(See Real Estate Settlement Procedures Act)
RESTRICTION, DEED deed.
A landlord's landlord's attem pt to evict a RETALIATORY EVICTION tenant from a lease because the tenant tenant has used the remedies availa availa ble un un der the wa rranty of habitability. habitability.
RIDER
An addition addition ti a docum ent.
RIDGE The horizontal line at the junction of the top edges of two sloping roof surfaces. (The rafters at both slopes slopes are nailed at the ridge.)
The board placed on edge at the ridge RIDGE BOARD of the roof to support the upper ends of the rafters; also called roof t ree, ridge piece, piece, r idge plate, or ridgepole. RIGH RIGH T OF FIRST REFUSAL
P AGE 77
A right of preemption.
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. RIGHT OF PRE EMPTION A right to have the first chance to buy or lease property if the owner decides to put it up for s ale or make it available. available. Also Also cal led a right of first refusal. COMPARE: Option.
ROW HOU HOU SE
SEE: Townhouse.
A complex set of laws RULE AGAINST PERPETUITIES designed to prevent excessive restrictions on the transferability of pr pr operty. The rule holds holds that "no interest is is good unles unles s it mu st ves ves t, if at at all, all, not later later tha n 21 ye ye ars after som e life life in being at the the creation creation o f the interes interes t."
The right to acquire the RIGH RIGH T OF SURVIVORSHIP interest of a deceased joint-owner. It is the distinguishing distinguishing f eature of a join join t tenancy. A righ t triang le in wh ich two of the RIGHT TRIANGLE sides meet at a right angle. RIGHT OF RESCISSION RESCISSION A borrowers s right to cancel a credit contract within three business days from the day he or she entered into the loan contract.
The right to pass over a piece of RIGHT OF WAY rea l prop erty or or to have pipes pipes , electrical electrical lines , or t he like go acro acro ss it. it. An ea ea sem ent granting granting a person the right right to pass across another's property.
Can be given with a RULES-OF AGENCY DISCLOSURE sellers listing. listing. The exact wording of the Rules-of-Ag ency Disclosure is not dictated by statute. Transactions involving the sale of non residential property property requires the statutory Rules-of Agency Disclosure be given to the buyer. RULE OF CAPTURE A legal principle that grants a landowner the right to all oil and gas produced from wells on his or her land, even belonging to someone else.
A term used in deeds RIGHT, TITLE AND INTEREST to deno te that the gr antor antor is c onveying all of tha t to to which grantor he he ld claim claim .
RUNNING WITH THE LAND Binding or benefiting the successive owners of a piece of property, rather than terminating when a particular owner transfers his or her interest. Usually said in reference to an easement or a restrictive restrictive co venant.
A lease hold interest in a time-share RIGHT-TO-USE unit based on a limited time (one or more weeks) specified in the agreement.
RURAL HOUS ING SERVICES ADMINISTRATION ADMINISTRATION (FL) An agency of the Department of Agriculture that offers assistance to rural residents and communities.
The right of a landowner with RIPARIAN RIPARIAN RIGH TS regard to a stream crossing or adjoining his or her property.
R-VALUE A special rating or method of judging the insulating effectiveness of insulation products.
RISER (1) The upright board at the back of each step of a stairw ay. ay. (2) In heating, a riser is is a duct slan ted upward to carry hot air from the furnace to the room above. RISK The chance of loss of all or a part of an investment; the uncertainty of financial loss.
A study made, usually by a lender, RISK ANALYSIS of the various factors that might affect the repayment loan.
S In a listing agreement, a provision that SAFETY CLAUSE if anyone found by the broker d uring his listing listing p eriod eriod purchases the property within a specified time after the expiration of the listing, the broker receives his full commission. SALES PRICE
Se e Price
SALES COMP ARISON APPROACH TO VA LUE Market Approach to Value
Se e
A process used by the lender to decide RISK RATING on the soundness of making a loan and to reduce all the various factors affecting the repayment of the loan to a qualified qualified rating of some kind.
SATISFACTION SATISFACTION OF MORT GAGE Satisfaction of.
ROLLOVER When a taxpayer sells his or her principal residence and reinvests the sale proceeds in another home, deferring recognition of the gain on the sale.
SALE- LEASE BACK BACK A situation in which the owner of a piec piec e of property sells sells it and and retains oc cupancy be leasing it from the buyer.
To reflect the input numbers with the ROUNDED highest degree of precision, answers should be rounded.
A sale and leaseback SALE- LEASEBACK-BUY-B ACK transaction in which the leaseholder has the option to buy back
P AGE 78
SEE: Mortgage,
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. the original property after specified period of time.
SAVINGS ASSOCIATION INSURANCE FUND (SAIF) (SAIF) Administered by the FDIC to insure deposits at savings and loans and federal savings banks.
In the sale of SALE OF RENTAL PROPERTY rental property an agency agreement requires a written contract. SALES SALES ANALYSIS GRID comparable properties. properties.
Deposit-type SAVINGS AND LOAN ASSOCIATIONS savings institutions that are major lenders in the residential field.
Table of relevant data on
A lice nsed individual individual wh o, for SALES ASSOC IATE compensation, is employed by an owner-developer or by a broker. SALES COMPARISON (APPROACH) One of the three classic approaches to value. It involves comparing similar properties, that have recently sold, to the subject property This method is considered the most important one..
Savings and loan associations using SAVINGS BANKS newly-permitted designations. SCARCITY
In rela rela tively sh ort supply.
SCRIBING
Fitting woodwork to an irregular surface.
SEAL An impression mark or stamp made to attest to the execution of an instrument. SEASONAL VARIATIONS recur at lea lea st once a year.
A contract between buyer and SALES CONTRACT seller setting out the terms of sale.
Changes in the economy that
SECR SECR ET PR OFIT OFIT A financial benefit that an agent takes from a transaction without informing the principal; usually the result of self-dealing.
SALES DATA METHO D OF DEP RECIATION Method of estimating depreciation wherein building values abstracted from sales are com pared to current costs new.
One disadvantage disadvantage of adding a second SECOND FLOOR floor is that an additional set of stairs stairs may be required or a fire scape may have to be added.
An in in dividual dividual licensed to sell SALESPERSON property, but who must at all times be under the supervision and direction of a broker. SALVAGE VALUE In computing deprecation for tax purposes, the reasonably anticipated fair market value of the property at the end of its useful life and must be considered with all but the declining balance methods of depreciation.
A loan SECOND MORTGAGE (SECONDARY FINANCING) that is junior or subordinate to a first mortgage, normally taken out out w hen the borrower borrower n eeds eeds m ore money. A loan secured by a second SECONDARY FINANCING mortgage or a second deed of trust. Agency or financial institution institution that SECONDARY LENDER buys mortgage loans previously made by primary lenders.
A leaseho ld interes interes t that lies lies SANDWICH LEASE between the prim ary lease lease a nd the op op erating lease. Example: A leases to to B; B subleases to to C; C subleases to D. C's lease lease is a sandwich lease. SASH A wood or metal frame containing one or more windowpanes.
Discharge of a SATISFACTION OF MORTGAGE mortgage or deed of trust lien lien from t he records upon paymen t of the secured secured debt. Discharg Discharg e of an obligation obligation or indebtedness by paying what is due. This paying off SATISFACTION OF JUDGEMEN JUDGEMEN T judgem judgem ent. It It m ust be recorde d to clear title title
selling ex isting SECONDARY MARKETING Buying and selling mortgage and trust deed loans. The primary market is the one in which lenders loan money to borrowers; the secondary market is the one in which the lenders sell their loans to the large secondary marketing agencies (FNMA, (FNMA, FHLMC, and GNMA) or to ot her investors. investors. SECONDARY MORTGAGE MARKET The purchasing and selling of existing mortgages and notes secured by a deed of trust. This market is dominated by Fannie Mae, Freddie Mac and Ginnie Mae. SECRET PROFIT PROFIT OR COMMISSION
SATISFACTION PIECE An instrument for recording and acknowledging payment of an indebtedness indebtedness secured with a mortgage.
(See Overage)
A square mile of land, as established by SECTION government survey, containing 640 acres.
P AGE 79
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. SECT SECT ION O F TOWN SHIP SHIP consists of 640 acres.
SELLER FINANCING When a seller extends credit to a buyer to finance the purchase of the property; as opposed to having the buyer obtain a loan from a third party, such as an institutional lender. SEE: Loan, Carryback.
A section of township
A development method that SECTOR THEORY resem bles a pie chart.
ondition which exis exis ts SELLER S MARKET The m arket c ondition when a seller is in a more commanding position as to price and term term s because dem and exceeds supply. supply.
SECURITY Property pledged to ensure payment of debt; collateral.
In MLS printouts, th e selling SELL ING O FFICE (SO) broker is noted as the selling office.
An obligation that includes SECURED DEBT property held as security for the payment of that debt; upon default, the property may be sold to satisfy the debt.
