Board of Directors
A group of people responsible for the management of a corporation.
National Do Not Call Registry
A federal index of consumers that have requested telemarketers not be allowed to call them by telephone.
Price Fixing
An illegal practice that occurs when brokers conspire to set prices for the services they perform, rather than letting competition in the open market establish pricing naturally.
Contract
A voluntary agreement between legally competent parties to perform (or refrain from performing) a legal act; Elements of a contract include competent parties, mutual assent, consideration, legality of object, and legal form
Novation
Substitution of a new contract with an old one with the intent of extinguishing the old contract. It can occur between the same parties or a new one.
Breach of Contract
A violation of an agreement's terms without legal consent of both parties.
Binder
A shorter version of a sales agreement, which upon the seller's acceptance, will be given to an attorney to create a more formal agreement. Also known as an "offer to purchase".
Contingencies
Conditions that must be met before a contract is binding. The most common conditions are the buyer's ability to obtain suitable financing, a satisfactory property inspection, and the ability to obtain adequate insurance on the property.
Multiple Listing Service
An organization of member brokers that agree to share information about their listings to procure a ready, willing, and able buyer more quickly. Members also agree to split commissions between the listing and selling brokers upon sale of the property.
Exculpatory Clauses
Items that excuse a landlord for any negligence in maintaining a leased property. These items are illegal in Massachusetts.
Foreclosure Act of 2009
A law that states tenets can remain in a property that has been foreclosed upon for the remainder of their lease or 90 days, whichever is longer.
Constructive Eviction
Occurs when a tenet terminates their lease because a landlord's neglect has made the property uninhabitable. In order to be enforceable, the tenet must vacate the premises in order to prove uninhabitability.
Americans with Disabilities Act
A law that states any buildings that provide public goods or services must be free of architectural barriers that would impede access to disabled persons.
Externalities
Forces outside of a property that affect its value. These forces can be physical, political, economic, or social in nature.
Salvage Value
The worth of an asset after it has been depreciated.
Assemblage
The process of merging adjacent parcels into a single, larger parcel.
Functional Obsolescence
This results when depreciation of property is the result of outdated function or poor design. If easily remedied, then it is considered curable. If design constraints prevent remedy, then it is incurable. Ex: not enough bathrooms, lack of a laundry area,
Depreciation
Any condition that negatively affects the value of an improvement or personal property. There are three classes: physical deterioration, functional obsolescence, and external (economic) obsolescence.
Index
A financial indicator upon which the interest rate of a mortgage loan or note is based.
Monuments
Fixed objects that are used to establish real estate boundaries, typically in a metes and bounds formal legal description. They may be natural (trees, lakes, etc.) or artificial (fences, posts, etc.).
Ad Valorem Taxes
Taxes that are based upon the value of the specific property being taxed.
Equitable Right of Redemption
A property owner's right to prevent a foreclosure or tax sale on their property by bringing the delinquent balances current, including any interest and fees.
Statutory Right of Redemption *
A period of time after a tax sale in which the defaulted owner may reclaim the property by paying the purchaser of the property the full amount paid, along with any interest and fees. In Massachusetts, this time period is six months from the date of sale.
Special Assessments
A type of property tax applied to properties within a limited and determinable area, to offset the cost of providing those same properties with an advantage or betterment. Ex: taxing a neighborhood for sidewalk improvements done in their area. Also known
6D Certificate
If the sale property is a condominium, this document states the amount the seller owes in condominium fees and is used to establish if the unit is free of association fee liens. In Massachusetts, this document is required at the time of closing.
Title 5
An inspection of private, on-site sewage disposal systems, often required in title transfers. Correction of a defective septic system may be required prior to a property being eligible for some mortgages.
Abandonment
A listing agent is considered to have performed this act if they have invested neither time nor money to market a property.
Acceptance
Before a title transfer can become effective, the deed must be delivered by the grantor, and the grantee must perform this act either actually or by implication.
Abstract of Title
A condensed history of a property's title, including the original grant and any subsequent conveyances and encumbrances affecting the property and certification by the preparer that the history is complete and accurate.
Adverse Possession *
The loss of land to another person that has taken possession and used it without the owner's permission for an extended period of time as defined by state law (20 years in MA). This is a form of involuntary alienation.
Special Performance Suit
A transfer of title ordered by a court to transfer property to a buyer as promised in a previous contract. It may be done to satisfy a debt.
Probate
A legal process in which a court determines who will inherit a decedent's property and what the estate's assets are.
Statute of Descent and Distribution
A set of laws that determine inheritance for a person that dies intestate.
Grant Deed
A type of deed that implies that the grantor has the right to convey the property and that the grantor has not encumbered the property except as noted in the deed document.
This form is not in use in Massachusetts.
Quitclaim Deed
A type of deed that provides the least protection to the grantee and may only convey a grantor's interests (not property). It is frequently used to resolve a cloud on the title or correct misspellings of names. In Massachusetts, it is considered a special
Special Warranty Deed
A type of deed that only guarantees the property was not encumbered during the time the title was held by the grantor, except as otherwise noted. This deed can also be called a statutory warranty deed, and is often used by fiduciaries or for titles acquir
Fiduciary
A person trusted to handle the money of another, including trustees, executors, and corporations.
General Warranty Deed
This type of deed proves the greatest protection to the grantee because it binds the grantor by the following warranties: covenant of seisin, covenant against encumbrances, covenant of quiet enjoyment, covenant of further assurance, and the covenant of wa
Covenant of Seisin
This warranty states that the grantor is the owner of the property being conveyed and that they have the right to convey the title. It is included in a general warranty deed.
Covenant Against Encumbrances
This warranty states that the grantor of a property guarantees the property is free from liens and encumbrances that are not specifically included in the deed. It is included in a general warranty deed.
Covenant of Warranty Forever
A grantor's guarantee that if the title to the property being conveyed ever fails, they will compensate the grantee. This warranty is included in a general warranty deed.
Covenant of Further Assurance
A grantor's promise to obtain and deliver any instrument necessary to make a title good. This warranty is included in a general warranty deed.
Covenant of Quiet Enjoyment
A grantor's guarantee that there are no 3rd parties that have a superior right to the title of the property being conveyed. It is included in a general warranty deed.
Commingling *
The mixing of a clients' funds with business operating funds. This is an illegal practice in Massachusetts that can result in revocation of an agent's license.
Blockbusting
An illegal act of frightening homeowners in an area to sell their homes by stating that members of another race or class are going to be moving into the area. Homeowners are induced to sell cheaply, and the homes are then resold for a profit. This practic
Steering
An illegal act of channeling homebuyers to a particular area on the basis of race, religion, country of origin, or any other protected class, and limiting their access to other areas. It can be done by an agent unintentionally due to their own biases.
Redlining
An illegal act of refusing to make mortgage loans or issue insurance policies in specific geographic areas or to a specific class of people without any regard for the applicant's financial qualifications.
Situs
Peoples' personal preferences for one area over another, which is not necessarily based upon objective facts or knowledge.
Subrogation
The substitution of one creditor for another, in which the new party receives the legal claims and rights of the original party. This is usually done so a title company can acquire the rights of an injured party to sue and recover any claims the insurers
Subprime Loan
A note given to a borrower with less than perfect credit. It usually has a higher interest rate and may require a larger down payment or shorter term.
Cloud on the Title
Any encumbrance that may impair the title to real property or that makes the title doubtful. It is usually discovered by a title search and is cleared with either a quitclaim deed or suit to quiet the title.
Abstract of Judgement
The written determination of a judge or jury as a result of a judgement lien. It has no effect on the owner's property until it is recorded, but still creates a cloud on the title.
Writ of Execution
A court order that authorizes an officer of the court to seize and sell the debtor's property in order to satisfy a judgement.
Execution Lien
An involuntary lien that is issued by court order at the same time as a writ of execution, and ends when the property is sold. It is issued to satisfy a money judgement.
Lis Pendens
A notice filed in public records that gives constructive notice to all interested parties of a creditor's possible claim that will affect the title to a specific parcel of property. Often listed in local newspapers, it creates a cloud on the title.
Appraisal
An estimation of a property's value, usually prepared by a professional who is licensed in this field.
Brokerage
The business of bringing people together in a real estate transaction.
Commerical
The types of properties that include office spaces, shopping centers, stores, theaters, hotels, parking facilities, etc.
Development
The term for the construction of improvements upon the land.
Elevation Certificate
Insurance agents are required to obtain one of these on any property before issuing quotes for flood insurance.
Financing
The pledging of real property and collateral for the repayment of a loan through a mortgage or deed of trust.
Federal Deposit Insurance Corporation
This agency can fine and withdraw its insurance from lenders that do not carry flood insurance on required mortgages.
