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474 Cards in this Set

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abstract of title
The condensed history of a title to a particular parcel of real estate, consisting of a summary of the original grant and all subsequent conveyances and encumbrances affecting the property and a certification by the abstractor that the history is complete and accurate.
acceleration clause
The clause in a mortgage or deed of trust that can be enforced to make the entire debt due immediately if the borrower defaults on an installment payment or another covenant.
acknowledgment
A formal declaration made before a duly authorized officer, usually a notary public, by a person who has signed a document.
acre
A measure of land equal to 43,560 square feet. Approximately 1/2 the area of a football field.
actual notice
Express information or fact; that which is known; direct knowledge.
adjustable-rate mortgage (ARM)
A loan characterized by a fluctuating interest rate, usually one tied to a bank or savings and loan association cost-of-funds index.
ad valorem tax
A tax levied according to value, generally used to refer to real estate tax. Also called the general tax.
general tax
A tax levied according to value, generally used to refer to real estate tax. Also called the ad valorem tax.
adverse possession
The actual, open, notorious, hostile and continuous possession of another's land under a claim of title. Possession for a statutory period may be a means of acquiring title.
agency
The relationship between a principal and an agent wherein the agent is authorized to represent the principal in certain transactions.
agent
One who acts or has the power to act for another. A fiduciary relationship is created under the law of agency when a property owner, as the principal, executes a listing agreement or management contract authorizing a licensed real estate broker to be his or her agent.
agricultural fixture
In North Carolina, a fixture used in farming operations that is considered real property rather than personal property.
air rights
The right to use the open space above a property, usually allowing the surface to be used for another purpose.
alienation
The act of transferring property to another. Alienation may be voluntary, such as by gift or sale, or involuntary, as through eminent domain or adverse possession.
alienation clause
The clause in a mortgage or deed of trust that states that the balance of the secured debt becomes immediately due and payable at the lender's option if the property is sold by the borrower. In effect, this clause prevents the borrower from assigning the debt without the lender's approval.
amortized loan
A loan in which the principal as well as the interest is payable in monthly or other periodic installments over the term of the loan.
annual percentage rate (APR)
The relationship of the total finance charges associated with a loan. This must be disclosed to borrowers by lenders under the Truth-in-Lending Act.
anticipation
The appraisal principle that holds that value can increase or decrease based on the expectation of some future benefit or detriment affecting the property.
antitrust laws
Laws designed to preserve the free enterprise of the open marketplace by making illegal certain private conspiracies and combinations formed to minimize competition. Most violations of antitrust laws in the real estate business involve either price fixing (brokers conspiring to set fixed compensation rates) or allocation of customers or markets (brokers agreeing to limit their areas of trade or dealing to certain areas or properties).
appraisal
An estimate of the quantity, quality or value of something. The process through which conclusions of property value are obtained; also refers to the report that sets forth the process of estimation and conclusion of value.
appreciation
An increase in the worth or value of a property due to economic or related causes, which may prove to be either temporary or permanent; opposite of depreciation.
appurtenance
A right, a privilege or an improvement belonging to, and passing with, the land.
appurtenant easement
An easement that is annexed to the ownership of one parcel and allows the owner the use of the neighbor's land.
assessment
The imposition of a tax, charge or levy, usually according to established rates.
assignment
The transfer in writing of interest in a bond, a mortgage, a lease or another instrument.
assumption of mortgage
Acquiring title to property on which there is an existing mortgage and agreeing to be personally liable for the terms and conditions of the mortgage, including payments.
attachment
The act of taking a person's property into legal custody by writ or another judicial order to hold it available for application to that person's debt to a creditor.
attorney's opinion of title
An abstract of title that a lawyer has examined and has certified to be, in his or her opinion, an accurate statement of the facts concerning the property ownership.
balloon payment
A final payment of a mortgage loan that is considerably larger than the required periodic payments because the loan amount was not fully amortized.
wains
A board around the bottom of a wall perpendicular to the floor. Sometimes called baseboard, wainss cover the gap between the floor and the wall, protecting the wall from scuffs and providing a decorative accent.
basic form (HO-1)
An insurance policy covering buildings and personal property against loss or damage from fire, lightning, removal, windstorm, hail, explosion, riot, smoke, vandalism and theft.
basis
The financial interest that the Internal Revenue Service attributes to an owner of an investment property for the purpose of determining annual depreciation and gain or loss on the sale of the asset. If a property was acquired by purchase, the owner's basis is the cost of the property plus the value of any capital expenditures for improvements to the property, minus any depreciation allowable or actually taken. This new basis is called the adjusted basis.
baseboard
A board around the bottom of a wall perpendicular to the floor. Sometimes called wains, baseboards cover the gap between the floor and the wall, protecting the wall from scuffs and providing a decorative accent.
adjusted basis
The financial interest that the Internal Revenue Service attributes to an owner of an investment property for the purpose of determining annual depreciation and gain or loss on the sale of the asset. If a property was acquired by purchase, the owner's basis is the cost of the property plus the value of any capital expenditures for improvements to the property, minus any depreciation allowable or actually taken. This new basis is called the adjusted basis.
bench mark
A permanent reference mark or point established for use by surveyors in measuring differences in elevation.
beneficiary
(1) The person for whom a trust operates or in whose behalf the income from a trust estate is drawn.