Noninstitutional source of real SEMIFIDUCIARY LENDER estate lending, such as through a mortgage broker, involving greater risks risks than funding through f iduciary lenders.
The party having the security SECURED PARTY intere st in personal proper ty. ty. The mortgagee , conditional conditional seller, seller, or pledge e is re re ferre ferre d to as the sec ured party. An agreement between SECURITY AGREEMENT the secured party and the debtor that creates a security intere st in persona l propert y. It replace replace d such terms as chattel mortgage , pledge, pledge, tru st receipt, receipt, c hattel trust, trust, equipment trust, conditional sale, and inventory lien.
To qualify as senior citizen SENIOR CITIZEN CITIZEN H OUSING OUSING housing, a project must not limit residency to persons over the age of 62. iority ove r SENIOR LIEN A lien that is supe rior to or has pr iority another lien. lien. Also, the first deed of trust or lle e in on on a prop erty. erty.
SECU SECU RITY RITY DEPO DEPO SIT A deposit made to assure perfor mance of an obligation obligation , usuall y by a tenant. tenant. A sum of cash given as collateral to ensure faithful performance of specified oblig oblig ation ation s. A landlor landlor d has three wee ks in which to re turn the un used p ortion of the tenant s security deposit.
Property tha tha t is owned by a SEPARATE PROPERTY husband or wife and that is not com mu nity property. It is is property acquired by either spouse prior to marriage or by gift or inhe ritance ritance after marriage ; also, in California, California, it is the income from sepa rate p roperty after after ma rriage. rriage. Property h eld by a married person that that is not community property; property; it includes property owned before marriage and property acquired after marriage by gift or inheritance.
SECURITY INTEREST A term designating the interest of a secured creditor in the personal property of the debtor.
in which sewage from SEPTIC T ANK An underground tank in the house is reduced to liquid by bacterial action and drained off.
SECURITIZATION mortgag e portfolio portfolio
SERVICE OF PROCESS Delivery of a legal document (especially a summons) to a person in accordance with the rules prescribed by statute, so that he or she is held to have received it (whether or not he or she actually did).
Debt issuance backed by
SEIZIN The possession of land under a claim of freehold. SELF-DEALING When a real estate agent buys the principal s prop erty him or hers elf (or sells sells it to a relative, friend, or associate, associate, or to a business he or she has an intere intere st in), in), w ithou ithou t disc disc losing losing that fa n to the principal, and in violation violation of his o r her fi duciary duciary dut ies to the principal.
Businesses that attract local money SERVICE INDUSTRIES (e.g., grocery stores, retail shops). SERVICING LOANS Supervising and administering a loan after itit has been made. This involve involve s such things things as collecting payments, keeping accounting records, computing on interest and principal, foreclosure of defaulted loans, and so on .
SELF-EXECUTING ARBITRATION CLAUSE Th e parties do not need to use the court to compel arbitration.
That parc el of p rope rope rty whic whic h is SERVIENT EST ATE burdened burdened by and encum encum bered bered w ith an easeme easeme nt.
The owner of the property now being sold. SELLER Most trust deeds and notes are held by the seller.
SERVIENT TENEMENT easem easem ent.
P AGE 80
An estate burdened by an
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. judgem judgem ent.
SETBACK The minimum distance a building or other improveme nt must stand from the property lines; lines; in accord with local zoning ordinances or deed restrictions.
SHERIFF S SALE A foreclosure sale held after a judicial foreclosure. foreclosure. Sometimes called an execution sale. sale.
An ordina nce pr ohibiting ohibiting SET-BACK ORDINANCE the erection of a building or structure between the curb and the set-back line. (see Building Line) SETTLEMENT 1. An agreement between the parties to a c ivil ivil lawsu it, in which the plaintiff plaintiff agrees to drop the suit in exchange for money or the defendant s promise to do or refrain from doing something. 2. Closing. SETTLEMENT STATEMENT A document that presents a final, detailed accounting for a real estate estate transaction, listing each party s debits and credits credits and the amount each will receive or be required to pay at closing. Also called a closing statement. SETTLOR trust.
A shopping center can be a SHOPPING CENTER complicated management problem as it may contain the the following problems, security patrols, unchaperoned minors, and large parking lots. Lender Lender agreement to com prom prom ise adebt. adebt. SHORT PAYOFF Also called short s ale. ale. SHORT PLATTING three, or four l ots. ots.
A reduced rate for title insurance SHORT ( TERM) TERM) RATE applicable in cases where the owner of a property has been insured previously or where any lender has been insured som ewhat recently on the property.
One who creates an inter vivos or living
A physical condition caused SICK BUILDING SYNDROME by substances within a building that causes symptoms that disappear when occupant leaves the building.
SEVERABLE When one provision in a law or a contract can be held unenforceable, unenforceable, without making the entire law or contract unenforceable.
SIDE YARD YARD The area between a building and one of the side boundar ies of the lot it s located on.
Sole ownersh ownersh ip of p roperty. Owners hip SEVERALTY by one person.
SIGH SIGH T DEPOSIT SEVE SEVE RALT RALT Y OW NERSHIP person; sole ownership.
Se e Demand Deposit
Ownership by only one It is unlawful to modify without the SIGNED INSTRUMENT consent and knowledge of the party related to the instrument
ination of a joint joint tenan cy, turn turn ing itit SEVERANCE Term ination into a tenancy in common.
The property property manager mus t make sure sure the prope prope rty SIGNS man agem ent contract gives gives him or h er the sp ecific right to disp disp lay signs signs on t he property.
SEVE RANC E DAM AGE Damage to the value of the remainder parcel as a result of a partial taking by eminent domain. SHAKE grained.
Subdividing a parcel of land into two,
The board or piece of metal forming the lower side side of SILL an opening, suc h as a door sill or window sill.
A hand-sp lit lit shin gle, gle, usu ally ally edge-
A loan SHARED APPRECIATION MORTGAGE having a fixed rate rate o f interest interest se t below the mark et rate for the term of the loan which also provides for contingent interest to to be paid to the lender on a certain percentage of a ppreciation in the valu valu e of the property against which the loan is secured upon transfer of sale of the property or the repayment of the loan. SHEATHING Structural covering, such as boards, plywood, or wallboard, placed over the exterior studding or rafters rafters of a house. The The skin that covers the house. SHERIFF'S DEED A de de ed giv giv en by c ourt o rder in connection with the sale o f property property to satis satis fy a
Essentials of a simple contract are SIMPLE CONTRACT lawful object, mutual consent, and capable parties. SIMPLE INTEREST Interest computed on the principal; amount of a loan only as distinguished from compound interest. SINGLE AGENT A broker who represents the seller or the buyer but not both.
There are very few of these homes SINGLE BATH HOMES being built now as buyers generally demand two bathrooms. SINGLE-HUNG sash.
P AGE 81
A window characterized by a movable lower
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. SINKING FUND (1) A f und set aside from the income from property tha tha t, with with accru ed int int erest, will eventua lly pay for replacem replacem ent of the improve m prove ments. (2) A similar similar fund set aside to pa y a debt.
One authorized by a principal to perform SPECIAL AGENT a particular act or transac transac tion, without contemplat ion ion of continuity of service as with a general agent. Legal charge against real SPECIAL ASSESSMENT estate by a public public authority authority to pay the cos t of public improvement, as distinguished from taxes levied for the general general support support o f govern govern ment.
A document that indicates the SITE PLAN improvements details for a project of greater-thanaverage-size. Relationships and influences created by SITUS location of a pro perty perty th at affect va lue (e.g.; acces sibility sibility,, personal preference).
SPECIAL-FUNCTION A town whose employment concentrates on one special service or purpose.
SIXTY-TWO-OR-OVER SENIOR CITIZEN HOUSING If a housing project qualifies as 62-or-over senior citizen housing, all persons under the age of 62 are excluded, including including spouses under the age of 62. Concrete foundation foundation poured SLAB-ON-GRADE directly on the ground.
SPEC SPEC IAL EXCEPT EXCEPT ION PERMIT Permit.
SLANDER OF TITLE A false and malicious statements disparaging disparaging an owner s tit le to pr operty and resulting in actual pecuniary damage to the owner.
Hotels, resorts, nursing SPECIAL PURPOSE PROPERTY homes, theaters, schools, places of worship and other business or organizations whose special needs dictate design and operation of the building.
The razing of substandard and SLUM CLEARANCE unsalvageable residential buildings for redevelopment.
SPECIAL POWER OF ATTORNEY A written instrument whereby a principal confers lim ited authority upon an agent to
perform certain prescribed acts on behalf of the principal.
SPECIAL TAX ASSESSMEN ASSESSMEN TS Special tax assessments differ from annual tax assessments because special assess ments provide provide f or local improvement improvement .
A branch of the SMALL CLA IMS COURT Municipal Cour Cour t. The rules of this co urt forbid forbid p arties to be assisted by attorneys, dispense with most formal rules of evidence, and hav e all trials trials heard by judges . The monetary limit limit of cases before the court is $1,500.
