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379 Cards in this Set

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1. The state of being delinquent in paying a debt. 2. At or after the end of the period for which expenses are due or levied; the opposite of in advance. Mortgage interest and real estate taxes are often paid in arrears.
automated underwriting
Computer systems that permit lenders to expedite the loan approval process and reduce lending costs.
ad valorem
The Latin word for "according to value."
See personal property.
acceleration clause
A provision in a mortgage, trust deed, promissory note or contract for deed (agreement of sale) that, upon the occurence of a specified event, gives the lender (payee, obligee or mortgagee) the right to call all sums due and payable in advance of the fixed payment date. (See alienation clause)
The process of evaluating mortgage loan applicant's credit, collateral value and and the risks in making a loan.
The agent must exercise a reasonable degree of care while transacting the business entrusted to him or her by the principal. The principal expects the agent's skill and expertise in real estate matters to be superior to that of the average person. The most fundamental way in which the agent exercises care is to use that skill and knowledge in the principal's behalf. The agent should know all facts pertinent to the principal's affairs, such as the physical characteristics of the property being transferred and the type of financing being used. (See agent, law of agency, principal)
judgment lien
A general lien on the property of a judgment debtor, giving the holder of the judgment a right to levy the property to satisfy the debt. (See general lien)
The dollar amount that the Internal Revenue Service attributes to an asset for purposes of determining annual depreciation or cost recovery, and gain or loss in the sale of the asset. The determination of basis is of fundamental importance in tax aspects of real estate investment. All property has a basis. If property was acquired by purchase, the owner's basis is the cost of the property plus the value of any capital expenditures for improvements to the property, reduced by any cost recovery depreciation actually taken or allowable. The basis is also reduced by any untaxed gain "carried over" to the new property in cases where the new property is a replacement of a former residence or is acquired through a like'king exchange or through an involuntary conversion. This new basis is called the property's adjusted basis. (See adjusted basis, depreciable basis, original basis)
Securities (a series of bonds) issued backed by mortgages.
The consummation of a real estate transaction, when the seller delivers title to the buyer in exchange for payment by the buyer of the purchase price. Closing in some areas may not occur until the documents are recorded; however, under general rules of real estate law, transfer of title takes place upon delivery of the deed to the grantee.
acquisition cost
The amount of money or other valuable consideration expended to obtain title to a property. Includes purchase cost, plus such items as appraisal fees, closing costs, finance charges, mortgage loan origination fees and title insurance. (See title)
A competent and disinterested person who is authorized by another person to act in his or her place. In real estate conveyance transactions, an attorney-in-fact, who has a fiduciary relationship with his or her principal, should be so authorized by way of a written, notarized and recordable instrument called a power of attorney. (See power-of-attorney)
building inspection
An overall inspection of a home or building performed by a qualified contractor or inspector. The inspection usually covers all major systems including foundation, plumbing, electrical, roof, heating and air conditioning.
back-end ratio
The ratio of monthly housing costs (PITI) plus long-term debt service to total monthly income. (See (See front-end ratio, PITI)
certificate of eligibility
A certificate issued by a Veterans Administration regional office to veterans who qualify for a VA loan. The Veteran Housing Act permits regional administrators to restore a veteran's entitlement to loan-guarantee benefits after his or her property purchased with an existing VA-guaranteed loan has been disposed of and 1. this loan has been paid in full; 2. the administrator is released from liability under the guarantee or 3. any loss suffered by the administrator has been repaid in full. It is no longer required that property ownership was transferred for a compelling reason.

The act also authorizes regional administrators to restore a veteran/seller's entitlement to loan-guarantee benefits and release the veteran from liability to the VA when another veteran has agreed to assume the outstanding balance on the veteran/seller's existing VA-guaranteed loan and consented to the use of his or her entitlement to the same extent that the veteran/transferor had used the original entitlement. This is not a release from the lender, however. The veteran/transferee and the property must otherwise meet the requirements of the law. Reinstatement of eligibility is never automatic but must always be applied for, preferably at the time of the sale of property purchased with an existing VA-guaranteed loan.

Many veteran/sellers presume that they are eligible for a new VA loan after selling their property by way of a loan assumption. In a loan assumption, the broker should point out that for the seller to have complete VA entitlement restored, the buyer must be a veteran and must agree in the sales contract to substitute his or her entitlement for the seller's. (See VA loan)

The transfer of the right, title and interest in the property of one person (the assignor) to another (the assignee). There are assignments of, among other things, mortgages, sales contracts, contracts for deed, leases and options.
A, B, C, D paper
Mortage loans are rated as A, B, C, or D paper. "A" paper loans are the highest quality, lowest risk loans; "B" quality are loans where the borrower has minor credit problems; "C" quality are borrowers with marginal or poor credit; "D" quality indicates very high risk loans.
Unambiguous; clear; having only one possible meaning or interpretation.
bullet loan
A loan that includes a call date earlier than its normal amortization period; also called a renegotiable rate loan or a rollover loan.
civil action
An action where an issue, formed by some kind of complaint, is presented for trial. Proceedings are for declaration, enforcement, protection of a right, redress, or prevention of a wrong.
A person who receives benefits from the gifts or acts of another, as in the case of one designated to receive the proceeds from a will, insurance policy, or trust; the real owner, as opposed to the trustee who holds only legal title. With a trust, the trustee holds the legal title, but the beneficiary enjoys the benefits of ownership.
Civil Rights Act of 1870
The Voting Rights Act of 1870 (aka, Civil Rights Act of 1870) includes a clause reaffirming the remedies of the Civil Rights Act of 1866.
A male person appointed by the court to settle the estate of a person who has died intestate (leaving no will). Sometimes referred to as the personal representative. (See executor)
Uniform Commercial Code
A codification of commercial law, adopted in most states, that attempts to make uniform all laws relating to commercial transactions, including chattel mortgages and bulk transfers. Security interests in chattels are created by an instrument known as a security agreement. To give notice of the security interest, a financing statement must be recorded. Article 6 of the code regulates bulk transfers--the sale of a business as a whole, including all fixtures, chattels and merchandise.
aesthetic zoning
Zoning for beauty. May regulate architectural styles, colors or signage. (See zoning)
commercial waste
All solid waste from businesses. This category includes but is not limited to, solid waste originating in stores, markets. office buildings, restaurants, shopping centers, and theaters.
Alquist-Priolo Special Study Zone
A California law requiring a real estate agent or owner to disclose to prospective buyers that a property is located within a special studies zone (geological hazard zone) and if the property contains or will contain a dwelling (a residentally zoned lot). "Special study zones" cover an area 660 feet on each side of fault lines and are indicated on maps prepared by the California Department of Mines and Geology.
Civil Rights Act of 1968
In 1968, Congress enacted Title VIII of the Civil Rights Act, called the federal Fair Housing Act, which declared a national policy of providing fair housing throughout the United States (Reference Sections 3601-3631 of Title 42, United States Code). This law makes discrimination based on race, color, sex, familial status, handicap, religion or national origin illegal in connection with the sale or rental of most dwellings and any vacant land offered for residential construction or use. (See Fair Housing Act, Federal Fair Housing Law)
bankruptcy score
A scoring system to indicate risk of borrower default. (See bankruptcy)
Civil Rights Act of 1866
The Civil Rights Act of 1866 prohibits racial discrimination in the sale and rental of housing. (See Federal Fair Housing Law)
administered price system
Federal National Mortgage Association securities purchasing procedure where required yields are adjusted daily to reflect financial market factors. (See Federal National Mortgage Association)
An asset is something of value, encumbered or not, owned by an person, corporation or other entity. Assets are financial (cash or bonds), tangible or intangible, or physical (real or personal property).
The gradual repayment of a debt by means of systematic payments of principal and/or interest over a set period, so that at the end of the period there is a zero balance. The principal is thus directly reduced or amortized over the life of the loan. Some loans are not fully amortized, and require a balloon payment at the end of the term of the loan. (See balloon payment, fully amortized)
junction box
A rectangular metal or plastic box that provides a nexis (junction) for a home's electrical wiring system. Protects the wiring from the elements.
back-end qualification
When qualifying a prospective buyer for financing, the ratio of the borrower's income to monthly debt obligation is a primary consideration. Based on "back-end qualification," the ratio of a prospect's income to their total housing expense plus their long-term debt obligation should not exceed 36%. (See front-end qualification, prequalify)
cloud on title
Any document, claim, unreleased lien or encumbrance that may impair the title to real property or make the title doubtful: usually revealed by a title search and removed by either a quitclaim deed or suit to quiet title.
The return on an investment or the amount of profit, stated as a percentage of the amount invested; the rate of return. In real estate, yield refers to the effective annual amount of income that is being accrued on an investment. The yield on income property is the ratio of the annual net income from the property to the cost or market value of the property. The yield, or profit, to a lender is the spread or differential between the cost of acquiring the funds lent and the interest rate charged.
One authorized to represent and to act on behalf of another person (called the principal). Unlike an employee, who merely works for a principal, an agent works in the place of a principal. The main difference between an agent and an employee is that the agent may bind his or her principal by contract, if within the scope of authority, whereas an employee may not unless given express authorization. (See law of agency, principal)
zoning variance
A zoning varience permits a change in the specifications required by the zoning ordinance.
blended rate
An interest rate for a newly financed loan that is higher than the existing rate but lower than the current market rate.
Uniform Building Code
A national building code published by the International Conference of Building Officials. It has been adopted in part by municipalities throughout the United States, but used mostly in the western states. (See building code)
burden of proof
The obligation to prove the truth or falsity of a fact.
undue influence
Strong enough persuasion to completely overpower the free will of another and prevent him or her from acting intelligently and voluntarily, as in a case where a broker guilty of blockbusting has induced someone to sell in fear of a change in the racial character of the community. Undue influence usually requires a close or confidential relationship like parent-child, broker-seller, attorney-client, or trustee-beneficiary. Where a person has been unduly influenced to sign a contract, that person can void the contract.
blanket trust deed
A trust deed secured by several properties or a number of lots. A blanket mortgage is often used to secure construction financing for proposed subdivisions or condominium development projects. The developer normally seeks to have a "partial release" clause inserted in the mortgage so that he or she can obtain a release from the blanket loan for each lot as it is sold, according to a specified release schedule.
judgment decree
Specifiies the award made by the court in a civil case.
Borrowing at one interest rate and investing at a higher rate.
Selling property to the highest bidder.
Disposal by a testator in his or her lifetime of a specific property bequethed in his or her will so the bequest is revoked. (See testator)
The legal process of seizing the real or personal property of a defendant in a lawsuit by levy or judicial order, and holding it in court custody as security for satisfaction of a judgment. The lien is thus created by operation of law, not by private agreement. The plaintiff may recover such property in any action upon a contract, express or implied.
A group tour by a real estate office's sales agents to view listed properties. (See agent property evaluation)
unconscionable contracts
An agreement that is so unfair and one-sided that the courts will refuse to honor it.
advance fee addendum
An agreement specifying services for which an agent or broker will be compensated including a provision for payment of an advance fee. (See advance fee)
Commercial Investment Real Estate Institute (CIREI)
A professional organization of real estate practitioners specializing in commercial real estate. CIREI, affiliated with the National Association of REALTORS®, confers the designation CCIM (Certified Commercial Investment Member).
attractive nuisance doctrine
An owner has a duty to reasonably protect children from injury when his or her property is likely to attract children.
An illegal and discriminatory practice whereby one person induces another to enter into a real estate transaction from which the first person may benefit financially by representing that a change may occur in the neighborhood with respect to race, sex, religion, color, handicap famial status or ancestry of the occupants, a change possibly resulting in the lowering of the property values, a decline in the quality of schools or an increase in the crime rate. Also called panic selling or panic peddling.
zoning ordinance
An exercise of police power by a municipality to regulate and control the character and use of property.
bulk sales transfer
Any transfer in bulk (and not a transfer in the ordinary course of the seller's business) of a major part of the materials, inventory or supplies of an enterprise. The Uniform Commercial Code (UCC) regulates bulk transfers to deal with such commercial frauds as a merchant selling out stock, pocketing the proceeds and leaving creditors unpaid. The UCC requires the buyer of the goods to demand that the seller provide a schedule of all the property and a list of all creditors and that the buyer give notice to creditors of the pending sale. Failure to comply with UCC means that the transfer or sale is ineffective in respect to the claims of any creditor of the seller. Bulk transfers usually become relevant upon the liquidation or sale of a business.

