Real Estate Glossary

A

Abstract of title: The condensed history of a title to a particular parcel of real estate, consisting of a summary of the original grant and all subsequent conveyances and encumbrances affecting the property and a certification by the abstractor that the history is complete and accurate. 

Abstract of title with layer's opinion: An abstract of title that a lawyer has examined and has certified to be, in his or her opinion, an accurate statement of fact.

Acceleration Clause: The clause in a mortgage or trust deed that can be enforced to make the entire debt due immediately if the mortgagor defaults on an installment payment or other covenant.

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 naturally from a river, lake or sea. 

Accrued Items: On a closing statement, items of expense that are incurred but not payable, such as interest on a mortgage loan or taxes on real property.

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

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 hectare. 

Actual notice: Express information or fact; that which is known; direct knowledge.

Adjustable-Rate Mortgage: interest rates are periodically adjusted up or down depending on a specified financial index.

Ad Valorem Tax: A tax levied according to value, generally used to refer to real estate tax. Also called the general tax. 

Adverse Possession: THe actual, open, notorious, hostile and continuous possession of another's land under a claim of title. Possession for a statutory period may be a means of acquiring title. 

Affidavit of Title: A written statement, made under oath by a seller or grantor of real property and acknowledged by a notary public, in which the grantor: (1) identifies themselves 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). 

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 who acts or has the power to act for another. A fiduciary relationship is created under the law of agency when a property owner, as the principal, executes a listing agreement or management contract authorizing a licensed real estate broker to be his or her agent. 

Air Lot: A designated airspace over a piece of land. An air lot, like surface property, may be transferred. 

Air Rights: The right to use the open space above a property, usually allowing the surface to be used for another purpose. 

Alienation: The act of transferring property to another. Alienation may be voluntary, such as by gift or sale, or involuntary, as through eminent domain or adverse possession. 

Alienation Clause: The clause in a mortgage or trust deed that states that the balance of the secured debt becomes immediately due and payable to the mortgagee's option if the property is sold by the mortgagor. In effect, this clause prevents the mortgagor from assigning the debt without the mortgagee's approval. 

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. 

Amortized loan: A loan in which the principal as well as the interest is payable in monthly or other periodic installments over the term of the loan.

Antitrust Laws: Laws designed to preserve the free enterprise of the open marketplace by making illegal certain private conspiracies and combinations formed to minimize competition. Most violations of antitrust laws in the real estate business involve either price fixing (brokers conspiring to set fixed compensation rates) or allocation of customers or markets (brokers agreeing to limit their areas of trade or dealing to certain areas or properties). 

Apportionment Clause: Clause in an insurance policy providing that, if the insured is covered by more than one policy, any payments will be apportioned according to the amount of coverage. 

Appraisal: An estimate of the quantity, quality or value of something.

Appreciation: An increase in the worth or value of a property due to economic or related causes, which may prove to be either temporary or permanent; opposite of depreciation, 

Assemblage: The combining of two or more adjoining lots into one larger tract in order to increase their total value.

Assessment: The imposition of a tax, charge or levy, usually according to established rates. 

Assignment: The transfer in writing of interest in a bond, mortgage, lease, or other instrument.

Assumption of mortgage: Acquiring to property on which there is an existing mortgage and agreeing to be personally liable for the terms and conditions of the mortgage, including payments.

Attachment: The act of taking a person's property into legal custody by writ or other judicial order in order to hold it available for application to that person's debt to a creditor.

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. 

B

Balloon Payment: A final payment of a mortgage loan that is considerably larger than the required periodic payments because the loan amount was not fully amortized.

Bargain and Sale Deed: A deed that carries with it no warranties against liens or other encumbrances but that does imply that the grantor has the right to convey title. The grantor may add warranties tot he deed at his or her discretion. 

Base Line: One set of imaginary lines running east and west and crossing a principal meridian at a definite point, used by surveyors for reference in locating and describing land under the rectangular (U.S. government) survey system of property description. 

Basis: The financial interest that the Internal Revenue Service attributes to an owner of an investment property for the purpose of determining annual depreciation and gain or loss on the sale of the asset. If a property was acquired by purchase, the owner's basis is the cost of the property plus the value of any capital expenditures for improvements to the property, minus any depreciation allowable or actually taken. This new basis is called the adjusted basis. 

Benchmark: A permanent reference mark or point established for use by surveyors in measuring differences in elevation.

Beneficiary: 1. The person for whom a trust operates, or in whose behalf the income from a trust estate is drawn. 2. A lender who lends money on real estate and takes back a note and trust deed from the borrower. 

Bilateral contract: See Contract. 

Binder: An agreement that may accompany an earnest money deposit form the purchase of real property as evidence of the purchaser's good faith and intent to complete the transaction. 

Blanket Mortgage: A mortgage covering more than one parcel of real estate, providing for each parcel's partial release from the mortgage lien upon repayment of a definite portion of the debt. 

Blockbusting: The illegal practice of inducing homeowners to sell their properties by making representations regarding the entry or prospective entry of persons of a particular race or national origin into the neighborhood.

Blue-Sky Laws: Common name for those state and federal laws that regulate the registration and sale of investment securities. 

Boot: Money or property given to make up any difference in value or equity between two properties in an exchange. 

Branch Office: A secondary place of business apart from the principal or main office from which real estate business is conducted. A branch office usually must be run by a licensed real estate broker working on behalf of the broker who operates the principal office. 

Breach of Contract: Violation of any terms or conditions in a contract without legal excuse; for example, failure to make a payment when it is due. 

Broker: One who acts as an intermediary on behalf of others for a fee or commission.

Brokerage: The bringing together of parties interested in making a real estate transaction.

Broker-Salesperson: A person who has passed the broker's licensing examination but is licensed to work only on behalf of a licensed broker. 

Building Code: An ordinance that specifies minimum standards of construction for buildings in order to protect public safety and health.

Bulk Transfer: See Uniform Commercial Code.

Bundle of Legal Rights: The concept of land ownership that includes ownership of all legal rights to the land - for example, possession, control within the law of enjoyment. 

C

Capital Gain: Profit earned from the sale of an asset. 

Capitalization: A mathematical process for estimating the value of a property using a proper rate of return on the investment and the annual net income expected to be produced by the property. The formula is expressed: Income/Rate = Value

Capitalization Rate: The rate of return a property will produce on the owner's investment. 

Cash Flow: The net spendable income from an investment, determined by deducting all operating and fixed expenses from the gross income. If expenses exceed income, a negative cash flow is the result. 

Caveat Emptor: A Latin phrase meaning "Let the buyer beware".

Certificate of Sale: The document generally given to the purchaser at a tax foreclosure sale. A certificate of sale does not convey title; normally it is an instrument certifying that the holder received title to the property after the redemption period passed and that the holder paid the property taxes for that interim period. 

Certificate of Title: A statement of opinion on the status of the title to a parcel of real property based on the examination of specified public records. 