(2) A lender in a deed of trust loan transaction.
binder
An agreement that may accompany an earnest money deposit for the purchase of real property as evidence of the purchaser's good faith and intent to complete the transaction.
blanket loan
A mortgage covering more than one parcel of real estate, providing for each parcel's partial release from the mortgage lien upon repayment of a definite portion of the debt.
blockbusting
The illegal practice of inducing homeowners to sell their properties by making representations regarding the entry or prospective entry of persons of a particular race or national origin into the neighborhood.
branch office
A secondary place of business apart from the principal or main office from which real estate business is conducted. A branch office usually must be run by a licensed real estate broker working on behalf of the broker.
breach of contract
The violation of any terms or conditions in a contract without legal excuse; for example, failure to make a payment when it is due.
broad form (HO-2)
An insurance policy covering more perils than the basic form. This form also covers falling objects; weight of snow, ice or sleet; collapse of buildings; malfunctioning heating systems; accidental discharge of water or steam; and electrical currents that are artificially generated.
broker
One who acts as an intermediary on behalf of others for a fee or commission.
brokerage
The bringing together of parties interested in making a real estate transaction.
broker-in-charge
Required for each brokerage firm and each branch office, the person responsible for displaying all licenses properly, notifying the Real Estate Commission of any change of business address or trade name, ensuring that all advertising is done properly, maintaining the trust account and trust account records properly, retaining and maintaining all real estate transaction records properly and supervising all sales people associated with the firm or office.
building code
An ordinance that specifies minimum standards of construction for buildings to protect public safety and health.
building permit
Written governmental permission for the construction, alteration or demolition of an improvement, showing compliance with building codes and zoning ordinances.
bundle of legal rights
The concept of land ownership that includes ownership of all legal rights to the land-for example, possession, control within the law and enjoyment.
business cycle
The upward and downward fluctuations in business activities generally characterized by four stages: expansion, recession, depression and revival.
buydown
A financing technique used to reduce the monthly payments for the first few years of a loan. Funds in the form of discount points are given to the lender by the builder or seller to buy down or lower the effective interest rate paid by the buyer, thus reducing the monthly payments for a set time.
buyer-agency agreement
A principal-agent relationship in which the broker is the agent for the buyer, with fiduciary responsibilities to the buyer. The broker represents the buyer under the law of agency.
capital gain
The profit earned from the sale of an asset
capitalization
A mathematical process for estimating the value of a property using a proper rate of return on the investment and the annual net operating income expected to be produced by the property. The formula is expressed as capitalization rate The rate of return a property will produce on the owner's investment.
caveat emptor
A Latin phrase meaning "Let the buyer beware."
ceiling joist
Attached to the top plate of a wall, these joists carry the weight of the roof.
certificate of reasonable value (CRV)
A form indicating the appraised value of a property being financed with a VA loan.
certificate of title
A statement of opinion on the status of the title to a parcel of real property based on an examination of specified public records.
chain of title
The succession of conveyances, from some accepted starting point, whereby the present holder of real property derives title.
change
The appraisal principle that holds that no physical or economic condition remains constant.
chattel
Items, called chattels, that do not fit into the definition of real property; for example, movable objects.
Civil Rights Act of 1866
An act that prohibits racial discrimination in the sale and rental of housing.
closing statement
A detailed cash accounting of a real estate transaction showing all cash received, all charges and credits made and all cash paid out in the transaction.
HUD statement
A detailed cash accounting of a real estate transaction showing all cash received, all charges and credits made and all cash paid out in the transaction.
cloud on title
Any document, claim, unreleased lien or encumbrance that may impair the title to real property or make the title doubtful; usually revealed by a title search and removed by either a quitclaim deed or suit to quiet title.
LOADS
An acronym for the agent's specific duties in an agency relationship: loyalty, obedience. accounting, disclosure and service.
code of ethics
A written system of standards for ethical conduct.
coinsurance clause
A clause in insurance policies covering real property that requires that the policyholder maintain fire insurance coverage generally equal to at least 80 percent of the property's actual replacement cost.
commingling
The illegal act by a real estate broker of placing client or customer funds with personal funds. By law, brokers are required to maintain a separate trust or escrow account for other parties' funds held temporarily by the broker.
commission
Payment to a broker for services rendered, as in the sale or purchase of real property; usually a percentage of the selling price of the property.
common elements
Parts of a property that are necessary or convenient to the existence, maintenance and safety of a condominium or are normally in common use by all of the condominium residents. Each condominium owner has an undivided ownership interest in the common elements.
common law
The body of law based on custom, usage and court decisions.
community property
A system of property ownership based on the theory that each spouse has an equal interest in the property acquired by the efforts of either spouse during marriage. A holdover of Spanish law found predominantly in western states; the system was unknown under English common law.
comparable
Property used in an appraisal report that is substantially equivalent to the subject property.
competition
The appraisal principle that states that excess profits generate competition.
condemnation
A judicial or an administrative proceeding to exercise the power of eminent domain, through which a government agency takes private property for public use and compensates the owner.
conditional-use permit
Written governmental permission allowing a use inconsistent with zoning but necessary for the common good, such as locating an emergency medical facility in a predominantly residential area.
condominium
The absolute ownership of a unit in a multiunit building based on a legal description of the airspace the unit actually occupies, plus an undivided interest in the ownership of the common elements, which are owned jointly with the other condominium unit owners.
confession of judgment clause
A clause in a contract that permits judgment to be entered against a debtor without the creditor's having to institute legal proceedings.
conformity
The appraisal principle that holds that the greater the similarity among properties in an area, the better they will hold their value.
Conner Act
A North Carolina law that states that many types of real estate documents are not valid as to third parties unless the documents are recorded. These documents include deeds, mortgages, purchase contracts, installment land contracts, assignments, options, leases of three years or more, easements and restrictive covenants.
consideration
(1) That received by the grantor in exchange for his or her deed.
(2) Something of value that induces a person to enter into a contract
construction loan
Interim financing/Construction loans are associated with financing the construction phase of the project, before the project is completed and ready for occupancy.
interim financing
Interim financing/Construction loans are associated with financing the construction phase of the project, before the project is completed and ready for occupancy.
constructive eviction
The actions of a landlord that so materially disturb or impair a tenant's enjoyment of the leased premises that the tenant is effectively forced to move out and terminate the lease without liability for any further rent.
constructive notice
The notice given to the world by recorded documents. All people are charged with knowledge of such documents and their contents, whether or not they have actually examined them. Possession of property is also considered constructive notice that the person in possession has an interest in the property.
contingency
A provision in a contract that requires a certain act to be done or a certain event to occur before the contract becomes binding.
contract
A legally enforceable promise or set of promises that must be performed and for which, if a breach of the promise occurs, the law provides a remedy. A contract may be either unilateral, by which only one party is bound to act, or bilateral, by which all parties to the instrument are legally bound to act as prescribed.
contribution
The appraisal principle that states that the value of any component of a property is what it gives to the value of the whole or what its absence detracts from that value.
conventional loan
A loan that requires no insurance or guarantee.
conveyance
A term used to refer to any document that transfers title to real property. The term is also used in describing the act of transferring.
cooperating broker
The broker (that representa a buyer), from whose office negotiations leading up to a sale are initiated. The listing broker and the cooperating broker may be the same person.
cooperative
A residential multiunit building whose title is held by a trust or corporation that is owned by and operated for the benefit of persons living within the building, who are the beneficial owners of the trust or stockholders of the corporation, each possessing a proprietary lease.
co-ownership
Title ownership held by two or more persons.
cost approach
The process of estimating the value of a property by adding to the estimated land value the appraiser's estimate of the reproduction or replacement cost of the building, less depreciation.
counteroffer
A new offer made in response to an offer received. It has the effect of rejecting the original offer, which cannot be accepted thereafter unless revived by the offeror.
covenant
A written agreement between two or more parties in which a party or parties pledge to perform or not perform specified acts with regard to property; usually found in such real estate documents as deeds, mortgages, leases and contracts for deed.
covenant of quiet enjoyment
The covenant implied by law by which a landlord guarantees that a tenant may take possession of leased premises and that the landlord will not interfere in the tenant's possession or use of the property.
credit
On a closing statement, an amount entered in a person's favor-either an amount the party has paid or an amount for which the party must be reimbursed.
curtesy
A life estate, usually a fractional interest, given by some states to the surviving husband in real estate owned by his deceased wife. Most states have abolished curtesy.

In 1960, dower was abolished along with the husband's curtesy
debit
On a closing statement, an amount charged; that is, an amount that the debited party must pay.
decedent
A person who has died.
dedication
The voluntary transfer of private property by its owner to the public for some public use, such as for streets or schools.
deed
A written instrument that, when executed and delivered, conveys title to or an interest in real estate.
deed in lieu of foreclosure
A deed instrument in which a mortgagor (i.e., the borrower) conveys all interest in a real property to the mortgagee (i.e., the lender) to satisfy a loan that is in default and avoid foreclosure proceedings
deed in trust
An instrument that grants a trustee under a land trust full power to sell, mortgage and subdivide a parcel of real estate. The beneficiary controls the trustee's use of these powers under the provisions of the trust agreement.
deed restriction
Clause in a deed limiting the future uses of the property. Deed restrictions may impose a vast variety of limitations and conditions-for example, they may limit the density of buildings, dictate the types of structures that can be erected or prevent buildings from being used for specific purposes or even from being used at all.
default
The nonperformance of a duty, whether arising under a contract or otherwise; failure to meet an obligation when due.
defeasance clause
A clause used in leases and mortgages that cancels a specified right upon the occurrence of a certain condition, such as cancellation of a mortgage upon repayment of the mortgage loan.
defeasible fee estate
An estate in which the holder has a fee simple title that may be divested upon the occurrence or nonoccurrence of a specified event. Two categories of defeasible fee estates exist: fee simple on condition precedent (fee simple determinable) and fee simple on condition subsequent.
Fee Simple Determinable
A fee simple determinable is an estate that will end automatically if the condition of the grantor occurs and the interest will revert back to the grantor or the heirs of the grantor. The future interest created with this estate is called a possibility of reverter. Durational language such as, "to A as long as the property is used for a park" creates this type of estate.
Fee Simple Subject to Condition Subsequent
A fee simple subject to a condition subsequent does not end automatically upon the happening of the condition; the future interest in this estate must be claimed by the holder of the interest. The future interest is called a "right of reentry" or "right of entry." The language used to create this interest is, "to A, but if A sells alcohol on the land, then grantor has the right of reentry."
deficiency judgment
A personal judgment levied against the borrower when a foreclosure sale does not produce sufficient funds to pay the mortgage debt in full.
delivery and acceptance
The actual delivery of a deed by a grantor and the actual or implied acceptance of the deed by the grantee.
demand
The amount of goods people are willing and able to buy at a given price; often coupled with supply.
density zoning
Zoning ordinances that restrict the maximum average number of houses per acre that may be built within a particular area, generally a subdivision.
Department of Housing and Urban Development (HUD)
A federal cabinet department officially known as the U.S. Department of Housing and Urban Development; active in national housing programs. Among its many programs are urban renewal, public housing, model cities, rehabilitation loans, FHA subsidies and water and sewer grants.
depreciation
(1) In appraisal, a loss of value in property due to any cause, including physical deterioration, functional obsolescence and external obsolescence.
(2) In real estate investment, an expense deduction for tax purposes taken over the period of ownership of income property.
descent
The acquisition of an estate by inheritance in which an heir succeeds to the property by operation of law.
developer
A person or company that attempts to put land to its most profitable use through the construction of improvements.
devise
A gift of real property by will. The donor is the devisor, and the recipient is the devisee.
discount point
A unit of measurement used for various loan charges; one point equals 1 percent of the amount of the loan.
dominant tenement
A property that includes in its ownership the appurtenant right to use an easement over another person's property for a specific purpose.
dower
The legal right or interest, recognized in some states, that a wife acquires in the property her husband held or acquired during their marriage. During the husband's lifetime, the right is only a possibility of an interest; upon his death, it can become an interest in land.

