Specific Liens
A lien that attaches to a specific parcel of land--such as a property tax or mortgage lien.
Inter Vivos Trust
...
Freehold Estates
Real property ownership that are for an indefinite duration. (e.g. fee simple, life estate)
Front-end Ratio
A loan qualifying ratio, typically requiring the principal, interest, taxes and insurance (PITI) of the proposed loan to be within 29% of gross monthly income. See back-end ratio.
Fructus Industriales
Cultivated annual crops that when harvested are personal property. (from Latin "fruit of effort")
Fructus Naturales
Plants, trees, and crops that are considered real property because they are not harvested. (from Latin "fruit of nature")
Functional Obsolescence
Loss of value due to inadequacy of the building itself in today's market; i.e. age or poor/outmoded design.
Funding Fee
A percentage of the loan paid by a veteran borrower for the Department of Veterans Affairs guarantee of the loan repayment. The fee varies depending on the number of times the veteran has obtained a VA loan, and also with the amount of down-payment.
Garn Act (Garn-St. Germain Depository Institutions Act)
Federal statute enabling federally chartered banks to enforce their due-on-sale (alienation) clauses even if state laws prohibit such clauses.
General (Universal) Agent
An agent given a wide scope of authority to handle a variety of things. A property manager is a general agent because of the wide range of activity necessary to rent and maintain the property. Opposite of Special Agent
General Lien
A claim against all of a debtor's personal and real property filed in order to satisfy a debt.
General Partnership
A business organizational form in which all general partners actively participate in ownership and management and are liable for all debt and actions.
General Power of Attorney
Appointment of an attorney-in-fact with signature authority and with wide-ranging discretion in handling the delegated matters in the appointment.
General Warranty Deed
A title transfer document that includes numerous covenants and warranties; the highest level of protection for the buyer.
Gift Deed
A title transfer document reciting "love and affection" as consideration rather than monetarily valuable consideration.
Ginnie Mae (Government National Mortgage Association (GNMA)
Spun off of from Fannie Mae in 1968 to administer special assistance programs. Ginnie Mae sells guarantee certificates for pools of mortgages.
Good Consideration
Non-monetary consideration in a contract. Example: "For love and affection". Good consideration is okay for a gift deed, but not a normal arms-length transaction. Opposite of valuable consideration
Good Faith Estimate (GFE)
An estimate required by RESPA within 3 days of loan application of all closing costs. Must be within specified accuracy when compared with actual closing costs.
Government Loan
One insured by FHA or guaranteed by VA.
Governmental Survey System
(a/k/a Rectangular Survey System) One of 3 major methods of land description. Used for large parcels in non-urban areas. Based on principle meridians and baselines which form Quadrangles, Townships, Sections and fractions of sections.
Graduated Payment Mortgage
An FHA mortgage loan program in which the payment increases by a certain percentage each year for a specific number of years and then levels off for the remaining period of time. Similar to an ARM
Grandfather Clause
A phrase indicating permission to continue doing something that was once permissible but is now not allowed. In zoning, it permits a nonconforming use. For example, an existing auto repair shop being allowed to remain in a shopping area that is being revi
Grant
The act of transferring of title.
Grant Deed
A deed where the grantor warrants that he/she has not already transferred title to another and that he/she has not encumbered the property except as noted in the deed.
Grantee
Person named in a deed as receiving title.
Granting Clause
An essential element of a deed that states words of conveyance. Example "does hereby grant and convey".
Gross Income Multiplier
is an appraisal method which relates the sales price of a property to its rental income Sales Price / Gross Income = GIM
Gross Lease
A fixed-rate lease where the landlord pays all expenses of operation and maintenance.
Gross Rent Multiplier
A rough calculation to determine value of an income producing property. GRM is the average sales price of similar properties divided by the monthly gross rent. Gross Income Multiplier (GIM) reaches the same conclusion by dividing sales price of comps by a
Ground Lease
unmarked
A tenancy for years whereby a tenant leases land and usually improves (builds on) it. When the lease is up, the improvements revert to the landlord unless otherwise stated.
Groundwater
Non-flowing water below the surface. (Such as groundwater aquifers)
Growing Equity Mortgage (GEM)
A loan with scheduled payment increases, usually tied to some index, in which the increases are applied directly to principal, thereby reducing the term and the total interest paid on the loan.
Habendum Clause
An essential element of a deed, following the granting clause, that clarifies the extent of ownership. Example - "to have and hold in fee simple".
Habitability
Leased properties will meet municipal code standards (heat, electrical, weather-tight structure, etc.)
Handicap
A mental or physical impairment that substantially limits activity such as hearing, seeing, walking, learning, etc.
Hard Money Mortgage
One in which the borrower gets cash. Contrast with Purchase Money Mortgage
Hazard Insurance
Coverage for property damage (home and personal) for wind, fire, smoke, water pipe breaks, vandalism, etc. It usually has some deductible (an amount 1st paid by the insured).
Heterogeneity
No two are alike. Opposite of homogeneity
Highest and Best Use Principle
That use determined by an appraiser of a commercial property that would bring the highest net return on investment to the owner. May not be the same as the present use, depending on development in the surrounding area.
Hold Harmless Clause
A provision in a contract that protects a party from damage or harm arising from the transaction.
Holdover Clause
A clause in a lease which requires a higher rent if the tenant stays past the termination date. It is intended to encourage the tenant to vacate the property in a timely manner.
Holographic Will
A testator's handwritten will, dated and signed, but not witnessed.
Homestead
a tract of land 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 debt
Homestead Exemption
An amount of money established by state law and protected from attachment by unsecured creditors through foreclosure. However, lenders require waiver of the homestead exemption before approving a loan. (Note: States can adjust the exemption amount through
Homogeneity
Similarity; Neighborhoods that have homogeneity of houses and people are generally stable in value.
Hypothecate
To pledge property as security for repayment of a loan, while maintaining possession of the property.
Implied Agency
An agency relationship created by the acts or conduct of the parties involved. Opposite of Express Agency.
Implied Contract
An implied contract is created by the actions of the parties. It is understood but not stated.
Implied Easement
Created by acts of the parties; one that is apparent and for which access is implied. Example: If one sells a stand of trees to be used for lumber, one also grants an implied easement to harvest the trees.
Impound Account
A trust account to reserve funds for a specific purpose--e.g. the lender will accrue funds to pay property taxes and homeowners insurance when they become due.
Improvements
Man made items permanently attached to the land, such as buildings, patios, decks, sidewalks, sewers, etc.
Imputed Interest
An interest rate applied by the IRS when the note or contract either does not state, or contains an unreasonably low interest rate.
Incentive Zoning
Provides an incentive to a developer to provide a specific unplanned feature as a tradeoff for being allowed something normally not permitted.
Inclusionary Zoning
Specifies inclusions within a development, such as a playground or that a percentage of homes must be affordable for low-income families.
Income (Capitalization) Approach
Determination of value calculated from a property's income. Net operating income divided by the overall capitalization rate equals the value of the property. (NOI divided by % Return = Value).