SPECIAL WARRANTY DEED A deed in which the grantor warrants or guarantees the title only against defects arising during grantor s ownership of the property and not against defects existing before the time of grantor s ownership.
SOCIETY OF INDUSTRIAL AND OFFICE OFFICE REALTO RS An association of R ealto ealto r specializing specializing in (SIOR) leas leas ing and sellin sellin g industrial industrial a nd office p roperty.
A wavelike movement, similar to the SPECIFIC CYCLE business cycle, cycle, that occurs in certain certain sectors of the general econom econom y.
Pipe carrying waste from the house to SOIL PIPE the main sewer line. A bookkeeping entry on the SOLD TO TH E STATE STATE county tax rolls indicating that the property taxes are delinque nt. nt. The entry begins the five-year five-year redemption period, period, afte r which the property m ay be physic physic ally sold to the public public for back taxes. SOLE OR SOL E PLATE A structural structural mem ber, usually two-by-four, on which wall and partition studs rest.
SEE: Conditional Use
Claims that affect only the property SPECIFIC LIENS designated in the lien instruments or agreements. A legal action to compel SPECIFIC PERFORMANCE performance of a contract; for example a contract for the sale of land. A contract remedy by which one party is is ordered by the court to comply with the term s of the the agreem ent. SPOT ZONING SPOUSE
SEE: Zoning, Spot. A person's husband or wife.
SOLE PROPRIETOR A sole proprietor may have a trade name and may or may not have employees.
SREA
SPAN The distance between structural supports, such as walls, columns, piers, beams, and girders.
STABLE PHASE Second phase in the cycle of a neighborhood, marked by stability of the existing buildings and occupants.
P AGE 82
The Society of Real Estate Appraiser
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. Part of a five -year -year pr ojected STABILIZED BUDGET budget, arrived at by averaging income and expense items over a five-year period.
authorization authorization to sell real estate. A law that requires certain contracts (including most real estate contracts) to be in writing to be enforceable .
STANDARD STANDARD DEPT H Generally the most typical lot depth in the neighborhood.
Form often often required by the title title STATE MENT OF IDENTITY IDENTITY com pany from from buyer buyer and seller to to ensu re tha tha t item item s fou fou nd in in the title sear ch apply to to the i ndividuals ndividuals in quest ion.
A basic form of STANDARD FIRE INSURANCE insurance protecting a property against direct loss or damage. STANDARD OF PROOF
SEE: Proof. Standard of.
STANDBY COMMITMENT The mortgage banker frequently protects protects a builder by a standby agreem ent, under which the banker agrees to make the mortgage loans at an agreed price for many months into the future. The builder deposits deposits a standby fee with the the mortgage banker for this service. Frequently, the mortgage broker protects self by securing a standby from a long term investor for the same period of time, paying a fee for this privilege.
a fundamental principle principle of law, of law, STARE DECISIS which holds that courts should follow prior decisions on a point of law. A proper decision is is a binding precedent on equal or lower c ourts ourts havin havin g the sam e facts in controversy. taxpayer who won an important U.S. STARKER A taxpayer Court of Appeals case in 1979 (T.J. Starker v. U.S.) Dealing with with delayed excha nge and w hose nam e is synonymous with the those exchanges; the Sterker ruling has since been modified in IRS Code Section 1031 constitutio nal law law , action by a STAT E ACT ION In constitutio government (federal, state, or local) rather than by a priva priva te party. STAT E BOAR D OF EQUALIZATION EQUALIZATION.. for collecting state taxes.
STATUTORY CONSTRUCTION CONSTRUCTION When a judge interprets and applies a statute in the cou rse of resolving a lawsuit. STATU STATU TORY LAW Laws adopted by a legislative body (congre ss, a state state le gislatur gislatur e, or a co unty or city council), council), as opposed to constitutional law, case law, or administrative regulations. STATUTORY WARRANTY DEED A short short term warran ty deed which warrants by inference that the seller is the undisputed owne r, has has the right right to c onvey the property, and will defend the title if necessary. This type of deed protects the purchaser in th th at the the conv eyor c ovenants to defend all claim claim s against the property. If conveyor fails to do so, the new owner can defend said said claims and sur former owner. STAY
Delay t empora rily; rily; stop for a limited time. time.
STEERING Channeling prospective buyers or tenants to particular neighborhoods based on their race, religion, national origin, origin, or an cestry. STEPPED STEPPED -UP B ASIS ASIS a higher, increased tax value of property given as the result of most sales or taxable transfers. The tax basis is used in computing capital gains and losses on the transfer of property.
Is res ponsible ponsible
STEP-UP LEASE (STEP-UP CLAUSE) Lease agreement that establishes progressively higher rental amounts for different segments of the lease term; graduated lease.
Cases that involve the U.S. STATE COURT government are not heard in state court. STATEMENT OF ISSUES A writ ten all egation by the commissioner identifying the issues and listing the rules violated, used in a non property right hearing. STATUTE
that req uires uires STATUTE OF LIMITATIONS A statut e that lawsuits to be brought within a certain time to be enforceable. The basic periods are one year for personal injury, two years for oral contracts, three years for damages to real or personal property, four years for written contracts, and three years from date of discovery for fraud.
STOCK The ownership elem elem ent in a corporation usually divided into shares and represented by transferable certificates (may be divided into two or more classes of differing rights and stated values).
A written l aw.
The state law that STATUTE OF FRAUDS provides that certain contracts must be in writing in order to be enf orceable in the cou rts. Exam ples: real pr operty leased for m ore tha tha n one year or a n agent's
STOCK COOPERATIVE
SEE: Cooperative.
which rent is a fixed STRAIGHT LEASE Lease agreement in which amount that stays the som e over the entire lease term.
P AGE 83
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. an accounting STRA IGHT- LINE LINE DEPRECIATION DEPRECIATION procedure that sets the rate of depreciation as a fixed percentage of the amount to be depreciated; depreciated; the percentage stays the same each year.
A corporation that, for SUBCHAPTER-S CORPORATION federal tax purposes on ly, is taxed sim sim ilarly to a partnership. partnership. The corporate entity is disregarded for most federal tax purposes, and the shareholders are generally generally taxed as individual partners.
STRAIGHT-LINE METHOD OF DEPRECIATION Method of computing depreciation in which the loss in value of a building is assumed to be the ratio of its age (or effective age) to its total useful or economic life.
SUBDIVIDE To segment large, acquired tracts tracts of real property in order to create small tracts for the purpose of resale.
STRAIGHT MORTG AGE OR DEED OF TRUST a mortgage or deed of trust in which there is no reduction of the principal during the term of the instru ment. Payme nts to interes interes t are are usually made on an annual, semiannual, or quarterly basis.
A pro pro missory note th at is STRAIGHT STRAIGHT NOTE unamortized. The principal is is paid at the end of the term of the note.
SUBDIVIDED LAND S ACT ACT The right of the state to regulate regulate for the purpose of promoting health, safety, welfare and morality.
A legal definition of those divisions of real SUBDIVISION property for the purpose of sale, lease or financing which are regulated regulated by law. SUBDIVISION SUBDIVISION P LAT
A type of STRAIGHT PERCENTAGE LEASE percentage lease that bases rental rate solely on gross sales.
SUBDIVISION REGULATIONS State and local laws that must be complied with before land can be subdivided.
STRIC T LIABILITY IABILITY When someone is held legally responsible for an injury to another, even though he or she did did not an neg neg ligently. ligently. COM COM PARE : Negligence.
SUBJECT PROPERTY or appraisal.
STRIKE LIST An arbitration service sends a list of arbitrators arbitrators to each party and the parties parties strike the names that are unacceptable.
(1) a timber or other support for STRING, STRINGER cross- member s. (2) in stairs, stairs, the the support on which which the stair treads treads rest. A small shopping shopping center of about STRIP CENTER 10,000 to 30,000 square feet (four to ten retail spaces) located at the edge of an urban area or in a suburb. The rat io of t he total STRUCTURAL DENSITY ground floor area of a building to to the t otal land area area on the site on which it is built. STUDS OR STUDDING timber s in wa lls and partitions. partitions.
liable for an obligation. SUBJECT TO (1) Burdened b y and liable (2) A method of taking over a loan without becoming personally liable liable for its paym ent. When SUBJECT TO" MORTGAGE OR DEED OF T RUST a grantee takes a title to real property subject to a mortgage or deed of trust, he or she is not responsible to the holder of the promissory note for the payment of any portion of the amount due. The m ost that he or she can lose in the event of a forecl osure is his or her equity in the the proper ty. ty. In neither case is the original maker of the note released from his or her respon sibility. sibility. (See also also Assumpti on of Mortgage or Deed of Trust.) A lease lease given by a ten ten ant.