Chain of Title: The succession of conveyances, from some accepted starting point, whereby the present holder of real property derives title. 

Chattel: See Personal property. 

Closing: the deed to a property is legally transferred from seller to buyer, and documents are recorded

Closing Statement: A detailed cash accounting of a real estate transaction showing all cash received, all charges and credits made and all cash paid out in the transaction. 

Cloud on the Title: Any document, claim, unreleased lien or encumbrance that may impair the title to real property or make the title doubtful; usually revealed by a title search and removed by either a quitclaim deed or suit to quiet title. 

Clustering: The grouping of home sites within a subdivision on smaller lots than normal, with the remaining land used as common areas. 

Codicil: A supplement or addition to a will, executed with the same formalities as a will, that normally does not revoke the entire will. 

Coinsurance Clause: A clause in insurance policies covering real property that requires the policyholder to maintain fire insurance coverage generally equal to at least 80 percent of the property's actual replacement cost. 

Commingling: The illegal act of a real estate broker who places client or customer funds with personal funds. By law, brokers are required to maintain a separate trust account for other parties' funds held temporarily by the broker. 

Commission: Payment to a broker for services rendered, such as in the sale or purchase of real property; usually a percentage of the selling price of the property. 

Common Elements: Parts of a property that are necessary or convenient to the existence, maintenance and safety of a condominium, or are normally in common use by all of the condominium residents. Each condominium owner has an undivided ownership interest in the common elements. 

Common Law: The body of law based on custom, usage and court decisions. 

Community Property: A system of property ownership based on the theory that each spouse has an equal interest in the property acquired by the efforts of either spouse during marriage. A holdover of Spanish law, found predominantly in Western States; the system was unknown under English common law. 

Comparables: Properties used in an appraisal report that are substantially equivalent to the subject property. 

Competent Parties: People who are recognized by law as being able to contract with others; those of legal age and sound mind. 

Comparative Market Analysis (CMA): properties used in an appraisal report that are substantially equivalent to the subject property.

Condemnation: A judicial or administrative proceeding to exercise the power of eminent domain, through which a government agency takes private property for public use and compensates the owner. 

Condition: A contingency, qualification or occurrence upon which an estate or property right is gained or lost. 

Condominium: The absolute ownership of a unit in a multi-unit building based on a legal description of the airspace the unit actually occupies, plus an undivided interest in the ownership of the common elements, which are owned jointly with the other condominium unit owners.

Confession of Judgment Clause: A provision that may be included in notes, leases and contracts by which the debtor, lessee or obligor authorizes any attorney to go into court to confess a judgment against him or her for a default in payment. Also called a cognovit. 

Consideration: 1. That which is received by the grantor in exchange for his or her deed. 2. Something of value that induces a person to enter into a contract. 

Construction Loan: See Interim Financing. 

Constructive Eviction: 1. Actions of a landlord that so materially disturb or impair a tenant's enjoyment of the leased premises that the tenant is effectively forced to move out and terminate the lease without liability for any further rent. 2. A purchaser's inability to obtain clear title.

Constructive Notice: Notice given to the world by recorded documents. All people are charged with knowledge of such documents and their contents, whether or not they have actually examined them. Possession of property is also considered constructive notice that the person in possession has an interest in the property. 

Contingent Sale-Contingencies: a condition in a contract that must be met for the contract to be binding

Contract: A legally enforceable promise or set of promises that must be performed and for which, if a breach of the promise occurs, the law provides a remedy. A contract may be either unilateral, by which only one party is bound to act, or bilateral, by which all parties to the instrument are legally bound to act as prescribed. 

Conventional Loan: A loan that is not insured or guaranteed by a government source.

Cooperative: A residential multi-unit building to whose title is held by a trust or cooperation that is owned by and operated for the benefit of persons living within the building, who are the beneficial owners of the trust or stockholders of the corporation, each possessing a proprietary lease. 

Corporation: An entity or organization, created by operation of law, whose rights of doing business are essentially the same as those of an individual. The entity has continuous existence until it is dissolved according to legal procedures. 

Correction Lines: Provisions in the rectangular survey (government survey) system made to compensate for the curvature of the earth's surface. Every fourth township line (at 24-mile intervales) is used as a correction line on which the intervals between the north and south range lines are remeasured and corrected to a full six miles. 

Cost Approach: The process of estimating the value of a property by adding to the estimated land value the appraiser's estimate of the reproduction or replacement cost of the building, less depreciation. 

Cost Recovery: An Internal Revenue Service term for depreciation. 

Counseling: The business of providing people with expert advice on a subject, based on the counselor's extensive, expert knowledge.

Counteroffer: A new offer made as a reply to an offer received. It has the effect of rejecting the original offer, which cannot be accepted thereafter unless revived by the offeror. 

Covenant: A written agreement between two or more parties in which a party of parties pledge to perform or not perform specified acts with regard to property; usually found in such real estate documents as deeds, mortgages, leases and contracts for deed. 

Covenant of Quiet Enjoyment: The covenant implied by law by which a landlord guarantees that a tenant may take possession of leased premises, and that the landlord will not interfere in the tenant's possession or use of the property.

Credit: On a closing statement, an amount entered in a person's favor - either an amount the party has paid or an amount for which the party must be reimbursed. 

Curtesy: A life estate, usually a fractional interest, given by some states to the surviving husband in real estate owned by his deceased wife.

D

Datum: A horizontal plane from which heights and depths are measured. 

Debit: On a closing statement 

Decedent: A person who has died.

Dedication: The voluntary transfer of private property by its owner to the public for some public use, such as for streets or schools.

Deed: A legal document that formally conveys ownership of a property from seller to buyer.

Deed in Trust: An instrument that grants a trustee under a land trust full power to sell, mortgage, and subdivide a parcel of real estate. The beneficiary controls the trustee's use of these powers under the provisions of the trust agreement. 

Deed of Trust: See Trust Deed. 

Deed Restrictions: Clauses in a deed limiting the future uses of the property. Deed restrictions may impose a vast variety of limitations and conditions - for example, they may limit the density of buildings, dictate the types of structures that can be erected or prevent buildings from being used for specific purposes or even from being used at all. 

Default: The nonperformance of a duty, whether arising under a contract or otherwise; failure to meet an obligation when due.

Defeasance Clause: A clause used in leases and mortgages that cancels a specified right upon the occurrence of a certain condition, such as cancellation of a mortgage upon repayment of the mortgage loan. 

Defeasible Fee Estate: An estate in which the holder has a fee simple title that may be divested upon the occurrence or non-occurrence of a specified event. There are two categories of defeasible fee estates: fee simple determinable and fee simple subject to a condition subsequent. 

Deficiency Judgment: A personal judgment levied against the mortgagor when a foreclosure sale does not produce sufficient funds to pay the mortgage debt in full.

Delinquent Taxes: Unpaid taxes that are past due. 