Flood Insurance
This type of homeowner's insurance policy covers "rising water" problems such as a burst water main, overloaded drains, and melting snow. It is usually an optional add-on policy that becomes effective 30 days after purchase, unless the property is in a sp
HO1
This is the basic form of a homeowner's hazard insurance policy, and the default policy when a property has been empty for any length of time. It covers fire, lightning, hail, and other perils.
HO2
This form of a homeowner's hazard insurance policy covers more than the basic form, but not as much as the special form. It is often available for second homes.
HO3
This special form homeowner's hazard insurance policy offers the most coverage for the most reasonable price, and is the preferred policy on primary residences. It covers both real and personal property.
HO6
This form of a hazard insurance policy is designed for condominiums and can be customized to comply with the condo association's bylaws.
HO4
This renter's insurance policy is similar to the homeowner's insurance policy carried on primary residences, but doesn't include coverage on real property owned by someone else.
Improvements
Additions to property that increase its value or enhance its appearance. It can include buildings, fixtures, and landscaping.
Landlord's policy
This insurance policy is the reverse of a renter's policy and covers only the real property.
Property Management
A broad term for a person or company hired to maintain and manage a property on behalf of its owners, and who are to maximize the owner's returns.
Real Estate Counsellors
These people provide clients with competent, independent real estate advice without representing them as an agent.
Special Flood Hazard Area
Properties in this area are required by federal law to have special insurance as part of any federally-backed mortgages.
Subdivision
The process of splitting a single property into smaller parcels.
Residential
The type of properties that include single and multi-family homes.
Industrial
The types of properties that include warehouses, factories, power plants, and other manufacturing areas, even if the property has a storefront attached.
Agricultural
The types of properties that include farmlands, timberlands, orchards, and ranches.
Special Purpose
The types of properties that include churches, schools, cemeteries, and government-held lands.
Real Estate Market
The setting where real property is bought and sold and prices are established.
Submarket
A real estate market defined by property type and/or geographic location.
National Association of Realtors
A professional real estate organization that requires members to uphold a specific set of ethics and pay dues. In turn, the members can call themselves Realtors.
Seller's Market
The situation where demand for real property is greater than the supply, which causes sale prices to rise and builders to become more motivated to build.
Location
This characteristic of real property is important because a parcel's value is impacted by surrounding land uses.
Demographics
This factor determines the quantity and type of housing in demand in a particular area. It evaluates family sizes, ratio of adults to children, number of senior citizens, family incomes, lifestyles, etc.
Property
This term refers to both a physical article and the rights and interests involved in its use of ownership.
Rights of Ownership
A "bundle" of legal rights associated with owned property. These rights include possession, control of the property (within legal bounds), enjoyment of the property, exclusion, and disposition.
Appurtenance
Anything that is used with land for its benefits. Examples include subsurface, air, and water rights, as well as gardens and certain easements.
Exclusion
The right to legally ban other people from entering your property without your consent.
Air Rights
These rights are for the use of space above a piece of real property. They can be transferred and subdivided.
Subsurface Rights
These rights are for the use of anything found beneath a piece of real property, such as oil, coal, or gas. These rights can be transferred separately from the property itself, and include an implied easement that allows the owner access to the property s
Land
The earth's surface down to the center of the earth and upwards to infinity ("heaven to hell"), including all things attached by nature. Also known by the term real estate.
Littoral Rights
The rights granted to owners of land that are adjacent to large, navigable, non-flowing lakes and oceans. These rights state the owner may make use of the water for legal purposes, but they only own the land down to the average high water mark.
Percolating Water
Another name for subsurface water.
Prior Appropriation
A law used in states where water is scarce. This law limits homeowners' use of any domestic water found on or abutting their property.
Riparian Rights
The rights granted to owners of land that are adjacent to flowing waters and/or land that has subsurface water. These rights state the owner can use the water in any legal way as long as it doesn't interfere with the same rights of owners downstream.
Water Table
The name for the level at which subsurface water is located below ground.
Real Property
A term that encompasses the earth's surface, all things attached to that property by nature, all permanently attached improvements made by man, and the interests, rights, and benefits inherit in the ownership of the above named items.
Nonhomogeneity
A characteristic that states no two parcels of real property are exactly alike, and therefore, one cannot be legally swapped for another.
Township
A 36 square mile area of a rectangular survey that is bounded by base and range lines. Each is 6 miles wide by 6 miles long. Each one contains 36 1-acre sections.
Legal Description
A formal or informal definition of a specific property that unquestionably describes one property and cannot be applied to any other property.
Formal Legal Description
A description of any property in one of the following three methods: metes & bounds, rectangular survey, or plat plan.
Metes
A measure of distance and direction used in some formal legal descriptions.
Bounds
A name for the landmarks and monuments used in some formal legal descriptions.
Metes and Bounds *
The oldest and most difficult method of formal legal descriptions. This system is used in Massachusetts.
Benchmark
A permanent reference point, such as a street intersection, used in a metes and bounds legal description.
Rectangular Survey
A method of formal legal descriptions that involves the use of principal meridians and base lines that can all be located by a specific longitude or latitude. It was established by Congress in 1785.
Point of Beginning
The physical location at which a metes and bounds legal description starts. To obtain closure, the description must also end at this location.
Severance
The process of turning real property into personal property, such as by cutting a tree down.
Trade fixture
An article of personal property attached to a rental space by a tenet for use in conducting a business.
Accession
The process of personal property or accretion of alluvial deposits becoming additions to real property. Ex: installing a new HVAC system, planting a tree, or sand washed up naturally on the edge of a steam. Also referred to as annexation.
Fixture
An item that was once personal property but is now affixed to the real estate in such as a way as to become real property. Courts use the following tests if an item is being disputed:
M
- Method of attachment (i.e. permanence)
A
- Agreement between the pa
Datum
A point, line, or surface from which elevation is measured.
Personal Property
Possessions such as money, furniture, stocks and bonds, trade fixtures, and growing crops that are easily moved from one property to another. Also known as chattel.
Escheat
The process by which ownership of a property reverts or transfers to the state or county of location when the property's owner dies intestate and no heirs can be identified.
Freehold Estates
Properties that are held for an indefinite time, or that exist for a lifetime or more.
Governmental Powers
A group of rights that supersede a property owner's rights. These rights include police power, eminent domain, taxation, and escheat (PETE).
Eminent Domain
The right of the government to acquire private land for public use through a process called condemnation. To occur, a court must declare the proposed land use to be beneficial to the public, and fair compensation must be paid to the owner.
Emblements
Growing crops or flowers that are produced annually on a property and are referred to as fructus industriales, meaning "fruits of industry.
Homestead
A tract of land that is owned and occupied as the family home.
Fee Simple Absolute
A type of freehold estate in which the holder of the property is entitled to all rights of property ownership, and which passes to the holder's heirs upon their death. There are no restrictions on its use or its transfer.
General Liens
Encumbrances that usually affect all of a debtor's non-exempt property, both real and personal. Examples include judgement liens, debts, federal taxes, etc.
Nonmoney Encumbrances
Encroachments, licenses, restrictions, and easements that affect only the physical condition and use of a property.
Encroachment
Term that describes when a portion of a building, fence, driveway, or other item extends past its owner's property and onto the land of a neighbor or into an alley or street.
Consideration
Something given by a grantee in exchange for property. It can be a specific dollar amount, personal property, or even "love and affection".
Bargain and Sale Deeds
These deeds contain no real warranty against unnamed encumbrances, and only imply that the grantor has the right to convey the property.
This type of deed is not used in Massachusetts.
Alluvion
The accumulation of soil, rock, and other materials on the edge of a property that are deposited by the movement of water.
Reliction
The gradual, permanent withdrawal of water from the shore line, which uncovers more land and therefore increases the size of a specific property.
Intestate
A term used to describe one that has died without a will.
Erosion
The gradual wearing away of land through natural forces.
Involuntary Alienation
Occurs when a transfer of title is done without an owner's consent by operations of law (i.e. escheat, eminent domain, or adverse possession), court order, or natural forces.
Partition Suit
This process divides co-tenets interests in real property when the parties cannot all agree to voluntarily terminate the co-ownership.
Severalty
Type of ownership where property is owned by a single person or company.
Testator
Person who makes a will.
Devise
A gift of real property delivered through a will.
Bequest
A gift of personal property delivered through a will.
Legatee
The recipient of personal property delivered through a will.
Holographic Will
A will that is handwritten.
