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733 Cards in this Set

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Accession
The acquisition of title by the owner of real property to those things attached to the property by others, such as tenants or trespassers or by nature. (Also in Chapter 4)
Acre
A measure of land area equal to 43,560 square feet.
Air Lot
A designated air space over a parcel of land. In condominiums, each individual unit occupies a separate air lot.
Air Rights
The right to use and enjoy the air space above a parcel of land. Such rights may be leased or sold separately from the land.
Appurtenance
Anything that may be used with the land for its benefit and goes to the new owner when ownership of the land is transferred. Mineral rights, air rights , water rights, easements, improvements and natural attachments are appurtenant to the land.
Artificial Monuments
Man-made objects such as streets,fences, iron pins, concrete posts, etc.
Baseline
Certain reference lines which run east and west ; used in the rectangular survey system to locate land.
Bench Mark
A permanent reference point of known location used by surveyors. A bench mark may be a point established by a government survey team or a fixed monument such as a road right-of­ way.
Bill of Sale
A document which conveys ownership to personal property .
Call
The compass direction and distance for each boundary line.
Closure
The metes and bounds legal description must return to the point of beginning or the description is incomplete.
Constructive Severance
The transfer to someone other than the owner of the land the rights to remove attachments such as timber, or buildings, or the right to remove minerals.
Contour
The shape of the earth's surface.
Contour Map
See Topography Map .
Correlative Rights
The doctrine of law which allows riparian owners in certain states to use only a reasonable share of the water during periods of drought.
Datum
A point of surface of known location from which heights and depths are measured. The basic point from which vertical land (air rights and mineral rights) is described.
Emblements
Crops that require annual cultivation. They are considered personal property even though attached to the land. Also called Fructus Industriales.
Fixture
An item that was once personal property but has become real property because of the manner in which it was attached to the land or its improvement s.
Fructus Industriales
Crops that are planted and harvested each year.
Fructus Naturales
Growing things which require no annual cultivation .
Government Survey
See Rectangular Survey .
Improvements
Any permanent , man-made attachment to the land, such as buildings, fences, roads, or pipelines. Also known as arterial attachment.
Land
An area which starts at the center of the earth, passes through the earth's surface and extends into space.
Law of Capture
The law which allows a well drilled on one property to extract oil or gas reserves from under adjoin properties.
Legal Description
A description of land legally sufficient to distinguish it from all other parcels.
Littoral Rights
A landowners lawful claim to use and enjoy the water of a large lake or ocean bordering the owned property .
Meridians
Certain reference lines which run north and south used in the rectangular survey system to locate land . The north -south line on a compass .
Metes and Bounds
A method of legally describing land by measuring directions and distances of its boundary lines.
Mineral Rights
A landowner's legal interest in minerals below the surface of his land . Such rights are considered to be appurtenant to the land and may be sold or leased separately.
Monument
A fixed point or object used to denote the end point of a boundary line in a metes and bounds description.
Natural Monuments
Trees, streams, rocks , etc.
Navigable Water
A waterway open to the public for commercial boat traffic.
Non-homogeneity
A characteristic of land which holds that no two parcels are exactly alike because each parcel has its own unique location.
Percolating Water
Underground water not confined to a specific waterway, channel, or stream.
Personal Property
Anything of a movable nature capable of being owned that is not considered real property . Also known as pc1 sonality or chattel.
Plat of Survey
A map or drawing that shows the location and boundaries of a land parcel, and in some cases, how the land is subdivided into lots. Also called a Plat Map .
Point of Beginning
The starting point at one comer of a parcel of land described in a metes and bound legal description.
Portable Water
Water which is pure enough to drink.
Principal Meridian
One of the north-south reference lines used in the rectangular survey to locate land.
Prior Appropriation
A doctrine of law relating to riparian water rights used by states that typically experience periods of drought. The right to use riparian water is secured by permit. During periods of drought the earlier permits establish priority in using adjacent water.
Property
A specific object owned plus the rights of ownership.
Range
A six mile wide strip of land running north-south in a the rectangular survey system.
Real Estate
Land and attachments on it plus the rights to own and use them. Also known as real property or realty.
Real Property
See Real Estate .
Recorded Plat
A plat or map showing the location and boundaries of individual parcels of land that is filed in the public records in the county where the property is located .
Rectangular Survey System
A method of legally describing the surface of the land based upon a grid system formed by principal meridians, baselines, range lines, and township lines. Also know as the government survey system .
Right of Lateral Support
The right which protects the natural support of adjacent land in mining operations to extract minerals from below the surface of the earth.
Riparian Rights
A landowner's right to use and enjoy the water from a river, stream or lake which adjoins the owned land.
Section
A parcel of land in the rectangular survey system that is one mile square and contains six hundred forty acres (640).
Severance
To remove something from the land such as minerals or timber.
Situs
Location; refers to people's preference for a given location. Area preference. (Also in Chapter 12)
Spot Survey
The process of locating the exact boundaries, shape and area of a parcel of land.
Subdivision
A parcel of land divided into a number of smaller lots, generally for the purpose of building new structures. (Also in Chapter 5)
Topographic Map
A map that shows the elevations of the earth's surface. Also called a Contour Map.
Topography
The nature or shape of the earth's surface, such as hills , valleys, level, or rolling. Also called Contour .
Township
A parcel of land in the rectangular survey system that is six miles square.
Trade Fixture
An item of personal property attached to the land or building leased by a tenant who uses the item in a trade or business. (Also in Chapter 10)
Water Rights
A Landowners right to use and enjoy water adjacent to , underneath, or on the land .
Water Table
The level at which percolating water is found below the earth's surface. (END OF CHAPTER 1)
Allodial System
A system of land ownership which recognizes the right of individuals to own land independently of political superiors, but allows the government to retain the rights of eminent domain, police power, taxation and escheat.
Attachment Lien
An encumbrance created against land when the court is granted custody of the property to prevent the owner from conveying title while a suit for damages is being decided. By attaching the property the person seeking damages is assured that the property will be available to satisfy a judgement if it is awarded by the court .
Bundle of Rights :
All of the rights a person can have in real property. Included in the bundle are the rights of possession , control, enjoyment and disposition .
Commercial Easement in Gross
A right to use the land of another. It does not benefit any particular property. The right is transferable and freely inheritable. Typical examples include utility easements, railroad right-of-ways and billboard easements.
Condition
A provision in a deed which subjects the ownership of land to certain restrictions. The party creating the condition (the grantor) reserves a future right in a the property . Upon the occurrence or nonoccurrence of a stated condition, either the title automatically reverts to the grantor, or the grantor has the right to sue for possession and terminate the estate.
Consummate Dower
A wife's right in her husband's estate after his death.
Contingent Remainder
A nonpossessory estate created when a fee simple owner grants a lesser estate and designates another person to take possession of the fee simple estate upon termination of the lesser estate and the occurrence of a stated condition.
Conventional Life Estate
See Life Estate .
Covenant
A restriction in a lease or deed which specifies that the property will or will not be used in a certain manner. An example of a covenant is a subdivision restriction. Covenants must be enforced by seeking an injunction or damages. Covenants have a time limit after which they are no longer effective.
Declaration of Restrictions
An instrument which contains all the restrictive covenants affecting the lot in a subdivision. By recording the instrument, the subdivision restrictions are incorporated by reference into the deeds to each individual lot.
Dominant Estate
The land parcel which benefits from an easement appurtenant. When title to the land is conveyed, the easement is automatically transferred to the new owner.
Dower
A wife's life estate in the real property owned by her husband and conveyed to her by law upon his death .
Easement
A legal right to use the land of another for a specific purpose and in a specific manner . The right only constitutes an interest in the land . It does not give the easement owner an estate.
Easement Appurtenant
An easement which grants a right of use to one parcel of land in and on another parcel. The land over which the easement runs is the servient estate. The land benefiting from the easement is the dominant estate .
Easement in Gross
A legal right to use the land of another. It involve s only one parcel of land and does not benefit any particular property . There are two types: commercial and personal .
Egress
An exit leading from the parcel of land.
Eminent Domain
The government's right to take private property for public use with or without the consenting of the owner upon payment of a just compensation to the owner. The right may be with or delegated to quasi-public corporations, such as utility companies. The court suit for taking the property is called condemnation.
Encroachment
The illegal intrusion of an improvement, building or other attachment onto a neighboring land or into its airspace.
Encumbrance
Anything which affects the fee simple title or the use of land such as liens, easements, restrictions and encroachments.
Equitable Lien
See Voluntary Lien .
Escheat
A government right for land to go back to the state when the owner dies without leaving a will and without heirs. (Also in Chapter 4)
Estate
The quality, quantity, nature and extent of ownership interest or rights a person holds in real property . Estates are either possessory or nonpossessory .
Estate at Sufferance
An interest in real property held by a tenant who holds over without the consent of the landlord after the tenant's right of possession has terminated. (Also in Chapter 10)
Estate for Years
A tenant's interest in real property (leasehold estate) for a fixed period of time. (Also in Chapter 10)
Estate from Period to Period
A tenant's interest in real property (leasehold estate) for a certain period of time. Without proper notice the period is automatically renewed. (Also in Chapter 10)
Fee Simple Absolute
An inheritable estate of indefinite duration, without restrictions or conditions to satisfy in order to retain ownership. It is the most complete ownership of rights in land that one can hold . It is said to be potentially perpetual .
Fee Simple Determinable
A fee simple estate that automatically ends and goes back to the person who granted the estate, to their heirs or to a remainderman if named, upon the occurrence or nonoccurrence of a stated condition.
Fee Simple Estate
An ownership interest in land which is freely inheritable. The estate may be absolute, determinable or conditional.
Fee Simple; Condition Subsequent
A fee simple estate that may be ended by the grantor or the grantor's heirs or a remainderman if named, upon the occurrence or nonoccurrence of a stated condition.
Freehold Estate
An ownership interest in land, the duration of which is uncertain. The estate may last forever (i.e. , be inheritable), or its duration may be measured by one person 's life.
Future Right
The right to take possession or control of a property in the future (non-possessory).
General Lien
A lien against all of the property owned by the debtor.
Holdover Tenant
A tenant who remains in possession of leased premises after their right of possession has ended. Possession may be with or without the landlord's consent. (Also in Chapter 10)
Homestead Protection
A right which protects a portion of a family's primary residence in the event a creditor forces a sale to satisfy an outstanding debt. The amount of protection is determined by state law.
Impounds
Monthly payments of taxes and insurance collected by the lender to assure payment of these items when they become due.
Inchoate Dower
A wife's interest in her husband's property while he is still living.
Incorporeal
An intangible interest in land, such as an easement.
Ingress
Access to a parcel of land.
Inheritance Tax
Tax on property received by will or by inheritance through the probate court.
Injunction
Court ordered requiring a person to whom it is directed to do or refrain from doing a particular thing. A legal recourse that may be taken against one who violates a restrictive covenant in a lease or deed.
Involuntary Lien
A lien permitted by law and recorded without the landowner's consent. The lien may affect only one particular property, such as a mechanic's lien, or it may affect all the debtor's property, such as a judgment lien. Also known as a statutory lien.