In 1960, dower was abolished along with the husband's curtesy
dual agency
Representing both parties to a transaction. This is unethical unless both parties agree to it, and it is illegal in many states.
due-on-sale clause
A provision in a mortgage that states that the entire balance of the note is immediately due and payable if the mortgagor transfers (sells) the property.
duress
The unlawful constraint or action exercised on a person whereby the person is forced to perform an act against his or her will. A contract entered into under duress is voidable.
earnest money
Money deposited by a buyer under the terms of a contract, to be forfeited if the buyer defaults but applied to the purchase price if the sale is closed.
easement
A right to use the land of another for a specific purpose, such as for a right-of-way or utilities; an incorporeal interest in land.
easement by condemnation
An easement created by the government or a government agency that has exercised its right under eminent domain.
easement by necessity
An easement allowed by law as necessary for the full enjoyment of a parcel of real estate; for example, a right of ingress and egress over a grantor's land.
easement by prescription
An easement acquired by continuous, open and hostile use of property for the period of time prescribed by state law.
easement in gross
An easement that is not created for the benefit of any land owned by the owner of the easement but that attaches personally to the easement owner.
For example, a utility easement.
economic life
The number of years during which an improvement will add value to the land.
emblements
Growing crops, such as grapes and corn, that are produced annually through labor and industry; also called fructus industriales.
eminent domain
The right of a government or municipal quasi-public body to acquire property for public use through a court action called condemnation, in which the court decides that the use is a public use and determines the compensation to be paid to the owner.
employee
Someone who works as a direct employee of an employer and has employee status. The employer is obligated to withhold income taxes and Social Security taxes from the compensation of the employee. See also independent contractor.
enabling acts
State legislation that confers zoning powers on municipal governments.
encroachment
A building or some portion of it-a wall or fence, for instance-that extends beyond the land of the owner and illegally intrudes on the land of an adjoining owner or on a street or an alley.
encumbrance
Anything-such as a mortgage, tax or judgment lien; an easement; a restriction on the use of the land; or an outstanding dower right-that may diminish the value or use and enjoyment of a property.
Equal Credit Opportunity Act (ECOA)
The federal law that prohibits discrimination in the extension of credit because of race, color, religion, national origin, sex, age or marital status.
equitable right of redemption
The right of a defaulted property owner to recover the property prior to its sale by paying the appropriate fees and charges.
equitable title
The interest held by a vendee under a contract for deed or an installment contract; the equitable right to obtain absolute ownership to property when legal title is held in another's name.
equity
The interest or value that an owner has in property over and above any indebtedness
escheat
The reversion of property to the state or county, as provided by state law, in cases where a decedent dies intestate without heirs capable of inheriting or when the property is abandoned.
escrow
The closing of a transaction through a third party called an escrow agent, or escrowee, who receives certain funds and documents to be delivered upon the performance of certain conditions outlined in the escrow instructions.
escrow account
The trust account established by a broker under the provisions of the license law for the purpose of holding funds on behalf of the broker's principal or some other person until the consummation or termination of a transaction.
escrow instructions
A document that sets forth the duties of the escrow agent as well as the requirements and obligations of the parties when a transaction is closed through an escrow.
estate in land
The degree, quantity, nature and extent of interest a person has in real property.
estate (tenancy) at sufferance
The tenancy of a lessee who lawfully comes into possession of a landlord's real estate but who continues to occupy the premises improperly after his or her lease rights have expired.
estate (tenancy) at will
An estate that gives the lessee the right to possession until the estate is terminated by either party; the term of this estate is indefinite.
estate (tenancy) for years
An interest for a certain, exact period of time in property leased for a specified consideration.
estate (tenancy) from period to period
An interest in leased property that continues from period to period-week to week, month to month or year to year.
eviction
A legal process to oust a person from possession of real estate.
evidence of title
Proof of ownership of property; commonly a certificate of title, an abstract of title with lawyer's opinion, or a Torrens registration certificate.
exchange
A transaction in which all or part of the consideration is the transfer of like-kind property (such as real estate for real estate).
exclusive-agency listing
-A listing contract under which the owner appoints a real estate broker as his or her exclusive agent for a designated period of time to sell the property, on the owner's stated terms, for a commission.
-The owner reserves the right to sell without paying anyone a commission if he or she sells to a prospect who has not been introduced or claimed by the broker.
exclusive-right-to-sell listing
A listing contract under which the owner appoints a real estate broker as his or her exclusive agent for a designated period of time to sell the property, on the owner's stated terms, for a commission.
The owner must pay the agent, regardless of who finds the buyer. This is the most common agreement used.
executed contract
A contract in which all parties have fulfilled their promises and thus performed the contract.
execution
The signing and delivery of an instrument. Also, a legal order directing an official to enforce a judgment against the property of a debtor.
executory contract
A contract under which something remains to be done by one or more of the parties.
express agreement
An oral or a written contract in which the parties state the contract's terms and express their intentions in words.
external depreciation
The reduction in a property's value caused by outside factors (those that are off the property).
Fair Housing Act
The federal law that prohibits discrimination in housing based on race, color, religion, sex, handicap, familial status or national origin.
Fannie Mae
A quasi-government agency established to purchase any kind of mortgage loans in the secondary mortgage market from the primary lenders.
Federal Deposit Insurance Corporation (FDIC)
An independent federal agency that manages the insurance funds for deposits in commercial banks and savings and loan associations.
Federal Reserve System
The country's central banking system, which controls the nation's monetary policy by regulating the supply of money and interest rates.
fee simple absolute
The maximum possible estate or right of ownership of real property, continuing forever.
FHA loan
A loan insured by the Federal Housing Administration and made by an approved lender in accordance with the FHA's regulations.
fiduciary
One in whom trust and confidence are placed; a reference to a broker employed under the terms of a listing contract or buyer agency agreement.
fiduciary relationship
A relationship of trust and confidence, as between trustee and beneficiary, lawyer and client or principal and agent.
fixture
An item of personal property that has been converted to real property by being permanently affixed to the realty.
floor joist
A horizontal board laid on edge, resting on the beams that provide the main support for the floor. The subflooring is nailed directly to the joists.
footing
A concrete support under a foundation, chimney or column that usually rests on solid ground and is wider than the structure being supported. Footings are designed to distribute the weight of the structure over the ground.
foreclosure
A legal procedure whereby property used as security for a debt is sold to satisfy the debt in the event of default in payment of the mortgage note or default of other terms in the mortgage document. The foreclosure procedure brings the rights of all parties to a conclusion and passes the title in the mortgaged property to either the holder of the mortgage or a third party who may purchase the realty at the foreclosure sale, free of all encumbrances affecting the property subsequent to the mortgage.
foundation wall
The masonry or concrete wall below ground level that serves as the main support for the frame structure. Foundation walls form the side walls of the basement.
fraud
A deception intended to cause a person to give up property or a lawful right.
Freddie Mac
A corporation established to purchase primarily conventional mortgage loans in the secondary mortgage market.
freehold estate
An estate in land in which ownership is for an indeterminate length of time, in contrast to a leasehold estate.
front footage
The measurement of a parcel of land by the number of feet of street or road frontage.
functional obsolescence
A loss of value to an improvement to real estate arising from functional problems, often caused by age or poor design.
future interest
A person's present right to an interest in real property that will not result in possession or enjoyment until some time in the future, such as a reversion or right of reentry.
gable
The triangular portion of an end wall rising from the level top wall under the inverted V of a sloping roof that aids water drainage. A gable can be made of weatherboard, tile or masonry and can extend above the rafters.
gap
A defect in the chain of title of a particular parcel of real estate; a missing document or conveyance that raises doubt as to the present ownership of the land.
general agent
One who is authorized by a principal to represent the principal in a specific range of matters.
general lien
The right of a creditor to have all of a debtor's property-both real and personal-sold to satisfy a debt.
general warranty deed
A deed in which the grantor fully warrants good clear title to the premises. Used in most real estate deed transfers, a general warranty deed offers the greatest protection of any deed.
Ginnie Mae
A government agency that plays an important role in the secondary mortgage market. It sells mortgage-backed securities that are backed by pools of FHA and VA loans.
girder
A heavy wooden or steel beam supporting the floor joists and providing the main horizontal support for the floor.
graduated-payment mortgage (GPM)
A loan in which the monthly principal and interest payments increase by a certain percentage each year for a certain number of years and then level off for the remaining loan term.
grantee
A person who receives a conveyance of real property from a grantor.
granting clause
Words in a deed of conveyance that state the grantor's intention to convey the property at the present time. This clause is generally worded as "convey and warrant," "grant," "grant, bargain and sell" or the like.
grantor
The person transferring title to or an interest in real property to a grantee.
gross income multiplier (GIM)
A figure used as a multiplier of the gross annual income of a property to produce an estimate of the property's value.
gross lease
A lease of property according to which a landlord pays all property charges regularly incurred through ownership, such as repairs, taxes, insurance and operating expenses. Most residential leases are gross leases.
gross rent multiplier (GRM)
The figure used as a multiplier of the gross monthly income of a property to produce an estimate of the property's value.
ground lease
A lease of land only, on which the tenant usually owns a building or is required to build as specified in the lease. Such leases are usually long-term net leases; the tenant's rights and obligations continue until the lease expires or is terminated through default.
growing-equity mortgage (GEM)
A loan in which the monthly payments increase annually, with the increased amount being used to reduce directly the principal balance outstanding and thus shorten the overall term of the loan.
highest and best use
The possible use of a property that would produce the greatest net income and thereby develop the highest value.
hip
A pitched roof with sloping sides and ends.
holdover tenancy
A tenancy whereby a lessee retains possession of leased property after the lease has expired and the landlord, by continuing to accept rent, agrees to the tenant's continued occupancy.
home equity loan
A loan (sometimes called a line of credit ) under which a property owner uses his or her residence as collateral and can then draw funds up to a prearranged amount against the property.
homeowner's insurance policy
A standardized package insurance policy that covers a residential real estate owner against financial loss from fire, theft, public liability and other common risks.
implied agreement
A contract under which the agreement of the parties is demonstrated by their acts and conduct.
implied warranty of habitability
A theory in landlord/tenant law in which the landlord renting residential property implies that the property is habitable and fit for its intended use.
improvement
(1) Any structure, usually privately owned, erected on a site to enhance the value of the property-for example, a fence or a driveway.
(2) A publicly owned structure added to or benefiting land, such as a curb, sidewalk, street or sewer.
income capitalization approach
The process of estimating the value of an income-producing property through capitalization of the annual net income expected to be produced by the property during its remaining useful life.
independent contractor
-Someone who is retained to perform a certain act but who is subject to the control and direction of another only as to the end result and not as to the way in which the act is performed. Unlike an employee, an independent contractor pays all expenses and Social Security and income taxes and receives no employee benefits.
-Most real estate salespeople are independent contractors.
index method
The appraisal method of estimating building costs by multiplying the original cost of the property by a percentage factor to adjust for current construction costs.
installment contract
A contract for the sale of real estate whereby the purchase price is paid in periodic installments by the purchaser, who is in possession of the property even though title is retained by the seller until a future date, which may not be until final payment. Also called a contract for deed or articles of agreement for warranty deed.
contract for deed
A contract for the sale of real estate whereby the purchase price is paid in periodic installments by the purchaser, who is in possession of the property even though title is retained by the seller until a future date, which may not be until final payment. Also called a contract for deed or articles of agreement for warranty deed.
articles of agreement for warranty deed
A contract for the sale of real estate whereby the purchase price is paid in periodic installments by the purchaser, who is in possession of the property even though title is retained by the seller until a future date, which may not be until final payment. Also called a contract for deed or articles of agreement for warranty deed.
installment sale
A transaction in which the sales price is paid in two or more installments over two or more years. If the sale meets certain requirements, a taxpayer can postpone reporting such income until future years by paying tax each year only on the proceeds received that year.
installment sale
A transaction in which the sales price is paid in two or more installments over two or more years. If the sale meets certain requirements, a taxpayer can postpone reporting such income until future years by paying tax each year only on the proceeds received that year.
insulation
Pieces of plasterboard, asbestos sheeting, compressed wood-wool, fiberboard or other material placed between inner and outer surfaces, such as walls and ceilings, to protect the interior from heat loss. Insulation works by breaking up and dissipating air currents.
interest
A charge made by a lender for the use of money.
intestate
The condition of a property owner who dies without leaving a valid will. Title to the property will pass to the decedent's heirs as provided in the state law of descent.
intrinsic value
An appraisal term referring to the value created by a person's personal preferences for a particular type of property.
investment
Money directed toward the purchase, improvement and development of an asset in expectation of income or profits.
involuntary lien
A lien placed on property without the consent of the property owner.
joint tenancy
Ownership of real estate between two or more parties who have been named in one conveyance as joint tenants. On the death of a joint tenant, the decedent's interest passes to the surviving joint tenant or tenants by the right of survivorship.
judgment
The formal decision of a court upon the respective rights and claims of the parties to an action or a suit. After a judgment has been entered and recorded with the county recorder, it usually becomes a general lien on the property of the defendant.
junior lien
An obligation, such as a second mortgage, that is subordinate in right or lien priority to an existing lien on the same realty.
land
The earth's surface, extending downward to the center of the earth and upward infinitely into space, including things permanently attached by nature, such as trees and water.
lease
A written or an oral contract between a landlord (the lessor) and a tenant (the lessee) that transfers the right to exclusive possession and use of the landlord's real property to the lessee for a specified period of time and for a stated consideration (rent). By state law, leases for longer than a certain period of time (generally one year) must be in writing to be enforceable.
leasehold estate
A tenant's right to occupy real estate during the term of a lease, generally considered to be a personal property interest.
lease option
A lease under which the tenant has the right to purchase the property either during the lease term or at its end.
lease purchase
The purchase of real property, the consummation of which is preceded by a lease, usually long-term; typically done for tax or financing purposes.
legal description
A description of a specific parcel of real estate complete enough for an independent surveyor to locate and identify it.
legally competent parties
People who are recognized by law as being able to contract with others; those of legal age and sound mind.
leverage
The use of borrowed money to finance an investment.
levy
To assess; to seize or collect. To levy a tax is to assess a property and set the rate of taxation. To levy an execution is to officially seize the property of a person to satisfy an obligation.
liability coverage
Insurance providing protection of the property owner against financial claims of others.
license
(1) A privilege or right granted to a person by a state to operate as a real estate broker or salesperson.
(2) The revocable permission for a temporary use of land-a personal right that cannot be sold.
lien
A right given by law to certain creditors to have their debts paid out of the property of a defaulting debtor, usually by means of a court sale.
lien theory
Some states interpret a mortgage as being purely a lien on real property. The mortgagee thus has no right of possession but must foreclose the lien and sell the property if the mortgagor defaults.`
life cycle costing
In property management, comparing one type of equipment with another based on both purchase cost and operating cost over its expected useful lifetime.
life estate
An interest in real or personal property that is limited in duration to the lifetime of its owner or some other designated person or persons.
life tenant
A person in possession of a life estate.
liquidated damages
An amount predetermined by the parties to a contract as the total compensation to an injured party should the other party breach the contract.
liquidity
The ability to sell an asset and convert it into cash, at a price close to its true value, in a short period of time.
lis pendens
A recorded legal document giving constructive notice that an action affecting a particular property has been filed in either a state or a federal court.
