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72 Cards in this Set
- Front
- Back
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ABANDONMENT
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The giving up of a responsibility as shown through some overt action. Non-use of property is not abandonment; failure to keep property up or to pay taxes may be recognized as abandonment. May result in non-compensatory loss of property rights. dying intestate with no heirs is a form of abandonment. allowing us of property, which results in a judgment for adverse possession or prescriptive easement, is a form of abandonment. |
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Abstract of Title |
A collection of documents showing interests, which have been recorded against title to a property. Does not guarantee marketability of title. |
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Abstractor |
One who prepares an abstract of title |
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Acceleration Clause |
Clause in a contract, which will, under specified circumstances, cause a speeding up of the due date. Commonly used by a mortgagee as a remedy for the Due on Sale Clause to require payment in full before the termination date of the contract, forcing the property into foreclosure. Can also be used in other contracts such as leases as a remedy for default See also: Alienation Clause |
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Acceptance |
Agreement to receive what has been offered. Typically used in connection with the execution of an offer or a deed. Acceptance of an offer results in contract and terminates the offer, i.e., if an offeree does not accept an offer, the offer terminates without resulting in contract. Acceptance of a deed terminates a purchase agreement. it is possible for offer or delivery to occur without acceptance if the party receiving does not wish to receive, e.g. a deed to property in default may be delivered to the mortgagee, but, if a mortgagee does not accept, no transfer occurs. |
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Accession |
Man-made additions to real property. Examples of accession include the encroachment of a structure onto another's property; the construction of a building on a leased lot |
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Accretion |
Natural additions to real property. Typically results from the addition of soil because of the natural flow of a body of water, (alluvial soil) Opposite of erosion |
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Acknowledgment |
Positive declaration as to of the truth of a stated fact. As it refers to the recording process, it relates to the statements of the signatory on the document to be recorded, particularly relating to age of the party, lack of duress, and assurance that the party is who s/he is. see also: Notary |
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Acre |
An area of land totaling 43,560 square feet |
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Active License |
One, which has been issued for use. An active license is simply available for use. See also: Lapsed License, Expired License.
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Actual Damages |
Court order providing restitution of costs incurred by a party to a contract because of default by the other party. See also: Liquidated Damages; Damages |
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Actual Eviction |
Court action (summary Proceeding), which a landlord can take against a tenant for breach for lease. An attempt by the landlord to remedy the problem between the parties must be made first through a Notice to Quit which notifies the tenant of the breach and requires that the tenant either remedy the problem or quit the premises. A 7-day Notice to Quit is required for money due, and a 30-day notice for any other breach. if the Notice to Quit fails, the landlord can file action in court to obtain a court order, called a Writ of Restitution, for the tenant to restore the right of possession to the landlord. 10 days is allowed for the tenant to comply. after this, the landlord, under the supervision of an "officer of the court" can remove the tenant's personal property form the premises and regain the right of possession. See also: Constructive Eviction |
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Actual Notice |
Information, which is known. A search of the public record will provide known information, i.e., actual notice. Questioning will provide known information, therefore, actual notice See also: Constructive Notice |
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Addendum |
An addition, which becomes part of a contract at the time it is created. Generally, additional pages resulting from lack of adequate space on the contract itself. See also: Attachment, Amendment |
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Adjustable Rate Mortgage (ARM) |
Type of variable rate mortgage in which interest rate changes are identified in the contract based on an economic indicator or index. See also: Renegotiable, Variable, or Fixed Rate |
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Administrator |
Party named by the court to act on behalf of a party who has died without leaving a will. Feminine for: executrix |
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Ad Valorem Tax |
Tax assessed against real property based on the value of the property, which can be, assessed value or a state equalized value. In Michigan, Assessed value is, by law 50% of the Market Value of the property. Actual tax amount is based on a millage rate. Ad valorem taxes pay for public services, e.g. police and fire protection, and maintenance of improvements, which are in place for the public such as roads, street lighting, etc. Provides real property owner with income tax deduction. See also: Assessed value; Millage Rate; Special Assessment. |
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Advance (Paid in) |
Term used to refer to time at which payments are made in relation to the period over which the time or service is received. Advance payments are made at the beginning of the process or period. Taxes paid in advance are paid at the beginning of the tax year. See also: Arrears. |
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Adverse Possession |
A statutory means by which title to real property can be lost to a party claiming open, continuous, hostile, notorious use against the wishes of the owner for a statutory period of time. (The statutory period in Michigan is 15 years) With proof of the above requirements, a claimant can be awarded title by the courts. See also: Easement by Prescription |
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Agency |
