-
-
- A, B, C, D paper:
- Mortage loans are rated as A, B, C, or D paper. "A" paper loans
are the highest quality, lowest risk loans; "'B" quality
are loans where the borrower has minor credit problems; "C" quality
are borrowers with marginal or poor credit; "D" quality
indicates very high risk loans.
- absorption rate:
- The total number of vacant square feet of office space divided by the square footage leased per year historically. Used to analyze demand of office space in a
given market area.
- abstract of title:
- A full summary of all consecutive grants, conveyances, wills, records and judicial proceedings affecting title to a specific parcel of real estate, together with
a statement of all recorded liens and encumbrances affecting the property and their present status. The abstract of title does not guarantee or ensure the validity
of the title of the property. Rather, it is a condensed history that merely discloses those items about the property that are of public record; thus, it does not
reveal such things as encroachments and forgeries.
- abstract of judgment:
- A full summary by the court of a judgment. It becomes a general lien on all a debtor's property in the county where it is recorded.
- abstracter:
- The person preparing the abstract of title. The abstracter searches the title as recorded or registered with the county recorder, county registrar, circuit court
and/or other official sources. He or she then summarizes the various instruments affecting the property and arranges them in the chronological order of recording,
starting with the original grant of title.
- acceleration clause:
- A provision in a mortgage, trust deed, promissory note or contract for deed (agreement of sale) that, upon the occurence of a specified event, gives the lender
(payee, obligee or mortgagee) the right to call all sums due and payable in advance of the fixed payment date.
- acceptance:
- An acceptance is a promise by the offeree to be bound by the exact terms proposed by the offeror. The acceptance must be communicated to the offeror.
- accession:
- Acquiring title to additions or improvements to real property as a result of the annexation of fixtures or the accretion of alluvial deposits along the banks
of streams. accretion The increase or addition of land by the deposit of sand or soil washed up natu rally from a river, lake or sea.
- accord and satisfaction:
- The settlement of an obligation. An accord is an agreement by a creditor to accept less than bargained for from a debtor. The creditor's acceptance of the accord
constitutes satisfaction of the debt.
- accounting:
- The agent must be able to report the status of all funds received from or on behalf of the principal. Most state real estate license laws require a broker to
give accurate copies of all documents to all parties affected by them and to keep copies on file for a specified period of time. Most license laws also require the
broker to deposit immediately, or within 24 to 48 hours, all funds entrusted to the broker (such as earnest money deposits) in a special trust, or escrow, account.
Commingling such monies with the broker's personal or general business funds is strictly illegal.
- accretion:
- The gradual and imperceptible addition of land by alluvial deposits of soil through natural causes, such as shoreline movement caused by streams or rivers. This
added land upon a bank or stream, navigable or not, becomes the property of the riparian or littoral owner, and it also becomes subject to any existing mortgages.
- accrued depreciation:
- 1. In accounting, a bookkeeping account that shows the total amount of depreciation taken on an asset since it was acquired; also called accumulated depreciation.
2. For appraisal purposes, the difference between the cost to reproduce
the property (as of the appraisal date) and the property's current
value as judged by its "competitive condition." In
this context, accrued depreciation is often called diminished
utility.
- accrued items:
- On a closing statement, items of expense that are incurred but not yet payable, such as interest on a mortgage loan or taxes on real property.
- accusation:
- The first step in a disciplinary action against a licensee.
- acknowledgment:
- A formal declaration made before a duly authorized officer, usually a notary public, by a person who has signed a document; also, the document itself. An acknowledgment
is designed to prevent forged and fraudulently induced documents from taking effect.
- acquisition cost:
- The amount of money or other valuable consideration expended to obtain title to a property. Includes purchase cost, plus such items as appraisal fees, closing
costs, finance charges, mortgage loan origination fees and title insurance.
- acre:
- A measure of land equal to 43.560 square feet, 4,840 square yards, 4,047 square meters, 160 square rods or 0.4047 hectares. actual eviction The legal process
that results in the tenant's being physically removed from the leased premises.