Partial transfer of a t enant s right in arental SUBLETTING property to a third third p arty. arty. SUBMERIDIANS
SUBAGENTS. Subagents are also called selling agents. A licensed salesperson cannot be a subagent of the seller.
(See Township Lines)
The real property under discussion
Support that the soil below the SUBJACENT SUPPORT surface gives to the surface of the land.
SUBLEASE
Vertical supporting
Sub-acounts within a trust SUB-ACCOUNTS account must be reconciled within the general account.
SUBBASELINES
SEE: Plat.
SUBORDINATE
(See Range Lines Lines )
To make subject or junior to.
Made subject to or subservient to; SUBORDINATION assignment to a lesser roll or position.
P AGE 84
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. In a mortgage SUBORDINATION (AGREEMENT) or deed of trust, a p rovision that that a l ater ater lien shall ha ve a priority interes interes t over the existing existing lien. lien. It makes th e existing lien inferior to a later later lien, in effect exch anging priorities with that later lien.
The next succeeding owner of SUCCESSOR IN INTEREST an interest in property. The transferee or recipient of a property interest. The lia bility bility of the next successive owner of the real estate.
SUCCESSOR S LIABILITY
Senior lien lien that m akes it SUBORDINATION CLAUSE inferior to what would otherwise be a junior lien. SUBPOENA A legal order to cause a witness to appear and give testimony.
SUIT An act of suing; an action in court of law for the recovery of a right or claim.
Emergency or immediate action SUMMARY SUSPENSION against a license to protect the public.
SUBPOENA DUCES TECUM An order to produce books, records or other documents.
SUMMATION APPROACH
SUBROGATE To substitute one person for another's legal rights rights to a claim or debt.
SEE: Cost Approach.
doc ument inform ing a defen dant that a laws uit SUMMONS A doc has been filed against him or her, and ordering the defendant to file an answer to the plaintiff plaintiff s com plaint with the c ourt.
The substitution of another SUBROGATION person in place of the creditor with regard to an obligation. Residential development for SUBSIDIZED HOUSING low-incom low-incom e fam ilies ilies that are insured or (indirectly) (indirectly) financed in part by a government agency.
SUM-OF-THE-YEARS S-D S -D IGITS DEPR ECIATION An accelerated depreciation o n method. Accomplished by multiplying multiplying the remaining years of the property s economic life by the property s rem aining aining value value and then dividin dividin g by the sum of all all the years in the remaining economic life of the property. SUPERFUND AMENDMENTS AND REAUTHORIZATION The umbr ella t itle given to va rious rious ACT OF 1986 (S ARA) ame ndm ents to CERC LA.. Am Am endm ents limit pesticide pesticide liabili liability ty and provide the government reclamation reclamation of contaminated property.
SUBSIDY SUBSIDY BUYDOW N Funds provided usually by the builder or seller to temporarily reduce the borrower s monthly principal and interest payment.
The laws describing SUBSTANTATIVE LAW rights and duties. Differs from procedural law, law, which only describes how to enforce and protect rights. SUBSTANTIAL SUBSTANTIAL PERFORMANCE When a promisor doesn t perform all of his or her contractual obligations, but does enough so that the promisee is required to fulfill his or her side of the bargain. COMPARE: Breach, Material SUBS TITUTI TITUTI ON, PRINC PRINC IPLE OF Affirms t hat the maximum value of a property property tends tends to be set by the cost of acquiring an equ ally desirable desirable and valuable subs titute property, as sum ing no no costly delay delay is enc enc ountered in making the substitution. substitution.
SUPPLY AND DEMAND , PRINCIPLE PRINCIPLE OF In appraising, a valuation principle stating that market value is affected by intersection intersection of supply and demand forces in the market as of the appraisal date.
The principal trial cou cou rt of the state; a SUPERIOR COURT court of unlimited monetary and subject matter jurisdiction, and an ap ap peal cour cour t for for decisions of m unicipal co urts a nd sm sm all claims courts. A stay of enforcem ent; SUPE RSEDEAS, RSEDEAS, WR IT OF temporary stop in a legal proceeding; restraining order.
Includes information about SUB-STRUCTURE DATA basement or crawl area, parts of the building as is also known as f oundation data.
SUPPORT SUPPORT , LATER LATER AL The Support that a piece of land receives receives from the land ad ad jacent to it. it. SUPPORT, SUBJACENT The support that the surface of a piece of of land rece rece ives from the land beneath it.
This wa s greatly aided aided SUBURBAN DEVELOPMENT DEVELOPMENT by the railroads enabling people easy access to the nearby cities.
SUPPORT RIGHTS RIGHTS The right to have one s land supported by the land land a djacent to it and beneath it.
SUCCESSION The inheritance of property.
The quantity of goods or services offered for sale SUPPLY to the consumers.
P AGE 85
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. The highest court in the SUPREME COURT California California and t he fe deral court court structure. This This cour t is is almost exclusively an appeals court, accepting (by certiorari) certiorari) only those c ases that, in the court's court's desecration, involve issues of significant magnitude and social importance.
or possession by TACKING When successive periods of use or more than one person are added together to make up the five years required for prescription or adverse possession.
SURETY One who guarantees the performance performance by another, a guarantor.
private property for TAKING When the government acquires private public use use by con con dem natio natio n, itit s called a taking. The term is also used in inverse condemnation condemnation lawsuits, when a government action has made private property useless.
SURP LUS PRODUCTIVITY, PRODUCTIVITY, PRINCIPLE OF The net income that rem ains after the proper costs of labor, organization and capital have been paid, which surplus is imputable to the land and tends to fix the value thereof.
TAKE-O TAKE-O UT LO AN The loan arranged by the owner or builder developer for a buyer. The construction loan made for construction of the improvements is usually paid in full from the proceeds of this this more permanent m ortgage loan.
SURRENDER Giving up an estate (such as a life estate or leasehold) before it has expired.
TANGIBLE ASSET real real p rope rope rty.
The process by which a parcel of land is SURVEY located on the ground and measured.
This is the name of t he plan us ed by GNM A TANDEM PLAN and FNMA for buying loans loans at par, which which is less than market value.
SURVIVORSHIP
SEE: Right of Survivorship.
A compulsory charge on property or individuals, the TAX payment of wh ich supports a go go vernm ent.
license is SUSPENSION W hen a rea l estate ag ent s temporarily withdrawn. SUSPENSION, SUMMARY a hearing has been held. held.
License suspension before
Gross income minus tax deductions; deductions; TAXABLE INCOME net operating income plus reserve for replacements minus financing costs and allowable deductions. The assessed value less allowable TAXABLE VALUE exemp tions tions resulting in an am ount to which the tax rate is is applied to determine property taxes due. TAX BASIS The tax value of of prop erty to the taxpayer. It is is a figure used to compute capital gains and losses.
SWING LOAN A short term loan to bridge the gap between the purchase of a new home and the subsequent sale of an old one.
association formed to operate an SYNDICATE An association investment business. A syndicate is not a recognized legal e ntity; ntity; it can be organized as a c orpora tion, tion, partners partners hip, or trust.
A docum ent sold b y a local local tax authority TAX CE RTIFICATE granti ng the the cert ificate ificate b uyer uyer the right right to receive delinquent delinquent taxes plus interest when paid by the legal property owner.
gro up of individuals individuals poolin poolin g their SYNDICATION A gro resources to purchase purchase property through the holding vehicle of a partnership, corporation, or other associ ation. ation. Each individual individual owns share in the the legal entity entity form ed to acqu ire and hold title to the pro perty. perty.
A provision in a mortgage that requires the TAX CLAUSE borrower to pay all legitimate property taxes. TAX DEED
SYSTE SYSTE M M AINTENANCE AINTENANCE ADM INISTRATOR INISTRATOR (SMA); SYST SYST EMS MAINTENANC E TECHNICIAN TECHNICIAN Designations awarded to building engineers and maintenance personnel by the Building Owners and Managers Institute International (BOMI) for completion of courses in building building systems systems operation and maintenance.
T
Anything of substance; personal and
Deed issued to the purchaser at a tax sale.
postponing TAX-DEFERRED TAX-DEFERRED EXCHANGE A method of postponing capita l gains w hen disposing of real proper ty by trading trading one property for another of like kind. An authority, such as a city, county, school TAX DISTRICT board or special levy area(e.g., water district) with power to assess property owners annually in order to meet it s expenditures for the public good. TAX-FREE EXCHANGE The trade or exchange of one real property for another without the need to pay income taxes on the gain at the time of trade.
P AGE 86
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. TAX, GENERAL REAL ESTATE
Property taxes.
An estate created created by TENANCY BY THE ENTIRETIES husband and wif e jointly jointly owning real property with instant and complete right of survivorship.
A claim against real property arising out of TAX LIEN non-payment of the property taxes.
Ownership by two or more TENANCY-IN-COMMON persons who hold an undivided interest in real property, without right right of sur vivors vivors hip; hip; the interests need not be equ al.