Demand: The amount of goods people are willing and able to buy at a given price; often coupled with supply.

Density Zoning: Zoning ordinances that restrict the maximum average number of houses per acre that may be build within a particular area, generally a subdivision. 

Depreciation: 1. In appraisal, a loss of value in property due to any cause, including physical deterioration, functional obsolescence and environmental obsolescence. 2. In real estate investment, an expense deduction for tax purposes taken over the period of ownership of income property. 

Descent: Acquisition of an estate by inheritance in which an heir succeeds to the property by operation of law. 

Determinable Fee Estate: A fee simple estate in which the property automatically reverts to the grantor upon the occurrence of a specified event or condition.

Devise: A gift of real property by will. The donor is the devisor, and the recipient is the devisee. 

Direct Market Comparison Approach: The process of estimating the value of a property by examining and comparing actual sales of comparable properties. 

Dominent Tenement: A property that includes in its ownership the appurtenant right to use an easement over another person;s property for a specific purpose. 

Dower: The legal right or interest, recognized in some states, that a wife acquires in the property her husband held or acquired during their marriage. During the husband's lifetime, the right is only a possibility of an interest; upon his death it can become an interest in land. 

Down Payment: a percentage of the purchase price that the buyer must pay in cash and may not borrow from the lender.

Dual Agency: Representing both parties to a transaction. This is unethical unless both parties agree to it, and it is illegal in many states. 

Duress: Unlawful constraint or action exercised upon a person whereby the person is forced to perform an act against his or her will. A contract entered into under duress is voidable. 

E

Earnest Money: Money deposited by a buyer under the terms of a contract, to be forfeited if the buyer defaults but applied on the purchase price if the sale is closed.

Easement: a right to use the land of another for a specific purpose, such as for a right-of-way or utilities; an incorporeal interest in land. An easement appurtenant passes with the land when conveyed.

Easement by Necessity: An easement allowed by law as necessary for the full enjoyment of a parcel of real estate; for example, a right of ingress and egress over a grantor's land. 

Easement by Prescription: An easement acquired by continuous, open and hostile use of the property for the period of time prescribed by state law. 

Easement in Gross: An easement that is not created for the benefit of any land owned by the owner of the easement but that attaches personally to the easement owner. For example, a right granted by Eleanor Franks to Joe Fish to use a portion of her property for the rest of his life would be an easement in gross. 

Economic Obsolescence: See Environmental obsolescence. 

Emblements: Growing crops, such as grapes and corn, that are produced annually through labor and industry. 

Eminent Domain: The right of a government or municipal quasi-public body to acquire property for public use through a court action called condemnation, in which the court decides that the use is a public use and determines the compensation to be paid to the owner. 

Employee: Someone who works as a direct employee of an employer and has employee status. The employer is obligated to withhold income taxes and social security taxes from the compensation of employees. See also Independent contractor. 

Enabling Acts: State legislation that confers zoning powers on municipal governments.

Encroachment: A building or some portion of it - a wall or fence for instance - that extends beyond the land of the owner and illegally intrudes upon some land of an adjoining owner or a street or alley.

Encumbrance: Anything - such as mortgage, tax, or judgment lien, an easement, a restriction on the use of the land or an outstanding dower right - that may diminish the value of a property. 

Environmental Obsolescence: Reduction in a property's value caused by outside factors; also called economic obsolescence.

Equalization: The raising or lowering of assessed values for tax purposes in a particular county or taxing district to make them equal to assessments in other counties or districts.

Equalization Factor: A factor (number) by which the assessed value of a property is multiplied to arrive at a value for the property that is in line with state-wide tax assessments. The ad valorem tax would be based upon this adjusted value. 

Equitable Lien: See Statutory Lien. 

Equitable Title: The interest held by a vendee under a contract for deed or an installment contract; the equitable right to obtain absolute ownership to property when legal title is held in another's name.

Equity: the value of the property actually owned by the homeowner: purchase price, plus appreciation and improvements, less mortgages and liens.

Erosion: The gradual wearing away of land by water, wind, and general weather conditions; the diminishing of property by the elements. 

Escheat: The reversion of property to the state or county, as provided by state law, in cases where a decedent dies intestate without heirs capable of inheriting, or when the property is abandoned. 

Escrow: a fund or account held by a third-party custodian until conditions of a contract are met.

Escrow Instructions: A document that sets forth the duties of the escrow agent, as well as the requirements and obligations of the parties, when a transaction is closed through an escrow. 

Estate at Sufferance: The tenancy of a lessee who lawfully comes into possession of a landlord's real estate but who continues to occupy the premises improperly after his or her lease rights have expired. 

Estate at Will: An estate that gives the lessee the right to possession until the estate is terminated by either party; the term of this estate is indefinite.

Estate for Years: An interest for a certain, exact period of time in property leased for a specified consideration. 

Estate From Period to Period: See Periodic estate.

Estate in Land: The degree, quantity, nature, and extent of interest that a person has in real property.

Estate Taxes: Federal taxes on a decedents's real and personal property.

Estoppel: Method of creating an agency relationship in which someone states incorrectly that another person is his or her agent, and a third person relies on that representation.

Estoppel Certificate: A document in which a borrower certifies the amount owed on a mortgage loan and the rate of interest. 

Eviction: A legal process to oust a person from possession of real estate.

Evidence of Title: Proof of ownership of property; commonly a certificate of title, an abstract of title with lawyer's opinion or a Torrens registration certificate. 

Exchange: A transaction in which all or part of the consideration is the transfer of like-kind property (such as real estate for real estate).

Exclusive-Agency Listing: A listing contract under which the owner appoints a real estate broker as his or her exclusive agent for a designated period of time to sell the property, on the owner's stated terms, for a commission. The owner reserves the right to sell without paying anyone a commission if he or she sells to a prospect who has not been introduced or claimed by the broker.

Exclusive Right-To-Sell: A listing contract under which the owner appoints a real estate broker as his or her exclusive agent for a designated period of time, to sell the property on the owner's stated terms, and agrees to pay the broker a commission when the property is sold, whether by the broker, the owner or another broker. 

Executed Contract: A contract in which all parties have fulfilled their promises and thus performed the contract. 

Execution: The signing and delivery of an instrument. Also, a legal order directing an official to enforce a judgment against the property of a debtor. 

Executory Contract: A contract under which something remains to be done by one or more of the parties.

Expenses: Short-term costs, such as minor repairs, regular maintenance and renting costs, that are deducted from an investment property's income.

Express Agreement: An oral or written contract in which the parties state the contract's terms and express their intentions in words.

F

Fee Simple Estate: The maximum possible estate or right of ownership of real property, continuing forever. Sometimes called a fee or fee simple absolute.

Feudal System: A system of ownership usually associated with precolonial England, in which the king or other sovereign is the source of all rights. The right to possess real property was granted by the sovereign to an individual as a life estate only. Upon the death of the individual, title passed back to the sovereign, not to the decedent's heirs.