Relationship, which results from consent and is based in trust. One party (the principal) authorizes and places trust in the other (the agent) to act on the principal's behalf and in the principal's best interest. Agency results from contract often an employment agreement, or arrangement. Listing Agreements, Independent Contractor Agreements, Powers of Attorney, Trust Agreements, Escrow Agreements are all documents, which result in the creation of agency. An agent owes certain fiduciary duties to the party. The fiduciary duties define the behaviors of the agent in the relationship. The fiduciary duties include: Care, Obedience, Loyalty, Accounting, Due Diligence and Confidentiality. |
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Alienation Clause |
Another name for a Due on Sale Clause, which acts as a default clause, often in a mortgage and identifies the sale of the property by the mortgagor as a default. Combining an alienation clause and an acceleration clause in a contract results in the elimination of the normal right of a contracting party to assign the rights of the contract. |
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Alluvion |
The soil carried by the natural movement of water which is deposited on the shore and increases the land mass |
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Amendment |
Change in contractual terms and conditions after a contract has been created. May result form contingency release or from changes to original contract |
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Amenities |
Additions available to or appurtenant to real property, which provide pleasure, comfort or convenience, e.g., central air, fireplace, neighborhood park, proximity to schools |
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Amortized |
Characterized by elimination of a debt (putting to death from the root "mort") through regular periodic payments to principal and interest over a specified period of time. Payment over the full term results in a fully amortized loan, i.e., the final payment reduces the balance to -0- or leaves a very small balance. Payments to principal and interest over less than the full amortization period result in a partially amortized loan requiring a balloon payment at the end of the term |
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Annual Percentage Rate (APR) |
Term created under Truth in Lending Act (Regulation Z) to refer to any yield earned by a lender in connection with a loan. Resulted from confusion by potential borrowers who were quoted an interest rate but were unaware of the other charges by the lender. Includes interest rate, discount points, origination fees, and any other money, which will be paid to the lender by the borrower. NOT a Trigger Term |
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Anti-Trust Law |
A body of law relating to regulation of activities which tend to restrain free trade. Includes price fixing, boycotting allocation of the area and tying agreements. Federal: Sherman or Clayton Anti-trust Act; Michigan: Uniform State Anti-trust Act. Anti-trust violations are felonies. Michigan penalties include: Criminal Action - fine up to $100,000 and imprisonment up to 3 years. Possibility also of civil action by injured party who can be awarded up to treble (3x actual) damages plus reasonable attorney fees. |
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Application Fee |
See: Origination Fee |
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Appraisal |
Report prepared by a specialist in property valuation providing an estimated opinion of value. Better than a guess because value is based on available market information. Can not be an absolute number since the final value is up to the purchaser ( the market), not the appraiser or seller. There are three primary methods used in appraising. Market approach, Cost Approach and Income Approach. |
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Appraised Value |
Value established by appraisal. Used by a lender to determine loan to value ration. If appraised value is less than sale price as established in Purchase Agreement, lender uses appraised value rather than sale price to determine loan amount. See also: Loan to Value Ratio |
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Appreciation |
Increase in value of property for any reason. Commonly results from effects of economic principle of supply and demand, updating of improvements, conditions external to the property, etc. See also: Depreciation; Supply and Demand |
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Appurtenance |
Attachment. Can refer to physical attachments to the land like fences and other structures, to conceptual attachments such as the rights, which attach to the interest in ownership, or to attachments to documents such as amendments or addenda. Appurtenances, as they relate to real property run with the land unless otherwise agreed in writing. |
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Area |
A two dimensional measurement, defining a flat surface. Determined by using the mathematical formula: L x W = A typical real estate references include: square footage, generally used to indicate size of a structure or a room; square miles, generally sued to define sections and townships; in the U>S> Rectangular Survey System |
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Arrears (Paid in) |
Behind. Term used to refer to time at which payments are made in relation to the period over which the payment is due. Payments in arrears are made at the end of the period. Taxes paid in arrears are paid at the end of the tax year, for example, to catch payment up to the due date. Interest, by law, is always paid in arrears. it is for this reason that the first payment on a loan is always due a period of time (typically at least 30 days) after the money is received |
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Articles 1 through 6 |
Portions of the Michigan Occupational Code which deal with all licensed occupations that fall under regulation by the Department of Consumer and Industry Services, Bureau of Occupational and Professional Regulation (BOPR). These 6 articles set up the regulatory structure; define the duties of the Department and Boards; identify violations and penalties; establish a complaint procedure for violations |
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Article 25 |
Portion of the Michigan Occupational Code, which specifically deals with the occupation of real estate. Identifies types and purposes of licenses; defines relationships between licensees within the occupation; establishes requirements for licensing; identifies disclosures and recommendations required by licensees; establishes certain contractual requirements relating to dealing with the public. |