TAX PARTICIPATION CLAUSE A lease provision requiring the tenant to pay a pro-rata share of any increase in real estate taxes or assessments in addition to the the basic basic renta renta l.
TENANCY, TERM
TAX, PROPERTY An annual ad valorem tax levied on real and person al pro pro perty. perty.
SEE: Estate for Years.
TENANCY IN PARTNERSHIP The form of concurrent ownership in which general partners own partnership property, whether or not title to the property is in the partnership s name. Each partner ha s an equal undivided interest, but no right to transfer the interest to someone outside the partnership.
Sale of property after a period of TAX SALE nonpayment of taxes. The percentage of value that is used to TAX R ATE determine the amount of tax to be levied against each individual individual unit of property; ad valorem (according to value).
TENANT
One who leases real property from the owner.
Construction, Construction, remodeling TENANT ALTERATION COSTS and alteration alteration expenses for work needed to make the premises usable by the tenant. These costs are assumed by t he tenant tenant or the owner or both and are a major point of negotiations.
TAX SALE NUMBER A number assigned to a property when property taxes are not paid on time; identifies identifies that pro perty perty o n the delinquent tax ro ll.
TENANTS BY THE ENTIRETIES Under certain state laws, ownership of property acquired by a husband and wife during marriage, which property is jointly and equally owned. Upon death of one spouse it becomes the property of the survivor.
TAX S ERVICE ERVICE A reporting service that notifies the lender in th e event the borrower does not keep the property taxes current.
in possession TENANT, HOLDOVER A lessee who remains in of the property after the lease term has expired.
TAX SHELTER An investment that shields items of income or gain gain from payment of incom incom e taxes; a term used to describe some tax advantages of owning owning real property (or other investments), including postponement or even elimination of certain taxes.
TENANT, LIFE LIFE
Someone who owns a life estate.
The combination of retail tenants occupying a TENANT M IX shopping center; must be considered carefully to achieve maximum profit for each merchant of the center.
When a purchaser buys an older TAX WRITE-OFF building building for this purpose on ly the bu bu ilding ilding is is depr depr eciable not the land.
TENANT UNION A local organization of residential tenants working for their common interests and rights.
A market condition in TECHNICAL OVERSUPPLY which available rental space exceeds tenant demand.
Employees of tenant companies who TENANT WARDENS are schooled in em ergency procedures by the building building staff to direct their fellow employees during routine drills and actual emergencies.
A leasehold estate. estate. (For specific types TENANCY of leases see Estates.) A rental situation situation in TENANCY AT SUFFERANCE which a tenant who originally obtained possession of the remises legally continues to occupy the property after the expiration of the leasehold interest and with out the consent of the owner. TENANCY AT WILL When a tenant is in possession with the owner s permission, but there s no definite lease term; as when a landlord allows a holdover tenant to remain on the premises until another tenant is found.
to a TENDER An unco nditional offer by one of parties to contract to perform his or her part of the agreement; made when the offeror believes the other party is breaching, it establishes the offeror s right to sue if the other party doesn t accept it. Also called a tender offer. rights in real real prop erty that pass w ith a TENEMENTS All rights conveyance of it. TENTATIVE M AP
P AGE 87
The Subdivision Map Act requires
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. subdiv iders initiall initially y to s ubmit a tentat ive map of the ir tract tract to the local local planning planning commissi on for study. study. The approval or disapproval of the planning commission is noted on the m ap. The reafter, the planning planning c omm ission requests a final map of the tract embodying any changes. TENURE IN LAND LAND held.
The manner in which land is
THREE-QUARTER BATH sink and a toilet.
A loan made for a specific period of
Lands that are covered and un covered covered by the the TIDELANDS ebb and flow of the tide.
TERMS Refers to the amount of each installment installment payment, interest rate , due dates, and number of years.
A market in which the demand for TIGHT MONEY MONEY MARKET money exceeds the supply, causing interest rates to increase and borrower qualifications to be tightened. Savings account with a fixed maturity, as TIME DEPOSIT opposed opposed to a de mand deposit.
The written dec laration laration of o ne's ne's last w ill. ill.
TESTAMENTARY DISPOSITION by will. TESTATE will.
A gift pa ssing ssing
"TIME IS OF THE ESSENCE" These words, when placed in an agreement, make it necessary that all time limitations and requirements be strictly observed.
Describes a person who dies leaving a
A person who makes a will. will. T echnically, TESTATOR a testator is a male and a testatrix is a female, although in common use testator refers to anyone anyone who makes a will. TESTATRIX
An east west row of townships (as used in the TIER government survey method of land descriptions).
Antlike insects that feed on wood.
A shield , usually of TERMITE SHIELD noncorrodible metal, placed on top of the foundation wall or around pipes to prevent passage of termites. TESTAMENT
This bath contains a shower, a
THRESHOLD A strip of wood or metal beveled on each edge and used above the finished floor under outside doors.
A nonamortizing nonamortizing loan that TERM MORTG AGE AGE normal ly calls for repayment of the principal in full full at the end of the loan term.
TERMITES
inating a pe riodic riodic THIRTY-DAY NOTICE A notice term inating tenancy without cause, by ending a tenancy thirty days from date of service. giving a tenant thre thre e days days in THREE-DAY NOTICE A notice giving which to cure a defaul t or quit the the premis es. It is the first first step in an unlawful detainer action, as the means of terminating a lease for cause. When rent is delinquent delinquent , itit is sometimes called a notice to quit or p ay rent.
TERM A prescribed period of time; especially, the length of time a borrower has in which to pay off a loan, loan, or the duration of a lease. TERM TERM LOAN time.
of the contract.
TIME-SHARE ESTATE A right of occupancy in a time share project (subdivision) which is coupled with an estate in the real property.
Ownership in vacation area TIME-SHARE TIME-SHARE CONDOMINIUM residential property for an assigned period, usually two weeks. Also called interval owner ship.
A wom wom an who m ake ake s a will. will. subdivision of r eal TIME-SHARE PROJECT A form of subdivision property into rights to the recurrent, exclusive use or occupancy of a lot, parcel, unit or a segment of real property, on an annual or some other period basis, for a specified period of time.
TESTER A person working with a fair housing organization, who pretends to be interested in buying or renting property property from someone suspected of unlawful discrimination.
As rel ated ated to r eal estate, it includes includes entering THEFT and removing part of the realty, defrauding by misrepresentation, and taking away part of the security for a trust deed with the intent to d efraud the ben eficia eficia ry. THIRD PARTY Persons who are not parties to a contract which affects an interest they have in the object
license or contractu al or m embers hip TIME-SHARE USE A license right of occupancy in a timeshare project which is not coupled with an estate in the rea l property. T-INTERSECTION T-INTERSECTION LO T T-intersection.
P AGE 88
Lot facing the dead-end street at the
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. Evide nce of the owner's right or inter inter est in in TITLE Evide proper ty. ty. (1) The right g ht of ownership. ownership. (2) The evidence evidence of a person's o wnership or interest in property. Title acquired by a grantor TITLE, AFTER-ACQUIRED after he or she attempted to convey property he or she didn t own. Title that is free of encumbrances or TITLE, CLEAR Title defects: marketable title.
An A LTA lende lende rs policy is the Title Policy usually required by the lender .
TITLE POLICIES
TITLE COMPANY Com pany authorized authorized to sell title title insurance, as well as to to serve escrow needs.
Nature of the surface of the land. TOPOGRAPHY Topography may be level, rolling, or mountainous.
interest in p roperty TITLE, EQU ITABLE The vendee s under a land con tract. Also called an equitable intere intere st. COMPARE : Title Title,, Lega Lega l.
A governmental title registration TORRENS SYSTEM syste syste m that us es certific certific ates of title title issue d by a public o fficial fficial ( the re gistrar of title) title) a s evidence of title. title.
TITLE INSURANCE Insurance protecting a property owner against losses resulting from an imperfect title.
TORRENS TITLE A title included in a state-insured title system no longer used in California. California.
TITLE, LEGAL The vendor s interest in property under a land contract. COMPARE: Title, Equitable. TITLE, MARKETABLE Tile free and clear of objectionable liens, encumbrances, or defects, so that a reasonable prudent person with full knowledge of the fans would not hesitate to purchase the property..
TORTIOUS
TITLE REPORT A report which discloses condition of title , made by a title company preliminary to issuance of title title ins urance po licy. licy. A duplicate (usually microfilmed) of a county s public record, maintained by a title company at its offices for use in title searches. TITLE THEORY A mortgage arrangement whereby title to mortgaged real property vests in the lender. Some state s give give greater protect protect ion ion to mortg age lenders lenders and assume lenders have title interest, Distinguished from the Lien Theory States TITLE THEORY ST ATE A state in which the borrower assigns title to the lender, typically typically in a deed o f trust.