FHA Loan: A loan insured by the Federal Housing Administration and made by an approved lender in accordance with the FHA's regulations. 

Fiduciary Relationship: A relationship of trust and confidence, as between trustee and beneficiary, attorney and client, or principal and agent. 

Financial Statement: See Uniform Commercial Code.

Fixed-Rate Mortgage: interest rates remain the same over the life of the loan. Compare to "adjustable-rate mortgage".

Fixture: An item of personal property that has been converted to real property by being permanently affixed to the realty.

Foreclosure: A legal procedure whereby property used as security for a debt is sold to satisfy the debt in the event of default in payment of the mortgage note or default of other terms in the mortgage document. The foreclosure procedure brings the rights of all parties to a conclusion and passes the title in the mortgaged property to either the holder of the mortgage or a third party who may purchase the realty at the foreclosure sale, free of all encumbrances affecting the property subsequent to the mortgage.

Fraud: Deception intended to cause a person to give up property or a lawful right. 

Freehold Estate: An estate in land in which ownership is for an indeterminate length of time, in contrast to a leasehold estate.

Functional Obsolescence: A loss of value to an improvement to real estate arising from functional problems, often caused by age or poor design.

Future Interest: A person's present right to an interest in real property that will not result in possession or enjoyment until some time in the future, such as a reversion or right of reentry. 

G

Gap: A defect in the chain of title of a particular parcel of real estate; a missing document or conveyance that raises doubt as to the present ownership of the land. 

General Agent: One who is authorized by a principal to represent the principal in a specific range of matters. 

General Lien: The right of a creditor to have all of the debtor's property-both real and personal-sold to satisfy a debt.

General Partnership: See Partnership

General Tax: See Ad valorem tax.

General Warranty Deed: A deed in which the grantor fully warrants good clear title to the premises. Used in most real estate deed transfers, a general warranty deed offers the greatest protection of any deed.

Government Lot: Fractional sections in the rectangular (U.S. government) survey system that are less than one quarter-section in area. 

Government Survey System: See Rectangular survey system.

Grantee: A person who receives a conveyance of real property from a grantor. 

Granting Clause: Words in a deed of conveyance that state the grantor's intention to convey the property at the present time. This clause is generally worded as "convey and warrant", "grant, bargain and sell" or the like. 

Grantor: The person transferring title to or an interest in real property to a grantee. 

Gross Income Multiplier: A figure used as a multiplier of the gross rental income of a property to produce an estimate of the property's value. 

Gross Lease: A lease of property according to which a landlord pays all property charges regularly incurred through ownership, such as repairs, taxes, insurance and operating expenses. Most residential leases are gross leases.

Ground Lease: A lease of land only, on which the tenant usually owns a building or is required to build as specified in the lease. Such leases are usually long-term net leases; the tenant's rights and obligations continue until the lease expires or is terminated through default. 

H

Habendum Clause: That part of a deed beginning with the words, "to have and to hold", following the granting clause and defining the extent of ownership the grantor is conveying.

Heir: One who might inherit or succeed to an interest in land under the state law of descent when the owner dies without leaving a valid will. 

Highest and Best Use: That possible use of land that would produce the greatest net income and thereby develop the highest land value.

Holdover Tenancy: A tenancy whereby a lessee retains possession of leased property after the lease has expired, and the landlord, by continuing to accept rent, agrees to the tenant's continued occupancy as defined by state law. 

Holographic Will: A will that is written, dated and signed in the testator's handwriting. 

Homeowner's Insurance Policy: A standardized package insurance policy that covers a residential real estate owner against financial loss from fire, theft, public liability and other common risks. 

Homestead: Land that is owned and occupied as the family home. In many states, a portion of the area or value of this land is protected or exempt from judgments for debts. 

Hypothecation: The pledge of property as a security for a loan. 

Implied Agreement: A contract under which the agreement of the parties is demonstrated by their acts and conduct. 

Improvement: 1. Any structure, usually privately owned, erected on a site to enhance the value of the property-for example, building a fence or a driveway. 2. A publicly owned structure added to or benefiting land, such as a curb, sidewalk, street or sewer.

Income Approach: The process of estimating the value of an income-producing property by capitalization of the annual net income expected to be produced by the property during its remaining useful life. 

Incorporeal Right: A non-possessory right in real estate; for example, an easement or right-of-way.

Independent Contractor: Someone who is retained to perform a certain act but who is subject to the control and direction of another only as to the end result and ot as to the way in which the act is performed. Unlike an employee, an independent contractor pays for all expenses and social security and income taxes and receives no employee benefits. Many real estate salespeople are independent contractors. 

Inheritance Taxes: State-imposed taxes on a decedent's real and personal property. 

Installment Contract: A contract for the sale of real estate whereby the purchase price is paid in periodic installments by the purchaser, who is in possession of the property even through title is retained by the seller until a future date, which may be not until final payment. Also called a contract for deed or articles of agreement for warranty deed.

Installment Sale: A transaction in which the sales price is paid in two or more installments over two or more years. If the sale meets certain requirements, a taxpayer can postpone reporting such income until future years by paying tax each year only on the proceeds received that year. 

Interest: A charge made by a lender for the use of money. 

Interim Financing: A short-term loan usually made during the construction phase of a building project (in this case, often referred to as a construction loan).

Intestate: The condition of a property owner who dies without leaving a valid will. Title to the property will pass to the decedent's heirs as provided in the state law of descent. 

Investment: Money directed toward the purchase, improvement and development of an asset in expectation of income or profits. 

Involuntary Alienation: See Alienation.

J

Joint Tenancy: Ownership of real estate between two or more parties who have been named in one conveyance as joint tenants. Upon the death of a joint tenant, the decedent's interest passes to the surviving joint tenant or tenants by the right of survivorship.

Joint Venture: The joining of two or more people to conduct a specific business enterprise. A joint venture is similar to a partnership in that it must be created by agreement between the parities to share in the losses and profits of the venture. It is unlike a partnership in that the venture is for one specific project only, rather than for a continuing business relationship.

Judgment: The formal decision of a court upon the respective rights and claims of the parities to an action or suit. After a judgment has been entered and recorded with the county recorder, it usually becomes a general lien on the property of the defendant. 

Judicial Precedent: In law, the requirements established by prior court decisions. 

Junior Lien: An obligation, such as a second mortgage, that is subordinate in right or lien priority to an existing lien on the same realty. 

K

L

Laches: An equitable doctrine used by courts to bar a legal claim or prevent the assertion of a right because of undue delay or failure to assert the claim or right. 

Land: The Earth's surface, extending downward to the center of the earth and upward infinitely into space, including things permanently attached by nature, such as trees and water.

Land Contract: See Installment Contract.

Lease: A written or oral contract between a landlord (the lessor) and a tenant (the lessee) that transfers the right to exclusive possession and use of the landlord's real property to the lessee for a specified period of time and for a stated consideration (rent). 