Increasing & Diminishing Returns Principle
The cost of improving a property increases its value (law of increasing returns) only to a certain point; over-improving an obsolete property, or improvements that do not add to value are examples of the law of decreasing returns
Incurable Depreciation
Loss of property value that cannot be fixed due to excessive cost or external factors
Index Lease
Rent is based on an index; Reduces the landlord's risk in a long-term lease.
Index Method
a type of cost approach used by appraisers, by computing the replacement cost of a building
Index rate
The interest rate upon which an ARM loan is based.
Initial Rate
The initial rate on an A.R.M. loan is the first year payment. It can be different than the true note rate and thus is more of a "come on" rate. When shopping ARM loans, always ask your lender what the payment would be next year if there were NO movement i
Injunction
A court order directing a party to refrain from doing some certain act(s).
Inquiry Notice
The presumption that a buyer has a responsibility to inspect a property and inquire as to any observed problems.
Installment Land Contract (ILC)
a/k/a Contract for Deed (conditional sales contract). An alternative sale agreement in which the buyer makes periodic payments directly to the seller, but does not receive a deed until all (or an agreed upon amount) of the payment price is reached. Used m
Interest
The cost of borrowing money, usually expressed as a percent of the amount borrowed
Interest Deduction
Interest paid on a 1st mortgage is 100% deductible on income tax.
Intermediary / Facilitator
A licensee who assists buyers and sellers but has no fiduciary relationship with either, and whose non-agent duties and limitations are spelled out in a written agreement. (May be also known as a Transaction-broker)
Intermediate theory
Based on the principle of title theory but requires the mortgagee foreclosure to obtain legal title
Interstate Land Sales Full Disclosure Act
regulates interstate sale of unimproved lots as is designed to prevent fraudulent marketing schemes that may arise when land is sold without being seen by purchasers.
A federal act requiring disclosure of property information to buyers when 25 or more uni
Intestate
To die without a will, causing the estate to be distributed to heirs according to the state laws of descent and distribution.
Introductory Rate
Also called a "teaser" rate and is used to help buyers qualify for a loan because it is initially lower than the prevailing market rate.
Inverse Condemnation
A court process started by the property owner instead of government; Used when an owner feels his or her property has de facto been condemned by government but with no payment of just compensation. The opposite of condemnation
Involuntary Alienation
Transferring property against the owner's will, such as through adverse possession, default on taxes (Sheriff's Sale), or foreclosure.
Involuntary Lien
One not taken through consent of the owner, such as a tax lien. In reality, most liens are involuntary
IRS reporting
The closing entity must report the sales price of all 1-4 unit residential properties to the IRS.
Joint and several liability
means that each of the individual owners is personally responsible for the total damages
Joint Tenancy
A form of co-ownership in which one fee simple title is undivided and shared equally among two or more owners with an automatic right-of-survivorship. Four unities--time, title, interest and possession--are required to create joint tenancy.
Joint Venture
A form of business organization in which two or more individuals come together for a business purpose and share in the profits or losses of the venture. It is treated like a partnership for tax purposes.
Judgment
A court-ordered claim by one person against another. A judgment lien is a general lien against a property in favor of the holder of the judgment.
Jumbo Loan
A large conventional loan that is non-conforming to Fannie Mae/Freddie Mac guidelines.
Laches
A legal doctrine that prevents seeking recourse from a court because of a lapse of time. For example, a neighbor built a second story addition and the roof exceeds the architectural code height restriction. Waiting until the addition is complete before se
Land
The surface of the earth from its core center up through the sky. Land includes all natural items permanently attached such as trees, water, and minerals.
Land contract
also called contract for deed, a bond for title, conditional sales contract, a land sales contract is an installment contract where the seller retains legal title while the buyer takes possession and gets equitable title to the property.
Land Contracts
Also known as contract for deed, it is a contract for the sale of real estate where the buyer receives equitable title (the right to possess). The seller retains legal title until all or an agreed upon portion of the sale price is paid.
Land Patent
The government conveys title using a land patent.
Land Trust
A land trust is a nonprofit organization that actively works to conserve land by undertaking or assisting in land or conservation easement acquisition, or by its stewardship of such land or easements. Land trusts work with landowners and the community to
Lease
an agreement, written or verbal, transferring the right to exclusive possession and use of real estate for a definite period of time
The granting of a possessory right to use a property for some time, while retaining a reversionary interest until the end
Lease Assignment
Transfer of all the rights and duties of a lease to another. This does not remove the original lessee from any liability unless stated in the original lease. Contracts may be assigned unless stated otherwise.
Leasehold Estate
The tenant's right to occupy real estate, for a specified term. The Landlord (lessor) possesses a right of reversion of the estate at the end of the lease term. This is a personal property interest of a tenant.
Legacy
Money left to someone in a will.
Legal Description
A description of property more accurate than street addresses and required in contracts, deeds or other real property transfers. The 3 major methods of legal descriptions are metes and bounds; governmental survey system; or subdivision (lot, block and tra
Legal Nonconforming Use
A legal nonconforming use or structure is a use or structure that was legally built under previous regulations but does not meet existing standards
Legal Purpose
An essential element of a valid contract. A contract for an illegal purpose is void.
Legal Purpose (Lease)
A lease, as all contracts, must have legal purpose. A lease of property for an illegal purpose is void.
Legatee
Person named in a will to receive money or personal property. Contrast with devisee who receives real property in a will.
Lessee
a tenant (an occupant, not necessarily a renter)
Lessor
The owner of income property.
Leverage
Purchasing using borrowed funds, such that a small down payment might lead to appreciation in value of both the investment and the funds used to purchase it.
License
unmarked
a right of access that is temporary, personal and revocable; such as a license to use a campground or fish in the lake on the landowner's property. Contrasted with Easements which are a real property right, permanent and generally irrevocable.
Lien
The right given by law to a creditor to have a debt or charge satisfied out of the property belonging to the debtor.
Lien Theory States
States in which a mortgage is the primary security instrument (versus a deed of trust) where title is retained by the mortgagor (borrower) and the mortgagee holds a lien for security of the debt.
Life Estate
An interest in real property limited to the duration of someone's life, either the grantor or other designated person.
Life of Loan Cap
The maximum increase in interest rate on an A.R.M. loan. The index + margin + lifetime cap = maximum interest rate that can ever be charged.
Like-kind
In a 1031 exchange, the real property application is broad, allowing real property to be exchanged for any real property. The 1031 exchange code states that no gain or loss shall be recognized on the exchange of property held for productive use in trade o
Limited Common Elements
Those areas in a common interest community reserved for exclusive use by a particular owner, such as decks, storage areas or parking spaces.
Limited Liability Company
A form of business organization treated like a limited partnership from a federal tax point of view and an "S" corporation from a liability point of view.
Limited Partnership
A business organizational form in which general partner(s) are liable for all debts and actions and limited partners carry no liability beyond the amount of their investment.
Liquidated Damages
Those damages specified by contract in advance (usually loss of earnest money) if the buyer defaults. If specified, liquidated damages are the seller's only remedy against the buyer.
Liquidity
Cash on hand plus anything that can be sold and converted to cash within a very brief period of time.