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"As Is" Clause |
Clause often included in a real estate purchase agreement to provide protection to the seller from lawsuits by a purchaser for defects of property. The Clause will give protection if the seller has not committed fraud in the transaction. |
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Assessed Value |
Value placed on real property by a taxing authority. In Michigan, the legal requirement for assessed value is 50% of market value. This value is established by the assessor on an annual basis as of dates established by law. A system of checks and balances insures that all property assessments are based on the 50% requirement. Local assessors report to the county assessors who report to the state assessor. At each level, adjustments can be made using an equalization factor to adjust the assessed value up or down as required. When this factor is applied by the state assessors' office, the resulting adjusted value is referred to as the State Equalized Value (SEV), which becomes the basis for ad valorem tax bills on real property. Since 1994, tax bills also show a taxable value which, except in the first year of the ownership will probably be lower than the assessed value or SEV since there is now a limit on the amount tax a given tax year |
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Assessor's Parcel Number |
See: Tax Identification Number |
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Assignment |
Giving up of an interest. Generally relates to contractual rights, which, by law, can be assigned to another unless the parties agree otherwise in writing. Assignment always leaves the assigning party in a positions of liability for the rights given should the assignee fail to live up to the agreement. |
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Assignor |
Party who gives up rights held by contract. |
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Assignee |
Party who receives or takes on contractual right from another |
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Associate Broker |
1) Type of license issued to real estate practitioner who has completed 3 years of real estate experience or the equivalent, 90 hours of statutory classes, has attained the age of 18, and passed the broker's license examination. This license can be issued only under a broker license. It may be held by a designated decision-maker for a real estate company ( principal associate broker) if the broker is a non-living entity such as a partnership, LLC or corporation. In this case, at least on party much hold an associate broker license in order for a broker license to be issued. This structure is often used to shift responsibility from the individual to a non-living entity, thereby limiting individual liability for the actions of those employed by the company. More than one principal associate broker license may be held as required by law with different companies at the same time. More than one individual in the company can also hold an associate broker license. 2) A party who has not been designated as a decision-maker for the company can be issued an associate broker license as a non-principal. Since the party has met the requirements, s/he can become a principal of the company or have a broker license issued without meeting further requirements. As a non-principal, a licensee can hold only one associate broker license under one company at a time |
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Association |
A method of tying together a group of people with a common purpose. Common in subdivisions and condominiums where a group of unit owners also share ownership in common areas. Typically, an association is formed to oversee and provide private regulation of the common areas and to collect dues or fees, which are charged to all owners to pay for maintenance of the common areas. |
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Association Dues |
Periodic charges to members of an association to fund the obligations of the association. In real property-related situations such as condominiums and sub-divisions, these charges become liens against the individually-owned property, and failure to pay may result in Association action to collect. The authority of the Association is defined in the Subdivision Restrictions or a Master Deed and By-laws |
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Assumed Name |
A name taken by an individual, which is different from the party's given name: an alias or a d/b/a (doing business as). An assumed name must be registered with the County Clerk's Office in the County in which the individual resides or in which s/he will be using the name. Once an individual takes a registered assumed name and, for real estate purposes, licenses are issued under this name, this becomes the individual's name for purposes of the particular business for which it was taken. An individual broker who takes an assumed name, for example, must advertise using this name |
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Assumption |
The receipt or acceptance of an interest. Generally relates to contractual rights, which can always be assumed by another person unless the parties agree otherwise in writing. Liability for following through on the assumed responsibilities falls to the assuming party, but the party from whom the right and responsibilities were assumed remains in a position of liability, as well |
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Attachment |
Any additional paper becoming part of a contract either when it is created or during the executory period prior to closing |
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Attorney-At-Law |
One who has completed law school, passed the bar exam and is licensed for the practice of law. An attorney-at-law can do real estate activities under a law license if the act is part of the practice of law. To actually list or sell property for others for compensation, however, requires a real estate license rather than a law license |
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Avulsion |
Sudden washing away of land through natural forces such as flooding |
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BALLOON PAYMENT
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Large (larger than the regular monthly payments) final payment on a loan. Characteristic of Bridge (Swing) loans and Partially Amortized loans. See also: Bridge Loan,Swing Loan; Term Loan; Amortized Loan
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BARE TITLE
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See:Naked Title.