Judgment
A court's official decision regarding the rights and claims of the parties in a lawsuit. A judgment in a suit for damages is the amount of indebtedness set by the court .
Laches
Undue delay or failure to exercise one's legal right, resulting in the loss of the ability to exercise the right .
Landlocked
Land which has no means of access except over neighboring land.
Leasehold Estate
A tenant 's rights in real property granted to them by a lease. (Also in Chapter 10)
Legal Ufe Estate
A life estate created by state law, the holder of which has a nonpossessory interest in real property . Legal life estates include dower , curtesy and homestead protection .
Lesser Estate
An estate is created when a portion of ownership rights is conveyed to another.
Lien
A monetary claim against real estate which services as security for a debt.
Life Estate
A freehold estate (i.e., ownership interest in real property). The indefinite duration of the estate is measured by the life of some person. Also called Conventional Life Estate.
Life Estate Pur Autre Vie
A life estate whose duration is measured by the life of someone other than the life tenant.
Life Tenant
One to whom a life estate is granted; the owner of the estate.
Lis Pendens
Legal notice that a lawsuit is pending, and the outcome could affect the title to certain real estate.
Mechanic's Lien
Also known as a materialman's lien, a lien created by statue against real property . It exists for the purpose of securing payment to those persons who have performed work and/or furnished materials for the improvement, maintenance or repair of real property against which the lien is recorded.
Mortgage Lien
A monetary claim against a specific property pledged by its owner as security for the repayment of a loan or other debt.
Non-possessory Estate
An estate in real property, the possession of which is postponed until a preceding possessory estate is terminated.
Notice of Completion
A legal notice required in some states in order to perfect a mechanic's lien. The notice lets the property owner know that certain contracted work has been completed and/or materials ordered have been supplied .
Ordinary Life Estate
A life estate whose duration is measured by the life of the life tenant.
Party Wall
A fence or wall of a building that straddles the boundary line of two adjoining lots and exists for the use of both owners.
Personal Easement in Gross
A personal righ t granted to an individual to use the land of another. The right is neither transferable nor inheritable and may be terminated by the easement holder or, by death of the easement holder.
Police Power
The government's right to enact and enforce legislation which regulates the use of real estate to provide for the public safety, health, morals and general welfare of the community. (Also in Chapter 18)
Possessory Estate
An estate whose owner has the right of present possession or control. Possessory estates are either freehold or leasehold.
Possibility of Reverter
A possibility that title to land will revert back to the grantor if the grantee breaches a condition placed on the title by the grantor.
Prescription
A method of acquiring an easement through continuous, open, visible and notorious use of another person's property. The use must be without the owner's permission and for a period of time as prescribed by law.
Present Right
The right to imm ediate possession or control of a property .
Release
The act of relinquishing a right or claim to real estate. A release is often accomplished by use of a quit-claim deed.
Remainder Estate
An estate in which the right of possession comes into being upon the termination of a lesser estate, such as a life estate. The right of future possession is vested in someone other than the grantor of the lesser estate.
Remainderman
One who holds a right of future possession.The person named by the grantor to receive the fee simple estate upon termination of a lesser estate.
Restriction
A limitation placed on the use of real property, either by the government or by other persons who have an interest in the property. Private restrictions are either in the form of covenants or conditions.
Reversionary Estate
An estate in which the right of possessionComes into being upon the termination of a lesser estate, such as a life estate. The right of future possession is vested in the grantor of the lesser estate or the grantor's heirs if the grantor is deceased .
Reverter Clause
A deed provision which causes a fee simple defensible estate to automatically terminate and revert to the grantor or a remainderman upon the occurrence of a stated condition.
Right of Entry
The right to resume fee simple ownership through court action, or to terminate a fee simple estate on a condition subsequent, upon the occurrence of a stated condition.
Run with the Land
The automatic transfer of certain rights or encumbrances in real property when title is conveyed.
Satisfaction Piece
Evidence from a creditor that a judgment, mortgage , or other lien has been paid in full. The satisfaction piece should be recorded to remove the cloud on the title created by the lien.
Servient Estate
A parcel of land over which an easement runs.
Special Assessment
A tax levied against real estate to pay for improvements which benefit only the property taxed. Assessments are generally made for such improvements as street lights, sewers, sidewalks or curbs. (Also in Chapter 5)
Specific Lien
A lien against only one property.
Statutory Lien
See Involuntary Lien .
Ucense
An owner's permission for another to use the land for a specific purpose. The permission does not grant a right in the land but a personal privilege , which is neither transferable nor inheritable and may be terminated by either party .
Vendee's Lien
A buyer's lien against the property of a seller who defaulted on a contract to sell.
Vendor's Lien
Also known as a purchase money mortgage or seller's lien. When a seller finances part of the purchase price and the purchaser pledges the property as security for the debt, the seller holds a vendor's lien against the property.
Vested Remainder
A nonpossessory estate created when a fee simple owner grants a lesser estate and designates another person to take possession of the fee simple estate upon termination of the lesser estate.
Voluntary Lien
A lien recorded with the owner's consent. One created by agreement.
Writ of Execution
A court order directing the sheriff to seize and sell enough of a debtor's property to satisfy a judgment and to pay expenses for the sale. Also referred to as a levying upon the debtor's property. (END OF CHAPTER 2)
Beneficiary
One for whom title is held under a trust and is entitled to receive income from the trust.
Broker
An individual or legal entity (corporation or partnership) licensed to act as the agent of another in buying, selling, exchanging, renting, leasing, managing, or auctioning real estate for another.
C
C & R'S , Covenants, conditions and restrictions which regulate the use of property held under condominium ownership and other subdivisions.
Co-owner
One who owns an interest in property simultaneously with another. Also known as co-tenant.
Co-ownership
See Concurrent Ownership .
Co-tenant
See Concurrent Owner .
Common Elements
Those areas in a condominium that each unit owner has the right to use in common with the other owners. Examples include land, buildings, recreational and parking areas, and other improvements .
Community Property
A type of concurrent ownership between husband and wife which entitles each spouse to one-half of all property acquired by their mutual efforts during marriage.
Concurrent Ownership
A form of ownership where more than one person has an interest in the same property at the same time.
Condominium
A form of concurrent ownership in which each occupant of a multiple unit building holds fee simple title to an individual unit. Common areas like land and recreational facilities are co-owned by the unit owners as tenants in common.
Cooperative
A form of concurrent ownership of a multiple unit building in which a corporation holds title to the land and improvements. Each unit owner buys stock in the corporation for the exclusive right to use a particular unit for the life of the corporation. The unit owner is assured of this right through a proprietary lease.
General Partnership
A type of partnership which allows each partner to participate in the management of the business but holds the partners jointly and personally liable for obligations incurred by the partnership .
Joint Tenancy
A form of concurrent ownership involving only one title that is shared equally by the co-owners. Upon the death of a co-owner, the decedent's interest passes usually to the remaining co­ owners.
Joint Tenant
One who co-owns property in joint tenancy .
Joint Venture
A partnership formed for the purpose of carrying out a particular business project without an intent to establish a permanent business relationship .
Land Trust
A trust in which the beneficiary retains control over the property held by the trustee. The trustee's duty is simply to sign at the beneficiary's request all documents which are necessary to convey, mortgage, or lease the property.
Limited Liability Company
A unique form of ownership not classified as a corporation, but an association similar to that of limited partnership. Management responsibilities are vested in its members and members are not personally liable for debts of the limited liability company. Members are not stockholders and therefore, profits are not taxed at the corporate level. (Also in Chapter 8)
Limited Partnership
A partnership made up of general and limited partners. A general partner has the responsibility of managing the business of the partnership and is held liable for its obligations. Limited partners are investors who do not participate in the management and are liable only to the extent of their investments.
Living Trust
A trust created by a property owner during his/ her life time for the purpose of providing financial care for the family or self.
Partition Suit
A legal action to divide or sell property held as tenancy in common or in joint tenancy. This legal procedure is available to co-tenants who are unable to mutually agree on an acceptable plan of division or sale.
Proprietary Lease
A lease used with cooperative ownership to assure the tenant of the exclusive right to use a particular unit in a multiple unit building.
Real Estate Investment Trust (REIT}
A trust which must be managed by a board of trustees who invest in real estate for at least one hundred beneficiaries (investors) in order to quality for certain income tax benefits.
Right of Survivorship
A right which allows a deceased co­ owner's interest in property to pass to the surviving co-owners rather than to the estate of the deceased.
Separate Property
In community property states, separate property is any property owned by either spouse prior to marriage, or property acquired during the marriage by gift or by inheritance .
Severalty Ownership
Ownership by one person or a single legal entity .
Sole Ownership
See Severalty Ownership .
Syndicate
A group of persons or firms who combine their resources for the purpose of investing or dealing in real estate.
Tenancy by the Entirety
A special form of joint tenancy between husband and wife. Both own an equal undivided interest in the entire property with the right of survivorship. Any instrument to convey or transfer an interest in the property must be signed by both spouses.
Tenancy in Common
A form of concurrent ownership where co-owners hold an equal or unequal undivided interest without the right of survivorship.
Tenancy in Partnership
A form of concurrent ownership in which title is held by either a general or limited partnership in a registered trade name.
Testamentary Trust
A trust created by will.
Time-sharing
A special form of condominium ownership which allows multiple owners to use (share) the same unit but during different specified times each years.
Trust
An arrangement in which title to property is held by a trustee on behalf of a beneficiary.
Trustee
A person or institution which holds title to property for the benefit of another under specific instructions for the use and disposition of that property.
Trustor
One who creates a trust by conveying title to a trustee.
Undivided Interest
An ownership interest in the entire property as opposed to ownership of a specific portion or separate part of the property.
Unities of Joint Tenancy
In order to create a joint tenancy, most states require that four events occur simultaneou sly. First, all joint tenants must acquire their interest at the same TIME. Second, all co­ owners must share the same TITLE to the property. Next , all co-owners must share equal INTEREST . Finally, each co-owner must have the equal right of POSSESSION. (END OF CHAPTER 3)
Laws of Descent and Distribution
State laws which transfer property to the heirs of a person who dies without leaving a valid will. Also known as laws of succession.
Absolute Delivery
A grantor's hand delivery of a deed to the grantee.
Abstract of Title
A condensed history of all conveyances, liens, encumbrances, judgments, and other court decisions affecting the property.
Accretion
The gradual addition to land resulting from some natural force, such as the action of water or wind. The two processes of accretion are alluvion and dereliction.
Acknowledgment
A formal declaration made by the grantor in the presence of an authorized official, usually a notary public, that the deed was signed voluntarily. The purpose is to prevent forgery and the fraudulent inducement of a conveyance. Required in most states for recording but has no effect on validity.
Action to Quiet Title
A court action to settle a title dispute or clear a title of defects.
Actual Notice
Knowledge that one acquires from what isheard, read or observed.
Administrator
A person appointed by a probate court to oversee distribution of property and to satisfy all debts out of the assets of the estate of a person who died without leaving a valid will or did not name an executor.
Administrator's Deed
A deed executed by an administrator to convey title to real property owned by a person who died intestate or did not name an executor.