- actual damages:
- Real, substantial and just damages, or the amount awarded to a complainant in compensation for his actual and real loss or injury.
- actual eviction:
- The legal process that results in the tenant's being physically removed from the leased premises.
- actual notice:
- Express information or fact; that which is known; direct knowledge.
- addendum:
- Additional material attached to and made part of a document. If there is space insufficient to write all the details of a transaction on the sales contract form,
the parties will attach an addendum or supplement to the document. The sales contract should incorporate the addendum by referring to it as part of the agreement.
The addendum should refer to the sales contract and be dated and signed or initialed by all the parties.
- add-on rate:
- Interest charged on a principal amount for specified term, regardless of any repayments of principal. The borrower is paying interest on the full principal sum
for the entire loan period, even though the principal is being reduced each month.
- ademption:
- Disposal by a testator in his or her lifetime of a specific property bequethed in his or her will so the bequest is revoked.
- adjustable rate mortgage (ARM):
- A broad term for a loan (mortgage or deed of trust) with rates and terms that can change. The adjustable rate loan has become commonplace, with allowable ranges
as to time intervals, percentage of increase or decrease and total increases or decreases likely to change as market conditions change.
- adjusted basis:
- The original cost basis of a property reduced by certain deductions and increased by certain improvement costs. The original basis determined at the time of acquisition
is reduced by the amount of allowable depreciation or depletion allowances taken by the taxpayer, and by the amount of any uncompensated property losses suffered
by the taxpayer. It then increases by the cost of capital improvements plus certain carrying costs and assessments. The amount of gain or loss recognized by the
taxpayer upon sale of the property is determined by subtracting the adjusted basis on the date of sale from the adjusted sales price.
- adjustment:
- Decrease or increase in the sales price of a comparable property to account for a feature that the property has or does not have in comparison with the subject
property.
- adjustment period:
- In an adjustable rate mortgage (ARM) the "adjustment period"
is period (one month, three months, six months, one year or three
years) between one interest rate and monthly payment change and
the next.
- administered price system:
- Federal National Mortgage Association securities purchasing procedure where required yields are adjusted daily to reflect financial market factors.
- administrative agency:
- A government agency that makes rules and regulations to carry out the law. A state's real estate commission develops regulations to complement license law.
- administrative order:
- A legal document signed by the EPA directing an individual, business, or other entity to take corrective action or refrain from an activity. The order describes
the violations and action to be taken and can be enforced in court.
- administrator:
- A male person appointed by the court to settle the estate of a person who has died intestate (leaving no will). Sometimes referred to as the personal representative.
- administratrix:
- A female person appointed by the court to settle the estate of a person who has died intestate (leaving no will). Sometimes referred to as the personal
representative.
- advance fee:
- A fee paid before any services are rendered. Specifically, it is a practice of some brokers to obtain a nonrefundable fee from the seller in advance to cover
the advertising of properties or businesses for sale while giving no guarantee that a buyer will be found, which is often held to be improper conduct. Brokers must
keep accurate records of expenditures.
- advance fee addendum:
- An agreement specifying services for which an agent or broker will be compensated including a provision for payment of an advance fee.
- ad valorem:
- The Latin word for "according to value."
-
- ad valorem tax:
- A tax levied according to value, generally used to refer to real estate tax. Also called the general tax.
IRS on Real Estate Taxes
- adverse action:
- A denial or revocation of credit, a change in the terms of an existing credit arrangement, or a refusal to grant credit in substantially the amount or on substantially
the terms requested.
- adverse possession:
- The acquiring of title to real property owned by someone else by means of open, notorious, hostile and continuous possession for a statutory period of time. The
burden to prove title is on the possessor, who must show that four conditions were met: 1. He or she has been in possession under a claim of right. 2. He
or she was in actual, open and notorious possession of the premises so as to constitute reasonable notice to the record owner. 3. Possession was both exclusive
and hostile to the title of the owner (that is, without the owner's permission and evidencing an intention to maintain the claim of ownership against all who may
contest it). 4. Possession was uninterrupted and continuous for at least the prescriptive period stipulated by state law.