listing agreement
A contract between an owner (as principal) and a real estate broker (as agent) by which the broker is employed as agent to find a buyer for the owner's real estate on the owner's terms, for which service the owner agrees to pay a commission.
listing broker
The broker in a multiple-listing situation from whose office a listing agreement is initiated, as opposed to the cooperating broker, from whose office negotiations leading up to a sale are initiated. The listing broker and the cooperating broker may be the same person.
littoral rights
(1) A landowner's claim to use water in large navigable lakes and oceans adjacent to his or her property.
(2) The ownership rights to land bordering these bodies of water up to the high-water mark.
loan origination fee
A fee charged to the borrower by the lender for making a mortgage loan. The fee is usually computed as a percentage of the loan amount.
loan-to-value ratio
The relationship between the amount of the mortgage loan and the value of the real estate being pledged as collateral.
lot-and-block (recorded plat) system
A method of describing real property that identifies a parcel of land by reference to lot and block numbers within a subdivision, as specified on a recorded subdivision plat.
management agreement
A contract between the owner of income property and a management firm or an individual property manager that outlines the scope of the manager's authority.
mansard
An architectural style in which the top floor or floors of a structure are designed to appear to be the roof. Such a roof has two slopes on each of the four sides of the building, with the upper slope less steeply inclined.
market
A place where goods can be bought and sold and a price established.
marketable title
A good or clear title, reasonably free from the risk of litigation over possible defects.
Marketable Title Act
Provides that if a chain of title can be traced back for 30 years without a problem, it becomes a marketable title. The act is designed to eliminate obsolete defects in a chain of title.
market value
The most probable price property will bring in an arm's-length transaction under normal conditions on the open market.
mechanic's lien
A statutory lien created in favor of contractors, laborers and materialmen who have performed work or furnished materials in the erection or repair of a building.
metes-and-bounds description
A legal description of a parcel of land that begins at a well-marked point and follows the boundaries, using directions and distances around the tract, back to the place of beginning.
minor
Someone who has not reached the age of majority and therefore does not have legal capacity to transfer title to real property.
monetary policy
Governmental regulation of the amount of money in circulation through such institutions as the Federal Reserve Board.
month-to-month tenancy
A periodic tenancy under which the tenant rents for one month at a time. In the absence of a rental agreement (oral or written), a tenancy is generally considered to be month to month.
monument
A fixed natural or artificial object used to establish real estate boundaries for a metes-and-bounds description.
mortgage
A conditional transfer or pledge of real estate as security for the payment of a debt. Also, the document creating a mortgage lien.
mortgage banker
A mortgage loan company that originates, services and sells loans to investors.
mortgage broker
An agent of a lender who brings the lender and borrower together. The broker receives a fee for this service.
mortgagee
A lender in a mortgage loan transaction.
mortgage lien
A lien or charge on the property of a mortgagor that secures the underlying debt obligations.
mortgagor
A borrower in a mortgage loan transaction.
multiperil policy
An insurance policy that offers protection from a range of potential perils, such as those of fire, hazard, public liability and casualty.
multiple-listing clause
A provision in an exclusive listing for the authority and obligation on the part of the listing broker to distribute the listing to other brokers in the multiple-listing organization.
multiple-listing service (MLS)
A marketing organization composed of member brokers who agree to share their listing agreements with one another in the hope of procuring ready, willing and able buyers for their properties more quickly than they could on their own. Most MLSs accept exclusive-right-to-sell or exclusive-agency listings from their member brokers.
negotiable instrument
A written promise or order to pay a specific sum of money that may be transferred by endorsement or delivery. The transferee then has the original payee's right to payment.
net lease
A lease requiring that the tenant pay not only rent but also costs incurred in maintaining the property, including taxes, insurance, utilities and repairs.
net operating income (NOI)
The income projected for an income-producing property after deducting losses for vacancy and collection and operating expenses.
nonconforming use
A use of property that is permitted to continue after a zoning ordinance prohibiting it has been established for the area.
nonfreehold estate
A tenant's right to occupy real estate during the term of a lease, generally considered to be a personal property interest. Also called a leasehold estate.
nonhomogeneity
A lack of uniformity; dissimilarity. Because no two parcels of land are exactly alike, real estate is said to be nonhomogeneous.
North Carolina Condominium Act of 1986
Specifies that a condominium is created and established when the developer of the property executes and records a declaration of its creation in the county where the property is located. The declaration must include any covenants, conditions or restrictions on the use of the property. Other requirements include disclosure and other consumer protection measures in connection with new residential condominium unit sales.
North Carolina Fair Housing Act of 1983
State fair housing law containing similar prohibitions to those of the federal fair housing law. Unlike the federal law, however, the North Carolina law does not exempt owners who are selling their own property, and it does exempt the rental of a unit in a one-unit to four-unit residential building if the owner or one of the owner's family members lives in one of the units.
North Carolina Human Relations Council
The state agency responsible for enforcing the North Carolina Fair Housing Act of 1983.
North Carolina Residential Rental Agreements Act
The state act that makes the obligations of the landlord and the tenant mutually dependent. If either the landlord or the tenant fails to fulfill a duty, the other party is no longer responsible for fulfilling his or her equivalent duty.
North Carolina Tenant Security Deposit Act
The state act that regulates the amount of money that can be required as a security deposit and what the landlord can do with that deposit. The amount of the deposit depends on the term of the tenancy.
North Carolina Time Share Act
The portion of North Carolina real estate law that defines time-shares and regulates their development and sales.
novation
Substituting a new obligation for an old one or substituting new parties to an existing obligation.
obsolescence
The loss of value due to factors that are outmoded or less useful. Obsolescence may be functional or economic.
occupancy permit
A permit issued by the appropriate local governing body to establish that the property is suitable for habitation by meeting certain safety and health standards.
offer and acceptance
Two essential components of a valid contract;
a "meeting of the minds."
offeror/offeree
The person who makes the offer is the offeror.
The person to whom the offer is made is the offeree.
Office of Equal Opportunity (OEO)
The federal agency under the direction of the secretary of the Department of Housing and Urban Development, which is in charge of administering the federal Fair Housing Act.
Office of Thrift Supervision (OTS)
Monitors and regulates the savings and loan industry. OTS was created by the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA).
open-end loan
A mortgage loan that is expandable by increments up to a maximum dollar amount, the full loan being secured by the same original mortgage.
open listing
A listing contract under which the broker's commission is contingent on the broker's producing a ready, willing and able buyer before the property is sold by the seller or another broker.
option
An agreement to keep open for a set period an offer to sell or purchase property.
option listing
A listing with a provision that gives the listing broker the right to purchase the listed property.
package loan
A real estate loan used to finance the purchase of both real property and personal property, such as in the purchase of a new home that includes carpeting, window coverings and major appliances.
parol evidence rule
A rule of evidence providing that a written agreement is the final expression of the agreement of the parties, not to be varied or contradicted by prior or contemporaneous oral or written negotiations.
partition
The division of cotenants' interests in real property when all parties do not voluntarily agree to terminate the co-ownership; takes place through court procedures.
payment cap
The limit on the amount the monthly payment can be increased on an adjustable-rate mortgage when the interest rate is adjusted.
percentage lease
A lease, commonly used for commercial property, whose rental is based on the tenant's gross sales at the premises. It usually stipulates a base monthly rental plus a percentage of any gross sales above a certain amount.
percolation test
A test of the soil to determine whether it will absorb and drain water adequately to use a septic system for sewage disposal.
periodic estate (tenancy)
An interest in leased property that continues from period to period-week to week, month to month or year to year.
personal property
Items, called chattels, that do not fit into the definition of real property; movable objects.
physical deterioration
A reduction in a property's value resulting from a decline in physical condition; can be caused by action of the elements or by ordinary wear and tear.
pier
A column, usually of steel-reinforced concrete. Piers are evenly spaced under a structure to support the weight. May also refer to the part of the wall between the windows or other openings that bears the wall weight.
planned unit development (PUD)
A planned combination of diverse land uses, such as housing, recreation and shopping, in one contained development or subdivision.
plat map
A map of a town, section or subdivision indicating the location and boundaries of individual properties.
point of beginning (POB)
In a metes-and-bounds legal description, the starting point of the survey, situated at one corner of the parcel. All metes-and-bounds descriptions must follow the boundaries of the parcel back to the point of beginning.
police power
The government's right to impose laws, statutes and ordinances, including zoning ordinances and building codes, to protect the public health, safety and welfare.
power of attorney
A written instrument authorizing a person, the attorney-in-fact, to act as agent for another person to the extent indicated in the instrument.
prepaid item
On a closing statement, an item that has been paid in advance by the seller, such as an insurance premium and some real estate taxes, for which he or she must be reimbursed by the buyer.
prepayment penalty
A charge imposed on a borrower who pays off the loan principal early. This penalty compensates the lender for interest and other charges that would otherwise be lost.
primary mortgage insurance (PMI)
Insurance coverage used for obtaining conventional loans with higher than normal loan-to-value ratios.
primary mortgage market
The mortgage market in which loans are originated, consisting of lenders such as commercial banks, savings and loan associations and mutual savings banks.
principal
(1) A sum loaned or employed as a fund or an investment, as distinguished from its income or profits.
(2) The original amount (as in a loan) of the total due and payable at a certain date.
(3) A main party to a transaction-the person for whom the agent works.
prior appropriation
A concept of water ownership in which the landowner's right to use available water is based on a government-administered permit system.
priority
The order of position or time. The priority of liens is generally determined by the chronological order in which the lien documents are recorded. Tax liens, however, have priority even over previously recorded liens.
private mortgage insurance (PMI)
Insurance provided by a private carrier that protects a lender against a loss in the event of a foreclosure and deficiency.
procuring cause
The effort that brings about the desired result. Under an open listing, the broker who is the procuring cause of the sale receives the commission.
promissory note
A financing instrument that states the terms of the underlying obligation, is signed by its maker and is negotiable (transferable to a third party).
property insurance
A policy that provides property owner coverage for the basic structure on that property.
property manager
Someone who manages real estate for another person for compensation. Duties include collecting rents, maintaining the property and keeping up all accounting.
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.
prorations
Expenses, either prepaid or paid in arrears, that are divided or distributed between buyer and seller at the closing.
protected class
Any group of people designated as such by the Department of Housing and Urban Development (HUD) in consideration of federal and state civil rights legislation; currently includes ethnic minorities, women, religious groups, the handicapped and others.
public offering statement
The document all prospective time-share purchasers must receive before signing a sales contract. The statement must disclose all material facts about the property, as required by the state.
puffing
Exaggerated or superlative comments or opinions
pur autre vie
"For the life of another."
A life estate pur autre vie is a life estate that is measured by the life of a person other than the grantee.
purchase-money mortgage (PMM)
A note secured by a mortgage or deed of trust given by a buyer, as borrower, to a seller, as lender, as part of the purchase price of the real estate.
quantity-survey method
The appraisal method of estimating building costs by calculating the cost of all of the physical components in the improvements, adding the cost to assemble them and then including the indirect costs associated with such construction.
quiet title
A court action to remove a cloud on the title
rafter
One of a series of sloping beams that extends from the exterior wall to a center ridgeboard and provides the main support for the roof.
rate cap
The limit on the amount the interest rate can be increased at each adjustment period in an adjustable-rate loan. The cap may also set the maximum interest rate that can be charged during the life of the loan.
ratification
A method of creating an agency relationship in which the principal accepts the conduct of someone who acted without prior authorization as the principal's agent.
ready, willing and able buyer
One who is prepared to buy property on the seller's terms and is ready to take positive steps to consummate the transaction.
real estate
Land; a portion of the earth's surface extending downward to the center of the earth and upward infinitely into space, including all things permanently attached to it, whether naturally or artificially.
Real Estate Commission
The state governmental agency whose primary duties include making rules and regulations to protect the general public involved in real estate transactions, granting licenses to real estate brokers and salespeople and suspending or revoking licenses for cause.
real estate investment trust (REIT)
Trust ownership of real estate by a group of individuals who purchase certificates of ownership in the trust, which in turn invests the money in real property and distributes the profits back to the investors free of corporate income tax.
real estate license law
1) The state law enacted to protect the public from fraud, dishonesty and incompetence in the purchase and sale of real estate. real estate mortgage investment conduit (REMIC)
2)A tax entity that issues multiple classes of investor interests (securities) backed by a pool of mortgages.
real estate recovery fund
A fund established in some states from real estate license revenues to cover claims of aggrieved parties who have suffered monetary damage through the actions of a real estate licensee.
Real Estate Settlement Procedures Act (RESPA)
The federal law that requires certain disclosures to consumers about mortgage loan settlements. The law also prohibits the payment or receipt of kickbacks and certain kinds of referral fees.
real property
The interests, benefits and rights inherent in real estate ownership
REALTOR
A registered trademark term reserved for the sole use of active members of local REALTORS(r) boards affiliated with the National Association of REALTORS(r).
reconciliation
The final step in the appraisal process, in which the appraiser combines the estimates of value received from the sales comparison, cost and income capitalization approaches to arrive at a final estimate of market value for the subject property.
reconveyance deed
A deed used by a trustee under a deed of trust to return title to the trustor.
recording
The act of entering or recording documents affecting or conveying interests in real estate in the recorder's office established in each county. Until it is recorded, a deed or mortgage ordinarily is not effective against subsequent purchasers or mortgagees.
rectangular (government) survey system
A system established in 1785 by the federal government, providing for surveying and describing land by reference to principal meridians and base lines.
redemption
The right of a defaulted property owner to recover his or her property by curing the default.
redemption period
A period of time established by state law during which a property owner has the right to redeem his or her real estate from a foreclosure or tax sale by paying the sales price, interest and costs. Many states do not have mortgage redemption laws.
redlining
The illegal practice of a lending institution denying loans or restricting their number for certain areas of a community.
registration certificate
The document that developers of time-shares in North Carolina must obtain from the Real Estate Commission before they can offer a project's time-shares for sale to the public.
Regulation Z
Implements the Truth-in-Lending Act requiring credit institutions to inform borrowers of the true cost of obtaining credit.
release deed
A document, also known as a deed of reconveyance, that transfers all rights given a trustee under a deed of trust loan back to the grantor after the loan has been fully repaid.
remainder interest
The remnant of an estate that has been conveyed, to take effect and be enjoyed after the termination of a prior estate, such as when an owner conveys a life estate to one party and the remainder to another.
rent
A fixed, periodic payment made by a tenant of a property to the owner for possession and use, usually by prior agreement of the parties.
rent schedule
A statement of proposed rental rates, determined by the owner or the property manager or both, based on a building's estimated expenses, market supply and demand and the owner's long-range goals for the property.
replacement cost
The construction cost at current prices of a property that is not necessarily an exact duplicate of the subject property but serves the same purpose or function as the original.
reproduction cost
The construction cost at current prices of an exact duplicate of the subject property.
restrictive covenant
A clause in a deed that limits the way the real estate ownership may be used.
revenue stamps
Tax stamps required to be affixed to a deed by state or local law. 1$ for each $500. Remember: round up!
reverse-annuity mortgage (RAM)
A loan under which the homeowner receives monthly payments based on his or her accumulated equity rather than a lump sum. The loan must be repaid at a prearranged date or upon the death of the owner or the sale of the property.
ridgeboard
A heavy horizontal board, set on edge at the apex of the roof, to which the rafters are attached.
right of first refusal
The right of a person to have the first opportunity to either purchase or lease real property. In a lease situation, a right of first refusal might give the tenant the right either to purchase the property, if offered for sale, or to renew the lease or lease adjoining space.