An inspection of the public record to
Time periods for various TIME PERIODS lawsuits lawsuits a re specified in the Statute of Fra uds.
injury. (3) Violation TORT (1) A wrongful act. (2) A wrong or injury. of a legal right. A civil wrong, no t arising arising from a breach of contra ct. Most tor ts lie lie in negligence, negligence, although they could also be intentional torts (such as assault and battery, trespass) or strict liability torts. TORTFEASOR
TITLE PLANT PLANT A duplicate (usually microfilmed) of a county s public record, maintained by a title company at its offices for use in title searches
TITLE S EARCH EARCH determ ine all all
Insurance written by a title com pany to TITLE INSURANCE protect a property-owner against loss if title is defective or not market able. able. A spe spe cial cial po po licy of insura nce issue issue d by by a title com pany, insuring insuring the owner aga inst loss loss of or defec t in title title to the insure d property. property. The policy policy m ay be e ither ither a CLTA policy, issued to the property owner and to noninstitutional lenders, or an ALTA policy, issued to institutional lenders.
A perso perso n who comm its a tort. tort. Conduct which amounts to a tort.
usually of the same TOWNHOUSE One of a row of houses usually or similar design with with commo n side walls or with a very narrow space between adjacent side walls. A territorial subdivision subdivision th at is six mi les long TOW TOW NSH NSH IP and six miles wide and that contains 36 sections, each one mile square. Lines running east-west, s paced six TOWNSHIP LINES Lines miles apart, in the government survey system. TOWNSHIP TIER In the government survey system, a strip of land running east-west, six miles wide and bounded on the north and south by township lines.
A residential unit connected to similar units. TOWNHOUSE Describ es a st yle of a rchitectu rchitectu re , with title title to t he unit and its lot invest ed in in the individual individual buyer w ith ith an undivided inter est in the common area. TRACS An on-line computer system being developed by HUD to help administer subsidized housing.
P AGE 89
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. TRACT 1. A piece of land of undefined size. 2. In the government survey system, an area made up of 16 townships; 24 miles on each side.
TRANSFEREE
The person to whom a transfer transfer is made.
person w ho makes a transfer. transfer. TRANSFEROR The person TRACT INDEX An index of the public record, grouping together all recorded documents that carry a particular legal description. COMPARE: Grantor/grantee Indexes.
TRANSMUTATION TRANSMUTATION AGREEMENT A contract in which coowners agree to change their form of ow nership; usually one one in which hu sband and wife wife agree to change com mun ity property property to separa te property.
TRA DE ASSOCIATION A voluntary n onprofit organization of independent and competing business units eng eng aged in th e sam e industry industry or trade, form ed to help solve industry problems, promote progress and enhance service.
TREADS
A series of related changes brought about by a TREND chain of causes and effects. effects.
Articles of personal property that TRADE FIXTURES are annexed to real property but that are necessary to the carrying carrying on of a trade trade and are removable by the owner. Fixtures installed installed to further further one's trade, business, business, or profess ion. ion. T hey are an exception to the the gene ral rule that fixtures are part of a building. building. Such fixt ures ures installed by a tenant may be removed before the expiration of the tenancy. TRADE-IN Method of guaranteeing an owner a minimum am ount of cash on the sale of his or her present property to permit him or her to purchase another. If the the property is no no t sold sold within within a spe cified cified time at the listed price, the broker agrees to arrange financing to purchase the property at an agreed-upon discount.
Any adopted or fictitious name used to TRADE NAME designate a business business concern. TRANSACTIONAL BROKER A real estate agent representing both buyer and seller in a transaction; also referred to as a dual agent.
TRIAL The fundamental court proceeding in a lawsuit, in which a judge ( and in some cases, a jury) hears evidence presented by both parties parties and issues issues a judgment. COMPARE: Appeal. TRIER OF F ACT The one who decides questions of fact in a lawsuit. In a jury trial, it s the jury; in a non -jury trial, it s the judge. judge. (Q uestions of law are always decided by the judge.)
The abi lity lity t o will, lease, give or
A charge made by alending alending TRANSFER FEE institution holding or collecting on a real estate mortgage to change its records to reflect different ownership. TRANSFER TAX
trespass es. T he im porta porta nce of this TRESPASSER One who trespass classif ication of individuals individuals o n prope rty is created by the method s for rem oval a nd the liabili liability ty of the p roperty owner if the trespasser is injured on his property.
The finish materials in a building, such as moldings TRIM applied around openings (window trim, door trim) or at the floor and ceiling (baseboard, cornice, picture molding).
Conveyance; passage of title.
TRANSFERABILITY sell a property.
An invasion of an owner's rights in his or her TRESPASS propert y. (1) Unauthorized entry entry onto another' another' s land. (2) Invas Invas ion of of anot anot her's her's rights rights or property. property.
The Truth-in-Lending Act requires TR IGGERING TERMS creditors to disclose certain information if certain credit terms, are included in the advertisement. Triggering terms include the amount or percentage of down payment, number of payments, payments, period (term) of repayment, amount of any payment, and the amount of any finance finance charges.
Accounts used to make TRANSACTION ACCOUNTS payments or transfers transfers to others, others, such as a checking checking account TRANSFER
Horizonta Horizonta l boards of a stairway. stairway.
Se e DOCUMENTARY STAMPS
In a real estate sale, the TRANSFER TAX STAMPS transfer tax stamps are the prime responsibility of the seller.
A right of propert y, real or person al, held by TRUST one party called the trustee for the bene fit of another party called the the beneficiary. Arrangem Arrangem ent whereby one person person holds property for the benefit of another under fiduciary (special confid ential) ential) relations relations hip. hip. separate and apart and TRUST ACCOUNT An account separate physically segregated from broker s own funds, in which broker is required required by law to deposit all funds collected collected f or client. ive in wh ich legal legal TRUST COOPERATIVE A cooperat ive ownership of a building is held by a trust company.
P AGE 90
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. TRUST DEED Deed given by a bo rrower to a trustee to be held pending fulfillm fulfillm ent of an obligation, which is usually repayment of a loan loan to a beneficiary. A deed of trust. It may contain all the following clauses, request for notice, prepayment penalty and late charges.
U.S. Constitution or a state constitution. An improvement which, because of UNDERIMPROVEMENT its deficiency in size or in cost, is not the highest and best use of the site. Insuring something against loss; UNDERWRITING guaranteeing f inanc inanc ially. ially.
TRUST FUNDS. Trust funds accepted by a broker may not be placed in th e broker s busines s accou nt, or his personal account. Trust fund handling requirements do not apply to advance fees. A broker must place trust funds in an interest-bearing account if requested by the owner of the funds. The broker must keep records of trust funds deposited in a trust account. A broker must retain records of trust funds for three years after the closing or cancellation of the transaction involving the funds. If a broker is found to be mishandling trust funds, the broker, the broker s business may be handed over to a receiver. Criminal penalties apply to mishandling of trust funds.
UNDIVIDED INTERESTS
SEE : Interest, Undivid ed
Taking any fraudulent or unfair UNDUE INFLUENCE advanta ge of another's necess ity or weaknes s of mind. Using a position of trust and confidence improperly to persuade a person to ta ke a course course of action. By relying relying on the the truste d confidant, the decision maker fails to exercise his free will and indepe indepen n dent dent judgment. An increase in value of real UNEARNED INCREMENT estate due to no effort on the part of the owner, often due to an increase in population.
TRUSTEE The person who holds property in trust for anothe r. In a deed of trust, trust, the person who holds bare legal title in in trust. After a deed has been paid off , the de ed reco nveying title title to the tr ustor ustor will be signed b y the trustee.
Incapable of being UNENFORCEABLE CONTRACT enforced at law. An e xam ple of an un un enforceable co co ntrac ntrac t is is an oral listing agreement to pay a broker a commission.
TRUSTEE'S DEED The deed issued by the beneficiary after the foreclosure and sale under a deed of trust.
The private sa le of property held TRUSTEE'S SALE by a trustee under a deed of trust as part of the foreclosure proceedings. (1) One who conveys his or her property TRUSTOR to a trustee. trustee. (2) The borrower borrower or debtor under a deed of trust.
An owner/ broker submits a UNETHICAL UNETHICAL CONDUCT listing listing to a m ultiple ultiple listing listing service, and an other brok er sells his property, however the owner/broker does not disclose that he is a broker would constitute unethical conduct under DRE regulation. A group of statutes UNIFORM COMMERCIAL CODE establishing a unified and comprehensive scheme for regulation of security transactions in personal property and other commercial matters, superseding the existing statutes on chattel mortgages, conditional sales, trust receipts, assignment of accounts receivable, receivable, and other similar similar mat ters.
A complex set TRUTH IN LENDIN G LAW (TIL) of federal statutes designed to provide a borrower with a means of discovering and comparing the true costs of credit. Under Regulation Z of the act, certain borrowers of property have three days afte r accepting a loan to rescind w ithou ithou t cost or liab liab ility. ility.