- A sworn statement written down and made under oath before a notary public or other official authorized by law to administer an oath. The term literally means "has pledged one's faith." The affiant (person making the oath, sometimes called the deponent")
must swear before the notary that the facts contained in the affidavit are true and correct.
- affidavit of title:
- A written statement, made under oath by a seller or grantor of real property and acknowledged by a not;uv pub lic, in which the grantor 1. identifies himself
or herself and indicates marital status, 2. certifies that since the examination of the title on the date of the contracts no defects have occurred in the
title and 3. certifies that he or she is in possession of the property (if applicable).
- after-acquired title:
- Title or interest acquired by the grantor after a property has been conveyed.
- agency:
- A relationship created when one person, the principal, delegates to another, the agent, the right to act on his or her behalf in business transactions and to
exercise some degree of discretion while so acting. An agency gives rise to a fiduciary relationship and imposes on the agent, as the fiduciary of the principal,
certain duties, obligations, and high standards of good faith and loyalty.
- agency coupled with an interest:
- An agency relationship in which the agent is given an estate or interest in the subject of the agency (the property).
- agent:
- One authorized to represent and to act on behalf of another person (called the principal). Unlike an employee, who merely works for a principal, an agent works
in the place of a principal. The main difference between an agent and an employee is that the agent may bind his or her principal by contract, if within the scope
of authority, whereas an employee may not unless given express authorization.
- agent property evaluation:
- A questionnaire filled out by real estate agents while reviewing a listed property. Often complete during the course of a caravan.
- aggrieved party:
- One whose legal right is invaded by an act(s) of another. The word "aggrieved" refers to a substantial grievance, a denial of some personal or property right,
or the imposition upon a party of a burden or obligation.
- agricultural lease:
- Agricultural landowners often lease their land to tenant farmers, who provide the labor to produce and bring in the crop. An owner can be paid by a tenant in
one of two ways: as an agreed on rental amount in cash in advance (cash rents) or as a percentage of the profits from the sale of the crop when it is sold (sharecropping).
- AIDA:
- Attention, Interest, Desire, Action. In real estate advertising, creating ads that get the Attention of prospects, stimulating
their Interest in a property, generate a Desire to purchase, and motivating the prospect to take Action.
- AIDS:
- Persons with acquired immunodeficiency syndrome are protected under most federal and state discrimination laws. If buyers ask the real estate agent whether a
prior occupant had AIDS, most agents point out that the law prevents responding one way or the other. Many states have emended their licensing laws to provide that
the fact that someone has AIDS is not deemed a material fact and therefore does not form the basis for a claim that a broker concealed a material fact. Also protected
are persons with AIDS-related complex (ARC) or human immunodeficiency virus infection (HIV).
- air lot:
- A designated airspace over a piece of land. An air lot, like surface property, may be transferred.
- air rights:
- Rights to the use of the open space or vertical plane above a property. Ownership of land includes the right to all air above the property. Until the advent of
the airplane, this right was unlimited, but now the courts permit reasonable interference with one's air rights, such as is necessary for aircraft, so long as the
owner's right to use and occupy the land is not lessened. Thus, low-flying aircraft might be unreasonably trespassing, and their owners would be liable for any damages.
Governments and airport authorities often purchase air rights adjacent to an airport, called an avigation easement, to provide glide patterns for air traffic.
The air itself is not real property; airspace, however, is real property when described in three dimensions with reference
to a specific parcel of land, as in a condominium unit. A Maryland case has decided that separate owners of the land and
the air rights may be separately assessed for tax purposes. Air rights may be sold or leased and buildings constructed thereon, such as was done with the Pam Am
Building constructed above Grand Central Station in New York City.