Under state law, a bulk sale must be reported by the seller to the state tax authorities, and the purchaser must withhold payment until the seller's tax clearance is received. If the tax clearance is not made, the purchaser may become liable for any unpaid taxes that are a lien against the items sold. (See Uniform Commercial Code)

A supplement or an addition to a will, executed with the same formalities as a will, that normally does not revoke the entire will.
Appropriation is the way a taxing body authorizes the expenditure of funds and provides for the sources of the funding. Appropriation generally involves the adoption of an ordinance or the passage of a law that states the specific terms of the proposed taxation.
associate broker
A real estate license classification used in some states to describe a person who has qualified as a real estate broker but still works for and is supervised by another broker; also called a broker-salesperson, broker-associate or affiliate broker.
amenity or amenities
The qualities and state of being pleasant and agreeable. In residential appraising, those peculiar and intangible benefits of home ownership such as satisfaction of possession and use arising from architectural excellence, scenic beauty, and desirable social environment.
junior lien/mortgage
An obligation, such as a second mortgage, that is subordinate in right or lien priority to an existing lien (senior loan) on the same real estate. (See senior lien/loan)
agricultural lease
Agricultural landowners often lease their land to tenant farmers, who provide the labor to produce and bring in the crop. An owner can be paid by a tenant in one of two ways: as an agreed on rental amount in cash in advance (cash rents) or as a percentage of the profits from the sale of the crop when it is sold (sharecropping). (See cash rents, sharecropping)
closing statement
A detailed cash accounting of a real estate transaction showing all cash received, all charges and credits made and all cash paid out in the transaction.
backup offer
An offer to buy submitted to a seller with the understanding that the seller has already accepted a prior offer; a secondary offer. Sometimes the seller accepts the backup offer contingent on the failure of the sales transaction on the part of the first purchaser within a specified period of time. The seller must be careful how he or she proceeds, however, when the time for buyer's performance under the first contract has expired.
The imposition of a tax, charge or lein, usually according to established rates.
after-acquired title
Title or interest acquired by the grantor after a property has been conveyed. (See grantor)
unenforceable contract
A contract that was valid then made but either cannot be proved or will not be enforced by a court. An unenforceable contract is not merely on that is void or illegal. A contract may be unenforceable because it is not in writing, as may be required under the state statutes of frauds, or because the statute of limitations period has elapsed.
adjustment period
In an adjustable rate mortgage (ARM) the "adjustment period" is period (one month, three months, six months, one year or three years) between one interest rate and monthly payment change and the next. (See adjustable rate mortgage (ARM))
judicial precedent
In law, the requirements established by prior court decisions.
A mathematical process for converting net income into an indication of value, commonly used in the income approach to value. The net income of the property is divided by an appropriate (capitalization) rate of return to give the indicated value. (Income ÷ Rate = Value)
CLTA policy
A standard coverage title insurance policy protects real estate buyers in matters of record and specific risk. (See standard coverage policy, title insurance)
annual percentage rate (APR)
An expression of the relationship of the total finance charge to the total amount to be financed as required under the federal Truth-in-Lending Act. Tables available from any Federal Reserve bank may be used to compute the rate, which must be calculated to the nearest one-eighth of 1 percent. Use of the APR permits a standard expression of credit costs, which facilitates easy comparison of lenders. (See interest, Truth-in-Lending Act)
coinsurance clause
A clause in insurance policies covering real property that requires the policyholder to maintain fire insurance coverage generally equal to at least 80 percent of the property's actual replacement cost.
An estimate of the monetary value of a property on the open market; an estimate of a property's type and condition, its utility for a given purpose or its highest and best use. (See cost approach, income approach, index method, market-data approach, quantity survey method, sales comparison approach, square-foot method, unit-in-place method)
combustion gases
The gasses that are emitted from a flame upon the combustion of a flammable material.
back-end qualification
When qualifying a prospective buyer for financing, the ratio of the borrower's income to monthly debt obligation is a primary consideration. Based on "back-end qualification," the ratio of a prospect's income to their total housing expense plus their long-term debt obligation should not exceed 36%. (See front-end qualification, prequalify)
add-on rate
Interest charged on a principal amount for specified term, regardless of any repayments of principal. The borrower is paying interest on the full principal sum for the entire loan period, even though the principal is being reduced each month.
underground storage tanks (USTs)
USTs are commonly used for storing petroleum products, chemicals or process wastes. Sites which use USTs include airports, gas stations, industrial locations and military bases. Over time neglected tanks may leak hazardous substances into the environment, contaminating groundwater. State and federal laws impose strict requirements on landowners where USTs are located to detect and correct leaks to protect groundwater.
Additional material attached to and made part of a document. If there is space insufficient to write all the details of a transaction on the sales contract form, the parties will attach an addendum or supplement to the document. The sales contract should incorporate the addendum by referring to it as part of the agreement. The addendum should refer to the sales contract and be dated and signed or initialed by all the parties.
Civil Rights Act of 1964
The first modern civil rights act. Made into law President John F. Kennedy's Executive Order 11063 prohibiting discrimination in housing where federal funds were involved. (See Federal Fair Housing Law)
balloon payment
Under an installment loan agreement, a final payment that is substantially larger than the previous installment payments and repays the debt in full; the remaining balance that is due at maturity (stop date) of a note or obligation. (See amortization, fully amortized, stop date)
closing costs
Expenses of the sale (or loan refinancing) that must be paid in addition to the purchase price (in the case of the buyer's expenses) or be deducted from the proceeds of the sale (in the case of the seller's expenses). Some closing costs result from legal requirements; other are a matter of local custom and practice.
broad-form homeowner's policy
Covers falling objects; damage due to the weight of ice, snow or sleet; collapse of all or part of the building; bursting, cracking, burning or bulging of a steam or hot water heating system or of appliances used to heat water; accidental discharge, leakage or overflow of water or steam from within a plumbing, a heating or an air-conditioning system; freezing of plumbing, heating and air-conditioning systems and domestic appliances; and injury to electrical appliances, devices, fixtures and wiring from short circuits or other accidentally generated currents.
jumbo loan
A "jumbo" loan is any loan that exceeds the underwriting guidelines for Fannie Mae/Freddie Mac maximum loan limits ($240,000 as of January 1999). (See Non-conforming loan, Fannie Mae, Freddie Mac)
The person who employs an agent to perform a service for a fee. In traditional real estate brokerage, the client is the seller, and the buyer is the prospect or customer. In modern practice, more and more buyers are seeking representation as a client. Dual agency occurs when a broker represents the seller and the buyer as clients.
build-up rate
The discount or interest rate used in the selection of the capitalization rate for an investment property. (See capitalization rate)
A person who evaluates the risk of default by a mortgage loan applicant, and grants approval or denial of the loan.
Building Owners and Managers Association (BOMA)
A national organization of more than 4,000 professionals in the highrise/office building industry, with 80 local BOMA associations. The Building Owners and Managers Institute (BOMI) is the related educational institute that provides professional training in all aspects of building management andoperations via courses In individual study leading to professional certification as a Real Property Administrator (RPA). The seven required courses are Engineering and Building Structures, Real Property Maintenance, Risk Management and Insurance, Accounting and Financial Concepts, Law, Finance and Management Concepts.
The illegal act of mixing deposits or monies belonging to a client (trust funds) with one's personal money. By law brokers are required to maintain a separate trust or escrow account for other parties' funds held temporarily by the broker. (See trust funds)
breach of contract