In some condominiums, the association of apartment owners retains the right of first refusal on any sale of a unit.
right-of-way
The right given by one landowner to another to pass over the land, construct a roadway or use the land as a pathway, without actually transferring ownership.
riparian rights
An owner's rights in land that borders on or includes a stream, river or lake. These rights include access to and use of the water.
roofing felt
Sheets of flat or other close-woven, heavy material placed on top of the roof boards to insulate and waterproof the roof.
roofing shingle
Thin, small sheet of wood, asbestos, fiberglass, slate, metal, clay or other material used as the outer covering for a roof. Shingles are laid in overlapping rows to completely cover the roof surface. Shingles are sometimes used as an outer covering for exterior walls.
rules and regulations
Real estate licensing authority orders that govern licensees' activities. They usually have the same force and effect as statutory law.
R-value
The insulation value of materials. The higher the R-value, the more resistant the material is to the transfer of heat.
sale and leaseback
A transaction in which an owner sells his or her improved property and, as part of the same transaction, signs a long-term lease to remain in possession of the premises.
sales comparison approach
The process of estimating the value of a property by examining and comparing actual sales of comparable properties.
salesperson
A person who performs real estate activities while employed by or associated with a licensed real estate broker.
satisfaction of mortgage
A document acknowledging the payment of a mortgage debt.
secondary mortgage market
A market for the purchase and sale of existing mortgages, designed to provide greater liquidity for mortgages; also called the secondary money market. Mortgages are first originated in the primary mortgage market.
security agreement
Part of the Uniform Commercial Code. Security interests in chattels are created by an instrument known as a security agreement. To give notice of the security interest, a financing statement must be recorded. Article 6 of the code regulates bulk transfers-the sale of a business as a whole, including all fixtures, chattels and merchandise.
security deposit
A payment by a tenant, held by the landlord during the lease term and kept (wholly or partially) on default or destruction of the premises by the tenant.
separate property
Under community property law, property owned solely by either spouse before the marriage, acquired by gift or inheritance after the marriage or purchased with separate funds after the marriage.
servient tenement
Land on which an easement exists in favor of an adjacent property (called a dominant estate); also called a servient estate.
setback
The amount of space local zoning regulations require between a lot line and a building line.
severalty
The ownership of real property by one person only; also called sole ownership.
severance
Changing an item of real estate to personal property by detaching it from the land; for example, cutting down a tree.
sharecropping
In an agricultural lease, the agreement between the landowner and the tenant farmer to split the crop or the profit from its sale, actually sharing the crop.
siding
Boards nailed horizontally to the vertical studs, with or without intervening sheathing, to form the exposed surface of the outside walls of the building. Siding may be made of wood, metal or masonry sheets.
sill
The lowest horizontal member of the house frame, which rests atop the foundation wall and forms a base for the studs. The term can also refer to the lowest horizontal member in the frame for a window or door.
sole plate
That which connects the studs to the flooring.
special agent
One who is authorized by a principal to perform a single act or transaction. A real estate broker is usually a special agent authorized to find a ready, willing and able buyer for a particular property.
special assessment
A tax or levy customarily imposed against only those specific parcels of real estate that will benefit from a proposed public improvement like a street or sewer.
special warranty deed
A deed in which the grantor warrants, or guarantees, the title only against defects arising during the period of his or her tenure and ownership of the property and not against defects existing before that time, generally using the language "by, through or under the grantor but not otherwise."
specific lien
A lien affecting or attaching only to a certain, specific parcel of land or piece of property.
specific performance
A legal action to compel a party to carry out the terms of a contract
square-foot method
The appraisal method of estimating building costs by multiplying the number of square feet in the improvements being appraised by the cost per square foot for recently constructed similar improvements.
statute of frauds
That part of a state law that requires that certain instruments, such as deeds, real estate sales contracts and certain leases, be in writing to be legally enforceable.
statute of limitations
That law pertaining to the period of time within which certain actions must be brought to court.
statutory lien
A lien imposed on property by statute-a tax lien, for example-in contrast to an equitable lien, which arises out of common law.
statutory redemption
The right of a defaulted property owner to recover the property after its sale by paying the appropriate fees and charges.
steering
The illegal practice of channeling home seekers to particular areas, either to maintain the homogeneity of an area or to change the character of an area, which limits their choices of where they can live.
stigmatized property
Property regarded as undesirable because of events that occurred there; also called psychologically impacted property. Some conditions that typically stigmatize a property are murder, gang-related activity, proximity to a nuclear plant and even the alleged presence of ghosts
straight (term) loan
A loan in which only interest is paid during the term of the loan, with the entire principal amount due with the final interest payment
subagent
One who is employed by a person already acting as an agent; typically a reference to a salesperson licensed under a broker (agent) who is employed under the terms of a listing agreement.
subdivider
One who buys undeveloped land; divides it into smaller, usable lots; and sells the lots to potential users.
subdivision
A tract of land divided by the owner, known as the subdivider, into blocks, building lots and streets according to a recorded subdivision plat, which must comply with local ordinances and regulations. subdivision and development ordinances.