Lis Pendens
Recorded constructive notice that legal action affecting a particular piece of property is pending. By filing a lis pendens a few days before expiration of their lien, a mechanic's lien claimant can keep the lien alive beyond six months.
Littoral Right
The right to land bordering on the shore of a sea or ocean.
Living Trust
A type of trust created during the lifetime of the owner (trustor).
Loan Approval
Usually given within a two-week period after credit and income have been verified and found acceptable. Verification of past or out-of-state employment may cause delays. Final approval must await the appraisal report.
Loan-to-Value (LTV) Ratio
The ratio between the amount of the loan and the purchase price. Typically an 80% loan-to-value ratio (loan equals 80% or less of the purchase price) will preclude the lender charging for mortgage insurance.
Lock-in Clause
A provision in a promissory note prohibiting prepayment unless full interest is paid as if the loan had gone to maturity; Also used in a loan application to tell the lender at what point to stop floating or fix the interest rate or discount points.
Lot, Block and Tract
One of the 3 major methods of land description that identifies a parcel by reference to a recorded plat map, using a lot number within a specific block which lies within a specific tract
Loyalty
The fiduciary duty of an agent to act at all times solely in the best interests of the principal to the exclusion of all other interests, especially the broker's own self-interest.
M.I.P. Mortgage Insurance Premium
Charged up-front and annually (in each monthly loan payment) by FHA to insure the lender against default on that portion of a loan above the borrower's equity.
Management agreement
a contract between the owner of an income producing property and the individual or firm that will manage the property. It establishes the scope of the agent's authority, as well as duties, compensation, termination procedures, payment of expenses and othe
Margin
The difference between the index rate and the rate of interest charged on an adjustable rate mortgage.
Market Value
Market value is the price a willing, informed buyer would pay to a willing, informed seller, allowing a reasonable time for sale. The most probable (not highest) price the property should bring at sale.
Marketable Title
Good title, defensible in court.
Master Deed
Describes the physical location of the common and individual elements (units) of a condominium.
Master Plan
A comprehensive growth plan that guides the long-term zoning, use, and development of a community.
Maturity Date
The due date of the loan. (30 years for most residential loans).
Maximum PITI
The highest allowable loan payment as determined by the lesser of the front-end ratio or the back-end ratio.
Mechanic's Lien
A statutory lien for the benefit of laborers and materialmen who have provided materials or labor in the construction or repair of a building.
Megan's Law
A federal law requiring residence registration of convicted sexual predators, in effect creating a stigmatized property. Real Estate licensees should direct buyers/tenants to the source of such registration lists as opposed to providing the information pe
Menace
The threat of duress used to force a party to sign a contract. The injured party may void a contract signed under duress or menace.
Merger
Combining two different estates into one. When a tenant becomes the owner, the tenant's former leasehold estate is merged into his or her new freehold estate.
Metes and Bounds
One of three major methods of land description. Used most often to describe irregular parcels using azimuth and bearing measurements. Metes are a measure of length and bounds are boundaries.
Mile
A distance in a straight line measuring 5,280 feet.
Mill
1/10 of one cent. Used to compute property taxes once the mill rate is established.
Mill Levy
A fraction of assessed valuation expressed in tenths of a cent per dollar; determined by the county commissioners. (85 mills = $0.085 or $85 of tax for each $1,000 of assessed valuation).
Mineral Rights
Rights to subsurface minerals, oil, and gas including the rights to remove them.
Misrepresentation
An untrue statement of material fact that induces a party to act. It may be intentional (fraud) or unintentional. A contract so signed is voidable by the injured party.
Mistake
unmarked
An error of fact by both parties that may cause a contract to be voidable. Example: A contract's legal description depicts a different lot than the buyer was shown.
Modification
The effect on use or value of a property due to use or improvements of surrounding properties.
Monuments
Markers used as points of beginning or other corners in metes and bounds descriptions. May be artificial (iron stakes or other man-made) or natural (trees, river centerline) provided by nature.
Mortgage
A two-party security instrument for a promissory note that pledges the property in the event of loan default and creates personal liability for the borrower. Automatically released when paid off. Mortgage foreclosure must be pursued through the courts.
Mortgage Backed Securities
Packages of loans sold as securities on the secondary market; secured or "backed" by the mortgages themselves. Normally associated with Ginnie Mae.
Mortgage Banker
A "banker" only of its own mortgage funds; typically sells its loans on the secondary market to recapture its original monies plus a small profit. May or may not "service" (payment collection and bookkeeping) the loan. Contrast with mortgage broker.
Mortgage Broker
A person who shops many lenders to best place the borrower's loan application. Mortgage brokers will handle pre-loan coordination, but have no money of their own and loans are typically closed and serviced by the actual lender.
Mortgage lien
a lien on the property of a mortgagor that secures the underlying debt obligation. It is a voluntary lien created by the property owner and is accorded priority by date of recording.
Mortgage Warehousing
Accumulation by a mortgage banker of a stack of mortgages to be later sold as a large package to an investor.
Mortgagee
The lender; receives the mortgage from the borrower in exchange for the loan.
Mortgagor
The borrower; gives the mortgage to the lender in exchange for the loan.
Multiple Listing Service (MLS)
A marketing service of NAR (National Association of REALTORS(r)) through local REALTOR(r) associations to which members post listings for all members to access.
Mutual Assent or Agreement
An essential element of a contract. A meeting of the minds. The parties agree to all provisions of the contract.
Mutual Rescission
Agreement by both parties to abandon an executory contract.
Mutual Savings Bank
A bank owned by its depositors and paying dividends instead of interest on its accounts. Located in some Northeastern states.
Naked Title
Legal title only without the bundle of rights associated with ownership; Example: Title held by a trustee under a deed of trust.
Narrative report
a complete and lengthy report where the appraiser presents all information pertinent to the property and the market for the property including analysis, opinions and conclusions which lead to an estimate of value.
National Flood Insurance Program
1968 federal legislation requiring flood insurance for all government loans on properties located in the 100-, 300- or 500-year flood plains as determined by flood maps.
Negative Amortized Loan
One in which the amortized payments will not retire the debt. The shortage in each payment is added to the principal (thus negative amortization as the principal is increasing instead of decreasing).
Negative Easement
Restricts a servient owner from something specific, usually a building restriction that might block a view or sunlight.
Negotiable instrument
any written instrument (checks, publicly traded stocks, promissory note) that may be transferred by endorsement or delivery so as to vest legal title in the transferee.
Net Lease
One in which the tenant pays the base rent plus a portion of the operating expense of the building, such as utilities.
Net Listing
One in which the broker's compensation is all "net" funds over and above the sales price the seller agreed to. Possibly used to sell distressed or pre-foreclosure property with not enough equity from which to pay a broker commission.
Net Net Lease
One in which the tenant pays a base rent plus a portion of the operating expenses of the building, plus taxes and insurance.
Net Net Net lease
In a triple net lease the tenant pays all operating expenses plus taxes and insurance, plus a portion or all of the maintenance (repairs on furnace, air conditioning, etc.).