Violation of any of the terms or conditions of a contract without legal excuse; default; nonperformance. The nonbreaching party can usually seek one of three alternative remedies upon a material breach of the contract: rescission of the contract, action for money damages or an action for specific performance.
common areas
Acquiring title to additions or improvements to real property as a result of the annexation of fixtures or the accretion of alluvial deposits along the banks of streams. accretion The increase or addition of land by the deposit of sand or soil washed up naturally from a river, lake or sea.
assumption "subject to"
When a loan is taken "subject to," the seller agrees to remain liable and the buyer accepts no liability in the event of a deficiency on a foreclosure. (See assumption of mortgage, foreclosure)
A sworn statement written down and made under oath before a notary public or other official authorized by law to administer an oath. The term literally means "has pledged one's faith." Athe affiant (person making the oath, sometimes called the deponent") must swear before the notary that the facts contained in the affidavit are true and correct.
civil law
A system of law codified by statutes. (See common law, constitutional law, Roman Civil Law, statutory law)
actual damages
Real, substantial and just damages, or the amount awarded to a complainant in compensation for his actual and real loss or injury.
Payment made to someone for referral of a customer or business. Unlike a commission, a kickback is made without the customer's knowledge; thus, the referral could have been made without the customer's best interest at heart.
bird dogs
See centers of influence.
The regulation of structures and uses of property within designated districts or zones. Zoning regulates and affects such things as use of the land, lot sizes, types of structure permitted, building heights, setbacks and density (the ratio of land area to improvement area). (See aesthetic zoning, bulk zoning, comprehensive zoning, cumulative zoning, downzoning, exclusionary zoning, incentive zoning, noncumulative zoning, partial zoning, spot zoning)
agency coupled with an interest
An agency relationship in which the agent is given an estate or interest in the subject of the agency (the property).
joint and several liability
A situation when more than one party is liable for repayment of a debt or obligation. A creditor can obtain compensation from one or more parties, either individually or jointly. (See liability)
biweekly loan
A loan with twice-monthly payments to match a borrower's payroll schedule.
joint venture
The joining of two or more people to conduct a specific business enterprise. A joint venture is similar to a partnership in that it must be created by agreement between the parties to share in the losses and profits of the venture. It is unlike a partnership in that the venture is for one specific project only, rather than for a continuing business relationship.
The act of transferring ownership, title or an interest or estate in real property from one person to another. Property is usually sold or conveyed by voluntary alienation, as with a deed or assignment of lease. Involuntary alienation takes place when property is sold against the owner's will, as in a foreclosure sale or a tax sale. (See alienation clause)
undisclosed dual agency
A broker may not intend to create a dual agency. However, like any other agency, it may occur unintentionally or inadvertently. Sometimes the cause is carelessness. Other times a salesperson does not fully understand his or her fiduciary responsibilities. Some salespersons lose sight of other responsibilities when they focus intensely on bringing buyers and sellers together. For instance, a salesperson representing the seller might suggest to a buyer that the seller will accept less than the listing price. Or that same salesperson might promise to persuade the seller to accept an offer that is in the buyer's best interests. Giving a buyer any specific advice on how much to offer can lead him or her to believe that the salesperson represents the buyer's interests and is acting as the buyer's advocate.
A switch-like device in electrical panel boxes used to keep the electrical current from exceeding the recommended load for the wire size connected to the breaker.
A kiosk is a freestanding structure (open sides, usually multi sided) located in a shopping center or mall from which merchandise is sold. A multi-sided structure found in a shopping mall or center.
The agent must be able to report the status of all funds received from or on behalf of the principal. Most state real estate license laws require a broker to give accurate copies of all documents to all parties affected by them and to keep copies on file for a specified period of time. Most license laws also require the broker to deposit immediately, or within 24 to 48 hours, all funds entrusted to the broker (such as earnest money deposits) in a special trust, or escrow, account. Commingling such monies with the broker's personal or general business funds is strictly illegal.
actual notice
Express information or fact; that which is known; direct knowledge.
zero coupon bonds
A single-payment bond that grows to its face value over a prescribed time period at a specific interest rate. All compound interest is tax-deferred until the bond is cashed.
American Institute of Real Estate Appraisers (AIREA)
A professional organization formerly affiliated with the National Association of REALTORS. AIREA promoted professional practice and ethics in the real estate appraisal industry and identified experienced, competent, ethical appraisers by awarding the MAI (Member, Appraisal Institute) and RM (Residential Member) designations. In 1991, AIREA was merged with the Society of Real Estate Appraisers into the Appraisal Institute. The only designations awarded now are the MAI and SRA (Senior Residential Appraiser)
assumption of mortgage
The acts of acquiring title to property that has an existing mortgage and agreeing to be personally liable for the terms and conditions of the mortgage, including payments. (See acceleration clause, due-on-sale clause, novation, subrogation)
business opportunity
Any type of business that is for sale (also called business brokerage). The sale or lease of the business and goodwill of an existing business, enterprise or opportunity, including a sale of all or substantially all of the assets or stock of a corporation, or assets of partnership or sole proprietorship.
The sudden tearing away of land, as by earthquake, flood, volcanic action or the sudden change in the course of a stream. balance The appraisal principle that states that the greatest value in a property will occur when the type and size of the improvements are proportional to each other as well as the land.
1. A debt instrument; an obligation to pay; a security issued by a corporation. 2. A written promise the accopmpanies a mortgage and is evidence of the debt secured by the mortgage. 3. An interest-bearing certificate issued by a government to finance public projects. (See security)
automatic extension
A clause in a listing agreement that states that the agreement will continue automatically for a certain period of time after its expiration date. In many states, use of this clause is discouraged or prohibited.
Casualty insurance policies include coverage against theft, burglary, vandalism and machinery damage as well as health and accident insurance. Casualty policies are usually written on specific risks, such as theft, rather than being all-inclusive.
combination trust
A trust that participates in real estate investments as both financier and investor.
abstract of judgment
A full summary by the court of a judgment. It becomes a general lien on all a debtor's property in the county where it is recorded. (See general lien, judgment)
uncollected rent
Uncollected rent or vacancy is subtracted from gross scheduled income. Uncollected rent is an estimate expressed as a percentage then converted to dollars. (See gross scheduled income)
The process at of laying two to four feet of soil over the top of a landfill site and then planting vegetation to prevent erosion and enhance the landfill's aesthetic value. (See landfill)
commercial leasehold insurance
Insurance that covers payment of rent in the event the insured (tenant) cannot pay it.
American Society of Appraisers (ASA)
A professional organization of appraisers engaged in the appraisal of both real and personal property. It confers the designations ASA and FASA (Fellow).
judicial foreclosure
A method of foreclosing on real property by means of a court-supervised sale. In a judicial foreclosure, there is an appraisal, after which the court determines an upset price below which no bids to purchase will be accepted. (See nonjudicial foreclosure, strict foreclosure)
antimerger clause
A clause in a mortgage or deed of trust specifying that the senior lienholder will retain lien priority in the event of a merger. (See merger)
classified ads
Advertisements purchased by the line and placed in the classified ad section of newspapers or real estate magazines. Used primarily for advertising residential properties and rentals. (See display ads)
air rights
Rights to the use of the open space or vertical plane above a property. Ownership of land includes the right to all air above the property. Until the advent of the airplane, this right was unlimited, but now the courts permit reasonable interference with one's air rights, such as is necessary for aircraft, so long as the owner's right to use and occupy the land is not lessened. Thus, low-flying aircraft might be unreasonably trespassing, and their owners would be liable for any damages. Governments and airport authorities often purchase air rights adjacent to an airport, called an avigation easement, to provide glide patterns for air traffic.