Municipal ordinances that establish requirements for subdivisions and development.
subdivision plat
A map of a town, section or subdivision indicating the location and boundaries of individual properties.
subflooring
Boards or plywood sheets nailed directly to the floor joists, serving as a base for the finish flooring. Subflooring is usually made of rough boards, although some houses have concrete subflooring.
sublease
The leasing of premises by a lessee to a third party for part of the lessee's remaining term. See also assignment.
subletting
The leasing of premises by a lessee to a third party for part of the lessee's remaining term. See also assignment.
subordination
Relegation to a lesser position, usually in respect to a right or security.

Clause in some mortgages which allows subsequent mortgages on the same property to have higher claim than the current mortgage.
subrogation
The substitution of one creditor for another, with the substituted party succeeding to the legal rights and claims of the original claimant. Subrogation is used by title insurers to acquire from the injured party rights to sue to recover any claims they have paid.
substitution
An appraisal principle that states that the maximum value of a property tends to be set by the cost of purchasing an equally desirable and valuable substitute property, assuming that no costly delay is encountered in making the substitution.
subsurface rights
Ownership rights in a parcel of real estate to the water, minerals, gas, oil and so forth that lie beneath the surface of the property.
suit for possession
A court suit initiated by a landlord to evict a tenant from leased premises after the tenant has breached one of the terms of the lease or has held possession of the property after the lease's expiration.
suit to quiet title
A court action intended to establish or settle the title to a particular property, especially when a cloud on the title exists.
supply
The amount of goods available in the market to be sold at a given price. The term is often coupled with demand.
supply and demand
The appraisal principle that follows the interrelationship of the supply of and demand for real estate. As appraising is based on economic concepts, this principle recognizes that real property is subject to the influences of the marketplace, as is any other commodity
surety bond
An agreement by an insurance or a bonding company to be responsible for certain possible defaults, debts or obligations contracted for by an insured party; in essence, a policy insuring one's personal or financial integrity. In the real estate business, a surety bond is generally used to ensure that a particular project will be completed at a certain date or that a contract will be performed as stated
surface rights
Ownership rights in a parcel of real estate that are limited to the surface of the property and do not include the air above it (air rights) or the minerals below the surface (subsurface rights).
survey
The process by which boundaries are measured and land areas are determined; the on-site measurement of lot lines, dimensions and position of a house on a lot, including the determination of any existing encroachments or easements.
taxation
The process by which a government or municipal quasi-public body raises monies to fund its operation.
tax deed
An instrument, similar to a certificate of sale, given to a purchaser at a tax sale. See also certificate of sale.
tax lien
A charge against property, created by operation of law. Tax liens and assessments take priority over all other liens.
tax sale
A court-ordered sale of real property to raise money to cover delinquent taxes.
tenancy by the entirety
The joint ownership, recognized in some states, of property acquired by husband and wife during marriage. Upon the death of one spouse, the survivor becomes the owner of the property.
tenancy in common
A form of co-ownership by which each owner holds an undivided interest in real property as if he or she were sole owner. Each individual owner has the right to partition. Unlike joint tenants, tenants in common have the right of inheritance.
tenant
One who holds or possesses lands or tenements by any kind of right or title.
tenant improvement
Alteration to the interior of a building to meet the functional demands of the tenant.
testate
Having made and left a valid will.
testator
A person who has made a valid will. A woman often is referred to as a testatrix, although testator can be used for either gender.
time is of the essence
A phrase in a contract that requires the performance of a certain act within a stated period of time.
time-share
A form of ownership interest that may include an estate interest in property and that allows use of the property for a fixed or variable time period.
title
(1) The right to or ownership of land.
(2) The evidence of ownership of land.
title insurance
A policy insuring the owner or mortgagee against loss by reason of defects in the title to a parcel of real estate, other than encumbrances, defects and matters specifically excluded by the policy.
title search
The examination of public records relating to real estate to determine the current state of ownership.
title theory
Describing those states that interpret a mortgage to mean that the lender is the owner of mortgaged land. Upon full payment of the mortgage debt, the borrower becomes the landowner.
trade fixture
An article installed by a tenant under the terms of a lease and removable by the tenant before the lease expires.
transfer tax
Tax stamps required to be affixed to a deed by state or local law. $1 per $500 value, rounded up.
trust
A fiduciary arrangement whereby property is conveyed to a person or an institution, called a trustee, to be held and administered on behalf of another person, called a beneficiary. The one who conveys the trust is called the trustor.
trust deed
An instrument used to create a mortgage lien by which the borrower conveys title to a trustee, who holds it as security for the benefit of the note holder (the lender); also called a deed of trust.
trust deed lien
A lien on the property of a trustor that secures a deed of trust loan.
trustee
The holder of bare legal title in a deed of trust loan transaction.
trustee's deed
A deed executed by a trustee conveying land held in a trust.
trust funds
Those monies received by a real estate licensee while acting as an agent in a real estate transaction. Generally, trust funds include earnest money deposits, down payments, tenant security deposits, rents and monies received from final settlements.
trustor
A borrower in a deed of trust loan transaction.
unenforceable contract
A contract that has all the elements of a valid contract, yet neither party can sue the other to force performance of it. For example, an unsigned contract is generally unenforceable
Uniform Commercial Code
A codification of commercial law, adopted in most states, that attempts to make uniform all laws relating to commercial transactions, including chattel mortgages and bulk transfers. Security interests in chattels are created by an instrument known as a security agreement. To give notice of the security interest, a financing statement must be recorded. Article 6 of the code regulates bulk transfers-the sale of a business as a whole, including all fixtures, chattels and merchandise.