Net Operating Income (NOI)
Projected income from a property, NOT including depreciation or cost of financing. Start with annual potential gross income from all sources (-) vacancy and collection loss (bad debt) (-) operating expenses and replacement reserves = NOI. Cost of managing
Nonconforming Loan
One that does not conform to the secondary market purchase guidelines of Fannie Mae or Freddie Mac; usually held by the lender as a portfolio loan.
Nonconforming Use
An existing use permitted to continue even though zoning changes would now prohibit such use. The zoning clause that allows non-conforming use is a grandfather clause. For example, a long established auto repair shop permitted to continue operating in a b
Noncumulative Zoning
Zoning that permits only one use with no exception.
Non-disturbance Clause
A condition in a mortgage by which the mortgagee agrees not to terminate individual leases in the event of mortgage foreclosure on the overall building.
Non-freehold Estate
Less than freehold. A non-ownership or leasehold estate, which a tenant possesses in real property.
Non-judicial Foreclosure
Foreclosure under the power of sale provision of a mortgage or trust deed. (Not through the courts)
Non-recourse Loan
unmarked
One for which the borrower is not personally liable (i.e., no deficiency judgment is possible). The lender is satisfied by the value of the property alone as security for the loan. In a recourse mortgage the lender can go after the borrower's oth
Note
Signed evidence and agreement to pay a debt. In real estate, notes are secured by deeds of trusts or mortgages.
Note Rate (Float Rate)
In an A.R.M. loan it is the index plus a margin, a fixed number that is added to the index. The index equals a 6-month, 1-year or 3-year treasury bill or the Cost of Funds Index (COF).
Notice
A period of time required for either party to advise the other of termination of a periodic tenancy.
Notice Statute
Maintains that documents prevail (date), if not recorded.
Novation
Substitution of a new contract for a previous one; also substitution of one party in a contract for an original signer. Without novation the original party is still liable. Example: When an existing loan is assumed, the original borrower should sign a nov
Nuisance
Interference with one's reasonable use or enjoyment through an invasion of excessive noise, odors, light, fire hazards or other trespass to the senses.
Nuncupative Will
An oral will made by the testator in front of witnesses just prior to death.
Obedience
A fiduciary duty of an agent to obey the lawful instructions of the principal.
Objective Value
The price an informed buyer might be willing to pay for a property absent a specific personal interest in the property. Contrasts with subjective value.
Observed Condition Method
Method used by an appraiser to determine depreciation by subtracting observed physical deterioration, functional obsolescence and external obsolescence figures from the replacement cost.
Obsolescence
Loss of value due to a functional problem (floor plan layout is poor) or an external issue (down zoned the property or next door to industrial use property).
Offer and Acceptance
The final step in creating a contract. Notifying the offering party (offeror) that the offer has been signed converts an offer to a contract. Signing the contract alone does not create the contract.
Open Listing
Non-exclusive, simultaneous right-to-sell agreements with multiple brokers, the first of whom to procure a buyer earns a commission. The seller reserves the right to personally procure the buyer and not owe any commission. High risk for the broker
Open Mortgage
(1) One without a prepayment penalty. (2) A mortgage in default prior to a foreclosure sale.
Open-end Mortgage
A mortgage that may be increased in the future up to an agreed-on maximum amount.
Operating Expense Ratio
The result of dividing the operating expenses by the potential gross income of an income producing property.
Operating Expenses
Fixed expenses, variable expenses, and replacement reserves of operating and maintaining a property. Expenses do NOT include debt service (value is the same whether mortgaged or purchased with cash), capital improvements or depreciation.
Operative Words (Lease)
The extent and the nature of the leasehold interest being conveyed, including the term of the lease plus the lessee's rights. Similar to the Habendum clause in a deed.
Option
A unilateral contract in which the optionor (property owner) promises to sell if and when the optionee (prospective buyer) chooses to buy - at a price and before a date set in the option contract
Origination Fee
Charged by the lender for initiating the loan processing. Typically 1% of the loan amount.
Ostensible Agency
The agency relationship occurs due to actions of the parties - implied agency.
P.I.T.I.
Acronym for the four components of a budget mortgage payment; Principal, Interest, Taxes and Insurance.
Package Mortgage
A loan that funds purchase of, and is secured by, both real and personal (fixtures, appliances, furnishings etc.,) property.
Parol Evidence Rule
A judicial rule of procedure prohibiting oral evidence from being used to change the terms of a written contract.
Partially Amortized Loan
One in which the total payments do not reduce the principal balance to zero, leaving a balloon payment.
Participation Certificate
Representation of ownership in a specific pool of mortgages sold by Freddie Mac.
Participation Mortgage
One in which the lender receives a share of the revenue or profits in addition to interest. The lender takes an equity share as a limited partner or shareholder as partial consideration for the loan.
Partition
A court action or lawsuit to dissolve co-ownership of property when one (or more) co-owners want to sell a property, but others do not. The court may split or partition the property.
Payment Cap
The annual limit of increase in rate on an A.R.M loan. This may cause negative amortization.
Percentage Lease
A commercial, usually retail, lease in which at least part of the rent is based on a percentage of gross income.
Periodic Estate
An leasehold interest in property for some repeating and indeterminate period of time; week-to-week, month-to-month, or year-to-year. Because there is no end date, periodic tenancies require (usually statutory) notice by one of the parties in advance of t
Permanence of Investment
One of the four Economic Characteristics of Real Estate. Refers to the long payback period and stable nature of real estate investment. Requires future projections on usage. Zoning can stabilize value as investors can predict future use.
Personal Property
Movable property, also known as chattels. All property that is not real property, or permanently attached, is personal property.
Physical Deterioration
Ordinary wear and tear, age, and breakage.
Piggyback Mortgage
A mortgage with two lenders, one taking the bottom portion (greater security) and the other taking the remainder (higher risk).
Planned Unit Development (PUD)
A community planned with a variety of individual ownership interests such as residential and shared interests of common recreation areas.
Plat
The legal description in map form of a subdivision. It contains lot and block numbers and show dimensions of each parcel. Used mostly in urban/suburban areas. Plat maps are "recorded" by filing with the county clerk and recorder
a detailed map that illust
Plottage
increased value resulting from assemblage (the combining of adjacent lots into one larger lot)
PMI (Private Mortgage Insurance)
Insures the lender against default of any amount of the mortgage above 80% LTV. PMI companies (such as Mortgage Guaranty Insurance Corp - MGIC) require the borrower to qualify separately from the lender before they are willing to insure the loan.
Point
Also Discount Point; 1% of the loan amount.
Point of Beginning (POB)
The starting point, usually a monument, in a metes and bounds land description. For the legal description to be complete, it must return to the POB.
Police Power
The constitutional authority and inherent power of the state to adopt and enforce laws and regulations to promote and support the public health, safety, morals and general welfare.
Polychlorinated biphenyls
PBCs may be present in electrical equipment and are suspected of causing health problems. Manufacture of PCBs have been banned since Jan. 1, 1979
Portfolio Loan
One held and serviced by the lender rather than sold on the secondary market
Power of Attorney
A written document appointing an "attorney-in-fact" to act independently and with signature authority on behalf of another person in matters specified. May be either specific (e.g., attend a closing and sign on behalf of a seller) or general (e.g., manage
Prepayment penalty
the amount set by the creditor as a penalty to the debtor for paying off a debt before it matures
Prescription
Acquiring a right of access (usually an easement) by long uninterrupted use without the consent of the owner. Established in statute
Price Fixing
Conspiracy by two or more professionals to mutually standardize fees for service. Price fixing defeats competition and violates federal and state antitrust laws.