Air rights may also be transferred by way of easements, such as those used in constructing elevated highways or
in acquiring scenic easements or easements of light and air. Because of the scarcity of land, many developers are examining the possibilities for developing
properties in the airspace above prime properties owned by schools, churches, railways and cemeteries.
- air quality standards:
- The level of selected pollutants set by law that may not be exceeded in outside air. Used to determine the amount of pollutants that may be emitted by industry.
- alienation:
- The act of transferring ownership, title or an interest or estate in real property from one person to another. Property is usually sold or conveyed by voluntary
alienation, as with a deed or assignment of lease. Involuntary alienation takes place when property is sold against the owner's will, as in a foreclosure
sale or a tax sale.
- alienation clause:
- A provision sometimes found in a promissory note or mortgage that provides that the balance of the secured debt becomes immediately due and payable at the option
of the mortgagee upon the alienation of the property by the mortgagor. Alienation is usually broadly defined to include any transfer of ownership, title or an interest
or estate in real property, including a sale by way of a contract for deed. Also called a due-on-sale clause.
-
- allodial system:
- A system of land ownership in which land is held free and clear of any rent or service due to the government; commonly contrasted to the feudal system. Land is
held under the allodial system in the United States.
- Alquist-Priolo Special Study Zone:
- A California law requiring a real estate agent or owner to disclose to prospective buyers that a property is located within a special studies zone (geological
hazard zone) and if the property contains or will contain a dwelling (a residentally zoned lot). "Special study zones" cover an area 660 feet on each side of fault
lines and are indicated on maps prepared by the California Department of Mines and Geology.
- ambient:
- Any unconfined portion of the atmosphere; open air; outside surrounding air.
- amendment to the escrow instructions:
- A change to escrow instructions requiring the agreement of both buyer and seller.
- amendments:
- An amendment is a change to the existing content of a contract. Any time words or provisions are added to or deleted from the body of the contract, the contract
has been amended.
- amenity or amenities:
- The qualities and state of being pleasant and agreeable. In residential appraising, those peculiar and intangible benefits of home ownership such as satisfaction
of possession and use arising from architectural excellence, scenic beauty, and desirable social environment.
- American Institute of Real Estate Appraisers (AIREA):
- A professional organization formerly affiliated with the National Association of REALTORS. AIREA promoted professional practice and ethics in the real estate
appraisal industry and identified experienced, competent, ethical appraisers by awarding the MAI (Member, Appraisal Institute) and RM (Residential Member) designations.
In 1991, AIREA was merged with the Society of Real Estate Appraisers into the Appraisal Institute. The only designations awarded now are the MAI and SRA (Senior
Residential Appraiser)
- American Land Title Association (ALTA) policy:
- A title insurance policy that protects the interest in a collateral property of a mortgage lender who originates a new real estate loan.
- American Society of Appraisers (ASA):
- A professional organization of appraisers engaged in the appraisal of both real and personal property. It confers the designations ASA and FASA (Fellow).
- American Society of Real Estate Counselors (ASREC):
- A professional organization, affiliated with the National Association of REALTORS, composed of individuals with proven success in real estate counseling who serve
clients on a fee basis. The society offers its members exclusive use of the professional designation CRE (Counselor of Real Estate).
- Americans with Disabilities Act (ADA):
- On July 26, 1990, President Bush signed into law the Americans with Disabilities Act of 1990 ("ADA"), a federal law which prohibits discrimination against individuals
with disabilities. The ADA addresses discrimination in four general areas:
- Employment (Title I);
- Public services (Title II);
- Public accommodations and commercial facilities (Title III)
- Telecommunications (Title lV).
The purpose of the ADA is to give individuals with disabilities civil rights protection against discrimination similar to hose afforded to individuals on the basis
of race, color, national origin, sex, and religion.
- amortization:
- The gradual repayment of a debt by means of systematic payments of principal and/or interest over a set period, so that at the end of the period there is a zero
balance. The principal is thus directly reduced or amortized over the life of the loan. Some loans are not fully amortized, and require a balloon payment at the
end of the term of the loan.