For example, if a homeowner purchases an item on credit, and gives the creditor a security sgreement, that item remains personal property. On sale of the home, the seller (or creditor, if defaulted) may remove the appliance.
Uniform Settlement Statement
The standard HUD Form 1 required to be given to the borrower, lender and seller at or before settlement by the settlement agent in a transaction covered under the Real Estate Settlement Procedures Act. The lender must retain its copy for at least two years.
unilateral contract
A one-sided contract wherein one party makes a promise to induce a second party to do something. The second party is not legally bound to perform; however, if the second party does comply, the first party is obligated to keep the promise.
unit-in-place method
The appraisal method of estimating building costs by calculating the costs of all of the physical components in the structure, with the cost of each item including its proper installation, connection, etc.; also called the segregated cost method.
unit of ownership
The four unities traditionally needed to create a joint tenancy:
unity of title
time
interest
possession
usury
Charging interest at a higher rate than the maximum rate established by state law.
valid contract
A contract that complies with all the essentials of a contract and is binding and enforceable on all parties to it.
VA loan
A mortgage loan on approved property made to a qualified veteran by an authorized lender and guaranteed by the Department of Veterans Affairs to limit the lender's possible loss.
value
The power of a good or service to command other goods in exchange for the present worth of future rights to its income or amenities.
variance
Permission obtained from zoning authorities to build a structure or conduct a use that is expressly prohibited by the current zoning laws; an exception from the zoning ordinances.
vendee
A buyer, usually under the terms of a land contract.
vendor
A seller, usually under the terms of a land contract.
voidable contract
A contract that seems to be valid on the surface but may be rejected or disaffirmed by one or both of the parties.
void contract
A contract that has no legal force or effect because it does not meet the essential elements of a contract.
voluntary lien
A lien placed on property with the knowledge and consent of the property owner.