Primary (Mortgage) Market
Borrower Interaction with Lender. Contrast with Secondary Market
Primary Financing
The mortgage or deed of trust in first lien position.
Principal
The person appointing an agent in an agency relationship.
Principal Meridian
The main imaginary lines that run north and south, crossing a base line at a specific point. There are 36 principal meridians in the US.
Principle of Substitution
Sets upper limit of value as it determines whether a buyer could find an equally desirable substitute property. (Can I do better with my money?)
Principles of Value
Economic rules that impact the value of real property, including principles of anticipation, change, competition, conformity, contribution, highest and best use, increasing and diminishing returns, plottage, progression and regression, supply and demand,
Priority
refers to the order of rights in time
Probate
An official court process to determine whether a will is valid, whether assets exist, and to dispose of assets and debts.
Procuring cause
The broker who is the immediate and primary reason for the sale of a property. More likely to become an issue in other than exclusive right-to-sell listing contracts
that effort that brings about the desired result.
Progression & Regression Principle
Twin principles of value holding that a property tends toward the value of those around it. The worst house in the best neighborhood will tend to be more valuable (progression); whereas a luxury mansion in a neighborhood of moderate single family homes wi
Promissory Notes
The written evidence of and promise to repay a debt. Terms of the note usually include: Names of note holder and borrower, total amount to be repaid, interest rate, payment intervals and amounts. A note alone is unsecured (without collateral) unless accom
Property Management
Duties and activities: Leasing and collection of rent, marketing, maintenance and repairs (physical management), fiscal management and long-term planning, along with maintaining files and records.
Property Tax
A tax based on the assessed value of real property; 100% deductible on income tax.
Prorating
The fair-share buyer-seller splitting of expenses that extend over closing. Examples: Property taxes to be later paid by buyer, or anything pre-paid by the seller.
Protected Class
A category protected in law from housing discrimination. Federal law includes race, color, religion, national origin, sex, familial status and handicap. States and even local governments may have additional protected classes
Public Grant
The giving of public lands to private individuals.
Public Liability Coverage
Coverage in hazard insurance policies that pays for damage repair and legal costs for defending oneself against lawsuit for damages caused by or injury to the public.
Public Trustee
An official in each county who, as a third party to the borrower and lender, holds, releases and forecloses on deeds of trust.
Puffery
An exaggerated opinion, not necessarily based in fact, intended to portray a property in a more favorable light. Example: "This property is one of the best buys in the neighborhood. It is sure to go up in value".
Punitive Damages
Additional charges intended to "punish" above and beyond compensatory damages which are intended to return the parties to their original positions before the contract.
Pur Autre Vie
A life estate based on the duration of the life of a person and other than the grantor. (from French "for other life")
Purchase Money Mortgage
A loan created at the time of purchase; Often a seller carry back of part of the purchase money. Borrower receives the right to make payments to purchase as opposed to cash. Contrast with Hard Money Mortgage
Quadrangles
An area of land measuring 24 miles on each side.
Qualification Ratio
The ratio of the borrower's monthly mortgage payment to monthly income (Front-end, usually 28%); or the ratio of the monthly payment plus all other monthly long term expenses to monthly income (Back-end, usually 36%).
Quantity Survey Method
The most complex, technical, time consuming and accurate method of determining replacement/reproduction cost by considering not only materials and labor, but regulatory costs, survey, taxes, profit, etc. Applied primarily to historical structures.
Quiet Enjoyment
The right of a tenant to use the premises without interference from the lessor. The lessor shall also defend the tenants' rights to possession against third parties.
Quiet Title Suit
A court action to remove a cloud on title and determine one's right to an ownership interest.
Quitclaim Deed
A title transfer document of the grantor's ownership interest with no warranties or covenants. Often used to resolve clouds on title. "If I have title, and I'm not saying that I do, I hereby grant...
R1 zoning
R1 districts permit only single-family detached houses on lots at least 100 feet wide
Race Notice
Term referring to the fact that the date and time of recording determine priority of recorded documents, liens, etc. Comes from a "race" to the courthouse. (Example: If Jones buys a property on January 1, 2006, and Smith buys the same property from the sa
Radon
is a radioactive gas
Range
A six-mile wide strip of land or townships which run north and south of a baseline, and numbered east or west of a principal meridian. Used in the Governmental Survey System.
Rate of Return
The yield of an investment, expressed as a percentage that the investor expects to make over the term of ownership.
Real Estate
Land plus all improvements (things permanently attached to it), running from the center of the earth up through the sky.
Real Estate Broker
Any licensed person, firm, partnership, association, or corporation who, in consideration of valuable compensation or with the intention of receiving such compensation, acts as a special agent for parties in the sale or lease of real estate. In single lic
Real Estate Investment Trusts (R.E.I.T.S.)
Money funds through which small investors participate in large real estate projects through ownership of certificates. REITS are created and managed by brokerage companies.
Real Estate Salesman
In some states, one who is employed by a real estate broker, usually as an independent contractor. In single licensing states there is no salesperson license, and entry-level licensees are educated to and licensed at the associate broker level.
Real Property
Land plus all improvements (things permanently attached to it), and also includes the bundle of rights--interests, benefits and rights inherent of ownership.
Reasonable Care and Diligence
The duty of an agent to discover and share relevant facts that a real estate licensee could readily discover--such as zoning changes, school closing, new roads, etc.
Recapture Clause
Provision in a percentage lease permitting the landlord to cancel the lease if gross sales do not meet some specified amount.
Recital of consideration
Statement in a deed of the amount that is being paid for the property.
Reconciliation
The final step in determining value in which the appraiser correlates the three approaches to value (cost, income and direct sales comparison). It is NOT an average, but gives weight to the most appropriate method for the type of property.
Recording
Entering documents into the public record. Any written document that affects any state, right, title, or interest in land must be recorded in the county where the land is located to serve as constructive notice.
Rectangular Survey System
Synonym for Government Survey System
Redemption
A redemption occurs in a foreclosure if the borrower (trustor) gives written notice, 7 days before the sale, to cure (pay the amount due plus all costs occurred by lender), and do so by noon of sale date. The trustor then continues making monthly payments
Redemption Period
is a period of time established by law during which a property owner has the right to redeem real estate after a foreclosure or tax sale by paying the sales price, interest and costs
Redlining
Illegal restriction on the number of loans or the loan-to-value ratio in specific areas based on grounds that exclude any protected class.
Reformation
An action taken to correct a mistake or error in a deed or other legal document.
Regression
a principle of appraisal stating that , between dissimilar properties, the worth of the better property is adversely affected by the presence of the lesser-quality property
Regulation Z (Reg Z)
Regulation Z (Truth in Lending Act) requires the lender at the time of loan application to disclose who the lender is, the payment schedule for the loan, prepayment clauses (if any), late payment charges, insurance required, filing fees, collateral that w
Release of a Deed of Trust
Issued by the public trustee when shown a note signed by the lender "paid in full," accompanied by the original or copy of the deed of trust, and a "release of deed of trust" application signed by the lender.