Adverse Possession
A method of acquiring title to real property by the unauthorized occupation of another person's land. The adverse claimant's possession must be actual, hostile, open, notorious, exclusive, and continuous for a period of time required by state law.
After Acquired Title
Doctrine of , A princip le of law which enables a prior grantee to automatically acquire title to real estate after a grantor has attempted to convey title but, in fact, did not have good title.
Alluvion
A form of accretion where soil is gradually accumulated on land bounded by a riv.er, lake, or other body of water as a result of action of the water .
Alluvium
Soil accumulated by the process of alluvion.
ALTA
American Land Title Association . An organization of title insurance companies, title attorneys, and others interested in land titles whose purpose is to promote professional standards and ethics throughout its industry .
Attestation
The act of witnessing a person's signing a document, such as a deed or will, and then signing the document as a witness.
Avulsion
The loss of land caused by a sudden or violent change in the course of a river, stream, or other body of water.
Bargain and Sale Deed
A deed which contains neither expressed nor implied warranties of title, but the grantor implies ownership of the property described in the deed.
Bequest
Personal property received by will.
Certificate of Title
A title examiner's written opinion of the current condition of a property title based on a search of the public records dating back for a specified number of years.
Chain of Title
The recorded history of conveyances affecting . a property's title beginning with the original patent or grant from the government and continuing to the current owner.
Cloud on the Title
Any claim, lien, or encumbrance that impairs title to real estate.
Codicil
A written instrument executed for the purpose of amending an existing will.
Color of Title
A title condition which appears to be good but in fact is not valid due to a certain defect, such as a forged deed .
Condemnation
A legal proceeding to exercise the power of eminent domain to take private property for public use.
Constructive Notice
Knowledge that one is presumed by law to have, even though there is no actual knowledge of the fact. Constructive notice may be given by recording an instrument in the public records or by taking possession.
Conveyance
The document used to transfer interest in real property. Such as deeds, leases, mortgages, etc.
Correction Deed
See Deed of Reformation .
Covenant Against Encumbrances
A deed provision which assures the grantee that title to the property is free from any and all encumbrances not excepted in the deed or visible on the premises, or recorded in the public records.
Covenant of Further Assurances
A deed provision in which the grantor promises to perform any acts necessary to produce whatever documents are required to perfect title to the grantee.
Covenant of Quiet Enjoyment
A deed provision in which the grantor promises that the grantee shall be free of interference from the acts or claims of others having a superior title to the property.
Covenant of Seisin
A deed provision in which the grantor promises that at the time of conveyance, he/she owns the property and has the right to convey title to it.
Covenant of Warranty Forever
A deed provision in which the grantor promises to compensate the grantee for any loss suffered while defending the title against persons asserting a genuine claim to the property from any time in the past.
Covenants of Title
Either expressed or implied deed provisions in which the grantor promises that certain conditions of title exist. If it is later proven that those conditions do not exist, the grantor is obligated to compensate the grantee for any actual damages which result.
Decedent
A deceased person.
Dedication
The act of giving to a government real property which is designated for public use .
Deed
A written instrument which, when properly executed and delivered by the grantor during the grantor's lifetime, conveys the grantor's interest to the person who accepts it, known as a grantee.
Deed in Foreclosure
See Sheriff's Deed .
Deed In Partition
A deed issued by the court when property is sold at a partition sale for the purpose of dividing a joint tenancy or tenancy in common ownership.
Deed of reformation
A deed which corrects an error in another deed.
Deed of Trust
A deed used in many states in lieu of a mortgage . Title is held by a trustee on behalf of a lender (beneficiary) until the borrower (trustor) repays the loan .
Dereliction
A process of accretion whereby usable land is gradually exposed when a body of water receded and remains below its normal waterline.
Devise
A gift of real property by will .
Devisee
A person named to receive real property by will.
Devisor
A person who disposes of real property by will.
Erosion
The gradual wearing away of land caused by the action of water or wind .
Exception
A deed provision which excludes from the conveyance some portion of the property granted.
Executor
Person named in a will to carry out the directions and requests of the deceased. (Also in Chapter 18)
Executor's Deed
A deed executed by an executor to convey title to real property owned by a decedent who left a valid will.
Foreclosure Sale
A court-ordered proceeding to sell property to satisfy certain debts of the owner.
Formal Will
A typed or preprinted will usually prepared by an attorney. The instrument must comply with state requirements and be properly witnessed.
General Warranty Deed
A deed which offers the most comprehensive title protection of any deed . The grantor fully warrants good title to the property through the expressed or implied covenant of seizin, covenant against encumbrances , covenant of quiet enjoyment, covenant of warranty forever, and the covenant of further assurances. The covenants apply to defects occurring at any time before Litle is conveyed by the grantor .
Genuine Assent
An essential element of a contract which requires that all parties enter into the contract under their own free will absent of fraud , misrepresentation , duress, menace, or undue influence. (Also in Chapter 8)
Gift Deed
A deed in which the consideration is love and affection . Such deeds are normally used to make a gift of real property to a relative or friend . Sometimes called a voluntary deed.
Grant Deed
A deed in which the covenant of seizin and covenant against encumbrances are implied by statute when the word grant is used in the words of conveyance . Used in some states instead of a warranty deed.
Grantee
A person to whom an interest in real estate is conveyed .
Granting Clause
A deed provision whereby the grantor clearly expresses the intent to make a present conveyance to the grantee also called Words of Conveyance .
Grantor
A person or legal entity that conveys an interest in real property by deed.
Grantor-grantee Index
A public recording system which lists alphabetically all grantors and grantees named in documents recorded for each calendar year. A separate index book is maintained for grantors and grantees so the book and page number of a document can be located by searching under either name.
Guardian's Deed
A deed executed by a court-appointed guardian to convey title to property owned by a minor, insane person, or the aged.
Habendum Clause
A deed provisio n which defines the extent of ownership rights granted, such as a life estate, a fee simple estate, or an easement. Usually part of the granting clause.
Holographic Will
A will written, dated and signed in the testator's handwriting which need not be witnessed
Intestate
To die without a will or having left an invalid will.
Involuntary Alienation
A transfer of title to real property without the owner's consent .
Last Will and Testament
A person 's written or oral declaration of arrangements to be made for the disposition of real and/or personal property owned at the time of death.
Laws of Succession
State laws which transfer property to the heirs of a person who dies without leaving a valid will. Also known as laws of descent and distribution.
Legacy
A gift of personal property by will. A bequest.
Legatee
A person who received a gift of personal property by will.
Legator
A person who disposes of personal property .
Manual Delivery
See Absolute Delivery .
Nuncupative Will
An oral will declared by a person in expectation of death and made for the purpose of disposing of personal property . To be valid a nuncupative will must be properly witnessed and reduced to writing.
Partition Sale
A method of involuntarily transferring title to real property. When joint tenants or tenants in common cannot mutually agree to a plan for dividing their co-ownership, the court will issue an order to sell the property with proceeds paid to the owners based on their percentage share of ownership.
Patent
A government document which conveys title to public land to a private individual.
Probate Court
A court which determines the validity of a will. If a person dies intestate, the court will determine the rightful heirs and appoint an administrator to distribute property according to the court's decree.
Quit Claim Deed
A deed without either expressed or implied warranties . It simply conveys whatever interest, right, or title the grantor has in the property, if any. (Also in Chapter 14)
Relation Back
Doctrine of , A legal principle which allows a conveyance to be effective as of when the deed was placed in the hands of an escrow agent even if the grantor dies before the closing.
Release Deed
See Quitclaim Deed , Reconveyance Deed .
Reliction
Usable land exposed by the process of dereliction .
Reservation
A deed provision whereby the grantor retains certain right of use , such as an easement, in the property that is being conveyed.
Sheriff 's Deed
A deed which conveys title to property sold to satisfy either a mortgage lien, judgment lien, or tax lien.
Special Warranty Deed
A deed in which the grantor fully warrants good title to the property through the expressed or implied covenants of seizin, covenant against encumbrances, covenant of quiet enjoyment, and the covenant of further assurances. However, the covenants apply only to defects occurring during the grantor's period of ownership. Also called a Limited Warranty Deed .
Tacking
The process of combining successive periods of continuous occupation of real property by different adverse possessors in order to establish the required statutory period of continuous possession. Usually limited to blood relatives.
Tax Deed
A deed used to convey title to property sold by the government for nonpayment of taxes.
Testate
To die leaving a valid will.
Testator
A person who executes a will.
Title
The evidence of ownership of real property.
Title Insurance
Insurance which protects either an owner or mortgagee (lender) against losses arising from title defects except whose specifically excluded in the policy.
Torrens System
A system of title registration which lists all ownerships and encumbrances in a court. Title search is made easier since no claim is effective until recorded in this system.
Tract Index
A public recording system which assigns a map reference number to each parcel of land in the county. By locating a parcel on the map, the reference number will guide a title examiner to a page which lists the book and page numbers of all recorded documents relating to that particular parcel.
Trust Deed
See Deed of Trust.
Voluntary Alienation
A transfer of title to real property initiated by the owner.
Warranty Deed
A deed which guarantees good title through the expressed or implied covenant of seizin, covenant against encumbrances, covenant of quiet enjoyment, covenant of warranty forever , and the covenant of further assurances. Depending on the extent of the grantor's liability, the deed may be either general or special. (END OF CHAPTER 4)
Ad Valorem Tax
A tax assessed against real property based upon its value. Revenue from such taxes is used to pay for the general operational expenses of the taxing authority .
Appropriation
The formal legislative enactment of how a taxing authority intends to acquire funds through taxation, along with a detailed account of how the money is intended to be used.
Assessed Value
An amount used for tax purposes and arrived at by multiplying a fixed percentage times the property's fair market value. The percentage is predetermined by the taxing authority and in some cases by state law.
Assessment
See Assessed Value .
Assessment Rate
Percentage which, when multiplied times market value, determines assessed value.
Assessment Roll
A record of all taxable properties in a taxing jurisdiction, along with their assessed value. Also called Tax Base .
Blockbusting
The illegal practice of inducing homeowners in a neighborhood to sell their property by calling attention to the possibility that minority families may be moving in, resulting in a lessening of property values , a decline in the quality of education, and an increase in crime. (Also in Chapter 19)
Board of Equalization
A state authority whose function is to apply equalization factors to assessed values of properties located in counties which use different assessment rates. The purpose of this procedure is to assure fair and equitable treatment of taxpayers required to pay a state ad valorem tax.
Buffer Zone
A parcel of land which separates other land used for different purposes. For instance, a playground may be used as a buffer zone to separate residential property from commercially used land.
Building Codes
Regulations, either local or state, which set construction standard s for materials, method s and safety procedures .
Certificate of Occupancy
Authorization from a building inspector that construction has been completed in compliance with building codes and is ready for occupancy.
Civil Rights Act of 1866
The first federal legislation intended to prohibit racial discrimination in the sale or rental of all types of property.
Enabling Legislation
A law or statute enacted by any government body which enables (makes legal) some practice not previously authorized. A condominium law enacted by a state legislature is an example of enabling legislation.
Equalization Factor
A mathematical factor used to adjust assessed values of properties in differing taxing jurisdictions. The equalization factor is multiplied by the assessed value. This procedure is normally used when states charge an ad valorem tax based upon local assessed values determined by using different assessment rates.