Writ of Attachment
The process by which a court takes custody of a piece of land until the outcome of a court suit is determined. It is usually placed on an unencumbered property to prevent a quick sale by the owner, but does not affect homestead exemptions or joint tenets'
Surety Bond
Insurance purchased to cover the loss of monies placed in trusts or escrow accounts. Used by property managers and escrow agents. Can be used to cover a deposit made by a creditor to cover any losses to the debtor that result if a creditor's writ of attac
Mechanic's Lien
A right given by statute to give security to those that perform labor or furnish materials for the improvements of a property. It is a specific, involuntary claim that can only be placed on a property if there was a contract with the property owner (or th
Leasehold Estates
An estate of a predetermined length of time. Ownership remains with the landlord, but the tenet has rights of exclusive possession and use during the period of contract. There are four main types: estate for years, estate for period to period, an estate a
Estate at Sufferance
A type of leasehold estate that is conducted without the landlord's consent. The tenet legally obtained the property, but continued to hold possession after the lease's expiration. The landlord must instigate legal action (such as an eviction) to regain p
Covenant of Quiet Possession
A landlord's guarantee that a tenet will not be evicted during the duration of their lease by anyone with a superior claim. This is a warranty is implied in a lease contract.
Principals of Value
Economic elements that affect the value of real estate, including: highest and best use, substitution, supply & demand, balance, conformity, regression, progression, anticipation, plottage, increasing returns, decreasing returns, contribution, completion,
Highest and Best Use
The most profitable purpose to which a property can be adapted, or the type of application most likely to be in demand in the near future (ie agricultural, industrial, residential, commerciBlanceal, or special purpose). This is one of the principals of va
Substitution
The maximum value of a property as set by the cost of purchasing an equally desirable and valuable property. This is the basis for comparative market analyses and it is one of the principals of value.
Balance
A value principal that states the greatest value of a property will occur when the type and size of the improvements are proportional to each other and to the land.
Conformity
The realization of maximum values when the land and property are in sync with existing neighborhood standards of design, construction, size, and age. This is one of the principals of value.
Plottage
The principal of value that states the merging of adjacent properties into one larger property for sale (a process known as assemblage) may yield higher profits than if the adjacent properties had been sold separately.
Contribution
The value of any component of a property in terms of what it adds or detracts to the property's whole value. Usually determined with a cost to benefit ratio, this is one of the principals of value.
Competition
The value principal that states excess profits will attract rivals that can, in some instances, destroy profits.
Change
The value principal that states no physical or economic condition will remain constant. Adjustments can be the result of natural phenomena (tornadoes, fires, erosion, wear and tear, etc.) or a shift in the demands of the local market.
Anticipation
Values in an area can increase or decrease with the expectation of future events. This is one of the principals of value. Ex: a rumor regarding the rezoning of adjacent properties may make a property currently for sale more desirable (and therefore more e
Regression
Occurs when the value a higher-quality property is limited or decreased because of the presence of lower-valued properties in the area. This is one of the principals of value.
Progression
Occurs when the value of a lower-quality property is increased due to the presence of higher-quality properties in the area. This is one of the principals of value.
Increasing Returns
The principal of value that occurs if money spent on an improvement produces an increase in the property's income or value.
Decreasing Returns
The principal of value that occurs if money spent on an improvement does not produce a proportionate increase in the property's income or value. Remodeling a home to standards much higher than neighboring properties will result in this happening.
Supply and Demand
The principal of value that states the value of a property will increase if the number of available properties decreases (as in a seller's market), and the value will decrease if the number of available properties increases (as in a buyer's market).
Sales Comparison Approach
A valuation method in which an estimate of a property's value is obtained by comparing the subject property with the recent sales of similar properties in the area, and adjusting for any dissimilar features. This is also called a market data approach.
Valuation Methods
A process to estimate the value of a property in one of three basic systems: sales comparison approach, cost approach, and the income approach.
External Obsolescence
A form of depreciation that results from negative factors outside of the subject property that are incurable because they are beyond the property owner's control. Ex: noisy airports, nearby landfills, pollution, etc. This can also be the result of deterio
Economic Life
The length of time in which an improvement is expected to add value to the land. This time period is based upon the condition and utility of the structure, and can be less than the actual age of the improvement.
Testers
Undercover volunteers that visit real estate offices to see whether consumers and clients are being treated equally and being offered a free choice of properties within a given price range without regard to any of the protected classes (ie race, nationali
Protected Classes *
Groups of people against whom discrimination is illegal if it is based upon any of the following characteristics: race, color, religion, national origin, sex, disability or handicap, or familial status (per the Federal Fair Housing Act of 1968). The Massa
Masschusetts Fair Housing Act *
This law adds the following protected classes to the ones already listed in the Federal Fair Housing Act of 1968: number of children, age, ancestry, veterans or members of the armed forces, marital status, use of public assistance or rental assistance, ge
Massachusetts Commission Against Discrimination
This state agency investigates fair housing complaints and reports directly to the governor's office. If probable cause for the complaint is determined, the accused violator is sent a conciliation agreement ordering him or her to comply with the law, make
Wetlands
Legally protected property consisting of waterways around which the Department of Environmental Protection may draw nonencroachment lines to prevent harmful or destructive practices such as dredging, filling, or polluting. Acts that protect these areas in
Lead-Based Paint
A substance that is hazardous to a homeowner's health and that was banned in 1978. It is still present in older homes, and its known presence must legally be reported to buyers prior to sale. Buyers should also be encouraged to have the home tested if was
Carbon Monoxide *
A colorless, odorless gas produced by water heaters, furnaces, space heaters, and wood stoves. It is a natural result of fuel combustion, but can be hazardous or fatal in areas that are not properly ventilated. MA law states that all residential dwellings
Familial Status *
A protected class consisting of one or more adults that have minor children, are pregnant, or are in the process of seeking legal custody. Grantors cannot discriminate against this class except in situations where the property qualifies as housing for sen
Tenancy by the Entirety
A special joint tenancy between husband and wife. Both owners have the rights of survivorship in the event of the other's death. While both parties are alive, the property cannot be conveyed without both of their signatures. The property cannot be partiti
Community Property
All property, both real and personal, that has been acquired by either a husband or his wife during the duration of their marriage. Each party owns half of the property, and their half is conveyed to their heirs at the time of their death. Massachusetts i
Unities of Ownership
The name for the four criteria that must be met in order for a property to be considered as held in a valid joint tenancy: unity of time, title, interest, and possession. These criteria stipulate that all parties must have acquired the property at the sam
Judgement
A formal court decision regarding the respective rights and claims of involved parties in an action or suit. After it has been entered and recorded with the count recorder, it usually becomes a general lien on the property of the defendant.
Liquidity
The ability to sell and an asset and convert it into cash, at a price close to its true value, in a short period of time.
Market Rent
The amount of income a leaseable property would command in a fully informed competitive marketplace, based upon the going rate for leased spaces in the area.
Loan Origination Fee
A fee charged by lenders to cover the expenses of generating a loan. They vary in amount but are usually figured in points, at a rate of 1 point being 1% of the loan value. It is not prepaid interest. The maximum allowed under an FHA or VA loan is 1%.
Megan's Law
A federal law that requires individuals convicted of certain sex offenses (especially those involving minors) to register their home addresses so that community members may protect themselves and their children from child molesters.
Acceleration Clause
A provision in a mortgage or deed of trust that can be enforced to make the debt immediately due in its entirety if the borrower defaults on an installment payment or other covenant.
Acknowledgment
A legal declaration made before a duly authorized officer (usually a notary public) by a person who has signed a document. The purpose is to guarantee the signature is not forged or made under duress.
Addendum
A document that was not part of the original contract. It may contain additional contract terms, and may be known as a rider.
Appropriation
An action taken by a taxing body that authorizes the expenditure of funds and provides for the sources of the money. It generally involves the adoption of an ordinance or the passage of a law setting forth the specifics of the proposed taxation.
Caveat Emptor
A Latin phrase meaning "let the buyer beware.
Building Code
A set of ordinances that specifies minimum standards of construction for buildings in order to protect public health and safety.
Banker's Year
Statutory period that contains 12 months, with 30 days in each month, for a total of 360 days.
Buffer Zone
A strip of land, usually a park or some other designated space, that is used to separate land dedicated to one use from land dedicated for another. Ex: separating commercial property from residentially zoned areas with a playground.
Condemnation
The process of private land being taken for public use by the government under the right of eminent domain.
Constructive Notice
The presumption of law that makes a party responsible for inspecting a property and searching public records to learn of other partys' possible interests. Notice is given to the world by recorded documents, and all parties are responsible for knowledge of
Cost Approach
The process of estimating the total value of a property by estimating the value of the land alone, adding the cost of reproduction or replacement of the improvements, and subtracting depreciation. This is a valuation method.
Chain of Title
A record of a property's ownership over a period of time.
Statute of Frauds
A requirement that instruments affecting interests in real estate must be in writing, with applicable signatures, in order to be legally enforceable. It may also stipulate that they must be recorded publicly.