Reliction
An increase of land due to the gradual recession of water from its normal level.
Remainder Estate
A life estate that goes to a named third party when the life tenant dies, also known as a vested remainder interest.
Replacement Cost
Cost to replace a structure to similar utility using current materials and modern construction methods. Estimating replacement cost methods include square-foot, unit-in-place, quantity-survey or index.
Reproduction Cost
Cost to reproduce a structure exactly, using identical original materials and methods. Sets the highest level of value.
Rescind
To take back or annul. Until an offer is accepted and becomes a contract, the offering party may rescind the offer without penalty.
Rescission
Ending of a contract with the return of the parties to their original position.
Reserve for Replacement
Funds set aside on a monthly basis and kept in reserve in order to replace carpet, air conditioners or other assets.
Residual Method
An appraisal process used in the income approach to estimate the value of the building by itself by deducting the value of the land as used in the cost approach.
RESPA (Real Estate Settlement Procedures Act)
A federal disclosure act that requires lender to give borrowers a good-faith estimate of the settlement costs and an information booklet. Also requires use of a HUD-1 Settlement Statement at closing and prohibits payment of any unearned fees in connection
Restrictive Covenants
Rules or private agreements, usually stated in a deed or lease, that restrict things like lot size and architectural controls.
Retroactive liability
means that the liability is not limited to the current owner but includes those who have owned the site in the past
Reverse Mortgage
A loans against equity in a home in which a fixed amount of money is advanced each month, secured by a note and deed of trust. When the loan reaches a certain percent (e.g. 75%) of value, or the borrower dies, the property must be sold to pay off the loan
Reversionary Interest
That real property interest retained by a landlord during the term of a lease, including the right to re-take all the rights given to the tenant during the lease term.
Revocation
To recall or withdraw; such as withdrawal of an offer prior to acceptance by the offeree, or the state's disciplinary action permanently removing a real estate license.
Right of First Refusal
The right to have the first chance to purchase or lease property if the owner decides to sell or lease. sometimes seen in common interest condominium communities.
Right of Rescission.
The right of a borrower to rescind a consumer loan (non-1st mortgage) in which real estate is used for collateral. 3 days for most, 5 days for time shares.
Right of Survivorship
A key feature of joint tenancy whereby the deceased joint tenant's ownership rights automatically pass to the surviving joint tenant(s).
Riparian Right
Right to use enjoy running water (e.g. streams, rivers) adjacent to and under one's land
Rural Housing Service
An agency of the US Dept. of Agriculture that administers low-income homeownership loans, home renovation & repair, rental assistance and other rural Housing and Community and Facilities Programs (HCFP). Programs managed by the Famer's Home Administration
S Corporation
An IRS category of corporation that is treated like a partnership for tax purposes, avoiding taxation of corporate profits and subsequent taxation of dividends to shareholders (double taxation).
Sale-Leaseback
The owner sells the property and then leases it back, usually for a long-term lease with terms favorable to the seller-tenant. Allows the seller-tenant to free up investment capital to expand business elsewhere.
Salesperson
In some states, one who is employed by a real estate broker, usually as an independent contractor. In single licensing states there is no salesperson license, and entry-level licensees are educated to and licensed at the associate broker level.
Sandwich Lease
Also known as a sublease: The original lessee (tenant) becomes the lessor to a new tenant and is still liable for the original lease terms, thus he/she is "sandwiched" between the original landlord and the new tenant. A lessee may be sub-let unless specif
Satisfaction
Payment of a debt or obligation such as a judgment.
Scarcity
Relationship between supply and demand in which demand exceeds supply, i.e. a seller's market.
Seasoned Mortgage
A loan with a payment history.
Secondary (Mortgage) Market
Lender interaction with large investors or agencies specifically formed to buy/sell existing mortgages. The sale in the secondary market of loans originated in the primary market generates "new" money to loan to new borrowers. Contrast with Primary (Mortg
Sections
One of 36 sub-units within a township that is one mile square in the Governmental Survey System.
Securities
Investments regulated by state and federal law where investors are inactive participants. Investment condominiums with a mandatory rental pool agreement are regulated by the Securities and Exchange Commission.
Security Agreement
Required by the Uniform Commercial Code (UCC); a document signed by the borrower to create the creditor's security interest in personal property.
Security Deposit
Tenant funds held by the landlord to cover any damage beyond normal wear and tear, and to secure performance of the lease. Some localities may require payment of interest on funds so held.
Seller Financing
The seller loans the buyer the money to purchase the property. Seller gets a note instead of cash.
Servient Estate
Land over which the dominant estate crosses in the use of its easement.
Settlement
The closing of the real estate transaction.
Severance
The act of separating real property from attachment to the land, such as a shed, causing the real property to become personal property. Also the termination of a relationship as when a joint tenant transfers his/her interest; also breakup of one parcel of
Severance Damage
Compensation for loss of value to the remaining portion of property after a partial eminent domain split or severed the property.
Sharecropping
in an agricultural lease, the agreement between the landowner and the tenant farmer to split the crop or the profit from the sale, actually sharing the crop
Shared Appreciation Mortgage (SAM)
An amortized loan in which the lender either gives a lower interest rate or provides the down payment. The lender receives a percent of the appreciation when the property is sold, usually by some fixed date.
Signatures (Lease)
All parties must sign written leases for longer than one year, (Statute of frauds)
Simple Interest
Interest paid on the loan balance, not including any prior earned interest. Contrast with "compound interest".
Single Agency
Representation of only one party in a real estate transaction.
Sinking Fund
Any fund created to accumulate money for a specific purpose at a future point in time.
Site Valuation
Determining the value of the vacant land alone.
Situs
Preference for one location over another without basis in objective fact or knowledge. It is said that the most important consideration in buying real estate is location, location, location.
Sky Lease
A lease permitting the tenant to build above an existing structure. Example: The Chicago Merchandise Mart is constructed over the tracks of the Chicago & Northwestern Railroad.
Special Agent
One authorized by the principal to perform a narrow or specific task. A listing broker employed to sell one home is a special agent. Opposite of General Agent
Special Assessment
A charge by a local taxing authority collected to pay for common improvements such as sewer lines or sidewalks. Creates a priority lien on the affected property usually second only to ad valorem property tax.
Special Warranty Deed
A title transfer document that warrants only defects created during the grantor's ownership. Used most often by a grantor who is not truly in the chain of title, e.g. the personal representative in a will, or the trustee of a trust.
Specific Performance and or Damages
A contract remedy permitting either party to force the other to perform the contract and/or sue for damages. Buy-Sell contracts are often "specific performance" against the seller. Opposite of liquidated damages.
Spot Survey
A survey which locates and outlines the improvements, easements and encroachments and is usually required by a lender prior to making a loan.
Spot Zoning
An isolated use of a small parcel or area, zoned inconsistently with a larger surrounding use.