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BARGAIN AND SALE DEED
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Type of deed which conveys an absolute interest in real property but which does not make any guarantees about the quality or quantity of the interest. Often used as the instrumentof conveyance by a sheriff in a foreclosuresale. See also: Warranty Deed; Quit Claim Deed; Foreclosure
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BASELINE
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See: Legal Description;Rectangular Survey System
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BENCHMARK
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Physically identifiable indicator used by a surveyor to establish altitudes and measurements in relation to sea level. See also:Datum; Monument
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BENEFICIARY
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One who benefits. Under Title Theory, refers to the lender,who receives the proceeds of the sale if the Trustee uses the Power of Sale Clause.Regarding insurance, the party to whommoney will be paid in the event of loss.See also: Title Theory, Owner’s Title Insurance Policy; Mortgage Title Insurance Policy
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BEQUEST
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The gift of personal property given by will. See also:Legacy; Devise
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BEQUESTEE
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The receiver of personal property by will
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BEQUESTOR
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The giver of personal property by will. |
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BILATERAL CONTRACT
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Contract in which both parties make promises, which are binding on the promising party, i.e.,party A promises and Party B promises. Breach of contract results if either or both Parties fail to perform. Examples include a Purchase Agreement, Lease Agreement. See also: Contract; Unilateral Contract; Consideration
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BILL OF SALE
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instrument used to transfer interests in personal property, as distinguished from a deed, the instrument used to transfer interests in real property.
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BLANKET MORTGAGE
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Document identifying more than one parcel of real property as collateral for a loan. Typically used by builders or developers to allow several individual lots to be pledged as collateral to borrow money for construction on these lots. An entire tract,which has been subdivided, provides collateral value for the loan, as identified by individual legal descriptions of the lots.To protect a potential purchaser from alien against property purchased, the mortgage document includes a Partial Release Clause allowing for removal of each legal description from the mortgage as payment is made on its sale. See also: Discharge; Chattel Mortgage; Package Mortgage
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BLEND RATE
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Method of establishing an interest rate when two different rates are involved. Commonly used in connection with an Escalation Clause on an assumption of an existing mortgage or in a Wrap around Mortgage. The dollar amount charged at each rate is given a percentage value in relation to the entire loan, thus, giving it a comparative weight. By using this ratio, a new rate is established. For example, if $25,000 is outstanding on the loan at 8% and $50,000 is to be loaned in addition at 10%, the blend rate will be determined by counting one part at 8% and two parts at !0%. Adding these up, 8 + 10+ 10, gives a total of 28, which is then divided, by the number of parts (3). 28 divided by 3 = 9.33% - the blend rate See also: Wrap around Mortgage; Escalation Clause.
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BLIND AD
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Advertisement that fails to notify the public that the advertiser is a business rather than an individual. In real estate ads, use of the name of an individual broker without using the word broker to clarify that the person is also a company is a blind ad. A salespersons’ s use of his/her name without the use of the broker’s name to advertise listed property is also a blind ad. Such ads are illegal, and use of them is punishable under licensing law as a form of false advertising
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BLOCK
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see: Legal Description.
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BLOCKBUSTING
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Illegal activity defined under fair housing law in which a licensee, for financial gain, through implied or express means, leads a property owner to believe that the presence of a minority in a neighborhood will adversely affect market value. Under Michigan Fair Housing law a violation for blockbusting also occurs if the party identifies the decline in quality of schools, increase of crime in a neighborhood as a reason for the decrease of value of a property. Also known as Panic Peddling. See also: Minority; Discrimination; Steering; Redlining
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BLUE SKY LAWS
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See: Michigan Uniform Securities Act.
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BOARD
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As regards real estate, the Board of Real Estate Brokers and Salespersons established under the Michigan Occupational Code as part of the regulatory structure of the real estate occupation. The Board is made up of 9 total members, 6 of whom hold licenses in the occupation and 3 who are members of the general public. The Board exists within the Michigan Department of Consumer and Industry Services (DCIS) as part of the Bureau of Occupational and Professional Regulation (BOPR). Members are nominated by the Governor and, upon approval by the Senate, serve a maximum of two 4 year terms. It is the Board, which ultimately decides penalties in licensing disputes.Other functions of the Board include the promulgation of rules, and, in conjunction with the Department, oversight and approval of license examinations. Any action of the Department as to issuance or renewal of licenses or other approvals are at the discretion of the Board. See also;Bureau of Occupational and Professional Regulation; Articles 1 through 6
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BORROWER
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Party to a loan who receives the money.
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BOND
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Form of insurance to provide against loss of money held by one individual on behalf of another. Required of sub-dividers prior to receipt of any monies from potential purchasers. Landlords, under the Security Deposit Act, must post bond for any security deposits held on behalf of tenants before the landlord can use any of this money. A real estate licensee need not post bond as a requirement for licensing. However, the Board as a penalty in the event of violations involving other people’s money may make such a requirement. See also: Security Deposit Act
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BOTTOMLAND
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Land under water in rivers, lakes and streams. See: Riparian Right; Littoral Right.
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BRANCH OFFICE
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A location used by a company other than its main office
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