Wraparound Loan
A larger loan that includes the assumption of an existing mortgage or deed of trust, plus additional funding. These loans often have a higher interest rate. The lender assumes the original mortgage and makes the regular payments.
Straight Loan
A non-amortizing loan calling for periodic payments of interest and principal. It is often used for second mortgages and home improvement loans. Also called a term loan.
VA-Insured Loan
A loan made to a veteran by an approved lending institution and guaranteed by the Department of Veterans Affairs. These loans usually require little to no down-payment, and may or may not be assumable by a 3rd party.
FHA-Insured Loan
A loan made by an approved lending association and insured against borrower default by the Federal Housing Authority. Their most popular program is the 203(b), and all loans can be prepaid without penalty.
Package Loan
A loan that covers both real and personal property. It is often used to finance furnished condominiums in resort areas.
Open-End Loan
A loan that secures both a note and allows future withdrawals, such as a home equity line of credit. It is frequently used by farmers. Interest on the initial amount borrowed is fixed, but future withdrawals may incur interest at the current market rate.
Granting Clause
Words of a deed that state the grantor's intention to convey the property at the present time. It usually begins with "convey and warrant", "grant", "grant, bargain, and sell", or other such terminology.
Habendum Clause
It follows the granting clause and usually begins with the words "to have and to hold." It is used when it is necessary to define or explain the extent of the ownership to be enjoyed, such as fee simple, life estate, easement, etc.
Limitations
A part of a deed that describes what interest in the property is being conveyed. Examples of wording: "to Mr. K and her heirs and assigns forever" (conveying an entire fee simple interest), or "to Mrs. K for the duration of her natural life" (conveying a
Grantor's Signature
Required to make a document legal. It can be done as a mark "X" if done in the presence of two witnesses. Some applications may require that it is acknowledged by a public official, such as a notary.
Attorney-in-Fact
A person appointed by a power of attorney to act on the behalf of another.
Power of Attorney
A specific written document assigning an attorney-in-fact authority to execute and sign legal documents on behalf of a grantor. This document is usually recorded with the county.
Instrument
A formal, written legal document such as a contract, deed, will, or lease.
Torrens System
A method of evidencing title by registration with the proper public authority (generally called the registrar). A similar system is used in Massachusetts.
Suit to Quiet Title
A legal action in which a court is asked to determine who actually owns a parcel of land and what claims or liens against the property are valid. Sometimes done to remove clouds on a title.
Avulsion
The sudden tearing away of land, usually caused by weather or a change in a body of water. Ex: land that is underwater or gone after a hurricane.
Trustee's Deed
A document executed by a trustee acting in accordance with a power of attorney granted by a trust instrument. It is typically used when a trustee is named in a will, agreement, or deed. It allows the conveyance of real estate out of a trust.
This type of
Deed of Trust
An instrument used to create a mortgage lien by which a borrower conveys title to a trustee, who holds it as security for the benefit of the note holder (the lender). It is use to establish property as loan collateral, and is also called a trust deed.
Deed in Trust
An instrument to convey real estate to a trustee, usually to establish a land trust or living trust. It includes full power to sell, mortgage, and subdivide. A beneficiary controls the trustee's use of these powers under the provisions of the trust agreem
Default
Failure to meet an obligation when due; the nonperformance of a duty. A term often used to describe a borrower's loan status when they have stopped making payments.
Density Zoning
Local ordinances that restrict the maximum number of houses per acre that may be built within a particular area (generally in a subdivision).
Right of Survivorship
Automatic transference of a deceased's interests in a property to the remaining tenets, without the need for probate. It is a characteristic of joint tenancy.
Testamentary Trust
A trust created after a person's death, as part of a will.
Fiduciary
One who acts in confidence or trust and has a special legal relationship with the beneficiaries. He or she can only perform duties outlined in a trust.
Trustor
A person originating a trust.
Syndicate
A joining together of 2 or more people or entities to make and operate a single real estate investment. It can be set up as a tenancy in common, joint tenancy, partnership, trust, or corporation.
Condominium
A property containing multiple units, where each unit is owned with a fee simple title, and each owner has a shared of common areas as tenets in common. The units can be used for either residences, office spaces, or retail spaces, as long as all units hav
Horizontal Property Acts
Another name for condominium laws that have been enacted in every state. The laws outline the elements of condominium ownership.
Recording
The process of placing documents into the public record. All records must be filed in the same county as the property, must be in English, and must be drawn and executed in accordance with local statutes.
Time-Shares
Properties that are owned by multiple owners that each have an undivided interest and right to use the facility for a fixed or variable period. Ownership can be fee simple or right-to-use.
Evidence of Title
Documented proof that the grantor is the owner of a property and has good title. There are four acceptable documents: abstract of title and lawyer's opinion, title insurance policies, a Torrens certificate, or a certificate of title.
Title Insurance
A contract by which an insurance company agrees to compensate or reimburse the insured against losses sustained as a result of defects in the title other than any exceptions listed in the policy. It is paid once per conveyance, and can be either standard
Standard Coverage
A type of title insurance policy that protects the insured against defects found in the public record, forged documents, incompetent grantors, incorrect marital statements, and improperly delivered deeds. Does not cover any defects or liens listed in the
Extended Coverage
Title insurance policy that covers everything under a standard policy, with the additional coverage against defects found through the process of property inspection, unrecorded rights of persons in possession of the property, defects found through examina
Principal
The person who employs a real estate broker. Also known as a client. Can be a seller, renter seeking a residence, a prospective buyer, or an owner wanting to lease their property.
Recovery Fund
A state established account created to protect consumers who have lost money in a transaction due to the negligence or illegal activities of a licensed real estate agent.
Agent's Fiduciary Responsibilities
A term encompassing the obligations of a real estate agent to their principal, which are Care, Obedience, Accounting, Loyalty, and Disclosure (remember COALD).
Obedience
An agent's fiduciary responsibility that states the agent must obey their principal's lawful instructions and authority.
Errors and Omissions Insurance
An insurance policy that covered unintentional (but not fraudulent) contractual errors and protects a broker in the event of litigation.
Stigmatized Properties
Properties that are said to be psychologically impacted by some event, such as a murder, rape, ghosts, or contamination. Disclosure is recommended by not required in most states (including MA).
Puffing
Exaggerated statements made to inflate performance or deceive. This is an illegal practice unless such statements are offered only as a matter of opinion and not as facts.
Latent Defects
Problems with a property that are known only by the seller and that are not discoverable with an ordinary inspection. Disclosure by the seller is mandatory. Ex: basements that flood during rainstorms, termite damage, etc.
Patent Defects
Problems with a property that are readily seen and understood by the buyer or an inspector. Ex: visible water stains, broken stairs, stained carpeting, etc.
As Is
A term that states the seller will convey the property in its current condition and is under no obligation to repair any patent or latent defects. Seller disclosure of any known defects is still mandatory.
Transaction Broker
A licensee that is not an agent of either the selling or buying party, and is limited to facilitating a transaction between the two. Because the agent is not representing either party, they are not bound by the rules of confidentiality. They can also be k
Ready, Willing, and Able Buyer
A person who is prepared to buy on the seller's terms and is ready to take positive steps towards finalization of the transaction.
Parol Evidence
Oral agreements, promises, and inducements that are made by parties prior to entering into a written contract. Such statements may not be used in court to dispute or contradict the written contract.
Compensatory Damages
Monetary amounts that are paid to a party who has demonstrated in court that they have suffered an actual injury or economic loss. Also known as actual damages.
Nominal Damages
A small court-ordered monetary amount (usually $1) given to an injured party to acknowledge that a wrong was committed, but no serious damage was documented.
Punitive Damages
A court-ordered monetary payment to an injured party that is in excess of actual damages, usually meant to send a message to other potential wrong-doers.
Liquidated Damages
An amount paid to an injured party, the maximum of which was pre-determined in a term of a contract. Ex: loss of a buyer's earnest money because they changed their mind about purchasing a property after putting it under contract.
Damages
Monetary amounts paid to an injured party per a court-order. Can be compensatory, nominal, punitive, or liquidated.
Statute of Limitations *
A period of time during which parties may bring legal suit to enforce their rights; 6 years in Massachusetts
Open Listing
A listing agreement in which the seller retains the right to employ any number of brokers to act as their agents. Only the broker providing a ready, willing, and able buyer will receive compensation from the seller. If the seller produces a buyer on their
Exclusive Agency Listing
A type of listing agreement in which a broker is specified to act as the seller's only agent. The seller retains the right to sell the property on their own and not pay commission to the agent.