- annexation:
- An addition to property by the act of joining or uniting one thing to another, as in attaching personal property to real property and thereby creating a fixture.
For example, a sink becomes a fixture when it is annexed to the plumbing outlet.
- annual debt service:
- Monthly loan payments (principal and interest), if any, times 12 months.
- annual operating expenses:
- The actual costs it takes to run the property, such as property tax, insurance, maintenance, repairs, management fees, utilities, and supplies.
- annual percentage rate (APR):
- An expression of the relationship of the total finance charge to the total amount to be financed as required under the federal Truth-in-Lending Act. Tables available
from any Federal Reserve bank may be used to compute the rate, which must be calculated to the nearest one-eighth of 1 percent. Use of the APR permits a standard
expression of credit costs, which facilitates easy comparison of lenders.
- annuity:
- A sum of money recieved by an annuitant in a series of fixed periodic payments.
- anticipation
- The appraisal principle that holds that value can increase or decrease based on the expectation of some future benefit or detriment produced by the property.
- antimerger clause
- A clause in a mortgage or deed of trust specifying that the senior lienholder will retain lien priority in the event of a merger.
- antitrust laws:
- State and federal laws designed to maintain and preserve business competition. The Sherman Antitrust Act (1890) is the principal federal statute covering competition,
which is defined by most courts as "that economic condition in which prices are determined by market forces without interference from private concerns and there is reasonable freedom of entry into most businesses."
Certain real estate brokerage activities have come under public scrutiny by the Federal Trade Commission. These activities include the fixing of general commission rates by local boards or groups of brokers and the exclusion of brokers from membership in local boards or in multiple-listing arrangements due to unreasonable
membership requirements. As a result of court cases, local real estate boards no longer directly or indirectly influence fixed commission rates or commission splits
between cooperating brokers. Moreover, in some states clients must be specifically informed that the commission rates are negotiable between client and broker.
- apartment building:
- A building having separate units for permanent tenants who rent or lease them. The owner of the building provides common facilities, such as lights, heat, elevator
and garbage disposal services, and maintains common entrances and hallways.
- appraisal:
- An estimate of the monetary value of a property on the open market; an estimate of a property's type and condition, its utility for a given purpose or its highest
and best use.
- appraiser:
- An independent person trained to provide an unbiased estimate of value, as a professional service performed for a fee.
- appreciation:
- An increase in the worth or value of a property due to economic or related causes, which may prove to be either tempo rary or permanent; opposite of depreciation.
- appropriation:
- Appropriation is the way a taxing body authorizes the expenditure of funds and provides for the sources of the funding. Appropriation generally involves the adoption
of an ordinance or the passage of a law that states the specific terms of the proposed taxation.
- appropriative water rights:
- A water right favored in some states where an owner has the exclusive rights to take all the water for specific beneficial uses.
- appurtenant:
- Belonging to; adjunctive; appended to or annexed to. For example, the garage is appurtenant to the house, and the common interest in the common elements of a
condominium is appurtenant to each apartment. Appurtenant items run with the land when the property is transferred.
- appurtenant easement:
- An easement that is annexed to the ownership of one parcel and allows the owner the use of the neighbor's land.
- aquifer:
- An underground water-bearing layer of rock, including gravel and sand, that will yield water in usable quantity. Aquifers are sources of water for wells and springs.
- arbitrage:
- Borrowing at one interest rate and investing at a higher rate.
- arbitration:
- The nonjudicial submission of a controversy to selected third parties for their determination in a manner provided for by an agreement or under the law.
- arranger of credit:
- A defined under the federal Truth-in-Lending Law, a person who regularly arranges for the extension of consumer credit by another person if a finance charge will
be imposed, if there are to be more than four installments, and if the person extending the credit is not a creditor. At present, the term does not include a real
estate broker who arranges seller financing of a dwelling or real property.
- arrears:
- 1. The state of being delinquent in paying a debt.