Fair Housing Act of 1968
Title VIII of the Federal Civil Rights Act, establishing a policy of equal housing opportunity, and making discrimination illegal.
Floor-area Ratio
A guideline used to regulate building density. The ratio is calculated by dividing a building's floor area by the ground (lot) area or by dividing the number of floors in a building by the portion of the lot covered by the building.
Homestead Exemption
An ad valorem tax reduction for persons who own the home they occupy.
Improvement District
An area designed to benefit from certain improvements for which the property owners will be levied a special assessment .
Jones versus Mayer
A landmark discrimination case in which the U .S. Supreme Court in August, 1968 upheld the Civil Rights Act of 1866 in its ruling that discrimination on racial ground is unlawful.
Land-use Districts
Areas in a community which are classified (zoned) according to their intended use, such as residential, commercial, and industrial.
Master Plan
A comprehensive, long-range plan to gUtde the growth and development of a community.
Mill
One tenth of one cent. One Mill= .001. Used in property taxation.
Minority
Any person or persons who can be identified by race, color, sex, religion, national origin, familial status, handicap, or other locally or federally adopted characteristic .
Nonconforming Use
Land use in existence prior to the enactment of a zoning ordinance. Because zoning cannot be retroactive, the use is allowed to continue even though it does not conform to the new ordinance. Any building which is a nonconforming use may be used so long as it is in existence. If it is destroyed in any way or abandoned, the use will be terminated, and the building cannot be rebuilt under the existing zoning law.
Panic Selling
See Blockbusting .
Realists
Active members of the National Association of Real Estate Brokers.
REALTOR
Active member of the National Association of REALTORS.
Right of Redemption
A taxpayer's right, in some states, to get real property back within a specified period of time after it is sold at a tax sale by paying all past due taxes, penalties , and interest.
Setback
An imaginary line which denotes the space required between any improvement and the front, sides, and rear of the lot. Also called a Building Line.
Specific Advertising
Advertisement of a specific property listed with the brokerage firm.
Spot Zoning
Zoning which designates certain areas for use that differs from the general requirements in the area.
Steering
Limiting·a prospect's choice of certain neighborhoods because of race, color, sex, religion, national origin, familial status, or handicap . Also called Slanting or Channeling .
Tax Certificate
A document which entitles the successful bidder in a tax sale to receive a deed after the original owner's period of redemption has ended .
Variance
Authorization from a zoning board , or similar body, for a property owner to deviate from the existing required use of land. This right is generally granted only to property owners who are successful in demonstrating that the required zoning creates a hardship.
Zoning
A procedure whereby a local government divides its community into districts with each having a designated use . (END OF CHAPTER 5)
100% Commission Plan
A method of compensating salespeople where each salesperson pays the broker a monthly fee for the use of office space, support services, and the broker's name, and in return, the salesperson keeps 100% of the commission.
Acceptable Buyer
A buyer whose offer is acceptable to theseller, though different from the terms in the brokers' listing agreements.
Actual Agency
An agency established by agreement, either written or verbal.
Administrative Law
The laws that are passed by elected legislatures.
Agency
Agency as defined under "BRRETA" means every relationship in which a real estate broker acts for or represents another by that person's express authority in a real estate transaction.
Agency Coupled with an Interest
An agency in which the agent has a legal interest in the property of the principal. Cannot be revoked by the principal.
Agent
A person authorized to act on behalf of another.
As-Is
A term used to describe property offered for sale in its pr.esent condition with no warranty provided by the owner. It does not confer immunity from liability of fraud.
Attorney-in-fact
On e who has the authority to act on behalf of another under a power of attorney.
Automatic Renewal Clause
A provision in a listing agreement which allows the listing to automatically renew indefinitely until the property is either sold, or the agreement is canceled by the owner. Such provisions are not allowed in most states.
Brokerage
Under "BRRETA" a brokerage is defined under Georgia Law as anyone who is authorized to buy, sell, rent, manage , exchange or auction real property for another in return for a fee. Simply stated, the brokerage busine ss is the occupation of a real estate broker .
Brokerage Engagement
Under BRRETA ," a brokerage engagement is an expressed contract (written or oral) where the client (Principal) agrees to give to the real estate broker valuable consideration upon the broker producing a seller, buyer, tenant, or landlord ready, willing and able to sell, buy or rent the property (i.e., Listing Contracts, Buyer Representation Agreements , Management Contracts and Lease Contracts).
Brokerage Relationship
Under "BRRETA ," the brokerage relationship is the relationship that is formed as a result of the parties entering into a brokerage engagement.
Buyer Brokerage Agreement
The contract that creates an agency relationship between a broker and a buyer.
Caveat Emptor
Let the buyer beware .
Client
Under "BRRETA," the client is the person or entity who has entered into a contractual relationship (brokerage engagement) with the broker. (Also in Chapter 18)
Client
The person who authorizes the agent (broker) to act on his/ her behalf. In real estate transactions, the client may be the seller. Also called the Principal .
Co-broker
A broker who assists the listing broker in securing a buyer.
Commission
A broker's compensation for rendering a service to the principal as negotiated with the principal .
Common Law
A body of law based on custom and court decisions over time .
Customer
Under "BRRETA," a customer is someone who is working with a broker concerning real estate matters but has not entered into a brokerage engagement with the broker. In a situation where the broker works with a "customer ," this law allows the broker to perform "Ministerial Acts" for the customer while working with them in a specific real estate transaction .
Designated Agent
An agent representing either buyer or seller in a transaction where both parties have agents who are with the same broker , and are delegated by the broker to continue serving their clients.
Dual Agency
Representing both the buyer and the seller in the same transaction . This practice constitutes a violation of the License Law, unless both parties give their written consent. (Also in Chapter 18)
Dual Agent
Under BRRETA, a dual agent is a broker who has entered into a brokerage engagement with both seller and buyer or landlord and tenant in the same transaction .
Due Diligence
A proper and fair degree of care a buyer might use in inspecting a proposed purchase, or the time period within which the buyer should have to make that inspection.
Equal Dignities Rule
A doctrine of law which states that the power of attorney or contract you use to appoint an agent, must have the same degree of formality as any document or form the agent is expected to sign.
Equitable Title
The buyer's interest in a property from the time he/she enters into a contract until legal title is conveyed at closing. The ultimate right to receive legal title. (Also in Chapter 14)
Estoppel
A doctrine of law which prevents a person from exercising rights that are not consistent with his/her prior conduct or words.
Exclusive Agency Listing
A listing agreement in which the seller appoints only one broker to represent him/her in securing a purchaser. However, the seller reserves the right to sell the property himself/herself without being liable to the broker for commission.
Exclusive Right to Sell Listing
A listing agreement which guarantees the broker a commission if the property is sold during the term of the listing, regardless of who sells it.
Fiduciary
A relationship of trust and confidence between a principal and agent; a person in a position of trust and confidence, as between broker and seller.
Forbear
To not act: to give up a right to which a person is entitled.
Franchise
A right to use the name, logo (trademark or service mark), and service of another business.
General Agent
One who has authority to bind his/her principal in a particular business.
Guardian
One appointed by a court to take care of and manage property and affairs of another person judged legally incompetent. (Also in Chapter 8)
Implied Authority
Authority of an agent arising from custom rather than expressed agreement.
Independent Contractor
One who contracts to do work according to his/her own methods and is responsible to his/her employer only as to the results of that work.
Latent Defect
Defects not readily apparent from an ordinary inspection of the property . Concealed defects that affect the value of the property and must be disclosed by the seller and broker (when known or apparent to them) and to third parties.
Law of Agency
That body of law that governs the relationship between principal , agent and third parties.
Listing Agreement
A real estate broker's contract of employment with an owner. The agreement obligates the owner to pay the broker a commission if the broker finds a ready, willing, and able buyer, but it does not obligate the owner to contract with the buyer. (Also in Chapter 8)
Ministerial Acts
Under "BRRETA," Ministerial Acts are acts that a broker or affiliated licensee performs for a person (customer) which do not require discretion or the exercise of judgment on the part of the licensee (i.e., preparing and conveying offers, locating draftsmen, architects, attorneys, or lenders).
Multiple Usting Service
A vehicle for sharing listings and seeking cooperation, used by brokers who are members of a multiple listing service.
Net Listing
A listing agreement which authorizes the broker to sell the property for any price possible, while the seller agrees to accept a set amount. It is prohibited by the License Law in most states. (Also in Chapter 19)
Open Listing
An authorization made by an owner, either verbal or in writing which gives a broker the non-exclusive right to secure a purchaser. Such listings may be given to any number of agents without liability to compensate anyone; except the one who first secures a buyer ready, willing, and able to meet the terms of the listing, or who first secures the seller's acceptance of an acceptable offer. The owner can also sell and pay no commission . (Also in Chapter 8 and 19)
Ostensible Agency
An agency which is created when a principal's expressed or implied actions indicate that a particular person is acting as his/her agent.
Partnership
A working relationship of two or more persons where they unite skill, property , or labor to carry on a business and share in the profits or losses..
Power of Attorney
A written instrument which authorizes a person, called an attorney-in-fact, to act on behalf of the one granting the authority. (Also in Chapter 8)
Principal
Also called Client . One who employs an agent to represent him/her . (Also in Chapter 18)
Procuring Cause
The person whose action is the primary reason for a sale taking place.
Ratification
The acceptance of an agent's unauthorized acts by direct confirmation or implication.
Safety Clause
A provision in a listing agreement that entitles the broker to a commission after the listing expires, provided the owner sells to one of the broker's prospects and certain other conditions are met.
Special Agent
One who is appointed to act on a particular occasion or for a specific purpose. A person with limited authority.
Straw Purchaser
One who buys property for another in order to keep the identity of the real purchaser confidential .
Subagent
A co-broker who is working for the listing broker and sharing representation of the seller.
Supervening Illegality
A method of terminating an agency due to a change of law causing the purpose of the agency to become illegal.
Transaction Broker
A licensee who has no agency relationship with either party in a transaction but is acting only as a facilitator, performing ministerial duties.
Universal Agent
One who has the authority to perform any lawful act the principal could perform him/herself. An agent who has authority without limitations, u sually granted by a general power of attorney.
Vendor
A seller. (END OF CHAPTER 6)
Actual Communication
Oral or written communication to the offer or that the offeror has accepted the offer.
Actual Fraud
A deliberate misrepresentation of a material fact, made with the intent of inducing the other party to act upon it to one's detriment. Can be done by words or silence.
Addendum
A page added to a form contract for the purpose of including essential terms or to provide supporting documentation, such as plats or a power of attorney. The addendum should be incorporated into the contract by reference then initialed and dated by the parties. Also called an Exhibit .
Affiliation Agreement
The contract a licensee signs when joining a broker or brokerage firm.
Arbitration
The process of settling disputes whereby the disagreeing parties submit their differences to a neutral third party and agree to be bound by his/her judgment.
Assignee
The person to whom a right or legal interest istransferred; one to whom an assignment is made.
Assignment
A legal transfer of one's rights and obligationsunder a contract to a third party.
Assignor
One who transfers a right or legal interest toanother.