UNIFORM RESIDENTI RESIDENTIAL AL LANDLORD LANDLORD AND AND TENANT ACT, A model law drafted in 1972 by the National Conference of Comm issioners issioners on Uniform State Laws. It serves as a model statue for standardization and regulation of the residential landlord-tenant relationship.
Loan with lower initial initial fixed TWO-STEP MORTGAGE interest rate, increasing after conversion period.
UNIFORM SETTLEMENT STATEMENT STATEMENT A closing statement required required for any trans trans action invo invo lving a loan loan that s subject to the Real Estate Settlement Settlement Procedures An (RESPA).
The frequency in which new tenants TURNOVER mov e in and out of a unit.
U UNCONSTITUTIONAL
UNIFO UNIFO RM STANDARDS O F PROFESSIO PROFESSIO NAL APPRAISAL APPRAISAL These standards are developed, interpret interpreted ed and PRACTICE amended by The Appraisal Standards Board. UNILATERAL (CONTRACT)
Violating a pr ovision ovision of the
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One-sided, ex parte. parte.
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. UNILATERAL ESCROW INSTRUCTIONS Separate sets of escrow instructions, one for the buyer and one for the seller; seller; norm ally ally drawn up afte r all the inform ation ation is in and escrow is ready to close. UNILAT ERAL M ISTAKE ISTAKE
SEE: Mistake , Unila Unila teral. teral.
refuses to UNLAWFUL DISCRIMINATION A bank refuses loan money to a buyer because of his religion.
The am ount of valuable valuable UNLIQUIDATED DAMAGES consideration awarded by a court to an injured party as a result of a default.
UNITIES, FOUR The unities of time, title, interest, and possession , requ requ ired fo r a join join t tena tena ncy.
UNSECURED DEBT A debt not backed by specific property to satisfy the indebtedness in case of default.
UNI T- IN - PLACE METH OD The cost of erecting a building by estimating the cost of each separate component.
A loan granted solely on the UNSECURED NOTE (LOAN) (LOAN) strength of a borrower s signature; no security is pledged, and no deed of trust recorded.
UNITY OF INTEREST When each co-owner has an equal interest (equal share of ownership) in a piece of property.
UNTENANTABLE
When each co-owner acquired title title at
A representative authorized by UNIVERSAL AGENT the principal to perform all acts that the principal can personally perform and that m ay be lawfully delegated delegated to another. A legal doctrine that UNJUST ENRICHMENT prevents a person from inequitably benefitting from another's mistake, mistake, poor judgment, or loss. In a land sales contract the vender may no longer keep both the property an an d the the buyer's exces s paym paym ents (over his damages) in the event of breach, because to do so would unjustly enrich him at the buyer's expense. UNLAWFUL
Illegal.
A license e solicits solicits a UNLAWFUL CONDUCT listing by selling a prospective home seller and the property has a high market value when there is no
Not fit for occupancy.
UP C Identification number for a specific property; also called assessor s tax tax parc el num num ber, a ccount num ber o r folio folio number.
each co-o co-o wner is UNI TY OF POSSESSION POSSESSION When each equally entitled entitled to poss ession of the entire prope rty, because the ownership interests are undivided.
UNITY OF TITLE When each co-owner acquired title through the same instrument (deed, will, or court order).
An action to recover UNLAWFUL DETAINER possession of real prope prope rty. A lawsuit lawsuit de de signed to evict a defaulting tenant, or anyone unlawfully in possession of proper ty, ty, from premise s. It is summary in nature, nature, entitled to to a priority court trial, trial, and litigat litigat es only the righ t to possessi on of property (and damages resulting therefrom). UNLAWFUL DISCRIMINATION A person fined with this act may be fined as high as $10,000 for a first violation.
UNINCORPORATED ASSOCIATION The legal designation for an organization that has recorded a statement listing the names of those who are authorized to execute conveyances on its behalf, which makes possib le for title title to b e held held in th e asso ciation ciation s name.
UN ITY OF TIME TIME the same time.
reason able basis basis to the representa representa tion. tion. It would be unlawful conduct.
A nonprofit organization URBAN LAND INSTITUTE (U LI) founded in 1936 to improve the quality of land-use planning and development. URBAN PROPERTY PROPERTY
City property; closely settled prope rty.
Renova tion, rehabilitation rehabilitation and URBAN REN EWAL EWAL redevelopment of substandard urban residential properties. Floor area of an office building that can be USABLE SPACE used for tenant office space. USE VARIANCE
SEE: Variance, Use.
Stands for Uniform Uniform standards of Professional USPAP Appraisal. Claiming a rate of USURY OR USURIOUS INTEREST interest interest greater than perm itted by by law. Ch arging a g reater rate of inte inte rest on loans than the rate a llowed llowed by law (10 p ercent in many cases cases ). The penalty for any landlord who UNTENABLE PROPERTY collects collects or demands rent when his property has become untenable is ; actual damages up to $10,000, the tenant s court P AGE 92
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. costs and fees, and possible punitive damages imposed by a judge.
The internal angle formed by the junction of VALLEY two sloping sides of a roof.
UTILITIES Refers to services rendered by public utility companies, such as ---- water, gas, electricity or telephone.
(1) Estimated worth or price. price. (2) The act of VALUATION valuing valuing by appraisal. VALUATION
lity to give sat isfact ion and/or exci te a UTILITY The abi lity desire for possession. An element of value. UTILITY VALUE
VALUE Present worth of future benefits arising out of ownership to typical users/investors. The monetary worth of property , goods or services to buyers. When net operating income is divided by the capitalization rate you get value.
The usefulness of property.
VALUE, BASE Under Proposition 13, the initial assessed value of a piece of property, used in calculating a particular owner s prop erty taxes; this figure is later adjusted to ref lect inflation inflation and improvements.
V VA
SEE: Appraisal.
Veteran s Administration.
A deduction VACANCY AND COLLECTION LOSSES from potential gross incom e for (1) current or future space not rented due to tenant turnover and (2) loss from uncollected rent due from delinquent tenants. VACANCY RATE are not occupied. VACATE emoty.
VALUE, FULL CASH Under Proposition 13, the assessed value of newly transferred proper ty; it s the purchase price of the property, unless unless it can be shown that the property wouldn t have be be en sold a t that price on the open open mark et.
A method of expressing variable VARIABLE VARIABLE CO STS RATIO costs for a property as a percentage of total rental income. An ex pense ite m in a pro perty s VARIABLE EXPENSE operating budget that increases or decreases with the occupa ncy level of th e building.
The percentage of rental units that
To set aside, cancel, or annul; to leave fluctuates VARIABLE VARIABLE INTERE ST RATE RATE An interes t rate t hat fluctuates in a set proportion to changes in an economic index, such as the c ost o f mo mo ney. E xtensive r egulation egulation s cover cover use of VIRs VIRs in loans loans on residential property.
lass ificati ificatio o n of a cont ract th at is VALID The legal c lass binding and enforceable in a court of law. VALUABLE CON SIDERATION
VARIABLE SCALE PERCENTAGE LEASE A type of percentage lease in which the percentage rental rate increases or decreases according to the volume of business done by the tenant.
SEE: Consideration. Consideration.
(1) Legally sufficient and VALID VALID CONTR ACT authorized authorized by law. (2) Ha Ha ving force or binding binding force. Fully effective effective at law; legally sufficient. VALID DEED All legal essential legal elements are present. One that is binding and enforceable in a court of law.
It is a n ecessary requ irem irem ent in in VALID ESCROW a valid escrow for the trans fer of title to real propert y for: a binding contract for the sale of real property and a conditional delivery of instructions to escrow A loan made to qualified qualified veterans for the V A LOAN purchase of real property wherein the Department of Veteran s Affairs guarantees the lender payment of the mortgage.
An exception or departure from the general VARIANCE rule. rule. A n exc exc eptio eptio n gra gra nted to a prope rty owner, relieving relieving him from obeying ce rtain aspects of a zo ning ordinance. Its gran gran ting is is discr discr etion etion ary with with the zoning authorities and is based on undue hardship suffered by the property owner because of unique circumstances affecting his property. VARIANCE, USE A variance that permits an owner to use the pr operty in a way that isn isn t ord inarily allowed in that zone; for example, a commercial use in a residential zone. VENDEE
Purchaser or buyer or real property.
VENDOR
Selle Selle r of re al property.
VEND OR S S LI EN P AGE 93
A claim against proper ty giving the seller
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. status, sa sa lary, and and leng leng th of em em ployment.
the rig rig ht to hold the property as se curity curity for an y unpa unpa id purchase purchase m oney.
VOID VENEER material.
Having no legal force or effect.
Thin sheets of wood placed placed over another
VENT A pipe ins talled to provide a flow of air to or from a drainage system o r to provide provide a circ circ ulation ulation of a ir within within such system to protect trap seals seals from siphon age and back pressure.