Square-Foot Method
The most common and easiest method of determining replacement cost based on cost-per-square-foot of a comparable, recently constructed building multiplied by the square footage of the subject property
States Rights Concerning Property
The legal rights states have concerning all property. These rights are: 1. Protect the health, safety and general welfare of the public (i.e. zoning), 2. Tax the land, 3. Escheat, and 4. Eminent Domain.
Statute of Frauds
State laws requiring transfer of any interest in land to be in writing to be enforceable. Statues of Fraud generally exempt oral or written lease of less than one year from this requirement.
Statute of Limitations
Laws requiring lawsuits to be brought to court within a specific period of time
Statutory Lien
is a lien created by statute without any action by the property owner. i.e. a real estate tax lien
Steering
The discriminatory practice of directing homebuyers to (or away from) specific areas based on a protected class to maintain homogeneity.
Step Up (Graduated) Lease
Usually of very long duration, the rent "steps up" at stated intervals, or based upon the appraised value of the property.
Straight (Term) Loan
A loan on which interest only is paid, without amortization of the principal, with the entire principal payable on the due date.
Straight Line Method
a method of depreciation, computed by dividing the adjusted basis of the property by the number of years of estimated remaining useful life. The cost of the property is deducted in equal annual installments.
Determines the equal annual depreciation allowe
Strict Foreclosure
Foreclosure without sale and with court-ordered waiver of buyer redemption rights. (Note: Allowable in only a few states)
Strict liability
means that the owner is responsible to the injury party without excuse
Subagent
An agent of an agent. In the past, MLS participants agreed to be subagents of each other, all working on the seller's behalf. With the advent of buyer agency, subagency is all but defunct.
Subdivider
One who partitions a large parcel of land for resale as individual lots.
Subject to a loan
A method of purchasing real estate without agreeing to pay the underlying encumbrance. Since the buyer is not personally liable on the loan, a deficiency judgment from a foreclosure would have to be against the original seller/borrower.
Subjective Value
What a specific person might be willing to pay for a property because of a perceived direct benefit not shared with others. Contrasts with objective value. Example; the property is next to a friend or relative.
Sublease
A lease given by the lessee to a new lessee for some interest remaining on the original lease. Unless specifically prohibited in its terms, a lease may be sub-let
Subordinate agreements
Written agreements between lien holders to change the priority of mortgage, judgment and other liens.
Subordination
A loan is secondary to another encumbrance.
Subsurface Rights
The rights to ownership below the surface, e.g., mineral and water rights-- not including surface rights or air rights.
Suit to quiet title
A court action to establish property ownership when title is clouded.
Supply and Demand Principle
Value is affected by supply; tending higher in areas of scarcity (demand exceeds supply), and lower in a saturated market (supply exceeds demand). Often stated as a ratio. A ratio of 1/4 reflects a seller's market (four buyers for every home).
Surface Rights
Rights to ownership that do not include air rights or subsurface rights: The ground to which you can attach improvements.
Surrender
Turnover of a leased property to the landlord prior to lease termination. If accepted, the lessee is free of any further lease obligations.
Survivorship
A feature of joint tenancy or tenancy of the entirety co-ownership whereby upon the death of one tenant, property automatically passes to the remaining tenant(s) rather than to the heirs of the deceased tenant.
Swing Loan
Also knows as a "bridge" or "gap" loan. A temporary loan which the borrower intends to pay off quickly or obtain better financing at a later date. Sellers may put a Swing loan on their current home in order to purchase a replacement. When their current ho
Syndication
A process for two or more people coming together to operate an investment, such as partnerships, corporations, etc. It is not a form of ownership
Tacking On
Occupying real property by related successors in interest, and adding their individual times in order to accumulate the total time prescribed in law to claim ownership by adverse possession.
Take-Out Loan
A short-term construction loan. The lender must guarantee that a long term loan will be available at build-out
Taking
The act of appropriating private land for public use upon payment of fair market value under a government's right of eminent domain and through the legal process called condemnation.
Tax Deferred Exchange
An exchange of like-kind property under IRS Code 1031 in which both parties may defer any capital gains tax due.
Tax Liens
When property taxes or special assessments remain unpaid, they become a specific lien against the property which takes priority over other liens.
Tax Sale
The sale of real property to satisfy unpaid property tax liens.
Tax Shelter
Any legal tax advantage that defers or eliminates tax liability, such as property tax and mortgage interest deductibility, depreciation, etc.
Taxation
The main source of revenue for cities and counties for things like schools and road maintenance.
Teaser Rate
In introductory rate used to help buyers qualify for a loan because it is initially lower than the prevailing market rate.
Tenancy at Sufferance
A leasehold estate of a holdover tenant or trespasser. The lease has terminated, but the tenant remains without permission.
Tenancy at Will
A leasehold estate with no fixed term or period. Either party may terminate with (usually) 3 days notice.
Tenancy by the Entirety
A legal form of co-ownership in some states between only lawfully married husband and wife giving both spouses equal, undivided interest in the whole property. Upon the death of one party, the remaining spouse has a right of survivorship. While living, bo
Tenancy for Years
A leasehold estate for a fixed period of time (not necessarily "years" - just to a time certain). Since the lease has a definite end date, no notice to terminate is required.
Tenancy in Common
A form of co-ownership of real property in which two or more owners each owns an individual undivided percentage of the property. Co-tenants-in-common may or may not have equal ownership portions and share only the unity of possession. Upon the death of a
Tenancy in Severalty
Ownership by a sole person (individual, corporation, partnership).
Term Mortgage
A note on which interest only is paid, with the entire principal payable on the due date (A straight note).
Termination of Lease
The end of a lease caused by expiration of the term, surrender and acceptance, breach of lease conditions or eviction.
Testamentary Trust
A trust created at time of death by the will.
Testate
Refers to death whereby the deceased leaves a will declaring transfer of property interests to parties named in that will.
The Taxpayer Relief Act of 1997
Passed by Congress to greatly reduce the tax on the gain to be realized on the sale of real estate, especially for residential real estate.
Tier
A six-mile wide horizontal row of townships running and numbered north or south of a baseline in the Governmental Survey System).
Time is of the Essence
A contract clause requiring adherence to contract deadlines.
Timesharing
Ownership or right-to use interest by multiple owners of undivided interests in a single real property for a specified period of time. Usually a resort condominium or hotel. The time period may be fixed or variable.
Title commitment
The preliminary promise by a title company to insure the title to a property if stated requirements are met (e.g. payoff of existing trust deed). It reveals the results of a title search and specifies any exceptions to coverage.
Title Company Closing
Closing performed by a title company closer as agent (scrivner) for the broker. The practice is usually completed in two parts: the loan closing (buyer and lender), and the real estate transaction closing (buyer and seller).
Title Insurance
Protection for the buyer against previous title defects that may become known in the future. Owner's policy purchased by seller insures up to contract price; Lender's policy purchased by buyer insures lender up to balance of loan.
Title Search
Title search is an examination of all the public records to determine whether any defects exist in the chain of title.
Title Theory State
One using a mortgage (vs. a deed of trust) as the primary security instrument and in which title is conditionally (in the event of default) transferred to the lender by the mortgage rather than buyer retaining title with a lien against it.