Legal Description: description of a specific parcel of real estate complete enough for an independent surveyor to locate and identify it.

Lessee: See Lease.

Lessor: See Lease.

Leverage: The use of borrowed money to finance the bulk of an investment.

Levy: To assess; to seize or collect. To levy a tax is to assess a property and set the rate of taxation. To levy an execution is to officially seize the property of a person in order to satisfy an obligation.

License: 1. A privilege or right granted to a person by a state to operate as a real estate broker or salesperson. 2. The revocable permission for a temporary use of land-a personal right that cannot be sold.

Lien: A right given by law to certain creditors to have their debts paid out of the property of a defaulting debtor, usually by means of a court sale. 

Lien Theory: Some states interpret a mortgage as being purely a lien on real property. The mortgagee thus has no right of possession, but must foreclose the lien and sell the property, if the mortgagor defaults. 

Life Estate: An interest in real or personal property that is limited in duration to the lifetime of its owner and some other designated person or persons.

Life Tenant: A person in possession of a life estate. 

Limited Partnership: See Partnership.

Liquidity: The ability to sell an asset and convert it into cash, at a price close to its true value, in a short period of time.

Lis Pendens: A recorded legal document giving constructive notice that an action affecting a particular property has been filed in either a state or a federal court. 

Listing Agreement: A contract between a landowner (as principal) and a licensed real estate broker (as agent) by which the broker is employed as agent to sell real estate on the owner's terms within a given time, for which service the landowner agrees to pay a commission.

Listing Broker: The broker in a multiple-listing situation from whose office a listing agreement is initiated, as opposed to the selling broker, from whose office negotiations leading up to a sale are initiated. The listing broker and the selling broker may be the same person. See also Multiple Listing.

Listing Contract: an agreement whereby an owner engages a real estate company for a specified period of time to sell a property, for which, upon the sale, the agent receives a commission

Littoral Rights: 1. A landowner's claim to use water in large navigable lakes and oceans adjacent to his or her property. 2. The ownership rights to land bordering these bodies of water up to the high-water mark. 

Lot-and-Block System: A method of describing real property that identifies a parcel of land by reference to lot and block numbers within a subdivision, as specified on a recorded subdivision plat. 

M

Management Agreement: A contract between the owner of income property and a management firm or individual property manager that outlines the scope of the manager's authority.

Market: A place where goods can be bought and sold, and a price established.

Marketable Title: Good or clear title, reasonably free from the risk of litigation over possible defects.

Market Comparison Approach: See Direct market comparison approach.

Market Price: the actual price at which a property sold

Market Value: the price that is established by present economic conditions, location, and general trends

Master Plan: A comprehensive plan to guide the long-term physical development of a particular area. 

Mechanic's Lien: A statutory lien created in favor of contractors, laborers and materialmen who have performed work or furnished materials in the erection or repair of a building.

Meridian: One of a set of imaginary lines running north and south and crossing a base line at a definite point, used in the rectangular (U.S. government) survey system of property description. 

Metes-and-Bounds Description: A legal description of a parcel of land that begins at a well-market point and follows the boundaries, using directions and distances around the tract back to the place of beginning. 

Mill: One-tenth of a one cent. Some states use a mill rate to compute real estate taxes; for example, a rate of 52 mills would be $0.052 tax for each dollar of assessed valuation of a property.

Minor: Someone who has not reached the age of majority and therefore does not have legal capacity to transfer title to real property.

Money Judgment: A court judgment ordering payment of money rather than specific performance of a certain action. See also Judgment. 

Month-to-Month Tenancy: A periodic tenancy under which the tenant rents for one month at a time. In the absence of a rental agreement (oral or written), a tenancy is generally considered to be month to month. 

Monument: A fixed natural or artificial object used to establish real estate boundaries for a metes-and-bounds description.

Mortgage: A conditional transfer or pledge of real estate as security for the payment of a debt. Also, the document creating a mortgage lien. 

Mortgagee: A lender in a mortgage loan transaction.

Mortgage Lien: A lien or charge on the property of a mortgagor that secured the underlying debt obligations. 

Mortgagor: A borrower who pledges (hypothecates) property as security for a loan.

Multiple Listing Clause: A provision in an exclusive listing for the additional authority and obligation on the part of the listing broker to distribute the listing to other brokers in the multiple-listing organization.

Multiple Listing Service (MLS): A system that provides to its members detailed information about properties for sale.

Mortgage Insurance: An insurance policy that protects a mortgage lender or title holder in the event that the borrower defaults on payments, dies or is otherwise unable to meet the contractual obligations of the mortgage. 

N

Negotiable Instrument: A written promise or order to pay a specific sum of money that may be transferred by endorsement or delivery. The transferee then has the original payee's right to payment. 

Net Lease: A lease requiring the tenant to pay not only rent but costs incurred in maintaining the property, including taxes, insurance, utilities and repairs.

Net Listing: A listing based on the net price the seller will receive if the property is sold. Under a net listing, the broker can offer the property for sale at the highest price obtainable in order to increase the commission. This type of listing is outlawed in many states. 

Nonconforming Use: A use of property that is permitted to continue after a zoning ordinance prohibiting it has been established for the area.

Non-Homogeneity: A lack of uniformity; dissimilarity. Since no two parcels of land are exactly alike, real estate is said to be non-homogeneous.

Note: See Promissory note.

Novation: Substituting a new obligation for an old one, or substituting new parties to an existing obligation. 

Nuncupative Will: An oral will declared by the testator in his or her final illness, made before witnesses and afterwards reduced to writing. 

O

Offer and Acceptance: Two essential components of a valid contract; a "meeting of the minds."

Open-End Mortgage: A mortgage loan that is expandable by increments up to a maximum dollar amount, the full loan being secured by the same original mortgage.

Open Listing: A listing contract under which the broker's commission is contingent upon the broker's producing a ready, willing and able buyer before the property is sold by the seller or another broker. 

Option: An agreement to keep open for a set period an offer to sell or purchase property. 

Option Listing: Listing with a provision that gives the listing broker the right to purchase the listed property.

Ostensible Agency: A form of implied agency relationship created by the actions of the parties involved rather than by written agreement or document.

Parcel: A specific portion of a large tract of real estate; a lot. 

Parol Evidence Rule: A rule of evidence providing that a written agreement is the final expression of the agreement of the parties, not to be varied or contradicted by prior or contemporaneous oral or written negotiations.

Participation Financing: A mortgage in which the lender participates in the income of the mortgaged venture beyond a fixed return or receives a yield on the loan in addition to the straight interest rate. 

Partition: The division of co-tenants' interest in real property when the parties do not all voluntarily agree to terminate the co-ownership; takes place through court procedures.