Exclusive Right-to-Sell Listing
A type of listing agreement in which one broker is appointed as the sole agent of the seller and will receive compensation regardless of who produces a buyer. This type of contract is sometimes required for submission of the property to the MLS.
Net Listing *
A type of listing agreement in which a minimum sales price is agreed upon by the broker and seller. The broker is then free to sell the property at a higher price and only give the seller the amount previously agreed upon. It is illegal in Massachusetts a
Competitive Market Analysis
A report often compiled by a real estate licensee that compares the prices of recently sold homes that are similar to a listing seller's home in terms of location, style, and amenities, with adjustments made for any dissimilar features.
Growing-Equity Mortgage
A loan in which the monthly payments increase annually, with the increased amount being used directly to reduce the outstanding balance and thus shorten the overall term of the loan. Also known as a rapid-payoff mortgage.
Home Affordable Modification Program
A government program to help homeowners avoid foreclosure by making their monthly payments more affordable.
Purchase-Money Loan
A loan given at the time of purchase to facilitate the sale of the property. It most often refers to an instrument given by the seller to the buyer, who "takes back" a note for all or part of the purchase price (another words, a seller-financed sale), but
Blanket Loan
A loan that covers more than one lot or parcel and is usually used to finance subdivision developments. It usually includes a partial release clause, which allows the borrower to release any one lot or parcel by repaying a specified amount of the loan.
Partial Release Clause
A provision in a blanket loan that allows the borrower to remove any lot or parcel from the loan in exchange for repaying a specified amount.
Construction Loan
A loan made to finance the development of improvements on real estate, in which the lender commits the full amount but makes partial progress payments at pre-defined intervals. It is a short-term loan that often bears a higer-than-average interest rate be
Shared-Appreciation Mortgage
A mortgage in which the lender extends a favorable interest rate to the buyer now in exchange for a portion of the profits received when the property is sold again later.
Reverse-Annuity Mortgage
A loan under which the homeowner receives monthly payments, a lump sum, or a line of credit based on the accumulated equity in the property. The loan must be repaid at a prearranged date, upon the death of the owner, or upon the sale of the property.
Balloon Payment Loan
A loan in which the regular, periodic payments will not fully amortize the amount of the loan by the time the final payment is due, so the final payment must be larger to complete repayment.
Home Equity Loan
A source of funds for homeowners that wish to finance the purchase of expensive items, consolidate existing installment loans on credit card debt, or pay for other large expenses such as home improvement, medical, or educational costs.
Real Estate Investment Trust
A trust ownership of real estate by a group of individuals who purchase certificates of ownership in the trust and, in turn, the money is invested into the property and profits are distributed back to the investors free of any corporate income tax. Profit
Common Law Trust
Another name for a Real Estate Investment Trust.
Discount Points
Prepaid interest on a loan that can be paid by either the buyer or seller, and is equal to 1% of the loan amount.
Graduated-Payment Mortgage
A loan for which the payments for the first few years (usually 5) are lower, and then increase with the expectation that the borrower's income will also have increased by then. The lower payments up front can result in negative amortization. This loan typ
Equity
The difference between the current market value of a property and the amount owed.
Buydown
A prepayment of loan interest in exchange for the lender temporarily reducing the interest rate on the loan. Can be offered by sellers seeking to help buyers qualify for a loan at a lower interest rate. A typical reduction is 1%-3% of the interest rate fo
Brokerage Agreements
Employment contracts that establish the relationship between the broker and the consumer. Examples include listing, buyer agency, and management arrangements. In most states, one of these is necessary in writing before a broker can initiate court action t
Protection Clause
A provision in a brokerage agreement that protects a broker's interests for a stated period after the expiration of the original contract as long as the client has not signed a new agreement with another broker.
Listing Agreement
A brokerage contract in which a real estate broker is hired to legally represent a seller or landlord. The basic forms are an open listing, exclusive-agency listing, and exclusive-right-to-sell listing.
Management Agreement
A brokerage contract establishing a general agency relationship between the broker and the owner of a rental property. It outlines the duties that must be performed by the broker, the authority of the broker, and the terms under which a broker earns their
Counteroffer
A proposal of change made by either the buyer or seller during negotiation of a contract. It relieves both parties of any obligation to any previously proposed contract terms.
Lease
A contractual agreement in which the owner agrees to give possession of all or part of a real estate property to another person for a period of time in exchange for a rental fee (valuable consideration).
Escrow Agreement
A written arrangement, separate from the contract, that outlines the duties of the escrow agent and their obligations and requirements during the transaction.
Earnest Money
A deposit given by the buyer to the seller at the time an offer is made to provide evidence of the buyer's intention to carry out the terms of the contract. The listing broker usually holds this deposit until the contract is finalized. The funds can be co
Option
A contract by which an owner gives a prospective purchaser or lessee the right to buy or lease the owner's property at a fixed price within a stated period of time. The prospective purchaser pays the seller a fee for this right and assumes no obligation t
Law of Agency
It defines the relationship between principal (the party who does the hiring) and the agent (the one that is hired). Each party has basic implied responsibilities, such as loyalty and disclosure.
Housing for Older Persons Act
A federal law that made several changes to the provisions against discriminating for familial status if the housing is designated as being for persons 55 and older. This is an exemption from the Fair Housing Act.
Uniform Standards of Professional Appraisal Practice
A set of minimum quality control standards that represent the generally accepted and recognized standards of appraisal practices. It is updated every two years.
Servicemembers Civil Relief Act
It provides a wide range of protections for individuals entering or called to active duty in the military, and deployed servicemembers. It is intended to postpone or suspend certain civil obligations to enable service members to devote full attention to d
Condominium Conversion
The changing of a property from a rental to condominium ownership. In MA, there are specific laws that protect tenets that will be displaced by the sale of the property. They include provisions for offering the right of first refusal to existing tenets, t
Childhood Lead Poisoning Prevention Program *
A division of Massachusett's Dept. of Public Health. They publish a packet that presents information regarding lead-based paint and lead poisoning. This packet must be given to a prospective buyer or tenet along with a state-approved lead disclosure form
Property Transfer Notification Certification
A Massachusetts state-approved lead disclosure form that must be given to a prospective buyer or tenet of a property built prior to 1978, regardless of whether lead-based paint actually exists or is known to exist.
Nonconforming Loan
Any loan that does not meet the Fannie Mae/Freddie Mac loan requirements.
Settlement Statement
A document that lists all costs and credits associated with a property purchase. It is required by RESPA, and is also called a HUD-1. It must be provided to the borrower, lender, and seller one business day before closing. Lenders must retain it on file f
Good Faith Estimate
A disclosure form that identifies the settlement costs the borrower is likely to incur at closing.
Inter Vivos
A Latin term meaning "during the lifetime of:" Usually used in reference to deed conveyance, which must be during during the lifetime of both the grantor and grantee.
Exceptions and Reservations
Any encumbrances, reservations, or limitations that affect the title, including mortgage liens, easements, taxes, restrictions, and easements. Also called a "subject-to clause.
Curtesy
A husband's right in his wife's property at the time of her death. In Massachusetts, this has been abolished in favor of dower rights, which apply equally to both spouses.
Oceanfront Property
A term for properties that abut against the ocean, also called tidal waters. In MA, the property owner owns the land to the mean low water line, or 100 rods below the mean high water line, whichever is less. The land between low water and high water is re
Condominium Super Lien
A law improving a condominium association's right to collect unpaid condominium fees in the case of a foreclosure. It allows the association to collect up to six months of overdue fees after taxes and municipal debts are paid, but before any mortgage obli
Limited Partnership
A cooperative consisting of both general and limited partners. The general partners are in charge of the business' operation and management, and have extensive liability in the company. The limited partners have no say in how the business operates, and al
Rapid-Payoff Mortgage
Another name for a growing-equity mortgage.
Blue Sky Laws
State and federal laws that define and regulate the offering and sale of securities to protect the public from fraud.
Joint Venture
A cooperative of two or more people in order to conduct a specific business enterprise. It is similar to a partnership in that it is created by an agreement to share in the profits and losses of the project, but unlike a partnership, it is created for one
Joint Tenancy
A type of real estate ownership in which two or more parties have been named in one conveyance. Upon the death of a member, his or her interests are automatically conveyed to the remaining members by right of survivorship.
Right of Rescission
The right to cancel a credit transaction within three days. It does not apply to first mortgages, and was established as part of the Truth in Lending Act.
Tenancy in Common
A form of co-ownership in which each owner holds an undivided interest in real property as though they are the sole owner. Each owner has the right to partition. Unlike joint tenets, owners have the right of inheritance.
Right of First Refusal
The right that allows an existing tenet to be offered the purchase of a property first if the owner decides to sell at a future date.
Reversionary Right
States that the rights of property possession revert to the lessor at the expiration of a lease.