The air itself is not real property; airspace, however, is real property when described in three dimensions with reference to a specific parcel of land, as in a condominium unit. A Maryland case has decided that separate owners of the land and the air rights may be separately assessed for tax purposes. Air rights may be sold or leased and buildings constructed thereon, such as was done with the Pam Am Building constructed above Grand Central Station in New York City.

Air rights may also be transferred by way of easements, such as those used in constructing elevated highways or in acquiring scenic easements or easements of light and air. Because of the scarcity of land, many developers are examining the possibilities for developing properties in the airspace above prime properties owned by schools, churches, railways and cemeteries. (See surface rights, sub surface rights)

1. A pledge to do a certain act, such as a promise by a lender to loan a certain amount of money at a specific rate of interest to a qualified borrower, provided the loan is made by a certain date. 2. Also refers to an agreement by a title insurance company to issue a policy in favor of a proposed insured upon acquisition of a specific property.
bulk zoning
Zoning for density. Regulates height restrictions, open-space requirements, parking and setback. (See zoning)
Payment to a broker for services rendered, such as in the sale or purchase of real property; usually a percentage of the selling price of the property.
air quality standards
The level of selected pollutants set by law that may not be exceeded in outside air. Used to determine the amount of pollutants that may be emitted by industry
The formal decision of a court on the respective rights and claims of the parties to an action or suit. A judgement that has been entered and recorded with the county recorder usually becomes a general lien on the property of the defendant.
buying motives
Ownership of real estate satisfies certain basic human needs. These needs are what motivate a person to purchase real property. They include: comfort and convenience, desire for profit, pride of ownership, and security.
The appraisal principle that holds that no physical or economic condition remains constant. (See appraisal)
An independent person trained to provide an unbiased estimate of value, as a professional service performed for a fee.
asset management
The assembly, management and disposition of a portfolio of investment properties.
buyer's broker
A broker who represents the buyer in a fiduciary capacity. Some buyer's brokers practice single agency, in which they represent either buyers or sellers, but never both in the same transaction. Some buyer's brokers represent only buyers and refer prospective sellers to other brokers. The broker is paid by the buyer, or through the seller or listing broker at closing, provided all parties consent.
attorney's opinion of title
An abstract of title that an attorney has examined and has certified to be, in his or her opinion, an accurate statement of the facts concerning the property ownership. (See abstract of title)
Any unconfined portion of the atmosphere; open air; outside surrounding air.
joint tenancy
An estate or unit of interest in real estate that is owned by two or more natural persons with rights of survivorship. Only on title exists, and it is vested in a unit made up of two or more persons, all owning equal shares. The basic idea of a joint tenancy is unity of ownership; title is held as though all owners collectively constituted one person, a fictitious entity. The death of one joint tenant does not destroy the owning unit--it only reduces by one the number of persons who jointly own the unit. The remaining joint tenants receive the deceased tenant's interest by the right of survivorship. Thus, the decedent's interest cannot be transferred by will or descent. As each successive joint tenant dies, the remaining tenants acquire the interest of the deceased. The last survivor takes title in severalty, fully inheritable at his or her death by heirs and devisees. (See four unities)
air lot
A designated airspace over a piece of land. An air lot, like surface property, may be transferred.
commercial bank
A financial institution designed to act as a safe depository and lender for many commercial activities (usually short-term loans or lines of credit). Commercial banks rely heavily on demand deposits--checking accounts--for their basic supply of loanable funds, although they also receive capital from savings accounts, loans from other banks, short-term loan interest and the equity invested by their owners. (See line of credit)
carbon monoxide (CO)
A colorless, ordorless gas that occurs as a byproduct of burning such fuels as wood, oil and natural gas due to incomplete combustion.
Attorney General
The chief law officer of the federal or state government, who appears for the people in criminal court.
A relationship created when one person, the principal, delegates to another, the agent, the right to act on his or her behalf in business transactions and to exercise some degree of discretion while so acting. An agency gives rise to a fiduciary relationship and imposes on the agent, as the fiduciary of the principal, certain duties, obligations, and high standards of good faith and loyalty. (See agent, fiduciary, dual agency, buyer's broker)
code of ethics
A written system of standards of ethical conduct. Because of the nature of the relationship between a broker and a client or other persons in a real estate transaction, a high standard of ethics is needed to ensure that the broker acts in the best interests of both his or her principal and any third parties.
A female person appointed by the court to settle the estate of a person who has died intestate (leaving no will). Sometimes referred to as the personal representative. (See executrix)
commercial real estate/property
A classification of real estate that includes income-producing property such as office buildings, gasoline stations, restaurants, shopping centers, hotels and motels, parking lots and stores. Public accommodations.
California Housing Financial Discrimination Act of 1977
Also known as the Holden Act. A California act prohibiting discrimination by a lender for any reason unrelated to the creditworthiness of the loan applicant.
The grouping of homesites within a subdivision on smaller lots than normal, with the remaining land used as common areas.
annual operating expenses
The actual costs it takes to run the property, such as property tax, insurance, maintenance, repairs, management fees, utilities, and supplies.
Something of value given or pledged as security for a debt or obligation. The collateral for a real estate mortgage loan is the hypothecated mortgaged property itself.
building code
An ordinance that specifies minimum standards of construction for buildings to protect public safety and health. (See Uniform Building Code)
Uniform Condominium Act (UCA)
Many states have adopted the Uniform Condominium Act (UCA). Under its provisions, a condominium is created and established when the owner of an existing building (or developer of unimproved property) executes and records a declaration of condominium.
balloon payment
Under an installment loan agreement, a final payment that is substantially larger than the previous installment payments and repays the debt in full; the remaining balance that is due at maturity (stop date) of a note or obligation. (See amortization, fully amortized, stop date)
workers' compensation acts
Laws that require an employer to obtain insurance coverage to protect his or her employees who are injured in the course of their employment.
advance fee
A fee paid before any services are rendered. Specifically, it is a practice of some brokers to obtain a nonrefundable fee from the seller in advance to cover the advertising of properties or businesses for sale while giving no guarantee that a buyer will be found, which is often held to be improper conduct. Brokers must keep accurate records of expenditures.
An improper use or an abuse of a property by a possessor who holds less than fee ownership, such as a tenant, life tenant, mortgagor or vendee. Such waste ordinarily impairs the value of the land or the interest of the person holding the title or the reversionary rights.
Yearly and/or life-of-loan limitations on the amount of variation allowed when adjusting interest on variable-rate loans. (See adjustable rate mortgage (ARM), rate cap)
will-buy buyers
Will-buy buyers are bargain-hunters looking for motivated "must-sell" sellers. (See must-sell sellers)
An agreement that may accompany an earnest money deposit for the purchase of real property as evidence of the purchaser's good faith and intent to complete the transaction. blanket loan A mortgage covering more than one parcel of real estate, providing for each parcel's partial release from the mortgage lien upon repayment of a definite portion of the debt.
water well
An excavation where the intended use is for location, acquisition, development, or artificial recharge of ground water.
basic form homeowner's policy
The most common homeowner's policy is called a basic form. It provides property coverage against fire and lightning; glass breakage; windstorm and hail; explosion; riot and civil commotion; damage by aircraft; damage from vehicles; damage from smoke; vandalism and malicious mischief; theft; and loss of property removed from the premises when it is endangered by fire or other perils. (See homeowner's insurance policy)
A promise that certain stated facts are true. A guaranty by the seller, covering the title as well as the physical condition of the property. A warranty is different from a representation in that a representation is a statement made in the course of negotiations leading up to the sale, but not incorporated into the contract. A warranty, on the other hand, is a statement in the contract asserting the truth of certain things about the property.
balanced trust
A "combination trust" is referred to as a "balanced trust" in California. (See combination trust)
A written document, properly witnessed, providing for the transfer of title to property owned by the deceased, called the testator.
A cancer producing substance. (See asbestos, radon)
writ of execution
A court order authorizing and directing an officer of the court (sheriff, police officer) to levy and sell property of the defendant to satisfy a judgement.
cash now
The net spendable income from an investment, determined by deducting all operating and fixed expenses from the gross income. When expenses exceed income, a negative cash flow results.
warranty deed
A deed in which the grantor fully warrants good clear title to the premises; also called a general warranty deed. The usual covenants of title are covenant of seisin (possession), covenant of quiet enjoyment, covenant against encumbrances, covenant of warranty forever and covenant of further assurance. A warranty deed warrants the title, not the quality of construction of the real property. A warranty deed is used in most real estate deed transfers and offers the greatest protection of any deed.
bill of sale
A written agreement by which one person sells, assigns or transfers to another his or her right to, or interest in, personal property. A bill of sale is sometimes used by a seller of real estate to evidence the transfer of personal property, such as when the owner of a store sells the building and includes the store equipment and trade fixtures.
weighted average technique
When reconciling appraisal approaches, the application of a weight to each approach for averaging. (See appraisal)
before-tax cash flow
The result when the annual debt service is subtracted from the net operating income. (See annual debt service, net operating income)
Areas that are inundated or saturated by surface or ground water at a frequency and duration sufficient to support vegetation typically adapted for life in saturated soils. Also referred to as bogs, marshes, sloughs and swamps.
centers of influence
Influential people in a community. Real estate agents cultivate relationships with these "centers of influence" as a method of locating prospects in the community where the person has influence. Also known as "bird dogs," indicating that these people "point the way" to new prospects.
working level (WL)
A unit of measurement for documenting exposure to radon decay products. One working level is equal to approximately 200 picoCuries per liter.
bundle of legal rights
The concept of land ownership that includes ownership of all legal rights to the land. For example, possession, control within the law and enjoyment.
will-sell sellers
Unmotivated sellers who put their property on the market at an above-market price. Sellers who do not need to sell but will if the price is right.
capacity of parties
The legal ability of people or organizations to enter into a valid contract. A person entering into a contract will have full, limited or no capacity to contract.