Bilateral Contract
A contract in which the parties mutually exchange promises , binding both to perform.
Breach of Contract
Failure without legal excuse to perform one's obligations under a contract. Failure to fulfill a duty.
Commingling
Mixing fund s held in trust with the broker's personal or business accounts. (Also in Chapter 18)
Consideration
Anything of monetary value to induce another to enter into a contract.
Constructive Communication
Communication by operation of law. When an offer is made through a courier, such as the mail, the offeree's acceptance is effectively communicated to the offeror when the acceptance is sent, not when it is received by the offeror.
Constructive Fraud
The misrepresentation of material facts, without intending to deceive or mislead but involving a breach of duty, such as negligence or carelessness. For example, a broker is negligent in the duty to discover the truth about zoning and unintentionally misleads a prospective purchaser.
Contract
An agreement to do or not to do a particular act or thing which is enforceable by law. For the agreement to be valid and enforceable it must contain the following elements: Legally competent parties, mutual assent, genuine assent, con sideration, lawful purpose, and be in writing when required by law.
Contract for Deed
See Land Contract .
Corporation
A legal entity created under authority of the state. A resolution of the board of directors authorizing certain officers to sign a contract . This is required in order to bind a corporation.
Counter-offer
A proposal by an offeror to an offeree or made in response to an offer. A counter offer terminates the original offer. Sometimes called qualified acceptance. A proposal made by the receiver of an offer to the one who made the offer.
Damages
Loss or injury to a person or property caused by breach of contract. Also, the compensation paid for such loss.
Default
See Breach of Contract.
Duress
The use of force to compel a person to enter into a contract.
Earnest Money
The purchaser's initial commitment of something of value to indicate that he/she wants to buy the property according to the terms of the offer being submitted. Earnest money deposits received by the broker must be placed in his/her designated trust account, until the transaction is either closed or otherwise terminated. (Also in Chapter 18)
Earnest Money Contract
See Sales Contract .
Escrow Agreement
A contract between parties to a real estate transaction which provides for the deposit of legal documents and money with a neutral third party along with instructions for finalizing the transaction. Used only in certain states.
Executed Contract
A contract in which all parties have fully performed their obligations.
Executory Contract
A contract not yet fully performed. Something remains to be done by one or both of the parties.
Exhibit
A page added to a form contract for the purpose of including essential terms or to provide supporting documentation, such as plats or a power of attorney. The addendum should be incorporated into the contract by reference then initialed and dated by the parties. Also called an Addendum .
Expressed Contract
A contract made orally or in writing.
Fraud
Malicious (willful) or negligent misrepresentation of a material fact in a transaction on which one or more of the parties to the transaction relies and thereby suffers damages. It creates a voidable contract, possible court damages and possible sanctions for a licensee.
Good Consideration
Something without monetary value; love and affection.
Implied Contract
A contract in which the promises are not expressed but manifested by the conduct of the parties .
Incompetent
A person who lacks the legal capacity to form a contract due to infancy, insanity, intoxication, or other reasons.
Infant
See Minor.
Installment Land Contract
See Land Contract.
Land Contract
Also known as installment contract, installment land contract, or contract for deed. A contract in which the buyer typically makes a small down payment, takes possession, pays the taxes, and makes installment payments of principal and interest to the seller until the purchase price is paid in full. The seller retains title until the buyer has paid all installments and otherwise performed under the contact. (Also in Chapter 14)
Legal Capacity
Legal ability to enter into a contract.
Liquidated Damages
A sum of money specified in a contract as compensation to be paid to one of the parties if the other defaults.
Marketable Title
Title to land which is free from reasonable objections leaving no doubt as to who the owner is. A title which a title insurance company will insure at its regu lar rates, subject only to standard exceptions .
Meeting of the Minds
Mutual agreement to the terms and conditions of a contract by all parties involved .
Menace
The treat of force to compel someone to enter into a contract against his/her will.
Minor
A person under legal age or the age of majority. Depending on the particular state, a minor is one under 18 to 21 years of age. A contract made by a minor is voidable.
Mutual Assent
An expression of mutual agreement manifested by an unconditional acceptance of all terms and conditions of an offer.
Mutual Mistake
A mistaken assumption made by both parties concerning a material fact of the contract. Results in a void contract.
Mutual Rescission
Cancellation of a contract made voluntarily by all parties involved
Negative Fraud
Deliberate misrepresentation by failing to disclose vital information, such as defects that are not readily apparent from a reasonable inspection . A form of actual fraud .
Negligence
Breach of duty resulting from failure to exercise reasonable care required by the circumstances involved in each individual case.
Negligent Misrepresentation
A false statement believed to be true , but is mad e without sufficient grounds for such belief due to carelessness or negligence . When relied upon by another party, it has the same effect as \willful misrepresentation and results in con structure fraud.
Novation
A process of discharging obligations under a contract by substituting a new contract for an existing one or by substituting a new party for an old one.
Offer
A proposal to make a contract. It does not become a legal offer until it comes to the knowledge of the person to whom it is made, known as the offeree.
Offer and Acceptance
An essential element for the creation of a contract. Also called Mutual Assent and a meeting of the minds .
Offeree
The party to whom an offer is made .
Offeror
The party who makes an offer.
Option
A contract which binds one party to hold an offer open to another party for a specified period of time .
Optionee
The party (buyer or tenant) to whom an option is granted.
Optionor
The party (usually the owner) who grants an option to another.
Parol Evidence Rule
Rule of law disallowing oral evidence which disputes a written agreement.
Patent Defect
On e that is readily apparent by an ordinary inspection .
Puffing
A statement of exaggeration which a reasonable person would recognize as untrue, also called Puffery .
Reality of Consent
See Genuine Assent .
Rescind
To disaffirm or cancel a contract. Each party is restored to hisj her legal and monetary positions in existence prior to the contract.
Right of Rescission
The right to cancel a contract and restore the parties to their original positions. A return to status quo.
Sales Contract
Also called Contract of Sale or Purchase and Sale Agreement . An agreement which binds the buyer and seller of real estate .
Specific Performance
A legal action to force performance of the precise terms of a contract when one party defaults. This remedy of law is available to a seller only if a suit for damages is not adequate.
Statue of Frauds
State law which requires that certain contracts must be in writing in order to be enforceable in a court of law.
Statute of Limitations
State law which limits the amount of time one has to seek a legal remedy when the other party defaults .
Survival Clause
A contract provision which allows all or part of the agreement to survive the closing and to remain binding on the parties after the deed has been delivered.
Tender
An unconditional offer to perform under the terms of a contract. If the party to whom tender is offered does not perform, the other party usually enters a suit for damages or specific performance and files a legal notice of lis pendens.
Time is of the Essence
A contract provision which makes it essential that all time limits in the agreement be strictly met.
Undue Influence
Using a position of trust and confidence to take unfair advantage of another person in order to obtain a contract.
Unenforceable Contract
A contract which does not entitle the parties to seek legal remedy upon default because it fails to meet some legal requirement , such as the Statute of Frauds or Statute of Limitations
Unilateral Contract
A contract involving the promise of only one party in exchange for an act or forbearance of another. Only the party making the promise is obligated to perform .
Unilateral Rescission
When one party to a contract defaults, the injured party notifies the defaulting party that the contract is terminated and offers to return all consideration received. The injured party is then entitled to a return of any consideration paid.
Valid Contract
A contract that contains all the essential elements of a contract . To be enforceable it must also be in writing as required by the statute of fraud s in each particular state.
Valuable Consideration ·
Money or anything of a monetary value, such as property, service, or a forbearance, when received as a benefit by one party resulting from a detriment suffered by another.
Vendee
A buyer.
Void Contract
A contract which has no legal effect because one or more essential elements of a contract is not present. A void contract, under the law, never existed.
Voidable Contract
A contract that appears valid and enforceable on its face, but is subject to recision by the party or parties acting under a disability.
Waste
Willful misuse, destruction, or neglect of real estate by a person rightfully in possession that results in a decrease in value of the premises, to the detriment of another person who holds future right of possession . (i.e., life tenant and reversionary estate or remainder estate, lessee and lessor.) (END OF CHAPTER 8)
Abatement
A decrease or reduction. A tenant might be entitled to an abatement of rent if the rented premises are damaged by a storm.
Actual Eviction
A legal process to remove a tenant who holds over after the right of possession has ended, usually resulting from failure to pay rent.
Assignment
Relative to a lease, an assignment is a complete transfer of the tenant's remaining leasehold estate. The original tenant remains liable to the landlord for the unpaid rent should the new tenant default.
Certified Property Manager (CPM)
A professional designation for one who has met all the education and experience requirements of the Institute of Real Estate Management .
Condemnation Clause
A lease provision which specifies that proceeds be paid to the landlord in the event the leased premises are acquired by the government through condemnation.
Constructive Eviction
Occurs when the landlord's actions or omissions allow the leased premises to become uninhabitable for its intended use. Usually a violation of the implied warranty of habitability or the implied covenant of quiet enjoyment.
Contract Rent
The amount of rent stated in a lease agreement.
Economic Rent
The amount of rent a property could com mand in the open market; also called Market Rent. (Also in Chapter 12)
Ejectment
The legal process to have a trespasser or tenant at sufferance removed from property .
Escalator Clause
A lease provision which calls for changes in rental payments at specific intervals in the future.
Escalator Lease
A lease which provides for rental increases in relation to increased operating expenses.
Estate at Will
A tenant's interest in real property for an indefinite period of time. Either party may terminate the estate upon proper notice. Death of either party terminates an estate at will. Also known as tenancy for year.
Eviction
An action which results in dispossession of a tenant from leased premises . The action may be either actual or constructive .
Graduated Lease
Any lease which provides for rental changes in the future.
Gross Lease
Also called Flat Lease or Straight Lease. The tenant pays a fixed amount at specified intervals. The landlord pays all expenses associated with owing the leased premises.
Ground Lease
A long-term, net lease of unimproved land with permission for the tenant to make improveme nts.
Hypothecation
The borrower's retaining possession of property pledged as security for a mortgage loan.
Implied Warranty of Habitability
The landlord's implied duty to keep a dwelling unit at a minimum level of livability.
Index Lease
One which requires that rent be adjusted up or down periodically based upon changes in a designated index, such as the Consumer Price Index.
Landlord
One who leases real property to another. Also called Lessor.
Lease
A contract which also conveys an estate by granting one person the exclusive right to temporarily use the property of another and at the same time specifies the rights and obligations of the parties. A lease is the personal property of the lessee.
Leased Fee Estate
The landlord's estate in property leased to another.
Leasehold Improvement s
Improvements made to leased premises by the tenant
Lessee
See Tenant .
Lessor
See Landlord .
Management Contract
An agreement which authorizes a property manager to act on behalf of the owner.
Market Rent
The amount for which a property should rent based upon comparisons made with similar properties currently under lease. It is also known as economic rent, usually determined by an appraisal.
Net Lease
One which requires the tenant to pay the landlord a fixed rental amount plus all or part of certain operating expenses, such as taxes, insurance, and maintenance and repairs.