Partnership: An association of two or more individuals who carry on a continuing business for profit as co-owners. Under the law, a partnership is regarded as group of individuals rather than as a single entity. A general partnership is a typical form of joint venture, in which each general partner shares in the administration, profits and losses of the operation. A limited partnership is a business arrangement whereby the operation is administered by one or more general partners and funded, by and large, by limited or silent partners, who are by law responsible for losses only to the extent of their investments. 

Party Wall: A wall that is located on or at a boundary line between two adjoining parcels of land and is used or is intended to be used by the owners of both properties. 

Patent: A grant or franchise of land from the United States government. 

Pending: the seller has received and accepted an offer (contract), but hasn't closed yet.

Percentage Lease: A lease, commonly used for commercial property, whose rental is based on the tenant's gross sales at the premises; it usually stipulates a base monthly rental plus a percentage of any gross sales above a certain amount. 

Periodic Estate: An interest in lease property that continues from period to period - week to week, month to month, or year to year.

Personal Property: Items, called chattels, that do not fit into the definition of real property; movable objects.

Physical Deterioration: A reduction in a property's value resulting from a decline in physical condition; can be caused by action of the elements or by ordinary wear and tear. 

Planned Unit Development: A planned combination of diverse land uses, such as housing, recreation and shopping, in one contained development or subivision.

Plat: A map of a town, section or subdivision indicating the location and boundaries of individual properties. 

Plottage: The increase in value or utility resulting from the consolidation (assemblage) of two or more adjacent lots into one larger lot. 

Point: A unit of measurement used for various loan charges; one point equals one percent of the amount of the loan. 

Point of Beginning: In a metes-and-bounds legal description, the starting point of the survey, situated in one corner of the parcel; all metes-and-bounds descriptions must follow the boundaries of the parcel back to the point of beginning.

Point of Equilibrium: The point on a graph at which supply (production) and demand (consumption) curves meet. 

Police Power: The government's right to impose laws, statutes, and ordinances, including zoning ordinances and building codes, to protect the public health, safety and welfare. 

Power of Attorney: A written instrument authorizing a person, the attorney-in-fact, to act as agent ton behalf of another person to the extent indicated in the instrument. 

Prepayment Penalty: A charge imposed on a borrower who pays off the loan principal early. This penalty compensates the lender for interest and other charges that would otherwise be lost. 

Pre-Qualification Letter: received from a letter, stating that you appear to be qualified for a certain loan amount based on income, assets, and expenses.

Price Fixing: See Antitrust laws.

Primary Mortgage Market: See Secondary mortgage market. 

Principal: 1. A sum lent or employed as a fund or investment, as distinguished from its income or profits. 2. The original amount (as in a loan) of the total due and payable at a certain date. 3. A main party to a transaction-the person for whom the agent works.

Principal Residence: Primary location a person inhibits.

Prior Appropriation: A concept of water ownership in which the landowner's right to use available water is based on a government-administered permit system. 

Priority: The order of position or time. The priority of liens is generally determined by the chronological order in which the lien documents are recorded; tax liens, however, have priority even over previously recorded liens. 

Probate: A legal process by which a court determines who will inherit a decedent's property and what the estate's assets are. 

Procuring Cause: The effort that brings about the desired result. Under an open listing, the broker who is the procuring cause of the sale receives the commission. 

Progression: An appraisal principle that states that, between dissimilar properties, the value of the lesser-quality property is favorably affected by the presence of the better-quality property.

Promissory Note: A financing instrument that states the terms of the underlying obligation, is signed by its marker and is negotiable (transferable to a third party). 

Property Manager: Someone who manages real estate for another person for compensation. Duties include collecting rents, maintaining the property and keeping up all accounting. 

Prorations: Expenses, either prepaid or paid in arrears, that are divided or distributed between buyer and seller at the closing. 

Puffing: Exaggerated or superlative comments or opinions.

Pur Autre Vie: For the life of another. A life estate pur autre vie is a life estate that is measured by the life of a person other than the grantee. 

Purchase-Money Mortgage: A note secured by a mortgage or trust deed given by a buyer, as mortgagor, to a seller, as mortgagee, as part of the purchase price of the real estate.

Purchase and Sale Agreement: a contract between buyer and seller that outlines the details of the property transfer.

Q

Quit Title Suit: See Suit to quiet title. 

Quitclaim Deed: A conveyance by which the grantor transfers whatever interest he or she has in the real estate, without warranties or obligations. 

R

Range: A strip of land six miles wide, extending North and South and numbered East and West according to its distance from the principal meridian in the rectangular survey (government survey) system of land description.

Ratification: Method of creating an agency relationship in which the principal accepts the conduct of someone who acted without prior authorization as the principal's agent. 

Ready, Willing and Able Buyer: One who is prepared to buy property on the seller's terms and is ready to take positive steps to consummate the transaction.

Real Estate: Land; a portion of the Earth's surface extending downward to the center of the Earth and upward infinitely into space, including all things permanently attached to it, whether naturally or artificially; any and every interest in land. 

Real Estate Broker: Any person, partnership, association or corporation who sells (or offers to sell), buys (or offers to buy) or negotiates the purchase, sale or exchange of real estate, or who leases (or offers to lease) or rents (or offers to rent) any real estate or the improvements thereon for others for a compensation or valuable consideration. A real estate broker may not conduct business without a real estate broker's license. 

Real Estate Investment Syndicate: See Syndicate.

Real Estate Investment Trust (REIT): Trust ownership of real estate by a group of individuals who purchase certificates of ownership in the trust, which in turn invests the money in real property and distributes the profits back to the investors free of corporate income tax.

Real Estate License Law: State law enacted to protect the public from fraud, dishonesty and incompetence in the purchase and sale of real estate. 

Real Estate Mortgage Investment Conduit (REMIC): A tax entity that issues multiple classes of investor interests (securities) backed by a pool of mortgages.

Real Property: The interests, benefits, and rights inherent in real estate ownership.

Realtor: A registered trademark term reserved for the sole use of active members of Realtor boards affiliated with the National Association of Realtors.

Reconciliation: The final step in the appraisal process, in which the appraiser reconciles the estimates of value received from the market data, cost and income approaches to arrive at a final estimate of market value for the subject property.

Reconveyance Deed: A deed used by a trustee under a deed of trust to return title to the trustor. 

Recording: Act of entering or recording documents affecting or conveying interests in real estate in the recorders office established in each county. Until it is recorded, a deed or mortgage ordinarily is not effective against subsequent purchasers or mortgagees.

Recovery Fund: A fund established in some states from real estate license revenues to cover claims of aggrieved parties who have suffered monetary damage through the actions of a real estate licensee. 

Rectangular Survey System: A system established in 1785 by the federal government, providing for surveying and describing land by reference to principal meridians and base lines. 

Redemption: The buying back of real estate sold in a tax sale. The defaulted owner is said to have the right of redemption. 