Release Deed
A document that transfers all rights given to a trustee through a deed of trust back to the grantor after a loan has been fully repaid. Also called a deed of reconveyance.
Syndicator
A person that organizes a real estate project and recruits investors. They are usually a real estate broker, accountant, or lawyer that specializes in real estate.
Sale-and-Leaseback
The process of conveying a property to an investor, and then leasing it back from them. The seller retains possession of the property and makes lease payments to the investor. It is a method of acquiring funds without obtaining a loan and is usually used
Loan Servicing
A term that includes collecting and crediting monthly payments, collecting funds to be held in escrow (i.e. real estate taxes and hazard insurance payments), paying real estate taxes and insurance premiums, collecting late fees, and debt collections.
Physical Characteristics of Land
Immobility, permanence (indestructibility), and uniqueness (nonhomogeneity).
Economic Characteristics of Land
Relative scarcity, improvements, permanence of investment, and area preferences (situs).
Waste
A legal term for property deterioration, abuse, or destruction, generally done by a negligent tenet.
Chattel
Another term for personal property;differs from real property in that it is moveable
Survey
A confirmation of a lot's location, size, boundaries, easements, buildings, and encroachments by a professional.
Acre
43,560 square feet of land.
Zoning Code
Local regulations that determine how a parcel of land can be used (whether it is residential, commercial, industrial, or a combination of these), the minimum lot size required for construction, minimum setbacks from lot lines, and other basic usage restri
Fee Simple Defeasible
A type of freehold estate in which the holder of the property is entitled to all rights of property ownership, subject to the occurrence (or non-occurrence) of a particular event. There are two types: 1) subject to a condition subsequent and 2) qualified
Conventional Life Estate
A type of freehold estate limited to the lifetime of the owner or someone else as designated. It is "ordinary" if it is limited to the owner's lifetime, and "pur autre vie" if it is limited to the lifetime of someone else.
Remainderman
A person designated to receive a property upon the prerequisite death outlined in a conventional life estate.
Primary Market
A setting for the origination of loans. It is where applications are taken from borrowers by banks and investors, their credit worthiness is evaluated, the property in question is valued, and the final loan is underwritten and originated.
Secondary Market
A setting for the purchase and sale of existing mortgages. They are packaged and sold to Fannie Mae, Freddie Mac, and private investors.
Deficiency Judgement
An entitlement against a defaulted borrower caused when the proceeds from a foreclosure sale are not enough to satisfy the amount owed.
Conventional Loan
A loan that is not insured or guaranteed by a government source. They are made by lenders that can set their own requirements and who rely on data from appraisals, credit reports, securities, etc. These loans can be conforming (meaning they meet the stand
Conforming Loan
A loan that meets the minimum standards set by Fannie Mae and Freddie Mac.
Non-conforming Loan
A loan that does not meet the minimum standards set by Fannie Mae and Freddie Mac.
Private Mortgage Insurance
It insures lenders against losses in case a borrower defaults on their loan. The borrower usually pays for this insurance until their loan-to-value ratio falls below a preset rate (usually 75% to 80%).
Deeds Executed to Carry Out a Court Order
Statutory deeds that are used to convey a property's title by court order or as a result of a will. They must conform to the laws of the state where the property is located.
This deed is not used in Massachusetts.
Transfer Tax Stamps
A Massachusetts state-imposed excise tax on any conveyance of real estate for a consideration greater than $100. The amount is based upon the full purchase price, and is typically paid by the seller. The seller receives a device that is then attached to t
Conveyance Tax Stamps *
Another name for Transfer Tax Stamps, which are a Massachusetts state-imposed excise tax on any conveyance of real estate for a consideration greater than $100. They are also called revenue stamps or excise tax stamps.
Predatory Lending
Occurs when a lender forces a borrower into a loan with a higher interest rate than necessary, or with unfavorable terms.
Inverse Condemnation
Legal action taken by a property owner because the government's actions have negatively impacted the value of their property.
Regulation Z
This rule applies when credit is extended to individuals for personal, family, or household uses for $25,000 or less OR when the loan is secured by the borrower's residence. It states that the consumer must be fully informed of all finance charges and mus
American Land Title Association
A title insurance policy that protects the interest in collateral property of a mortgage lender who originates a new real estate loan.
Annual Percentage Rate
A disclosure of the total amount being received by a lender, including interest, points, and other fees, stated as a percentage.
Adjustable-Rate Mortgage
A loan characterized by a fluctuating interest rate.
Broker Price Opinion
An estimate of value prepared by a real estate licensee. It is most often requested by a lender to determine that the property actually exists. It is not an appraisal.
Covenants, Conditions, and Restrictions
Private restrictions on use of real property found in subdivisions or condominium communities.
Comprehensive Environmental Response, Compensation, and Liability Act
A law that established Superfund to clean up hazardous waste sites and to collect the costs from certain defined responsible persons (PRPs) associated with the sites.
Consumer Price Index
A measure of the average change over time in the prices paid by urban consumers for a variety of consumer goods and services. In MA, it affects how much rent can be increased for existing renters in a rental-property-to-condominium conversion.
Equal Credit Opportunity Act
A federal law that prohibits discrimination in the extending of credit due to race, color, nationality, religion, sex, age, or marital status.
Federal Housing Finance Agency
The organization that supervises and regulates Fannie Mae, Freddie Mac, and Federal Home Loan Banks.
Uniform Residential Landlord and Tenet Act
A model law establishing standards for landlord-tenet relations. It has been adopted in some form by most states, but is not used under this name in Massachusetts.
Uniform Electronics Transactions Act
A model law created by the National Conference Commissioners on Uniform State Laws. It is the basis for most state laws concerning electronic documents and signatures, including in Massachusetts. It contains the E-Sign Act of 2000 to protect consumers.
Uniform Residential Appraisal Report
A standardized estimation of a property's value, usually prepared by a professional who is licensed in this field.
Truth in Lending Act
A regulation that requires full disclosure of all costs of obtaining credit.
Rural Housing Service
The organization that channels credit to farmers and homeowners in small rural communities. It replaced the Farmers Home Administration (FmHA), and is operated under the Dept. of Agriculture.
Real Estate Settlement Procedures Act
A federal law controlled by HUD. It applies only to new first mortgage loans that are federally funded, and requires: 1) buyer to receive the HUD booklet "Settlement Costs and You", 2) a good-faith estimate of settlement costs, 3) use of a HUD-1, and 4) a
Planned Unit Development
A planned combination of diverse land uses, such as housing, recreation, and shipping, all in one contained development or subdivision.
Net Operating Income
Effective gross income less all operating expenses.
National Flood Insurance Program
An organization that provides flood insurance for properties in FEMA-designated flood zones. Zones designations include Zone A (for inland properties) or Zone V (for coastal properties).
Mortgage Insurance Premium
An insurance required of FHA borrowers that protects a lender against a loss in the event of a foreclosure and deficiency.
Massachusetts Consumer Protection Act
A regulation that outlaws unfair and deceptive acts or practices in the conduct of any trade or commerce, real estate. It increases the broker's responsibility for their statements and omissions, who can be held responsible for
any
untrue claims made to t
Loan-to-Value
A ratio of debt to the value of the property. Lenders will often require mortgage insurance if the loan-to-value ratio is over 80%.
Home Equity Conversion Mortgage
The name for an FHA reverse-annuity mortgage.
Government-Sponsored Enterprise
An enterprise in which the government retains a supervisory role and allows tax benefits in return. Ex: Fannie Mae and Freddie Mac.
Gross Rent Multiplier
A figure used as a multiplier of the gross monthly income of a property in order to estimate the property's value.
Rescission
A legal remedy that voids an existing contract and restores both parties to their situations prior to entering into the contract.
Certificate of Occupancy
A document granted by a local government agency when a property is determined to be in compliance with local building and zoning codes and is ready for habitability.
Spot Zoning
The allowance of a single parcel of land for a use different from the ones surrounding it. For instance, a small convenience store or playground being allowed on a property zoned for residential uses. It is usually only done when public opinion is in favo
Variance
A permanent exception to a zoning ordinance sought by a property owner who may suffer undue hardship as a result of current zoning ordinances.
Transit-Oriented Development
A type of urban expansion that focuses on walk-able community design in order to reduce day-to-day dependence on automobiles. Often centers around mass-transit, and includes residential, commercial, and sometimes light industrial uses.
Conditional-Use Permit
A zoning exception that is granted to allow special use of a property that is in the public's interests.
Taking
A term that encompasses both the acquisition of private property by the government through eminent domain and the negative impact on a property by either excessive government regulations, or through government-approved changes to adjacent properties. In a
Community Reinvestment Act
A law that states banks must make a reasonable percentage of their loans to customers in their own community area. It is designed to reduce redlining and discrimination.