Nondisturbance Agreement
A provision in a mortgage for larger income properties in which the lender agrees to honor the leases (not disturb the tenants) in the event of foreclosure; thereby enabling the owner to obtain large, important tenants known as anchor tenants.
Occupancy Agreement
An agreement which allows a purch.aser to take possession for a short term, pending the closing of a sales contract . The purpose of the agreement is to allow the purchaser to occupy the home without creating a landlord-tenant relationship. This procedure reduces the legal difficulty of having the purchaser removed from the premises in the event final settlement of the contract does not occur, and the purchaser refuses to move voluntarily. Also known as a move-in agreement
Operating Budget
A property manager 's proje ction of operating expenses and reserve for replacements and repairs. The budget serves as a guideline during the year of operation and must be revised as actual results point out items in the bud get which need correction.
Percentage Lease
A lease which bases the rental amount on a percentage of either gross sales, gross profit, or net income. Generally, the tenant is required to pay a fiat rental fee plus a percentage of the gross sales which exceed a certain minimum. Percentage leases are normally used in retail store operations.
Protective Covenant
A lease provision which prohibits certain use of the leased premises in order to eliminate competitive businesses within the same facility owned by the landlord.
Public Trustee
A government official who acts as trustee for borrower and lender when a trust deed is used as a security instrument in lieu of a mortgage.
Reappraisal Lease
One which bases the rental amount on the market ren t of the property . At set intervals the property is reappraised to establish its current rent, at which time the contract rent is adjusted accordingly.
Rent Schedule
The rental rate for a property based upon its current level of occupancy.
Restrictive Covenant
A lease provision which requires the leased premises to be used only for certain purposes.
Reversionary Estate
The landlord's right to regain possession of leased premises when the leased is terminated .
Right of First Refusal
A lease provision which assures the tenant of the right to buy the leased premises at the same price offered by a bona fide purchaser.
Sale Lease Back
A financing arrangement which enables a business property owner to sell owned property with an agreement to lease it back on a long-term, net lease basis from the investor who bought it.
Sandwich Leasehold
A tenant's interest in the leased premises which have been sublet to another tenant.
Step-up Lease
One which provides for rental payment increases in predetermined amounts.
Sublease
Also called Sublet . A transfer of less than the tenant's entire remaining leasehold estate to another person.
Subordination Clause
A lease provision which makes the lease inferior in priority to a future mortgage placed against the leased premises.
Surrender and Acceptance
Termination of a lease by mutual agreement of the parties. Also known as surrender.
Tenant
One who leases property from a landlord.
Unlawful Detainer
A legal action that puts a tenant on notice to pay past due rent or more out. (END OF CHAPTER 10)
4-3-2-1 Rule
A method of estimating the value of lots with more than standard depth; a depth table.
Accrual for Depreciation
A process for recovery of investmentin a building; also called Return of Investment .
Accrued Depreciation
Past depreciation; the actual depreciation in a property that has already occurred as of a given date.
Actual Age
The number of years a building has been in existence .
Adjusted Sales Price
The price put on a comparable property after adjustments have been made for differences between it and the subject property.
Age-life
A method of estimating accrued depreciation; also, called straight-line depreciation.
Amenities
Intangible benefits to be derived from property ownership, such as a pleasant view, conditions that are pleasant and agreeable for enjoyable living and a beneficial influence arising from a property's location.
Anticipation
Principle of , Holds that value is based upon the future benefits to be derived from property ownership.
Appraisal
An estimate or opinion of value, made by a qualified person.
Appraisal Process
Systematic procedures used by an appraiser to gather and analyze data in order to arrive at a final conclusion of value .
Appraiser
A person qualified by experience, education, and licensing to make estimates of value.
Appreciation
Increase in value .
Assemblage
The process of combining several individually owned adjoining (contiguous) lots into one large tract owned by one person.
Comparables
Properties with similar characteristics to the subject property used for analysis in the market data approach.
Contiguous
Adjoining, next to, in actual contact, with.
Correlation
See Reconciliation .
Cost
A historical record of past expenditure necessary to bring a property into being .
Cost Approach
One of the three approaches to value; it involves estimating the current cost of replacing all improvements, from which the amount of estimated accrued depreciation is deducted , and an estimated value of the land is added .
Cost-to-cure
A method of estimating accrued depreciation by calculating the cost to correct all curable depreciation; also called Observed Condition .
Curable Deprec iation
Items of physical deterioration and functional obsolescence within the owner's control, which are economically feasible to repair or replace .
Debt Service
Mortgage payments including principal and interest .
Depreciation
Lost in value due to physical deterioration, functional obsolescence, or economic obsolescence.
Depth Tables
Method of estimating the value of the added depth of a lot, as compared to a standard size lot.
Economic Life
The period of time over which a property is estimated to be profitable / utilized ; also called Useful Life.
Economic Obsolescence
Loss in value due to adverse conditions external to the property and therefore , beyond the owner's control; also called social, locational, or Environmental Obsolescence .
Effective Age
A property's age based upon its condition and appearance; may be more, the same, or less than its actual age.
Effective Gross Income
The actual gross income a property is expected to produ ce; determined by projecting a property's potential gross income and then making allowances for vacancies and collecting losses.
Expense Ratio
Total expenses divided by the effective gross income.
Front Foot
One linear foot on a lot's boundary line along a street, highway, or body of water.
Functional Obsolescence
Loss in value due to improvements that are inadequate, superadequate, or improperly designed for today's needs .
Gross Rent Multiplier
A number that, when multiplied by a property's estimated gross rent, produces an indication of the property 's value.
Highest and Best Use
That use of a property which will yield the greatest return on the property or greatest current value; the most profitable use to which a property is adapted.
Income Approach
One of three approaches to value; it converts the property's net operating income into an indication of value; also called Capitalization .
Incurable Depreciation
Items of economic obsolescence (sometimes physical deterioration or functional obsolescence) which are beyond the owner's control or which cannot be justified by the anticipated increase in value; not economically feasible to correct.
Key Lot
One that joins the rear of a comer lot. For residential use, such lots are not desirable because of the view of the neighbor's back yard. For commercial use, a key lot can be advantageous because of its importance in an attempt to assemble several lots under one ownership (assemblage).
Market Price
The amount for wh ich a property actually sells.
Market Value
The price a property would be expected to bring in the open market under normal conditions.
Narrative Report
An appraisal report summarizing all data, techniques, and appraisal methods used to arrive at a final conclusion of value; the most complete appraisal report supported with such documents as maps, photographs, charts, plat , floor plans, or contracts.
Neighborhood Analysis
Analysis of a homogeneous grouping of individuals or businesses, as part of an appraisal, to determine the effect on the subject property of such factors as: growth, stability or decline of the neighborhood or physical, economic, governmental and social forces at work.
Net operating Income
A property's income after all operating expenses have been paid; the income used in the income approach to estimate value.
Observed Condition
See Cost-to-cure.
Operating Expenses
Those expenses which are necessary to maintain a property's production of income.
Orientation
Placement of improvements in relation to the positive and negative features of a lot.
Over Improvement
An improvement which is not the highest and best use for the site on which it is placed due to excessive cost or size.
Percolation
The ability for soil to absorb water . Percolation tests are made to determine the rate of absorption when a septic system is to be used on a lot.
Physical Deterioration
Physical deterioration occurs because of normal wear and tear, by exposure to the elements, or by lack of proper maintenance. Also called Deterioration .
Plat
A map showing how a property is subdivided into lots.
Plottage ·
An increase in value brought about by the process of assemblage; the result of combining several lots under one ownership, so that the large tract has more utility and value than the sum of the lots owned individually. Also called Plottage Increment .
Potential Gross Income
The expected rental income from a property based upon full occupancy for an entire year.
Pro Forma Statement
A projected annual operating statement which forecasts gross income, operating expenses, and net operating income .
Quantity Survey
A method of estimating the current cost of reconstructing an improvement using a detailed breakdown of all labor, materials services, profit, and other overhead.
Recapture
See Return of Investment .
Reconciliation
The final step in arriving at a final estimate of value. The procedure involves assigning each approach a weigh ling factor based on the appraiser's judgment as to which approach is the most relevant in valuing the property . Also used in the market data approach and in the gross rent multiplier.
Replacement Cost
The current cost of replacing a property with one of similar utility , using modern materials, equipment, and construction methods.
Reproduction Cost
The current cost of constructing an exact replica of the subject property using the same or similar materials.
Reserve for Replacement
Money set aside each year for the replacement of items that have a usefu l life of more than one year, such as furniture, appliances, carpet, heating systems, air conditioning systems, or a roof.
Return of Investmen t
The recovery of an investment in a building which compensates the owner for loss due to depreciation that occurs over the economic life of the building, also called Recapture , or Accrual for Depreciation .
Return on Investment
The profit or interest earned on an investment .
Sales Comparison Approach
One of three approaches to value; it compares recently sold properties with similar characteristics to the subject property.
Straight Line Depreciation
A method of measuring depreciation, either past or future, as occurring in equal amounts each year over the useful life of the building; frequently used because of ease of application.
Subject Property
The property that is being appraised.
Substitution
Principle of , Holds that a property's maximum value tends to be set by the cost of purchasing an equally desirable substitute, provided the substitution can be made conveniently and without delay.
Unearned Increment
An increase in value due to no effort on the part of the owner.
Unit-in-place
A method of estimating the current cost of reconstruc ting an improvement by estimating the cost of each component part (foundation , walls, roof, heating system, etc.) in place .
Utility
The ability of a property to fill a need or create a desire.
Utility Value
Value to an owner or user of property; a subjective value based upon the ability to u se or enjoy a property.
Value
The amount a property will bring on the open market .
Yield
The interest earned by an investor on the investment; also called Return. (END OF CHAPTER 12)
Capitalization
The process of converting future income into present value . The income approach to value, considering net income and percentage of reasonable yield on the investment.
Capitalization Rate
The rate of return an investor will demand from the investment in a property ; increases \vith risk involved in a property. (END OF CHAPTER 13)
Acceleration Clause
Mortgage loan provision which permits the lender to demand the entire loan balance be immediately paid in full in the event of default.
Adjustable Rate Mortgage
Mortgage loan which allows the lender to periodically adjust the interest rate, up or down, to reflect changes in market rates. Changes are tied to an index, such as Treasury Bill rate, which measures market reactions to economic pressure s on interest rates.
Alienation Clause
Mortgage loan provision which allows the lender to demand the entire loan balance due if the property is sold, or the lender can allow the loan to be assumed by a credit worthy buyer and with an interest rate increase. Also known as due-on-sale clause.
All Inclusive Mortgage
See Wraparound Mortgage.
Amortized Loan
See Fully Amortized Mortgage .
Annual Percentage Rate
The total annual cost of credit, including interest , loan discount, and all other finance charges for obtaining the loan, expressed as a percent.
Assume and Agree to Pay
When a purchaser assumes and agrees to pay an existing loan, he/ she becomes primarily liable for repayment. Should he/she default and not have sufficient assets to satisfy a deficiency judgment, the seller is still secondarily liable to the lender . If the seller is required to pay off any deficiency, heI she may in turn sue the purchaser for the amount paid to the lender.
Balloon Payment
A lump sum pay off of the unpaid balance of a loan, usually at the end of the loan term.