Redemption Period: A period of time established by state law during which a property owner has the right to redeem his or her real estate from a foreclosure or tax sale by paying the sales price, interest and costs. Many states do not have mortgage redemption laws. 

Redlining: The illegal practice of a lending institution denying loans or restricting their number for certain areas of a community.

Regression: An appraisal principle that states that, between dissimilar properties, the value of the better property is adversely affected by the presence of the lesser-quality property. 

Regulation Z: Implements the Truth-in-Lending Act requiring credit institutions to inform borrowers of the true cost of obtaining credit. 

Release Deed: A document, also known as a deed of reconveyance, that transfers all rights given a trustee under a trust deed loan back to the grantor after the loan has been fully repaid.

Remainder: The remnant of an estate that has been conveyed to take effect and be enjoyed after the termination of a prior estate, such as when an owner conveys a life estate to one party and the remainder to another. 

Renegotiable Rate Mortgage: A mortgage loan in which the interest rate may increase or decrease at specified intervals, within certain limits based upon an economic indicator. 

Rent: A fixed, periodic payment made by a tenant of a property to the owner for possession and use, usually by prior agreement of the parties.

Rent Schedule: A statement of proposed rental rates, determined by the owner or the property manager or both, based on a building's estimated expenses, market supply and demand and the owner's long range goals for the property. 

Replacement Cost: The construction cost at current prices of a property that is not necessarily an exact duplicate of the subject property but serves the same purpose or function as the original. 

Reproduction Cost: The construction coast at current prices of an exact duplicate of the subject property.

Restriction: A limitation on the use of real property, usually originated in a deed by the owner or subdivider.

Reversion: The remnant of an estate that the grantor holds after granting a life estate to another person. 

Right of Survivorship: See Joint Tenancy. 

Riparian Rights: An owner's rights in land that borders on or includes a stream, river, or lake. These rights include access to and use of the water. 

Risk Management: Evaluation and selection of appropriate property and other insurance.

S

Sale and Leaseback: A transaction in which an owner sells his or her improved property and, as part of the same transaction, signs a long-term lease to remain in possession of the premises. 

Sales Contract: A contract containing the complete terms of the agreement between buyer and seller for the sale of a particular parcel or parcels of real estate.

Salesperson: A person who performs real estate activities while employed by or associated with a licensed real estate broker. 

Satisfaction: A document acknowledging the payment of a debt.

Secondary Mortgage Market: A market for the purchase and sale of existing mortgages, designed to provide greater liquidity for mortgages; also called the secondary money market. Mortgages are first originated in the primary mortgage market. 

Section: A portion of township under the rectangular survey (government survey) system. A township is divided into 36 sections, numbered 1 to 36. A section is a square with mile-long sides and an area of one square mile, or 640 acres. 

Security Deposit: A payment by a tenant, held by the landlord during the lease term and kept (wholly or partially) on default or destruction of the premises by the tenant. 

Selling Broker: See Listing Broker. 

Separate Property: Under community property law, property owned solely by either spouse before the marriage, acquired by gift or inheritance after the marriage or purchased with separate funds after the marriage. 

Servient Tenement: Land on which an easement exists in favor of an adjacent property (called a dominant estate); also called a servient estate. 

Setback: The amount of space local zoning regulations require between a lot line and a building line. 

Severalty: Ownership of real property by one person only, also called sole ownership.

Severance: Changing an item of real estate to personal property by detaching it from the land; for example, cutting down a tree. 

Shared Appreciation Mortgage: A mortgage loan in which the lender, in exchange for a loan with a favorable interest rate, participates in the profits (if any) the mortgagor receives when the property is eventually sold. 

Signing at Escrow: Occurs once an escrow officer has received all the lenders loan documents, and prepared the settlement sheet, deed, and related paperwork.

Situs: The personal preference of people for one area over another, not necessarily based on objective facts and knowledge.

Sole Ownership: See Severalty.

Special Agent: One who is authorized by a principal to perform a single act or transaction; a real estate broker is usually a special agent authorized to find a ready, willing, and able buyer for a particular property. 

Special Assessment: A tax or levy customarily imposed against only those specific parcels of real estate that will benefit from a proposed public improvement like a street or sewer.

Special Warranty Deed: A deed in which the grantor warrants, or guarantees, the title only against defects arising during the period of his or her tenure and ownership of the property and not against defects existing before that time, generally using the language, "by, through or under the grantor but not otherwise". 

Specific Lien: A lien affecting or attaching only to a certain, specific parcel of land or piece of property.

Specific Performance Suit: A legal action to compel a party to carry out the terms of a contract. 

Spot Zoning: A change in a local zoning ordinance to permit a particular use that is inconsistent with the area's zoning classification. Spot zoning is not favored in the law. 

Statute of Frauds: The part of a state law that requires certain instruments, such as deeds, real estate sales contracts and certain leases, to be in writing in order to be legally enforceable. 

Statute of Limitations: That law pertaining to the period of time within which certain actions must be brought to court. 

Statutory Lien: A lien imposed on property by statute-a tax lien, for example-in contrast to an equitable lien, which arises out of common law. 

Steering: The illegal practice of channeling home seekers to particular areas, either to maintain the homogeneity of an area or to change the character of an area in order to create a speculative situation.

Straight-Line Method: A method of calculating depreciation for tax purposes, computed by dividing the adjusted basis of a property by the estimated number of years remaining useful life. 

Subdivider: One who buys undeveloped land, divides it into smaller, usable lots and sells the lots to potential users. 

Subdivision: A tract of land divided by the owner, known as the subdivider, into blocks, building lots and streets according to a recorded subdivision plat, which must comply with local ordinances and regulations.  

"Subject to" Clause: A clause in a deed specifying exceptions and reservations affecting the title. 

Subletting: The leasing of premises by a lessee to a third party for part of the lessee's remaining term. See also Assignment. 

Subordination: Relegation to a lesser position, usually in respect to a right or security.

Subordination Agreement: A written agreement between holders of liens on a property that changes the priority of mortgage, judgment and other liens under certain circumstances. 

Subrogation: The substitution of one creditor for another, with the substituted person succeeding to the legal rights and claims of the original claimant. Subrogation is used by title insurers to acquire from the injured party rights to sue in order to recover any claims they have paid.

Substitution: An appraisal principle that states that the maximum value of a property tends to be set by the cost of purchasing an equally desirable and valuable substitute property, assuming that no costly delay is encountered in making the substitution.

Subsurface Rights: Ownership rights in a parcel of real estate to the water, minerals, gas, oil and so forth that lie beneath the surface of the property. 

Suit for Possession: A court suit initiated by a landlord to evict a tenant from leased premises after the tenant has breached one of the terms of the lease or has held possession of the property after the lease's expiration..

Suit to Quiet Title: A court action intended to establish or settle the title to a particular property, especially when there is a cloud on the title.

Supply: The amount of goods available in the market to be sold at a given price. The term is often coupled with demand. 