No capacity to contract: The inability of a person to enter into a valid contract under any circumstances. Such inability can arise when a person has been adjudicated insane or is an officer of a corporation who is not authorized to execute a contract in behalf of a corporation.
water rights
See appropriative water rights, correlative water rights, littoral rights, right of correlative user, right of prior appropriation, riparian rights
buying signals
Words, actions or facial expressions that signal a prospect's readiness to buy.
wraparound mortgage
A method of financing in which the new mortgage is placed in a secondary or subordinate position; the new mortgage includes both the unpaid principal balance of the first mortgage and whatever additional sums are advanced by the lender. Sometimes called an all-inclusive loan, an overriding loan or an overlapping loan. In essence, it is an additional mortgage in which another lender refinances a borrower by lending an amount over the existing first mortgage amount, without cashing out or disturbing the existence of the first mortgage. The entire loan combines two or more debts and is treated as a single obligation, and the wrap, or secondary, mortgagee pays the obligations of the first mortgage from the total payments received. While the wraparound lender makes the debt service payments on the first mortgage, the lender does not assume liability for this first lien. A default on the wraparound mortgage would usually result in a default on the underlying mortgage.
bail bond lien
A real estate owner who is charged with a crime for which he or she must face trial may post bail in the form of real estate rather than cash. The execution and recording of such a bail bond creates a specific, statutory, voluntary lien against the owner's real estate. If the accused fails to appear in court, the lien may be enforced by the sheriff or another court officer.
water table
The natural level at which water is located in a particular area, be it above or below the surface of the earth.
actual eviction
The legal process that results in the tenant's being physically removed from the leased premises. (See eviction, constructive eviction, lease)
The various ways to offset a foreclosure. (See moratorium, waiver)
American Land Title Association (ALTA) policy
A title insurance policy that protects the interest in a collateral property of a mortgage lender who originates a new real estate loan. (See title insurance)
weekly activity report
A weekly written report given to an owner by a listing broker reviewing the sales activities conducted by the broker to sell the listed property.
annual debt service
Monthly loan payments (principal and interest), if any, times 12 months.
wholesale agreements
An agreement of a loan originator to work exclusively with a single lender.
affidavit of title
A written statement, made under oath by a seller or grantor of real property and acknowledged by a not;uv pub lic, in which the grantor 1. identifies himself or herself and indicates marital status, 2. certifies that since the examination of the title on the date of the contracts no defects have occurred in the title and 3. certifies that he or she is in possession of the property (if applicable).
window well
The dugout area just outside of a basement window that can be used to escape in the event of a fire.
all-inclusive encumbrance
See wraparound mortgage
open-end trust deed
An expandable loan in which the borrower is given a limit up to which he or she may borrow, with each incremental advance to be secured by the same trust deed.
A program to help eligible California Veterans finance the purchase of farms and ranches within the state.
universal agent
A person empowered to do anything the principal could do personally. The universal agent's authority to act on behalf of the principal is virtually unlimited.
agent property evaluation
A questionnaire filled out by real estate agents while reviewing a listed property. Often complete during the course of a caravan. (See caravan)
occupancy permit
A permit issued by the appropriate local governing body to establish that the property is suitable for habitation by meeting certain safety and health standards.
antitrust laws
State and federal laws designed to maintain and preserve business competition. The Sherman Antitrust Act (1890) is the principal federal statute covering competition, which is defined by most courts as "that economic condition in which prices are determined by market forces without interference from private concerns and there is reasonable freedom of entry into most businesses."