Fair Credit Reporting Act
A regulation stating that if a borrower is denied a request for credit, they must be provided with the name and address of the credit reporting bureau that provided the data upon which the rejection was based.
Mortgage Disclosure Improvement Act
A regulation that requires the disclosure of certain estimated settlement costs. A lender cannot require an application fee or appraisal fee from a customer until these disclosures are made.
Asbestos
A mineral once commonly used as insulation in residential and commercial construction because of its fire-resistant and heat-containing qualities. Its use was banned in 1978 because inhalation of the mineral can cause a variety of respiratory diseases.
Encapsulation
The process of sealing off disintegrating asbestos, which may be preferable to its removal.
Radon
A colorless, odorless, tasteless, natural gas produced by the decay of natural radioactive minerals in the ground. It is a known carcinogen.
Banking Year
A period of 12 months, with each month having 30 days.
Reserve
A sum of money set aside to be used later for a particular purpose.
Prepaid Items
Items that have been paid in advance by the seller, and a portion of which is credited back to the seller at the time of settlement.
Affidavit of Title
A sworn statement in which the seller assures the title insurance company and the buyer that no judgments, bankruptcies, unrecorded deeds, contracts, unpaid repairs, or other such title defects have been incurred since the title examination was done.
Mortgage Reduction Certificate
A document issued by the lender when the buyer is assuming the seller's existing loan. It states the exact balance due on the loan, the interest rate, and the date the last payment was made.
Payoff Statement
A document provided by the seller's lender that indicates the exact dollar amount required to satisfied the existing loan through to the date of settlement.
Environmental Site Assessment
An audit done by a professional to determine the existence of any environmental issues that might affect the use of the property or impose future liability on the new owner.
Environmental Impact Statement
A study that indicates the impact a project will have on the surrounding environment. It is required by the EPA for any project funded with federal funding.
Brownfields
Economically depressed urban areas that are stigmatized by the potential of being contaminated by hazardous waste.
Small Business Liability Relief and Revitalization Act
Also known as the Brownfields Law, this act states that the current owners of a property are not liable for cleanup of environmental contaminants on their property if they did not cause or contribute to the contamination.
Landfill
An enormous hole lines with an impermeable membrane to prevent leakage of contaminants into local groundwater. The hole is then used for the disposal of trash and debris, and when full, it is covered with sand and soil.
Assignment
A term that refers to the transfer of the rights and/or duties of a contract. Obligations may be transferred by the original party, who will then be secondarily responsible unless specifically released.
Misrepresentation
An innocent misstatement of fact upon which someone relies and that causes the person to suffer damages.
Fraud
A deliberate misstatement of material fact with the intent to deceive. It can also be a result of the failure to disclose vital information such as a property's latent defects.
Mistake
A mutual misunderstanding in negotiations between parties.
Equitable Title
The reasonable right to obtain absolute ownership of a property when it is legally in another person's name. It occurs when both the buyer and seller have signed a sales contract.
Amendment
A document used to make minor changes to the sales contract. For instance, changing the closing date. It must be signed and agreed to by both parties.
Sublease
A transference of a portion of the rights held under a leasehold estate. The grantee pays rent to the grantor, who then pays the landlord. It is sometimes called a sandwich lease.
Security Deposits
Guarantees payment of rent and safeguards against destruction of property; must be held in an interest bearing account; may not exceed one month rent; must be held in an interest bearing account
Economic Rent
The amount of rent a property would command in a fully competitive marketplace. It is usually the same as the contract rent at the time the lease is created. It is sometimes called market rent.
Gross Lease
The tenet pays the landlord a fixed rent amount, and the landlord pays for all property charges (i.e. taxes, insurance, maintenance, etc.).
Net Lease
Occurs when a tenet pays a fixed rent amount to the landlorad, plus pays all or a portion of the property charges (i.e. taxes, insurance, maintenance, etc.). It is more commonly used for the renting of entire commercial or industrial buildings.
Percentage Lease
A tenet's rent is based upon a percentage of their gross income received by doing business on the property. The amount usually consists of a base rent plus a percentage of sales. It is often used for retail locations, and can assist seasonal businesses wh
Sharecropping
A type of agricultural lease in which the landlord, in lieu of a regular rent payment, accepts a preset percentage of the profits from the sale of the crops.
Lease Purchase
A type of lease used when a tenet wants to purchase the property but is currently unable to do so, due to lack of financing or problems with the title. The purchase agreement is primary and the lease is secondary.
Ground Lease
Occurs when undeveloped land is rented and the tenet erects their own buildings. Tenets are then responsible for the real estate taxes, insurance, upkeep, and repairs of the building. These contracts are usually for a length of 50+ years.
Graduated Lease
Occurs when a tenet's rent is set to increase at certain intervals. It can be used to assist business by allowing them to pay a smaller rent amount while they are getting established.
Index Lease
A rental contract in which the rent amount adjusts based on a designated financial indicator.
Equalization Factor
An amount that is used to correct general inequalities in statewide tax assessments.
Tax Lien
This type of lien is levied against a property automatically. It is a statutory lien that is given priority over all other liens on a property.
Tax Sale
Occurs when a court orders a property to be sold to pay delinquent levies.
Transfer Tax
A tax levied at the time a property is conveyed to a new owner. Also known as a grantor tax.
Capital Gains Tax
A federal tax imposed on the profits resulting from the ownership and/or sale of real estate.
Insolvent
Being unable to pay debts
Estoppel Certificate
A written statement that prevents its issuer from asserting different facts at a later date. It is often requested by a mortgagor from the borrower so that the mortgage can be sold to an investor. Also called a certificate of no defense.
Usury
The illegal act of charging a borrower a higher interest rate than is permitted by law.
Capitalization
A process by which anticipated future income is converted to a one lump sum capital value.
Documentary Evidence
Proof in the form of written or printed papers.
93A *
Consumer Protection Act: All agents must voluntarily give full disclosure of everything they know about the property including defects. If charged with a violation, agent will be given 30 day demand letter to resolve issue before court action. Court may i
1978 *
Year lead paint was declared illegal. No lead paint form needed for houses built after this year
21E *
Chapter 21E deals with hazardous waste clean-up.
18
Legal age of competence
3 years
Amount of time that all Sales and rental agreements must be kept in brokers office
Real Estate License *
Required by anyone selling or leasing real estate with the following exceptions: sale by owner, property manager on salary, auctioneer, public official, person acting under power of attorney, trustee, lawyer, banks, insurance companies or someone acting u
Bait and switch *
Advertising that a house is for sale or rent when it has already been sold; illegal in Massachusetts
Escrow
Money held in a separate account; other people's money such as earnest money or security deposits held during a transaction
Home Inspector*
Must be state licensed and carry a $250,000 liability policy. No sales agent can recommend a home inspector except a buyer's agent. Agents may provide a list.
Blind advertising*
Ads that do not identify agent/office. These are illegal in Massachusetts.
Commission
Paid at time of closing; negotiable; must always go directly to broker of record. In order to receive a commission, the broker must produce a buyer, buyer and seller must have signed a contract to purchase, a closing must occur.
MDCA *
Massachusetts Department of Consumer Affairs; Consumer has one year to file complaint.
Board of Registration *
comes under jurisdiction of MDCA; 5 members on 5 year term;3 are broker with at least 7 years experience; investigate consumer complaints which musty be in writing
Dual Agency *
Licensee represents both the buyer and the seller in the transaction. Undisclosed dual agency is illegal.
Special Agent
Agent hired by principal to perform a single act. In real estate, broker is special agent hired by seller to find ready, willing, able buyer
Dower *
In Massachusetts, refers to both the husband and wife's future interest in the deceased spouse's property.
Easement *
Right to use someone's property. It must be re-recorded every 50 years in order to be enforceable.
Security Deposit *
A sum of money, not to exceed one month's ren, held by the landlord to cover any damage to the apartment caused by a tenant. In Massachusetts, you must receive a letter from landlord telling you where your deposit is being held. It must be deposited in a
Great Pond
A pond that is 10 acres or more in size; Property owned extends to water's edge
Facilitator
A person working as a liaison between buyer and seller without agency duties; doesn't represent either party.
Quit Claim *
A deed that conveys all interest in a property which the grantor may or may not have, and gives no warranties as to the condition of title. This is the type of deed used to transfer property in Massachusetts.
6D *
A certificate from a condo association that shows that all condo fees are either in arrears or up to date
Intertidal Zone
Portion of the shoreline that lies between the high and low tide lines; all citizens have right to fish, fowl or navigate through this area.