Surety Bond: An agreement by an insurance or bonding company to be responsible for certain possible defaults, debts or obligations contracted for by an insured party; in essence, a policy insuring one's personal and/or financial integrity. In the real estate business, a surety bond is generally used to ensure that a particular project will be completed at a certain date or that a contract will be performed as stated.

Surface Rights: Ownership rights in a parcel of real estate that are limited to the surface of the property and do not include the air above it (air rights) or the minerals below the surface (subsurface rights).

Survey: The process by which the boundaries are measured and land areas are determined; the on-site measurement of lot lines, dimensions and position of a house on a lot, including the determination of any existing encroachments or easements. 

Syndicate: A combination of people or firms formed to accomplish a business venture of mutual interest by pooling resources. In a real estate investment syndicate, the parties own and/or develop property, with the main profit generally arising from the sale of the property. 

T

Tacking: Adding or combining successive periods of continuous occupation of real property by adverse possessors. This concept enables someone who has not been in possession for the entire statutory period to establish a claim of adverse possession. 

Taxation: The process by which a government or municipal quasi-public body raises monies to fund its operation. 

Tax Credit: An amount by which tax owed is reduced directly. 

Tax Deed: An instrument, similar to a certificate of sale, given to a purchaser at a tax sale. See also Certificate of Sale.

Tax Levy: See Levy.

Tax Lien: A charge against property, created by operation of law. Tax liens and assessments take priority over all liens. 

Tax Rate: The rate at which real property is taxed in a tax district or county. For example, in a certain county, real proeprty may be taxed at a rate of .056 cents per dollar of assessed valuation.

Tax Sale: A court-ordered sale of real property to raise money to cover delinquent taxes.

Tenancy by the Entirety: The joint ownership, recognized in some states, of property acquired by husband and wife during marriage. Upon the death of one spouse, the survivor becomes the owner of the property. 

Tenancy in Common: A form of co-ownership by which each owner holds an undivided interest in real property as if he or she were sold owner. Each individual owner has the right to partition. Unlike joint tenants, tenants in common have right of inheritance.

Tenant: One who holds or possesses lands or tenements by any kind of right or title. 

Tenant Improvements: Alterations to the interior of a building to meed the functional demands of the tenant. 

Testate: Having made and left a valid will.

Time is of the Essence: A phrase in a contract that requires the performance of a certain act within a stated period of time. 

Time-Share: Ownership interest that may include an estate interest in property and which allows use of the property for a fixed or variable time period.

Title: 1. The right to or ownership of land. 2. The evidence of ownership of land. 

Title Insurance: A policy insuring the owner and mortgagee against loss by reason of defects in the title to a parcel of real estate, other than encumbrances, defects and matters specifically excluded by the policy.

Title Theory: Some states interpret a mortgage to mean that the lender is the owner of mortgaged land. Upon full payment of the mortgage debt, the borrower becomes the landowner.

Torrens System: A method of evidencing title by registration with the proper public authority, generally called the registrar, named for its founder, Sir Robert Torrens.

Township: The principal unit of the rectangular survey (government survey) system. 

Trade Fixtures: Articles installed by a tenant under the terms or a lease and removable by the tenant before the lease expires. These remain personal property and are not true fixtures. 

Transfer Tax: Tax stamps required to be affixed to a deed by state and/or local law. 

Trust: A fiduciary arrangement whereby property is conveyed to a person or institution, called a trustee, to be held and administered on behalf of another person, called a beneficiary. The one who conveys the trust is called the trustor. 

Trust Account: See Commingling.

Trust Deed: An instrument used to create a mortgage lien by which the mortgagor conveys title to a trustee, who holds it as security for the benefit of the note holder (the lender); also called a deed of trust. 

Trustee: See Trust. 

Trustee's Deed: A deed executed by a trustee conveying land held in a trust. 

U

Undivided Interest: See Tenancy in Common. 

Unenforceable Contract: A contract that has all the elements of a valid contract, yet neither party can sue the other to force performance of it. For example, an unsigned contract is generally unenforceable. 

Uniform Commercial Code: A codification of commercial law, adopted in most states, that attempts to make uniform all laws relating to commercial transactions, including chattel mortgages and bulk transfers. Security interests in chattels are created by an instrument known as a security agreement. To give notice of the security interest, a financing statement must be recorded. Article 6 of the code regulates bulk transfers-the sale of a business as a whole, including all fixtures, chattels and merchandise.

Unilateral Contract: A one-sided contract wherein one party makes a promise in order to induce a second party to do something. The second part is not legally bound to perform; however, if the second party does comply, the first party is obligated to keep the promise. 

Unit of Ownership: The four unities that are traditionally needed to create a joint tenancy-unity of title, time, interest, and possession.  

Urban Renewal: The acquisition of run-down city areas for purposes of redevelopment. 

Useful Life: In real estate investment, the number of years a property will be useful to the investors. 

Usury: Charging interest at a higher rate than the maximum rate established by state law. 

V

Valid Contract: A contract that complies with all the essentials of a contract and is binding and enforceable on all parties to it. 

VA Loan: A mortgage loan on approved property made to a qualified veteran by an authorized lender and guaranteed by the Veterans Administration in order to limit the lender's possible loss. 

Value: The power of a good or service to command other goods in exchange for the present worth of future rights to its income and amenities. 

Variable Rate Mortgage: A mortgage loan in which the interest rate may increase or decrease at specified intervals within certain limits, based upon an economic indicator. 

Variance: Permission obtained from zoning authorities to build a structure or conduct a use that is expressly prohibited by the current zoning laws; an exception from the zoning ordinances. 

Vendee: A buyer. 

Vendor: A seller.

Voidable Contract: A contract that seems to be valid on the surface, but may be rejected or disaffirmed by one or both of the parties. 

Void Contract: A contract that has no legal force or effect because it does not meet the essential elements of a contract. 

Voluntary Transfer: See Alienation.

W

Waste: An improper use or an abuse of property by a possessor who holds less than fee ownership, such as a tenant, life tenant, mortgagor or vendee. Such waste ordinarily impairs the value of the land or the interest of the person holding the title or the reversionary rights. 

Will: A written document, property witnessed, providing for the transfer of title to property owned by the deceased, called the testator. 

Wraparound Mortgage: A method of refinancing in which the new mortgage is place in a secondary, or subordinate, position; the new mortgage includes both the unpaid principal balance of the first mortgage and whatever additional sums are advance by the lender. In essence, it is an additional mortgage in which another lender refinances a borrower by lending an amount over the existing first mortgage amount without disturbing the existence of the first mortgage. 

X

Y

Z

Zoning Ordinance: An exercise of police power by a municipality to regulate and control the character and use of property. 

Credits: All definitions received from: Galaty, F. W., Allaway, W. J., Kyle, R. C., & Williams, M. R. (1988). Modern real estate practice(11th ed.). La Crosse, WI: DF Institute, (Dearborn Real Estate Education).

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