Certain real estate brokerage activities have come under public scrutiny by the Federal Trade Commission. These activities include the fixing of general commission rates by local boards or groups of brokers and the exclusion of brokers from membership in local boards or in multiple-listing arrangements due to unreasonable membership requirements. As a result of court cases, local real estate boards no longer directly or indirectly influence fixed commission rates or commission splits between cooperating brokers. Moreover, in some states clients must be specifically informed that the commission rates are negotiable between client and broker.
unlawful detainer action
A legal action that provides a method of evicting a tenant who is in default under the terms of the lease; a summary proceeding to recover possession of property.
A measure of land equal to 43.560 square feet, 4,840 square yards, 4,047 square meters, 160 square rods or 0.4047 hectares. actual eviction The legal process that results in the tenant's being physically removed from the leased premises.
The purchaser of realty; the buyer. The buyer under a land contract.
administrative agency
A government agency that makes rules and regulations to carry out the law. A state's real estate commission develops regulations to complement license law.
First used in building materials, particularly insulation, in the 1970s. Gases leak out of the urea-formaldehyde foam insulation (UFFI) as it hardens and become trapped in the interior of a building. Once used to conserve energy by sealing crawl spaces and attics, it is longer used because emissions were found to be a health hazard. (See formaldehyde)
An amendment is a change to the existing content of a contract. Any time words or provisions are added to or deleted from the body of the contract, the contract has been amended.
option listing
A listing in which the broker also retains an option to purchase the property for the broker's own account. In view of the body of litigation involving breach of fiduciary duties by brokers who conceal offers from buyers until after the broker has exercised the option, full and fair disclosure must be given to the seller. (See listing agreement)
The first step in a disciplinary action against a licensee.
A measure used to indicate the insulating value of a window. The U-value measures the heat flow. The smaller the U-value, the better a material can stop heat flow.
apartment building
A building having separate units for permanent tenants who rent or lease them. The owner of the building provides common facilities, such as lights, heat, elevator and garbage disposal services, and maintains common entrances and hallways.
voluntary lien
A lien placed on property with the knowledge and consent of the property owner. (See lien)
The person preparing the abstract of title. The abstracter searches the title as recorded or registered with the county recorder, county registrar, circuit court and/or other official sources. He or she then summarizes the various instruments affecting the property and arranges them in the chronological order of recording, starting with the original grant of title.
unit-in-place method
The appraisal method of estimating building costs by calculating the costs of all of the physical components in the structure, with the cost of each item including its proper installation, connection, etc.; also called the segregated cost method. (See appraisal)
budget loan
A loan with payments set up to cover taxes and insurance in addition to interest and principal reductions.
Occupational Safety and Health Act (OSHA)
Congress created OSHA under the Occupational Safety and Health Act, which was signed by President Richard M. Nixon on December 29, 1970. OSHA's mission is to prevent work-related injuries, illnesses and deaths.
accrued items
On a closing statement, items of expense that are incurred but not yet payable, such as interest on a mortgage loan or taxes on real property.
unity of possession
One of the four "unities" required to create a joint tenancy. All joint tenants hold an undivided right to possession. (See joint tenancy, four unities)
Financing where the seller takes back a note for part of the purchase price secured by a junior mortgage, wraparound mortgage or contract for deed. (See wraparound, junior mortgage)
VA loan
A government-sponsored mortgage assistance program administered by the Department of Veterans Affairs. Under the Servicemen's Readjustment Act of 1944, eligible veterans and unremarried widows or widowers of veterans who died in service or from service-connected causes may obtain partially guaranteed loans for the purchase or construction of a house or to refinance existing mortgage debt.
Bank Insurance Fund
unilateral contract
A one-sided contract wherein one party makes a promise so as to induce a second party to do something. The second party is not legally bound to perform; however, if the second party does comply, the first party is obligated to keep the promise.
affirmative easement
Gives the owner of the dominant tenement the right to use the servient tenement. (See dominant tenement, servient tenement)
value in use
The value of a property as used for a specific purpose.
Money or other property that is not like-kind, which is given to make up any difference in value or equity between exchanged properties. Boot may be in the form of cash; notes; gems; the market value of an asset such as a mortgage, land contract, personal property, goodwill, a service or a patent offered in an exchange. The taxable gain in the like-kind exchange is recognized immediately to the extent of boot, whereas other gain from the exchange may be deferred until subsequent transfer. (See exchange, like-kind)
Charging interest at a higher rate than the maximum rate established by state law.
One who acts as an intermediary on behalf of others for a fee or commission.
ostensible agency
A form of implied agency relationship created by the actions of the parties involved rather than by written agreement or document. (See implied agency)
buyer listing
An agreement where a buyer agrees to pay a commission if a broker locates a property that the buyer purchases.
unity of ownership
The four unities that are traditionally needed to create a joint tenancy-unity of title, time, interest and possession.
An underground water-bearing layer of rock, including gravel and sand, that will yield water in usable quantity. Aquifers are sources of water for wells and springs.
one stop shopping
An arrangement where settlement and service providers are all available through the broker.
business cycle
The wavelike movement of increasing and decreasing economic prosperity consisting of four phases: expansion, recession, contraction and revival.
utility value
The value in use to an owner-user, which includes a value of amenities attaching to a property; also known as subjective value.
base line
One of a set of imaginary lines running east and west used by surveyors for reference in locating and describing land under the government survey method of property description.
A property where the owner physically occupies the property.
Any of the vertical supports for a stair, balcony or railing.
Describes a debt instrument, such as a debenture, that is backed only by the debtor's promise to pay.
ad valorem tax
A tax levied according to value, generally used to refer to real estate tax. Also called the general tax.
A promisor; one who incurs a lawful obligation to another (the obligee). The maker of a promissory note is an obligor. In a performance bond, the contractor is the obligor. One who guarantees the performance of the obligation is a surety; also called a guarantor. (See payor)
best-faith estimate
The acquisition cost is the purchase price plus a "best-faith estimate" of all settlement costs. (See acquisition cost)
utility liens
Municipalities often have the right to impose a specific, equitable, involuntary lien on the property of an owner who refuses to pay bills for municipal utility services. (See lien)
California Environmental Quality Act
The Act allows local governments to require environmental impact reports for private or government projects that may have a significant impact on the environment. (See environmental impact report, National Environmental Policy Act)
quasi contract
A contract implied by law, as a matter of equity, when no actual contract exists.
bona fide
In good faith, honestly, openly, and sincerely and without deceit or fraud. In an attitude of trust and confidence, without notice of fraud.
Unruh Civil Rights Act
Forbids discrimination as to sex, race, color, religion, ancestry or national origin in accommodations and business establishments. Under this law there can be no arbitrary eviction, rent increase or withholding of services by virtually any landlord, including the owner of a nonowner-occupied single-family dwelling that is sold or leased for income or gain.
allodial system
A system of land ownership in which land is held free and clear of any rent or service due to the government; commonly contrasted to the feudal system. Land is held under the allodial system in the United States.
offsite improvements
Improvements made outside of a property's boundaries, such sidewalks and streets.
bargain and sale deed
A deed that carries with it no warranties against liens or other encum brances but that does imply that the grantor has the right to convey title. The grantor may add warranties to the deed at his or her discretion.
Uniform Settlement Statement
The standard HUD Form 1 required to be given to the borrower, lender and seller at or before settlement by the settlement agent in a transaction covered under the Real Estate Settlement Procedures Act. The lender must retain its copy for at least two years.
American Society of Real Estate Counselors (ASREC)
A professional organization, affiliated with the National Association of REALTORS, composed of individuals with proven success in real estate counseling who serve clients on a fee basis. The society offers its members exclusive use of the professional designation CRE (Counselor of Real Estate).
A military weapon or item of destruction (e.g. bullets). (See military ordinance location)
An acceptance is a promise by the offeree to be bound by the exact terms proposed by the offeror. The acceptance must be communicated to the offeror. (See offeree, offeror)
Uniform Partnership Act (UPA)
Most states have adopted the "Uniform Partnership Act" (UPA), which permits real estate to be held in the partnership name. The "Uniform Limited Partnership Act" (ULPA) has also been widely adopted. It establishes the legality of the limited partnership entity and provides that realty may be held in the limited partnership's name. Profits and losses are passed through the partnership to each partner, whose individual tax situation determines the tax consequences.
accord and satisfaction
The settlement of an obligation. An accord is an agreement by a creditor to accept less than bargained for from a debtor. The creditor's acceptance of the accord constitutes satisfaction of the debt.
valid contract
A contract that complies with all the essentials of a contract and is binding and enforceable on all parties to it. (See contract)
broker cooperation
Working with outside licensed real estate brokers who have prospective tenants in exchange for a finders fee or commission split.
Uniform Residential Landlord and Tenant Act (URLTA)
A uniform act intended to provide some consistency in regulating the relationship of landlord and tenant in residential leases. A number of states have adopted all or parts of the URLTA, or have enacted similar legislation.
break-even point
In income property, the figure at which rental income is equal to expenses and debt service.
operating expenses
Those recurring expenses that are essential to the continuous operation and maintenance of a property. Operating expenses are generally divided into the following categories: fixed expenses such as real property taxes and building insurance; variable costs such as utilities, payroll, administration and property management fees; and reserves for replacement. Operating expenses do not include items such as mortgage payments, capital expenditures and depreciation.
Americans with Disabilities Act (ADA)
On July 26, 1990, President Bush signed into law the Americans with Disabilities Act of 1990 ("ADA"), a federal law which prohibits discrimination against individuals with disabilities. The ADA addresses discrimination in four general areas:

Employment (Title I);

Public services (Title II);

Public accommodations and commercial facilities (Title III); and,

Telecommunications (Title lV).

The purpose of the ADA is to give individuals with disabilities civil rights protection against discrimination similar to hose afforded to individuals on the basis of race, color, national origin, sex, and religion.
uniform residential loan application
A loan application form required by Freddie Mac and Fannie Mae.
bulk transfer of goods
Any transfer in bulk of a substantial part of the materials, supplies, merchandise, equipment or other inventory of an applicable enterprise that is not in the ordinary course of the transferor's business.
open-end loan
A mortgage loan that is expandable by increments up to a maximum dollar amount, the full loan being secured by the same original mortgage.
breaker panel
A large rectangular shaped electrical box used to distribute electricity throughout a house after passing through protective breakers located within the box. (See breaker)
Permission obtained from governmental zoning authorities to build a structure or conduct a use that is expressly prohibited by the current zoning lows; an exception from the zoning laws. A variance gives some measure of elasticity to the zoning game.
appurtenant easement
An easement that is annexed to the ownership of one parcel and allows the owner the use of the neighbor's land.
quiet title
A court action to remove a cloud on the title.
beneficiary statement
When an existing loan is to be paid or assumed by a buyer, the escrow agent will obtain a statement of the balance due on the loan so the buyer receives the proper amount of credit.
value in exchange
The market value of a property.
A formal declaration made before a duly authorized officer, usually a notary public, by a person who has signed a document; also, the document itself. An acknowledgment is designed to prevent forged and fraudulently induced documents from taking effect.
opinion of title
An opinion of the marketability of a title given by an attorney based on the abstract of title. (See abstract of title)
blind ad
An advertisement that does not include the name and address of the person placing the ad, only a phone number or post office box address. Licensed brokers are generally prohibited by state license laws from using blind ads.
one-hundred-percent commission plan
Some firms have adopted a 100 percent commission plan. Salespersons in these offices pay a monthly service charge to their brokers to cover the costs of office space, telephones and supervision in return for keeping 100 percent of the commissions from the sales they negotiate. The 100 percent commission salesperson pays all of his or her own expenses.
adjustable rate mortgage
A broad term for a loan (mortgage or deed of trust) with rates and terms that can change. The adjustable rate loan has become commonplace, with allowable ranges as to time intervals, percentage of increase or decrease and total increases or decreases likely to change as market conditions change. (See caps, index rate, initial rate, rate cap, rate factor)
veteran's exemption
California war veterans may receive a $4,000 exemption on the full cash value of their homes.
bilateral contract/agreement
A contract in which each party promises to perform an act in exchange for the other party's promise to perform. The usual real estate contract is an example of a bilateral contract in which the buyer and seller exchange reciprocal promises respectively to buy and sell the property. If one party refuses to honor his or her promise and the other party is ready to perform, the nonperforming party is said to be in default.
obligatory advances
Advances a lender is obligated to make to a borrower.
amendment to the escrow instructions
A change to escrow instructions requiring the agreement of both buyer and seller. (See escrow instructions)
Bulk Sales Act
An act that requires the recording and publication of a sale that is not in the normal course of business. The act is intended to give notice to the creditors of the seller so they can protect their interests.
open house
A listing given to any number of brokers who can work simultaneously to sell the owner's property. The first broker to secure a buyer who is ready, willing and able to purchase at the terms of the listing earns the commission. In the case of a sale, the seller is not obligated to notify any of the brokers that the property has been sold.