Torrens Certificate of Title
A property registration system similar to that used for automobiles. After a quiet title suit, a first Torrens certificate is issued. After 90 days, subsequent certificates may be issued by the county clerk and recorder.
Tort
A wrongful act, or infringement of a legal right, not governed by contract. Torts are tried in civil courts and may result in monetary damage awards.
Township
A 6 mile-square parcel of land in the Governmental Survey System. Contains 36 1 mile-square Sections.
Trade Fixture
Personal property attached by a commercial tenant to assist in a trade or business. If the tenant does not remove trade fixtures within a reasonable time after the lease expires, they become the property of the landlord.
Transaction broker
a non-agency relationship allowed in states that have designated a category of service where the agent represents neither the buyer nor seller in the transaction, treating both as customers.
Transfer Tax
A tax charged by the state to transfer an interest in real estate which helps establish an accurate value for tax assessment purposes.
A tax levied on the sale of real estate by state or local taxing authorities.
Transferability
A characteristic of value indicating that a property has good title and marketable title.
Trigger Terms
5 items in advertising that, if used, trigger full financial disclosure in the advertisement. They are 1. down payment amount or percent, 2. number of payments, 3. payment amount, 4. period of repayment (life of loan), and 5. finance charge (interest rate
Trust
Fiduciary arrangement where an owner (trustor) conveys property or money to a third party (trustee) who administers the trust for the benefit of another person (beneficiary).
Trust Accounts
Bank accounts to maintain funds that belong to the public -i.e., buyers' earnest money, tenants' security deposits, owners' rental income.
Trust Deed
A 3-party security instrument for a promissory note that transfers title from the trustor (borrower) to a trustee (third party) to be held for the benefit of the beneficiary (lender). Must be released when the loan is paid off.
Trustee
A third party that administers a trust on behalf of the beneficiary and carries out the wishes of the trustor.
Trustor
A person who creates a trust.
The borrower in a deed of trust.
Underground storage tanks
USTs approximately 3 to 5 million exist in the US and according to the EPA approximately 40% leak, potentially leaking hazardous substances into the environment
Truth-in-Lending
Federal legislation, originally part of the 1969 Consumer Credit Protection Act and others; Implemented by the Federal Reserve Board as Regulation Z. T-I-L requires meaningful credit information be disclosed to a borrower, including representing interest
Underwriter
Person in a lending institution who determines if a borrower qualifies for a loan.
Undivided Interest
An ownership interest in a percentage of a property, including use/possession of the total property.
Undue Influence
Strong urging that overwhelms a person so they no longer act of their own accord. Contracts signed as a result of undue influence are voidable.
Uniform Commercial Code
(UCC): A commercial law concerned with personal property transactions, requires security agreements and financing statements to protect creditors' rights to fixtures.
Uniform Settlement Statement (HUD-1)
A statement of accounting for the lender's loan costs and fees. It must be given prior to the final settlement. Note: HUD-1 is not required for business property, vacant land, refinancing, junior (second) loans, or loan assumptions if the lender charges l
Unilateral Contract
A promise for an unrequired act. If you perform, I will pay you, but you are not obligated to perform. Example: an option contract
Unit-in-Place Method
A method of determining replacement cost based primarily on cost of materials per square foot or yard (or other unit of measurement) plus labor, profit etc. Less technical and involved than the quantity survey method.
Upzoning
A change in zoning to a less restricted use such as from single family to multi-family use.
Urea-formaldehyde foam insulation
(UFFI) banned in 1982 by The Consumer Product Safety Commission was used in building materials, particularly insulation. The gases may become trapped in homes and some people suffer respiratory problems as well as eye irritations.
Usual Elements of Deeds of Trust and Mortgages
Date, parties, redemption, description of the indebtedness, amount, maturity date, method of repayment of the principal amount, interest rate and time of payment, and conditions of default as to principal and interest.
Usury
Charging interest above the rate set by law.
Utility Value
The value to a specific owner also known as subjective value.
VA - Veteran's Administration
Administers a home loan guarantee program begun after WW II to enable returning veterans to buy homes with 100% financing, no down-payment, and no insurance premium on the loan
VA Entitlement
dollar amount against which the VA guarantee protects the lender from loss on a VA home loan. Currently set by Congress at $60,000 since 2004; Loans above $144,000 may feature additional entitlement up to 25% of the Freddie Mac conforming limit, which cha
VA Guaranteed Loan
One guaranteed to the lender against default by the veteran borrower by the Department of Veterans Affairs.
Valid Contract
A contract that is enforceable by all parties to the contract in a court of law.
Valid Lease
One that meets the essential requirements of a contract; legally competent parties, mutual agreement, a description of the premises, a lawful objective, and consideration.
Valuable Consideration
Valuable consideration is money, a promise, property etc., something having value. Contrast with good consideration
Something sufficient to sustain a contract; the buyer's is the money offered, the seller's is the transfer of title to the property.
Variance
A permanent exception granted to either build a new structure or conduct a new use that would not be permitted under the current zoning.
Vendee Lien
A lien against the seller for default, intended to return to the purchaser all money paid.
Vendor Lien
A lien against the purchaser for the full amount owed to the seller.
Void
having no legal force or binding effect, not enforceable
Voidable Contract
A flawed contract in which the innocent party has the power to either void or enforce, but that remains valid unless voided. Example: A minor (not legally competent) may enforce the contract even though the adult party cannot force the minor to perform.
Voluntary Alienation
Normal transfer of title, as opposed to involuntary alienation when a property is sold in foreclosure or at a tax sale.
Voluntary Lien
A lien against the property that the owner has knowledge of and has granted consent for, such as a mortgage.
Waiver
To give up or surrender a right voluntarily.
Warranty Deed
A title transfer document that features inherent warrants and covenants that title is good and clear; Of the different kinds of deeds, it contains the maximum safeguards to the buyer.
Wasting Assets
A property such as a coal mine that becomes depleted from the mining process.
Water Rights
The legal right to the use of water of a natural stream or water furnished through a ditch or canal. (See Doctrine of Prior Appropriation, riparian rights, and littoral rights)
Special common-law right held by owners of land adjacent to rivers, lakes, or
Water table
is the natural level that ground is saturated
Well Permit
Authorization to use well water for single family residences. The permit will state the amount and uses (no watering of garden etc.).
Wetland
A wetland is an area of ground that is saturated with water either permanently or seasonally
Wraparound Mortgage
An alternative finance method in which a lender (often a seller) makes a larger second loan that includes or "wraps" the first loan without disturbing its payment schedule.
(a/k/a an all-inclusive deed of trust)
Writ of Attachment
A court order, usually recorded, that creates a lien preventing property from being disposed of before the court enters a final judgment.
Writ of Execution
A court order directing the sheriff to sell a defendant's real property to satisfy a judgment.
Yearly Cap
Maximum interest rate for any given year of an A.R.M. loan.
Yield
Annualized amount of return to an investor; expressed as a percentage of the original investment.
Zoning Laws
Laws created by city and county governments to control the use of land. Zoning laws are enacted in the exercise of police powers.