2. At or after the end of the period for which expenses are due or levied; the opposite of in
advance. Mortgage interest and real estate taxes are often paid in arrears.
- Article 5:
- The part of the Business and Professions Code governing transactions in real property sale contracts and trust deeds.
- Article 6:
- The part of the Business and Professions Code governing real property securities dealers.
- Article 7:
- The part of the Business and Professions Code governing commissions, loan costs, and payment requirements in loan brokerage activities.
- asbestos:
- A mineral once used in insulation and other materials that can cause respiratory diseases. Asbestos has been clasified as carcinogenic.
- asbestos containing material (ACM):
- The EPA defines asbestos containing material as any material or product that contains more than one percent asbestos. Some states regulate smaller percentages
of asbestos containing material.
- Asbestosis:
- A disease associated with inhalation of asbestos fibers. The disease makes breathing progressively more difficult and can be fatal.
- "as-is":
- Words in a contract intended to signify that no guarantees whatsoever are given regarding the subject property and that it is being purchased exactly as it is
found. An "as-is" indicator is intended to be a disclaimer of warranties or representations. The recent trend in the courts to favor consumers tends to prevent sellers
from using as-is wording in a contract to shield themselves from possible fraud charges brought on by neglecting to disclose material defects in the property.
- assemblage:
- The combining of two or more adjoining lots into one larger tract to increase their total value.
- assessment:
- The imposition of a tax, charge or lein, usually according to established rates.
- asset:
- An asset is something of value, encumbered or not, owned by an person, corporation or other entity. Assets are financial (cash or bonds), tangible or intangible,
or physical (real or personal property).
- asset management:
- The assembly, management and disposition of a portfolio of investment properties.
- assignment:
- The transfer of the right, title and interest in the property of one person (the assignor) to another (the assignee). There are assignments of, among other things,
mortgages, sales contracts, contracts for deed, leases and options.
- associate broker:
- A real estate license classification used in some states to describe a person who has qualified as a real estate broker but still works for and is supervised
by another broker; also called a broker-salesperson, broker-associate or affiliate broker.
- assumption of mortgage:
- The acts of acquiring title to property that has an existing mortgage and agreeing to be personally liable for the terms and conditions of the mortgage, including
payments.
- assumption "subject to":
- When a loan is taken "subject to," the seller agrees to remain liable and the buyer accepts no liability in the event of a deficiency on a foreclosure.
- attachment:
- The legal process of seizing the real or personal property of a defendant in a lawsuit by levy or judicial order, and holding it in court custody as security
for satisfaction of a judgment. The lien is thus created by operation of law, not by private agreement. The plaintiff may recover such property in any action upon
a contract, express or implied.
- Attorney General:
- The chief law officer of the federal or state government, who appears for the people in criminal court.
- attorney-in-fact:
- A competent and disinterested person who is authorized by another person to act in his or her place. In real estate conveyance transactions, an attorney-in-fact,
who has a fiduciary relationship with his or her principal, should be so authorized by way of a written, notarized and recordable instrument called a power of attorney.
- attorney's opinion of title:
- An abstract of title that an attorney has examined and has certified to be, in his or her opinion, an accurate statement of the facts concerning the property
ownership. (See abstract of title)
- attractive nuisance doctrine:
- An owner has a duty to reasonably protect children from injury when his or her property is likely to attract children.
- auction:
- Selling property to the highest bidder.
- automated underwriting:
- Computer systems that permit lenders to expedite the loan approval process and reduce lending costs.
- automatic extension:
- A clause in a listing agreement that states that the agreement will continue automatically for a certain period of time after its expiration date. In many states,
use of this clause is discouraged or prohibited.
- avulsion:
- The sudden tearing away of land, as by earthquake, flood, volcanic action or the sudden change in the course of a stream. balance The appraisal principle that
states that the greatest value in a property will occur when the type and size of the improvements are proportional to each other as well as the land.
Back to Top |