Unlike an exclusive listing, an open listing need not contain a definite termination date. The listing terminates after a reasonable time, usually whatever is customary in the community. Either party can, in good faith, terminate the agency at will. (See listing agreement)
adverse possession
The acquiring of title to real property owned by someone else by means of open, notorious, hostile and continuous possession for a statutory period of time. The burden to prove title is on the possessor, who must show that four conditions were met: 1. He or she has been in possession under a claim of right. 2. He or she was in actual, open and notorious possession of the premises so as to constitute reasonable notice to the record owner. 3. Possession was both exclusive and hostile to the title of the owner (that is, without the owner's permission and evidencing an intention to maintain the claim of ownership against all who may contest it). 4. Possession was uninterrupted and continuous for at least the prescriptive period stipulated by state law.
Veteran's Administration (VA)
Federal agency providing assistance to veterans, including the guarantee of VA mortgage loans.
bridge loan
A short-term loan made to cover the period between the termination of one loan, such as a interim construction loan, and the beginning of another loan, such as a perminant takeout loan. (See interim financing, swing loan, takeout)
other income
Refers to income other than rent, such as vending and laundry machines, storage or parking space income, and so on.
The gradual and imperceptible addition of land by alluvial deposits of soil through natural causes, such as shoreline movement caused by streams or rivers. This added land upon a bank or stream, navigable or not, becomes the property of the riparian or littoral owner, and it also becomes subject to any existing mortgages.
The right to use, possess, enjoy, transfer, and dispose of a thing to the exclusion of all others.
abstract of title
A full summary of all consecutive grants, conveyances, wills, records and judicial proceedings affecting title to a specific parcel of real estate, together with a statement of all recorded liens and encumbrances affecting the property and their present status. The abstract of title does not guarantee or ensure the validity of the title of the property. Rather, it is a condensed history that merely discloses those items about the property that are of public record; thus, it does not reveal such things as encroachments and forgeries.
volatile organic compounds
Carbon compounds that tend to be emitted as gases into the air. Organic chemicals are widely used as ingredients in household products. Paints, varnishes, and wax all contain organic solvents, as do many cleaning, disinfecting, cosmetic, degreasing, and hobby products. Fuels are made up of organic chemicals. All of these products can release organic compounds while in use or in storage.
blue-sky provision
Requiring full disclosure of all risks in a limited partnership solicitation under the Uniform Partnership Act. (See Uniform Partnership Act)
owner's title insurance
An insurance policy protecting the buyer for the amount of the purchase price in the event of a future title dispute. (See mortgagee's title insurance, title insurance)
1. A reduction or decrease. 2. The removal of a nuisance.
opportunity cost
Earnings that may be available on alternative investments.
buying on contract
A type of contract used in connection with the sale of real property where the seller retains legal title to the property until some future date, usually when the full purchase price has been paid. Referred to as one of four terms, all meaning much the same thing: agreement to convey, contract for deed, contract of sale, or installment sales contract.
voidable contract
A contract that seems to be valid on the surface but may be rejected or disaffirmed by one or both of the parties. void contract A contract that has no legal force or effect because it does not meet the essential elements of a contract.
Decrease or increase in the sales price of a comparable property to account for a feature that the property has or does not have in comparison with the subject property.
The seller of realty. The seller under a land contract. In some cases, the vendor may not be the owner--he or she might be the holder of an option.
The appraisal principle that holds that value can increase or decrease based on the expectation of some future benefit or detriment produced by the property. (See appraisal)
The power of a good or service to command other goods in exchange for the present worth to typical users and investors of future benefits arising out of ownership of a property; the amount of money deemed to be the equivalent in worth of the subject property. The four essential elements of value are utility, scarcity, demand and transferability. Cost does not equal value, nor does equity.

There are various types of value, such as market value, tax assessed value, book value, insurance value, use value, par value, rental value and replacement value. By far, the type of value used for the largest number of real estate transactions is market value.
buyer-agency agreement
A principal-agent relationship in which the broker is the agent for the buyer, with fiduciary responsibilities to the buyer. The broker represents the buyer under the law of agency.
An offer is a promise made by one party, requesting something in exchange for that promise. The offer is made with the intention that the offeror will be bound to the terms if the offer is accepted. The terms of the offer must be definite and specific and must be communicated to the offeree.
capital gain
Profit earned from the sale of an asset, where the sales price was greater than the adjusted basis. (See adjusted basis, deferred capital gain, excluded capital gain, realized capital gain (loss), recognized capital gain)
The party who makes an offer - usually the buyer.
accrued depreciation
1. In accounting, a bookkeeping account that shows the total amount of depreciation taken on an asset since it was acquired; also called accumulated depreciation. (See depreciation) 2. For appraisal purposes, the difference between the cost to reproduce the property (as of the appraisal date) and the property's current value as judged by its "competitive condition." In this context, accrued depreciation is often called diminished utility.
oil and gas lease
A grant of the sole and exclusive right to extract oil and/or gas from beneath the surface of land. Such a lease is generally for a designated term of years and is subject to a payment of royalties in the event of production, the commencement of drilling operations on or before a specified date and the performance within a specified time of a certain amount of development work. Typically, an express or implied easement is granted to enter the property in order to drill.
buyer's agent
A residential real estate broker or salesperson who represents the prospective purchaser in a transaction. The buyer's agent owes the buyer/principal the common-law or statutory agency duties. (See seller's agent)
Confirmation under oath of the truthfulness of a statement.
An addition to property by the act of joining or uniting one thing to another, as in attaching personal property to real property and thereby creating a fixture. For example, a sink becomes a fixture when it is annexed to the plumbing outlet.
This agreement is a nonexclusive agency contract between a broker and a buyer. It permits the buyer to enter into similar agreements with an unlimited number of brokers. The buyer is obligated to compensate only the broker who locates the property the buyer ultimately purchases.
A condition of financial insolvency in which a person's liabilities exceed assets and the person is unable to pay current debts.
original basis
The sum of the purchase price of a property plus buying expenses on acquisition. (See basis)
capitalization rate
The rate of return a property will produce on the owners investment.
quitclaim deed
A conveyance by which the grantor transfers whatever interest he or she has in the real estate, without warranties or obligations.
aggrieved party
One whose legal right is invaded by an act(s) of another. The word "aggrieved" refers to a substantial grievance, a denial of some personal or property right, or the imposition upon a party of a burden or obligation.
voluntary conveyance
Voluntarily signing over to a lender the property pledged as collateral on a defaulted loan. (See deed in lieu of foreclosure)
adjusted basis
The original cost basis of a property reduced by certain deductions and increased by certain improvement costs. The original basis determined at the time of acquisition is reduced by the amount of allowable depreciation or depletion allowances taken by the taxpayer, and by the amount of any uncompensated property losses suffered by the taxpayer. It then increases by the cost of capital improvements plus certain carrying costs and assessments. The amount of gain or loss recognized by the taxpayer upon sale of the property is determined by subtracting the adjusted basis on the date of sale from the adjusted sales price. (See basis, capital gain)
operating budget
A projection of income and expenses for the operation of a property over a one year period.
quantity-survey method
The appraisal method of estimating building costs by calculating the cost of all of the physical components in the improvements, adding the cost to assemble them and then including the indirect costs associated with such construction. (See appraisal)
A permanent reference mark or point established for use by surveyors in measuring differences in elevation.
The loss of value due to factors that are outmoded or less useful. Obsolescence may be functional or economic.
cash rent
In an agricultural lease, the amount of money given as rent to the landowner at the outset of the lease, as opposed to share cropping.
The fiduciary relationship obligates the agent to act in good faith at all times, obeying the principal's instructions in accordance with the contract. However, that obedience is not absolute. The agent may not obey instructions that are unlawful or unethical. Because illegal acts do not serve the principal's best interests, obeying such instructions violates the broker's duty of loyalty. On the other hand, an agent who exceeds the authority assigned in the contract will be liable for any losses that the principal suffers as a result.
caveat emptor
Latin for "let the buyer beware." A buyer should inspect the goods or realty before purchase.
vapor retarders
Special materials used in the installation of thermal insulation to reduce the passage of water vapor. These materials include treated papers, plastic sheets, and metallic foils.
arranger of credit
A defined under the federal Truth-in-Lending Law, a person who regularly arranges for the extension of consumer credit by another person if a finance charge will be imposed, if there are to be more than four installments, and if the person extending the credit is not a creditor. At present, the term does not include a real estate broker who arranges seller financing of a dwelling or real property. (See Truth-in-Lending Law)
variable costs
Operating expenses that fluctuate with occupancy, such as utilities and maintenance costs.
Covenants, conditions and restrictions are limitations on land use imposed by deed, usually when land is subdivided. CC&Rs are a means of regulating building construction, density and use. May be referred to simply as restrictions. (See deed restrictions, restrictive covenants)
The person to whom an offer is made - usually the owner.
The bringing together of parties interested in making a real estate transaction. The business of a broker in acting as a third party agent to a transaction.
Office of Thrift Supervision (OTS)
Monitors and regulates the savings and loan industry. OTS was created by FIRREA.
"cash-out" scheme
Where a buyer offers a large cash downpayment and asks the seller to carry-back the balance as a subordinate trust deed. (See carry-back, subordination clause)
quiet enjoyment
An implied warranty that the landlord will not interfere with the tenant's reasonable use and enjoyment of a leased property. (See implied warranty)
Belonging to; adjunctive; appended to or annexed to. For example, the garage is appurtenant to the house, and the common interest in the common elements of a condominium is appurtenant to each apartment. Appurtenant items run with the land when the property is transferred.
Economically depressed urban areas suffering from real or perceived hazardous material contamination.
banker's rule
Using a 360-day year for prorations.
variable lease
Allows for increases in the rental charges during the lease period One of the more common is the graduated lease. A graduated lease provides for specified rent increases at set future dates. Another is the index lease, which allows rent to be increase or decreased periodically based on changes in the consumer price index or some other indicator.
Article 5
The part of the Business and Professions Code governing transactions in real property sale contracts and trust deeds.
A final inspection of a property just before closing. This assures the buyer that the property has been vacated, that no damage has occurred and that the seller has not taken or substituted any property contrary to the terms of the sales agreement. If damage has occurred, the buyer might ask that funds be withheld at the closing to pay for the repairs.
When a seller of a property wants to receive the entire sales price in cash, with no carry-back financing. (See carry-back)
Having no legal force or binding effect; a nullity; not enforceable. A void agreement is no contract at all. A void contract need not be disaffirmed, nor can it be ratified. A contract for an illegal purpose (for example, gambling) is void. A voidable contract is one that is able to be voided. Voidable implies a valid act that may be rejected by an act of disaffirmance, rather than an invalid act that may be confirmed. For example, if a minor contracts to buy a diamond ring, the contract can be voided by the minor because of lack of sufficient age. If, however, the minor elects to enforce the contract, the contract is valid and the other party cannot assert the minor's lack of age as a defense.
appropriative water rights
A water right favored in some states where an owner has the exclusive rights to take all the water for specific beneficial uses. (See correlative water rights, riparian rights)
To give up a right voluntarily. (See workout)
cash flow analysis
A cash flow analysis shows the effect an investment property has on an owner's income in terms of tax benefits. Analyzes the return on investment after taxes on an income producing property. Measures the property manager's performance from period to period by comparing income and expenses for a given property.
Warehousing is the assembly of mortgage loans into "pools." Securities that represent shares in these pools are then sold to investors. Examples of warehousing "agencies" include Fannie Mae/Federal National Mortgage Association and Ginnie Mae/Government National Mortgage Association.
An increase in the worth or value of a property due to economic or related causes, which may prove to be either tempo rary or permanent; opposite of depreciation. (See depreciation)
office property
Income-producing commercial property from which a particular service is rendered.
A financing technique used to reduce the monthly payments for the first few years ofa loan. Funds in the form of discount points are given to the lender by the builder or seller to buy down or lower the effective interest rate paid by the buyer, thus reducing the monthly payments for a set time.
Article 6
The part of the Business and Professions Code governing real property securities dealers.
overriding trust deed
See wraparound mortgage
certificate of occupancy (CO)
A certificate issued by a governmental authority indicating that a building is ready and fit for occupancy and that there are no building code violations. Some condominium developers insert language into the sales contract to the effect that upon notification that the units are ready for occupancy, the buyer must accept the unit despite any construction defects that may exist, although acceptance will not bar the buyer from obtaining redress for such defects. Once the building has been certified for occupancy the developer can then close the individual sales, transfer title to the buyers and, most important, begin to pay off the construction loan and eliminate the interest payments.
offer and acceptance
Two essential components of a valid contract; a "meeting of the minds." (See acceptance, offer)
California Residential Mortgage Lending Act
An act administered by the Commissioner of Corporations which provides licensing authorizing mortgage lending and brokering.