Beneficiary
The lender when a trust deed is used in lieu of a mortgage.
Blanket Mortgage
A mortgage loan arrangement where several parcels of land are pledged as security; used primarily with subdivision financing.
Budget Mortgage
Mortgage loan in which monthly payment s include not only principal and interest but also one-twelfth (1/12) of the annual cost for taxes and insurance.
Certificate of Eligibility
The VA's official statement regarding the amount of entitlement available to a particular veteran.
Certificate of No Defense
See Estoppel Certificate.
Certificate of Reasonable Value (CRD)
An official VA apprai sal of a specific property
Certificate of Sale
Issued to the successful bidder at a foreclosure sale if the state provides a statutory period of redemption to the defaulting owner. If the property is not redeemed within the time allowed by law, a sherifrs deed is issued to the new owner .
Chattel Mortgage
See Security Agreement. Chattel. Personal Property.
Closed Mortgage
One which does not allow the borrower to pay off the loan before maturity.
Closing Costs
Prorated charges by the lender including costs of making the loan and a service charge can be paid by buyer or seller.
Collateral
Property pledged to a lender as security for a loan.
Conditional Commitment
An official FHA apprai sal of a specific property. Referred to as cost of acquisition . It is used to determine the amount of loan the FHA \vill insure.
Construction Loan
A short-term interim loan to finance the cost of labor and materials necessary to complete construction of a building or other project.
Conventional Loan
One that is neither insured nor guaranteed by the government.
Credit Report
A written report detailing the credit history of a prospective borrower, used by a lender to help determine credit worthiness .
Deed in Lieu of Foreclosure
A deed given to a lender by a defaulting borrower who wishes to avoid foreclosure proceedings . The lender may or may not accept the deed.
Deed to Secure Debt
See Security Deed.
Defeasance Clause
A mortgage provision which allows th e borrower to defeat the mortgage by repaying the loan according to the terms of the note. When the debt is paid, this provision causes the mortgage to become null and void, allowing the borrower to regain full rights of ownership .
Deficiency Judgment
Ajudgment ordered by the court against the borrower when the proceeds from a foreclosure sale are insufficient to satisfy the debt. The defaulting borrower's other assets may be sold to satisfy the judgment .
Demand Deposits
A bank 's deposits which are available to the depositor with no advance withdrawal notice required.
Discount Points
The percentage of a loan which determines the amount paid to the lender to increase the yield. One discount point is equal to one percent of the loan amount. See Loan Discount .
Discount Rate
The rate of interest the Federal Reserve System charges member banks to borrow money. By controlling the discount rate, the Federal Reserve controls the money available for credit.
Disintermediation
Occurs when withdrawals exceed deposits from savings and loan associations or other similar institutions because alternative investments offer a more attractive return.
Due-on-sale Clause
See Alienation Clause.
Entitlement
The amount of loan guarantee that a veteran is eligible to receive for a VA loan.
Equity
The difference between the value of a property and the outstanding loan balance(s).
Equity of Redemption
The borrower 's right to redeem property at any time after default but before a foreclosure sale, by paying off the debt to the lender's satisfaction.
Escalator Clause
Mortgage loan provision which allows the lender to increase the interest rate in the event of default or because of changes in some standard index, such as the index of U .S. Treasury bills to which the rate is tied .
Estoppel Certificate
The borrower 's written acknowledgement of the loan balance . Execution of this document prevents the borrower from later asserting that the amount owed is less than was stated .
Exculpatory Clause
Mortgage loan provision in which the lender waives the right to seek a deficiency judgment against the borrower. The borrower's personal liability on the note is eliminated, leaving the property itself as the lender's sole security for the debt.
Fannie Mae
An agency which buys loans from lenders , to assure them of a continuing flow of funds. It is owned by its stockholders.
Farmer's Home Administration (FMHA)
The Federal Agency under the U.S. Department of Agriculture that makes credit available to farmers and rural communities with smaller populations.
Federal Equal Credit Opportunity Act
Federal law which prohibits discrimination against credit applicants on the basis of race, color, religion , sex, national origin, marital status, or age.
Federal Reserve System
Agency responsible for regulating and monitoring the lending practices of federally chartered commercial banks. The Federal Reserve controls the supply of money made available for credit by regulating the discount rate charged member banks for the money they borrow . It also influences credit activity by regulating the amount of funds that these banks must keep on reserve.
FHA Insured Loan
A loan fully insured by the Federal Housing Administration .
FHA Mortgage Insurance Premium (MIP)
FHA mortgage insurance protects the lender against loss in the event of default.
Finn Commitment
A commitment to insure that a loan will be available for a given buyer.
First Mortgage
One that has the earliest recording date in most instances . See Subordination Clause.
Flexible Paymen t Mortgage
See Graduated Payment Mortgage.
Foreclosure
A legal procedure whereby mortgaged property is either sold to a third party or transferred to the lender in order to satisfy the debt.
Foreclosure by Advertisement
See Foreclosure by Power of Sale .
Foreclosure by Power of Sale
A legal procedure whereby the lender is authorized by the loan agreement to sell the mortgaged property upon default and to apply the proceeds to the debt. The sale must be advertised according to state requirements and an auction sale must be held.
Freddie Mac
Federal Home Loan Mortgage Corporation (FHLMC} a secondary mortgage market company, similar to RNMA , reporting to its own Board of Directors.
Fully Amort ized Mortgage
A long-term repayment plan which provides for equal monthly payments of principal and interest. Each months interest is figured on the loan balance at a fixed rate. As the loan matures, the amount of interest decreases each month while the amount paid on the principal increases, also called Amortized Mortgage or Constant MortgagG Plan .
Ginnie Mae (GNMA)
Government National Mortgage Association (GNMA) was established in order to buy special assistance mortgages carrying below market interest rates. GNMA is a government agency under HUD and deals only in VA and FHA mortgages. (See Pass Through Securities.)
Good Faith Estimate
A RESPA required estimate of all settlement charges to be assessed against the borrower at closing. The lender must provide this estimate at the time of loan application or within three business days.
Graduated Payment Mortgage (GPM)
A mortgage loan which provides for reduced payments in the first five to ten years in exchange for higher than usual payments which then remain fixed for the balance of the loan term .
Granting Clause in a Mortgage
In title theory states, this provision makes the mortgage an outright conveyance of title to the lender .
Holder in Due Course
One who, in good faith and without notice of defect, pays valuable consideration to receive a note before it is due.
Impounds
Monthly payments of taxes and insurance collected by the lender to assure payment of these items when they become due.
Interest
The amount paid or accrued in return for the use of money.
Jointly and Severally Liable
Where more than one person signs a note, they are not only liable for their proportionate share, but each is responsible for the entire debt .
Judicial Foreclosure
Legal proceeding where a lender files a lawsuit against a defaulting borrower in order to force the sale of property held as collateral .
Junior Mortgage
Any mortgage recorded after the first mortgage .
Kickbacks
The practice of accepting fees for referrals without providing an actual service.
Lien Theory
The legal position adopted by some states, holding that a mortgage only creates a lien rather than conveying title to the lender.
Loan Discount
Prepaid interest, paid by a borrower in seeking a loan, designed to increase the lender's yield or profit.
Loan Servicing
The lender's administrative duties after a loan is placed for instance, mailing out bills, keeping records of loan payments, maintaining, escrow accounts, making payments for taxes and insurance, and sending out delinquent notices.
Loan Transfer Fee
A charge for changing the lender's records when a buyer takes over the seller's existing loan.
Loan-to-value Ratio (LTV)
The percentage relationship between the amount of loan and the value of the property pledged as security. For example, a property valued at $100,000 with an $80,000 loan has an 80% loan -to-value ration ($80,000/$100,000=80%)
Lock-in Clause
Mortgage provision which prevents the loan from being paid off early.
Maggie Mae
The Mortgage Guaranty Insurance Corporation's private secondary mortgage market program designed to provide an outlet where lenders can sell their conventional loans insured by MGIC.
Mortgage
An instrument which secures a promissory note by either giving the lender a lien against certain property or conveying title to, depending on state law.
Mortgage Loan Correspondent
One who places mortgage loans by using funds belonging to an investor, such as a life insurance company who wants to invest in mortgage but does not want the administrative duties of placing and servicing the loan.
Mortgage Note
See Promissory Note .
Mortgage Pool
A package of many mortgage loans sold to several different investors. This approach allows a group of investors to participate in a pool of mortgages , thus spreading their risk.
Mortgagee
Lender
Mortgagee in Possession
A lender who petitions the court to appoint a receiver to manage income producing property during the period after default but before a foreclosure sale.
Mortgaging Clause
In lien theory state, this provision gives the lender a lien in the property pledged as security.
Mortgagor
Borrower.
Naked Title
Rights granted to a trustee by a trust deed.
National Banks
Commercial banks which are chartered by the Federal Reserve System.
Negative Amortization
An increase in the principal loan balance due to an insufficient amount of monthly payment to cover the accrued interest. The deficiency is added to the loan balance each month and is compou nded at the prevailing interest rate, normall y occurs in a graduated payment mortgage .
Negotiable Instrument
A written promise to pay a certain sum of money which may be transferred by endorsement or by delivery .
Nonjudicial Foreclosure
See Foreclosure by Power of Sale.
Notice of Lis Pendens
Recorded notice which indicates that a lawsuit is pending.
Open Mortgage
A mortgage loan which allows the borrower to pay off part or all of principal without penalty at any time before it becomes due .
Open-end Mortgage
Entitles the borrow er to receive future advances of fund s up to but not exceeding a specified limit.
Owner's Rent Clause
A mortgage provision which obligates a defaulting borrowers to pay rent while remaining in possession.
Package Mortgage
A financing arrangement where the borrower pledges both real and personal property as security for a loan.
Partial Release Clause
A provision in a blanket mortgage which obligates the lender to release each parcel held as security upon payment of a specified sum.
Participat ion Loan
Financing arrangement in which the lender is made a partner as a condition of obtaining a loan.
Pass Through Securities
An investment in a pool of mortgages which allows different investors to participate in the same mortgage rather than in individual ones. Investors receive principal and interest payments each month. These securities are sold by Ginnie Mae to raise funds for programs which offer special assistance in the secondary mortgage market.
Pledge
The transfer of property to be held by the lender as security for a loan.
Pledged Account Mortgage (PAM)
A mortgage loan which requires the borrower to make graduated payments and at the same time provides the lender with full monthly payments. This unique feature is accomplished by the borrower pledging a savings account to the lender from which supplemental payments are made on behalf of the borrower during the first few years of the loan. The regular payments are lower than usual.
Power of Sale Clause
Mortgage provision which enables the lender to foreclose without filing a lawsuit against the defaulting borrower.
Prepaymen t Penalty
A charge for paying off part or all of a loan before it becomes due.
Prepayment Clause
Mortgage provision which allows the borrower to pay off part or all of the loan without penalty at any time before it becomes due.
Prepayment Privilege
See Prepayment Clause.
Primary Mortgage Market
Where individual homebuyers go to obtain mortgage loan financing.
Private Mortgage Insurance (PM1)
Protect lenders who make conventional loans of more than eighty percent of value. In the event of default the insurance covers the lender's losses up to the amount of the insurance.