For example, mortgage or deed of trust.
wall stud
The vertical member to which horizontal pieces are attached. Studs are placed 16 to 24 inches apart and serve as the main support for the roof and the second floor.
waste
An improper use or an abuse of a property by a possessor who holds less than fee ownership, such as a tenant, life tenant, mortgagor or vendee. Such waste ordinarily impairs the value of the land or the interest of the person holding the title or the reversionary rights.
will
A written document, properly witnessed, providing for the transfer of title to property owned by the deceased, called the testator.
wraparound loan
A method of refinancing in which the new mortgage is placed in a secondary, or subordinate, position. The new mortgage includes both the unpaid principal balance of the first mortgage and whatever additional sums are advanced by the lender. In essence, it is an additional mortgage in which another lender refinances a borrower by lending an amount exceeding the existing first mortgage amount without disturbing the existence of the first mortgage
zoning ordinance
An exercise of police power by a municipality to regulate and control the character and use of property
quitclaim deed
A conveyance by which the grantor transfers whatever interest he or she has in the real estate, without warranties or obligations.
reversionary interest
The remnant of an estate that the grantor holds after granting a life estate to another person.
Accretion
adding soil to land naturally
Reliction
Exposure of land due to permanent recision of a body of water
Erosion
The wearing away of soil.
Avulsion
One neighbor losing his soil on a neighbors lot
Lateral Support or Subjacent Support
Right of a land-owner to have the sides of his land supported by his neighbor
Spot zoning
A small area is rezoned in a different manner thante surrounding area.

Usually illegal & negatively effects neighbors & community.
Common home environmental risk:
-Lead based paint (pre-1978)
-Radon (uranium from rocks)
-Mold (water damage)
-Buried petroleum tanks (~pre-1960)
Adjusted Basis
Purchase Price
+ Closing Costs
+ Capital (permanent) Improvments
1031 Exchange
Like kind exchange. A 1031 exchange allows an investor to sell a property, to reinvest the proceeds in a new property and to defer all capital gain taxes.
Interstate Land Sales Full Disclosure
Regulate interstate sale and lease of lots ib subdivisions of 25 or more lots.

Must furnish property report:
-distance over paved roads to nearby communities
-# homes occupied
-soil conditions affectin foundation & septic systems
-type of title a buyer receives
-existence of liens

Must be given 3 days before sales contract signed. 7 days to revoke. 2 years if report not received.
Coastal Area Management Act (CAMA)
Protect, preserve & give management guidelines in coastal areas.

Must be approved:
-building
-dredging
-filling
-digging
-clearing
-bulkheading
Sediment Polution Control Act
Handle problems of sedimentation (soil deposited in water) problems.

Prevents development that may disturb topography or vegetation that may cause erosion prolems.

Calls for erosion control devices, sedimentation plans and natural buffer zones.
Overide Clause
Clause in a listing contract saying seller will pay listing broker commission within a stated number of days after the listing contract expires (and if not relisted with another broker) for any buyer's introduced by the listing broker.

Also called an extender clause.
Protection Agreement
Agreement an exclusive buyer agent can sign with an unlisted seller to guarantee payment of commission.