open-market operations
The buying and selling of government securities by the Federal Reserve to control the amount of money in circulation.
Article 7
The part of the Business and Professions Code governing commissions, loan costs, and payment requirements in loan brokerage activities.
A single item in a group.
alienation clause
A provision sometimes found in a promissory note or mortgage that provides that the balance of the secured debt becomes immediately due and payable at the option of the mortgagee upon the alienation of the property by the mortgagor. Alienation is usually broadly defined to include any transfer of ownership, title or an interest or estate in real property, including a sale by way of a contract for deed. Also called a due-on-sale clause. (See acceleration clause)
An agreement to keep open, for a set period, an offer to sell or lease real property.
buyer's remorse
Buyers of expensive items, like a home or automobile, sometimes regret their decision. They wonder if they paid to much or made the wrong selection. This fear of having made a serious mistake is referred to as "buyer's remorse."
A sum of money recieved by an annuitant in a series of fixed periodic payments.
Persons with acquired immunodeficiency syndrome are protected under most federal and state discrimination laws. If buyers ask the real estate agent whether a prior occupant had AIDS, most agents point out that the law prevents responding one way or the other. Many states have emended their licensing laws to provide that the fact that someone has AIDS is not deemed a material fact and therefore does not form the basis for a claim that a broker concealed a material fact. Also protected are persons with AIDS-related complex (ARC) or human immunodeficiency virus infection (HIV).
certificate of reasonable value (CRV)
A certificate insured by the Veterans Administration setting forth a property's current market value estimate, based on a VA-approved appraisal. The CRV places a ceiling on the amount of a VA-guaranteed loan allowed for a particular property. (See VA loan)
capital loss
Loss sustained from the sale of an asset, where the sales price was less than the adjusted book basis. (See adjusted basis)
A mineral once used in insulation and other materials that can cause respiratory diseases. Asbestos has been clasified as carcinogenic. (See carcinogen)
certificate of sale
The document generally given to the purchaser at a tax foreclosure sale. A certificate of sale does not convey title: normally it is an instrument certifying that the holder received title to the property after the redemption period passed and that the holder paid the property taxes for that interim period.
adverse action
A denial or revocation of credit, a change in the terms of an existing credit arrangement, or a refusal to grant credit in substantially the amount or on substantially the terms requested.
The nonjudicial submission of a controversy to selected third parties for their determination in a manner provided for by an agreement or under the law.
building permit
Written governmental permis sion for the construction, alteration or dem olition of an improvement, showing compliance with building codes and zoning ordinances.
asbestos containing material (ACM)
The EPA defines asbestos containing material as any material or product that contains more than one percent asbestos. Some states regulate smaller percentages of asbestos containing material.
Attention, Interest, Desire, Action. In real estate advertising, creating ads that get the Attention of prospects, stimulating their Interest in a property, generate a Desire to purchase, and motivating the prospect to take Action.
A formal declaration that an affidavit is true.
administrative order
A legal document signed by the EPA directing an individual, business, or other entity to take corrective action or refrain from an activity. The order describes the violations and action to be taken and can be enforced in court.
branch office
A secondary place of business apart from the principal or main office from which real estate business is conducted. A branch office usually must be run by a licensed real estate broker working on behalf of the broker.
A disease associated with inhalation of asbestos fibers. The disease makes breathing progressively more difficult and can be fatal.
certificate of title
A statement of opinion prepared by a title company, licensed abstracter or an attorney on the status of a title to a parcel of real property, based on an examination of specified public records. This certificate of title should not be confused with the certificate of title that is issued to a titleholder of land registered under the Toreens system, or with a title insurance policy.

A certificate of title does not guarantee title, but it does certify the condition of title as of the date the certificate is issued, on the basis of an examination of the public records maintained by the recorder of deeds, the county clerk, the county treasurer, the city clerk and collector and clerks of various courts of record. The certificate also may include records involving taxes, special assessments, ordinances, zoning and building codes.

Note that a certificate of title does not offer protection against "off -the-record" matters such as undisclosed liens, rights of parties in possession and matters of survey and location. Nor does it protect against "hidden defects" in the records themselves, such as fraud, forgery, lack of competency or lack of delivery. A title insurance policy, not a certificate of title, protects against certain off-the-record and hidden defects risks.

absorption rate
The total number of vacant square feet of office space divided by the square footage leased per year historically. Used to analyze demand of office space in a given market area.
Words in a contract intended to signify that no guarantees whatsoever are given regarding the subject property and that it is being purchased exactly as it is found. An "as-is" indicator is intended to be a disclaimer of warranties or representations. The recent trend in the courts to favor consumers tends to prevent sellers from using as-is wording in a contract to shield themselves from possible fraud charges brought on by neglecting to disclose material defects in the property.
cessation of work
A period of 60 days where no work is being conducted. (See notice of cessation)
The combining of two or more adjoining lots into one larger tract to increase their total value.
chain of title
The succession of conveyances, from some accepted starting point, whereby the present holder of real property derives title. (See conveyance)