The location in which a cause of action VENUE occurs; it determines the court having jurisdiction to hear and decide the case. For real estate, the court having having proper venue is one one in the the c ounty in which the property is is located. A sworn s tatem tatem ent b efore a du du ly VERIFICATION qualified officer as to the correctness of the contents of an instrument . Writte n certification certification under oath and/or and/or penalty of perjury, confirming the truth of the facts in a docum docum ent. VERSUS Aga Aga inst (abbre viated viated v. or vs .). Used in case name s, with the plaintiff's nam e given given first. VEST To confer or bestow upon, as in the expression, Title shall ves t in....... ..
Current recorded owner.
VESTING
The manner in which title is held.
A title that is va lid until voided VOIDABLE CONTRACT by the party who has a right to nullify nullify it. VOLUME BUYING
See Bulk Purchasing
The license status that results VOLUNTARILY INACTIVE when a licensee has met all the requirements for licensure, yet the licensee chooses not to engage in the real estate business, and has requested his or her license be placed in this status.
Variable Variable Rate Mortgages. See Adjustable-Rate VRM Mortgages
W
Federal agency VETERANS ADMINISTRATION succeeded as of March 15' 1989 by the Department of Veterans Affairs.
interio r wall, lower sect ion WAINSCOTING Wood lin ing of an interio of a wall when finished differently from the upper part.
A deduction from the VETERAN'S EXEMP TION TION annual property tax allowed to a qualified veteran residing on residential property property . Since Jul y 1978, it has amoun ted to to $40 o ff the the normal tax bill.
WAIVE To give up a right.
govern or formally rejects VETO Wh en the pr esident o r govern a bill that Congress or the legislature has passed. The bill won t becom e law unle unle ss the legislative body body vo tes to override the veto. VOD Verification of Deposit form sent to borrower s financ ial ial institutions institutions to verify funds for the d own payment and closing costs. VOE Verification of employment form sent to prospective prospective borrower s employer to verify employment
An instrument that appears to VOIDABLE CONTRACT be valid and enforceable on its face but is, in fact, lacking som e ess entia entia l requirem requirem ent. M ay be d ecla ecla red v oid, oid, but is is va va lid unless and until declared void.
VOLUNTARY LIEN Any lien lien plac ed on p roperty with with th e consent of the owner owner or as a result of the voluntary act of the owner.
Bestowe Bestowe d upon som eone, such as title title VESTED to property. Absolute, not contin gent or subject to to being defeated. VESTEE
To have no legal force or effect; effect; that VOID VOID CONTRAC T which is unenforceable. Unenforceable, null, having no legal effect.
Giving up of certa in rights rights or privileges. privileges. The WAIVER relinquishment may be voluntary and knowing, or it may occur involuntarily throug h action action of the parties. The action resulting resulting in the w aiver aiver is unilatera unilatera l, and r equires no action or rel iance by the other p arty. arty. WALK-UP An apartment building with two or more floors without an elevator.
Rent i s usually establishe establishe d after surveying WAREHOUSES similar similar spaces to determ determ ine ma ma rket ren ren ts. WAREHOUSING
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Temporary retention of loans pending
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. sales to investors. WARRANT deed.
A lender may not WELFARE OR SOCIAL SOCIAL SECURITY SECURITY legally deny a loan loan app lication based on the applicant s receipt of income from from a public assistanc assistance e program such as W elfare or Social Secu rity. rity.
A guarantee or covenant, as in a warranty
WARRANTY An absolute undertaking or promise that certa in facts facts are as represented. Occasio nally nally used interchangeably with guarantee.
WILD DEED A deed that will not be discovered using the grantor-grantee indexes., because of a break in the chain of title. A deed of trust or other document can be wild.
A deed that is used to convey WARRANTY DEED real property and that contains warranties of title and quiet possession; the grantor thus agrees to defend the prem ises again again st the the lawful claim claim s of th ird person s. It is is commonly used in other states, but in California the grant deed has replace d it. it. Used predom inantly in states that do not have title t le insuran insuran ce companies . This deed deed contains six full warranties of protection to the buyer, includ includ ing warranties that the selle selle r owns the prop erty, erty, that it is unencumbered, and that the seller will defend title against any defects.
WILL A written, legal document that directs the disposition of one's property after death.
WARRANTY OF AUTHORITY AUTHORITY A representation by an agent to third persons that the agent is acting within the scope of authority co nferred by his or her principal.
This type of may include WORK WEEK (REGULAR) holidays, Sundays and weekdays.
Implied WARRANTY OF HABITABILITY warranty in residential residential leases. T he landlord coven coven ants by implication that the premises are suitable for human occupancy. The implied implied warranties warranties are found in the statutes statutes and implied implied by common law.
Provides WORKERS COMPENSATION INSURANCE coverage for employees injured or killed in the course of the job. WRAP AROUND MORTGAGE (DEED OF TRUST) TRUST) All-Inclusi All-Inclusive ve Deed of Trus t.)
The destruction, or material alteration of WASTE or injury to premises by a tenant-for-life, or tenant, or tenant -for-years. Exampl e: a tenant cutting down trees or mining coal. coal. The destruction, injury, injury, mater ial alteration, or abusive use of property by a person rightfully in possession, but who does not own the fee or entire estate (for example, by a lessee or life tenant).
(See
A sophisticated WRAP-AROUND DEED OF TRUST financing financing package that pe rmits the seller to sell his his p roperty withou withou t paying paying o ff the the outstanding deed of tr ust. T he bu bu yer's larger loan, which is used to purchase the property, includes provisions for p aying aying off the se ller's e xisting xisting loan. WRAPAROUND LOAN A loan tha t is rea lly a c ombination of loans, the existing loan(s) and a new second loan.
SEE: Prior Appropriation; Riparian
Distance from the surface of the WATER TABLE ground to a depth at which natural ground water is found. Deprecation of an asset due to
Electronic Electronic communication WIRELESS COMMUNICATION that is sent v ia satellite, satellite, thus eliminating t he need t o use telephone lines.
A forma l will, will, signed by the testator in WITNESSED WILL the presence of two or more witnesses, each of whom must also sign the w ill. ill.
WARRANTY, IMPLIED In the sale of property, a guarantee created by operation of law, whether or not the seller inte inte nded to o ffer it.
WEAR AND TEAR ordinary usage.
WILL, STATUTORY A formal will prepared on the statutory will form provid ed in in Calif ornia ornia s Probate Code.
A person who gives testimony ; one who WITNESS observers and attests to the signing or executing of a docum docum ent.
A provision in a deed WARRANTY FOREVER gauranteeing that th e selle selle r will for for all tim tim e defend title title and possession for the buyer.
WATER RIGHTS RIGHTS Rights
WILL, NUNCUPATIVE An oral will made on the testator or testatrix s deathbed. No longer recognized in California.
A court order directing a party to do a specific specific a ct, WRIT usually to appear in or report to a court of law. S A process of the court under WRIT OF POSSESSION POSSESSION which prope rty rty may be seized. seized. An order from from the court to the sheriff or other law enforcement officer directing and authorizing authorizing a specific act.
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REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. regu regu lation lation of pro perty perty u ses within each district. A use tha t is legally nonconfor ming is allowed to continue in this zone.
A writ authorizing authorizing and WRIT OF ATTACHMENT direc direc ting the phys ical attach ment (se izure) izure) of pro pro perty. perty.
ZONING AMENDMENT
orde r directing the sheriff to WRIT OF EXECUTION EXECUTION An orde seize prop prop erty to satisfy satisfy a judgm ent. WRIT OF IMMEDIATE IMMEDIATE POSSESSION An order authorizing a landlord to obtain immediate possession of a tenant's premises, pending the outcome of an unlawful retainer action or other court proceeding.
ZONING , EXCLUSIO EXCLUSIO NARY NARY A zoning law that has the effect of preventing certain groups (such as minorities or poor people) fr om living in a com munity. ZON ING, SPOT SPOT An illegal rezone that favors (or restricts) a particular property owner (or a small group of owners) without justification.
WRIT OF POSSESSION POSSESSION A court order issued after an unlawful detainer action, informing a tenant that he or she must vacate the landlord s prop erty within within a spe cified period or be forcibly removed by the sheriff.
X X An individual who cannot write may execute a legal document by affixing affixing an X (his/h er mark) where t he signature normally goes. Beneath the mark a witness than writes writes the person s name and signs his or her name as the witness. WRITTEN OFFER Submitting all written offers is a beneficial practice.
Y YARD
SEE: Rezone.
A unit of measurement 3 feet long.
YIELD The interest earned by an investor on an investment (or by a bank on the m oney it has loaned). Also, Also, called return. YIELD RATE The yield expressed as a percentage of the tot al investment. Also called called the rate of return.
Z uthorities in ZONE The area set off by the proper a uthorities which the real property can be used for only specific purposes. Act of city or county ZONING ORDINANCES authorities authorities specifying the type of us e to which property may be put in specific areas. A government 's division division of a city or other geographic area into districts, and the P AGE 96
REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course.
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