Promissory Note
The borrower's written promise to repay a loan. The note specifies the exact terms and conditions under which the debt is to be paid .
Property Manager
One who is given the responsibility of maintaining, preserving and enhancing an owner's property and at the same time generating the highest possible net return from it.
Purchase Money Mortgage
A financing arrangement where the purchaser gives the seller a note secured by a mortgage as part payment of the purchase price.
Real Estate Settlement Procedures Act (RESPA)
A federal law which requires lenders to inform potential homebuyers about various costs involved in arranging mortgage financing and which attempts to standardize settlement practices.
Receiver
A court-appointed official responsible for managing a property during the period beginning after default and continuing until foreclosure
Receiver Clause
A mortgage provision which permits a court to appoint a receiver to manage income producing property during a period of default.
Reconvey ance Deed
A deed executed by a trustee and delivered to the trustor for the purpose of return ing title upon full payment of a loan.
Redlining
The unlawful practice of a lender refusing to make a loan solely on the basis of the particular neighborhood involved . Federal Fair Hou sing Law prohibits the denial of a loan to a qualified borrower purely on the basis of the particular neighborhood .
Regulation z
Adopted by the Federal Reserve to implement the Truth-in-Lending Law. The regulations provided lenders and those who help arrange credit for borrowers specific guidelines to follow in disclosing to borrowers their exact cost of credit. Administrated and enforced by the Federal Trade Commission (FTC)
Release of Liability
A lender's written statement releasing the original borrower from further personal liability on the note. Such a release is usually not considered unless a qualified buyer agrees to accept the personal liability.
Request for Reconveyance
A lender's official request of the trustee to execute and deliver a reconveyance deed to the trustor as a result of paying off the loan.
Reserve Requirements
A federal regulation which requires certain lending institutions to keep a specified amount of their funds on hand and unavailable for loans or other use in order to influence the availability of credit. Commercial banks which are members of the Federal Reserve System and Savings and Loan Associations which are supervised by the Office of Thrift Supervision (OTS) must comply with these requirements.
Sale Lease Back
A financing arrangement which enables a business property owner to sell property with an agreement to lease it back on a long-term, net-lease basis from the investor who bought it.
Satisfaction of Mortgage
A mortgage's written statement which cancels the debt and terminates all rights in the property held as collateral. Such a document is obtained from the lender upon full payment of the loan and should be recorded to remove the mortgage from the public records.
Satisfaction Piece
See Satisfaction of Mortgage.
Seasoned Loan
One which has a history of prompt payments .
Secondary Mortgage Market
The market where loans are bought from local lenders in order to provide them with a constant supply of cash to originate more loans to homebuyers.
Security Agreement
An instrument which gives a lender a security interest in personal property pledged as collateral for a loan.
Security Deed
A security instrument which conveys title to the lender until the debt is satisfied. At which time the instrument is cancelled.
Senior Mortgage
See First Mortgage.
Shared Appreciation Mortgage (SAM)
A financing arrangement in which the borrower receives a below-market interest rate by allowing the lender to share in the property's future appreciation in value.
Statutory Right of Redemption
A delinquent borrower's right to redeem property by paying off the debt within a specified period of time after a foreclosure sale.
Straight-term Mortgage
The borrower makes periodic payments of interest only for the term of the loan plus a balloon payment at maturity .
Strict Foreclosure
A legal procedure which enables the lender to take title from a defaulting borrower without a foreclosure sale. The court grants the borrower a specified amount of time to pay off the loan. If the debt is not paid, title is awarded to the lender.
Subject To
A method of taking over a seller's existing loan without assuming any personal liability for the payment.
Subordination Clause
A mortgage provision which makes the lien automatically subordinate in priority to a specified existing loan or anticipated future lien.
Swing Loan
A short term loan allowing the purchaser to purchase a new property based on the strength of the equity from the property the purchaser is selling.
Take-out Commitment
A lender's commitment to a contractor that permanent financing will be available to pay off a construction loan when the building is completed.
Thrift Institutions
Saving and Loan Associations and Savings Banks.
Time deposits
A bank's savings deposits that may be used to finance real estate pledged as security of the debt.
Title Theory
The legal position adopted by some states holding that the mortgage conveys title to the lender. Upon payment of the debt, the mortgage is defeated and all full rights of ownership are restored to the borrower.
Trust Deed
A deed used in some states in lieu of mortgage. Title is held by a trustee on behalf of a lender (beneficiary) until the borrower (trustor) repays the loan.
Trustee
A neutral third party who holds title on behalf of a lender until the debt is paid .
Trustor
Borrower who executes a trust deed.
Truth-in-Lending Law
Federal law which require s a lender to disclose the exact cost of credit on certain loan s so the borrower can compare costs from other credit sources before committin g to take the loan.
Uniform Settlement Statement
A re-printed form on which RESPA requires the lender of certain loans to itemize all settlement charges.
Usury
The legal limit of interest imposed by state laws, does not apple to VA and FHA loans.
VA Guaranteed Loan
A mortgage loan where the VA guarantees a lend er against loss at foreclosure up to a certain amount for a qualified veteran.
Warehousing
A loan correspondent's practice of holding mortgages in his/her own name until they can be assembled into a package of loans and sold to an investor. The lender usually has a warehouse line of credit at a bank, against which the warehoused mortgages are pledged until they are sold in the secondary mortgage market, and the warehouse line of credit is replenished.
Wraparound Mortgage
A junior mortgage which includes the amount of any existing loan(s) plus the balance of the seller's equity after deducting the buyer's down payment. The hold of the wraparound continues to make payments on the existing loan(s). (END OF CHAPTER 14)
Transfer Tax
A tax on a conveyance, paid on the sale price minus any assumed loan, at the rate of $0.10 per $100 or fraction thereof. Usually assessed to the seller at closing. (END OF CHAPTER 16)
Intangibles Tax
A tax on personal property . In Georgia it is imposed on new mortgage loans at closing at the rate of $1.50 per $500 or fraction thereof. (END OF CHAPTER 17)
Active License
Status of an individual who has met all qualifications to practice real estate as a broker, associate broker, or salesperson; and such license is held by a broker, rather than by the Commission. (The definition doesn't appear in the chapter.)
Associate Broker
A person who has met all qualifications to be licensed as a broker but who elects to act on behalf of another broker in performing any act authorized by law to be performed by a broker
Attorney General
Legal counsel for the state. Whenever the Commission believes a serious violation of the License Law has occurred , the Attorney General may bring an action in the name of the state to enforce compliance.
Broker
The term under "BRRETA" means any individual or entity that has been issued a real estate license under the authority of the Georgia Real Estate Commission and includes, for the purpose of this section, any affiliated licensees.
Censure
Disciplinary power of the Commission whereby it reprimands a licensee, usually for technical violations occurring for the first time.
Co-brokering
Participation of more than one broker in a real estate transaction.
Commission
The Georgia Real Estate Commission, the state licensing authority charged with the enforcement of the Real Estate License Law.
Dual Contracts
See Falsifying Contracts .
Escrow Account
See Trust Account .
Falsifying Contracts
An illegal practice in which a sales contract is executed for the true sales price, and then a different and false price is written for submission to the lender.
Georgia Administrative Procedures Act
A state law which requires administrative bodies such as the Georgia Real Estate Commission to follow certain procedures in its investigative proces s and before exercising its disciplinary powers. For example, before the Commission can impose a sanction against a license, the licensee must be given a hearing .
Inactive License
Statue of a licensee temporarily unemployed, or who has otherwise ceased his/her active involvement in the real estate business on behalf of a broker. During such time, the license is held by the Commission and may remain there indefinitely, but must be renewed and fees must be paid the same as active licensees .
Misdemeanor
Offenses lower than felonies, punishable by fines and/ or imprisonment. License Law violations constitute misdemeanors, punishable by fines up to $1,000.
Pocket Card
An evidence of licensure kept by the licensee. It identifies the licensee by name, the licensing designation, the license number, and the date the original license was made.
Qualifying Broker
One designated as the principal broker for a corporation or partnership. May be any individual entitled to a broker 's license in Georgia.
Real Estate
Includes condominium, mobile homes when affixed to land, incorporeal interests (intangibles such as an easement), corporeal interest (tangible objects such as a house) , freehold estates for life or in fee, and less-than-freehold (leasehold) estates whether situated in this state or elsewhere.
Real Estate Commissioner
Full time employee of the Commission who serves as its chief administrator. Because of the commissioner's oath to faithfully discharge the duties of the office, the commissioner can have no interest in a real estate company or other related business.
Reinstatement Fee
A charge to reinstate a lapsed license .
Revocation
Disciplinary action by the Commission to take a license away from the licensee .
Rules and Regulations
Authoritative standards of practice created by the Commission which relate do the professional conduct of licensees and the administration of the License Law. They are intended to clarify certain sections of the Law which may be misunder stood or misinterpreted by the licensees and the public. Even though they are not a part of the License Law, they have the same force and effect as the Law.
Salesperson
Any person, other than an associate broker, who acts on behalf of a real estate broker in performing any licensed act authorized by the License Law to be performed by the broker.
Sanction
A penalty or punishment provided as a means of enforcing obedience to a law.
Subagent
Another brokerage firm appointed by the listing broker to assist in a real estate transaction.
Suspend
Disciplinary action by the Commission to temporarily take a license away from the licensee.
Trust Account
A separate account which a broker must maintain for the deposit of all funds coming into his/her possession that belongs to others. Before a broker's license will be issued , the broker must authorize the Commission to examine the account at any time. (END OF CHAPTER 18)
Blind Ad
An advertisement which does not indicate the party offering to buy or offering to sell is licensed by the Commission. Such ads are prohibited. Every ad or sign must contain the name of the brokerage firm as registered with the Commission
Closing
The act of finalizing a transaction, in which title is conveyed to the purchaser. Also called Settlement.
Declaratory Ruling
An official statement from the Commission which is intended to clarify the position and intent relating to a particular rule or part of the License Law.
Exclusive Listing
A written agreement in which an owner appoints one real estate broker as exclusive agent for the sale, or lease, of property during a specified time period. There are two types of exclusive listing. One is an exclusive right-to-sell listing which provides the broker is due a commission, if the property is sold by anyone during the term of the listing. The other is an exclusive agency listing. With this type agreement, the broker is due a commission, if the property is sold during the term of the listing by anyone other than the owner.
Independent Contractor
One who contracts to do work according to his/her own methods and is responsible to his/her employer only as to the results of that work.
Interpleader
A legal action that can be taken by a broker to settle an earnest money dispute by paying the funds into court. The court will determine how the funds are to be disbursed .
Sole Proprietor
A real estate brokerage company owned exclusively by one person and not operating as a corporation or partnership. Requires only the owner broker be licensed in his/her name or using a registered trade name.
Solicitation
The practice of seeking listings by the use of telephone, door-to-door, or mail inquires. It is a legitimate practice if conducted without discrimination or harassment.
Trust Account Journal
A bookkeeping system which accounts for all trust fund deposits and disbursements. The journal must show the name of the parties, amount of money received, date deposited , property address, and details of all disbursements. (END OF CHAPTER 19)