McCarthy vs. Tobin *
Ruling by Massachusetts Supreme Court that a simple one page agreement, sometimes called "An Offer to Purchase" is a legally binding contract
Competent Parties
Of Legal Age (18), sound mind, no coercion
Friable Asbestos
Material that is peeling or flaking; Agent can take a listing with the understanding that it will be disclosed.
Proprietary Lease
A lease given by the corporation that owns a cooperative apartment building to the shareholder for the shareholder's right as a tenant to an individual apartment; also known as a lifetime lease.
Offer to Purchase
The proposal made to an owner of property by a potential buyer to purchase the property under stated terms; becomes the purchase and sales agreement.
Transfer Stamps *
Money paid to state of Massachusetts to transfer proper; always paid by seller; 2014 rate is $4.56 per $1000 of sale price
Long-Term Lease *
A lease for more than 7 years must be in writing, acknowledged and recorderd (in Barnstable County)
Short Term Lease *
A lease for 6 months or less may be oral and enforceable.
Disclosure Form *
A form provided to purchasers prior to making an offer in order to clarify exactly what is being sold and what is being purchased; Seller's Disclosure Form IS NOT required in Massachusetts.
Nondisclosure
the failure to provide pertinent information about a projected contract; Nondisclosure of radon, asbestos, underground storage tanks and lead paint by realtor is grounds for punishment.
Bundle of Legal Rights
Ownership of all legal rights: control, possession, use, disposition, enjoyment
Subdivision Lot and Block
AKA subdivision plan, surveyor prepares plat map; use subdivision name and lot #; used in all states
Assistants
Unlicensed real estate assistant hired as clerical support; may not have any consumer contact
Fiduciary Responsibilities
Relationship of trust and confidence between employer and employee; Duties include care, obedience, accounting, loyalty and disclosure
COALD
Fiduciary responsibilities of agent to principal; Care, Obedience, Accounting, Loyalty and Disclosure
Executory Contract
A contract that has not as yet been fully performed.
Executed Contract
A contract that has been completely performed by both parties.
Void contract
A contract that has no legal force or effect because it does not meet the essential elements of a contract; i.e. contract for an illegal purpose
Voidable contract
A contract that seems to be valid, but may be rejected by one of the parties; i.e.. contract with minor, under duress or subject to financing
Unenforceable contract
Contract that seems to be valid but neither party can sue for performance; i.e.. purchase and sales agreement must be in writing.
Legal Form
Statute of Frauds requires the following: signatures of buyers and sellers, spouses signature when necessary to release dower, agent's signature for a principal;(with permission) and signatures of all legal owners.
Offer
Stated promise to perform if other party agrees.; may be withdrawn at any time before accepted; details price and terms; no longer binding once counteroffer is made.
Estate For Years
Most common type of least; one year; automatic ending; no notice needed to terminate
Estate from period to period
Month to month; may have automatic renewal clause; can be terminated by either party; notice must equal time period
Estate at will
Indefinite duration; can be terminated by either party
Mill
1/1000 of a dollar; often used to express tax rate; example: $3 per $100 = 30 mills or $30 per $1000.
Betterment Tax
AKA Special assessments of improvement taxes; levied o real estate that require property owners to pay for improvements; i.e. sewers
Tax Deductions
Federal tax law allows the homeowner to deduct : real estate taxes on primary residence, mortgage payments on primary and second homes, points
Capital Gains
Taxpayers who file jointly can exclude $500,000 in profits on sale of home as long as they have occupied it as a primary residence for 2 years.
Homeowner Benefits
Include tax deductions, exclusion of capital gain on sale, withdrawals from IRA (first time homebuyers only), homeowner tax relief,
Real Estate Tax Exemptions
real estate owned by municipalities, states, or religious organizations if used for tax-exempt purposes will not be taxed
PETE
Governmental limitations on ownership of property for general welfare of community. Include police powers, eminent domain,taxation and escheat
Remainder interest
Third party named in will to whom title will pass upon death of life estate owner.
Leasehold Estate
One of pre-determined duration
Encumbrance
Acharge or burden on a property that may diminish its value, but does not prevent transfer; example liens
Voluntary lien
a lien created intentionally by the property owners action, such as when someone takes out a mortgage loan
Involuntary lien
lien imposed against property without consent of an owner which typically are property taxes, special assessments and federal income taxes. Created by law and can be statutory or equitable.
Specific lien
A lien that attaches to a particular property.
General lien
A lien that affects all the debtor's non-exempt property both real and personal; most common IRS
Easement
A right acquired by one party to use the land of another for a particular purpose; no ownership interest
Easement by Prescription *
Created through continual use over a certain period of time. It must be continual, visible, & w/o approval. Example - a private road becomes public; In Massachusetts it must be used for 20 years
Easement Appurtenant
An easement which is annexed to the ownership of one parcel of land that allows one party the use of his or her neighbor's land and which runs with the land when the title is transferred to another party.
Servient Estate
An estate in land that is subject to use in some way by the owner of another property, the dominant estate
Dominant Estate
The tract of land in an easement appurtenant which benefits from the easement.
Easement in Gross
A personal right to use the land of another; not appurtenant to ownership; example railroads, power lines
CCRs
covenants, conditions and restrictions; private land controls; must be public record; automatically end in 25 years; example - restrictions put by developers in subdivision to maintain value
license
A privilege to enter the land of another party for a specific purpose; temporary and non-transferable; example permission to park in neighbors driveway's
Reversion
If creator of a life estate does not confer remainder interest to a third party, upon death the full ownership reverts to original fee simple owner
Voluntary Alienation
Transfer of title by gift, will or sale.
Deed
A document that transfers ownership of property from one party to another; In Massachusetts, all deeds must be recorded in county where property is located
Grantor
Person conveying the property; example seller
Grantee
Person acquiring the property; example buyer
Dual Agency *
Representing both parties to a transaction. This is unethical unless both parties agree to it, and it is illegal in Massachusetts
Title
A legal document showing ownership; Title is said to pass when deed is delivered and accepted.
Warranty deeds
Grantor is legally bound by certain covenants or warranties; offers greatest protection; is not used in Massachusetts
Noncupative Will
oral will dictated by the testator during last illness before appropriate witnesses to dispose of personal property and afterwards reducing to writing
Tenancy by Entirety
Special joint tenancy by husband and wife; owners have right of survivorship; to be conveyed deed must be signed by both parties
Partnership
A business in which two or more persons combine their assets and skills; may be general in which both partners share responsibility for running business or limited in which silent partner invests money but not time.
Co-operative Ownership
Title to land is held by corporation, purchases receive stock in corporation; not real estate but personal property; owner gets lifetime lease
Time Share
Permits multiple purchasers to own undivided interests in real estate for fixed period of year; i.e.. one week; may be fee simple or right to use; also called interval ownership
Pre-qualified
Approval for financing based on buyer's information
Pre-approved
Approval for financing based on verification of credit, employment, etc; generates commitment letter
Lien Theory State *
State in which mortgages are regarded as liens, the buyer holds the deed to the property during the mortgage term; Massachusetts is a lien theory state.
Loan Instrument
Made up of two parts; promissory note or written promise to repay loan and mortgage which provides security for the debt
Hypothecate
To pledge property as security for an obligation or loan without giving up possession of it.
Mortgagor
A borrower in a mortgage loan transaction
Mortgagee
A lender in a mortgage loan transaction; ("Its better to be the mortgagee")
Amortized loan
A loan in which the borrower makes regular payments consisting of principal and interest over a specified term.
Interest
Charge for the use of money; Interest is paid in arrears meaning that it is due and charged at the end of each month or payment period.
Satisfaction of Mortgage
A document acknowledging the payment of a mortgage debt; also known as release of lien.
PITI
Monthly loan payments required of borrower; includes principal, interest, taxes and insurance;
Escrow Account
Reserve fund required by many lenders to meet future real estate taxes and insurance premiums
Alienation clause
Also know as "due on sale" clause permits lender to declare balance of loan immediately due if property is sold; prevents loan assumption without lender approval
VA Guaranteed loan
Veterans only; may provide 100% financing; highest loan to value ratio; veteran must apply for a certificate of eligibility, VA issues CRV or certificate of reasonable value for property being purchased.
Graduated Payment Mortgage
Has a monthly payment that starts out at the lowest level and increases at a specific rate (low payments for 5 years cover only part of interest, fha designed for people who expect their income to increase)
Secondary Mortgage Market
Where loans are bought and sold after they have been funded; major sources are Fannie Mae, Freddie Mac and Ginnie Mae
Primary Mortgage Market
Investors, banks and companies that trace applications, determine creditworthiness and originate loans
Kickback
Receiving a fee for a referral; prohibited by RESPA
Nonconforming Use
Building that does not conform because it precedes zoning law; protected by grandfather clause.