Real Estate Vocabulary

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abstract of title

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The condensed history of a title to a particular parcel of real estate, consisting of a summary of the original grant and all subsequent conveyances and the encumbrances affecting the property and a certification by the abstractor that the history is complete and accurate.

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acceleration clause

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The clause in a mortgage or deed of trust that can be enforced to make the entire debt due immediately if the borrower defaults on an installment payment or other covenant.

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accretion

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The increase or addition of land by the deposit of sand or soil washed up naturally from a river lake or sea.

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accrued items

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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.

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acknowledgment

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A formal declaration made before a duly authorized officer, usually a notary public, by a person who has signed a document.

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Acre

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A measure of land equal to 43,560 square feet, 4840 square yards, 4047 square meters, 160 square rods, or .4047 hectares

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actual eviction

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The legal process that results in the tenant's being physically removed from the leased premises.

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actual notice

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Express information or fact; that which is known; direct knowledge

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adjustable-rate mortgage (ARM)

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A loan characterized by a fluctuating interest rate, usually one tied to a bank or savings and loan association cost-of-funds index.

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adjusted basis

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(see basis)

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Ad Valorem Tax

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A tax levied according to value, generally used to refer to real estate tax. Also called the general tax.

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Adverse possession

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The actual, open, notorious, hostile, and continuous possessionof anothers land under a claim of title. Possession for a statutory period may be a means of acquiring title.

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Affidavit of title

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A written statement, made under oath by a seller or grantor of real property and acknowledged by a notary public, 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)

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agency

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The relationship between a principal and an agent wherin the agent is authorized to represent the principal in certain transactions.

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agency coupled with an interest

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An agency relationship in which the agent is given an estate or interest in the subject of the agency (the property)

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air lot

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a designated airspace over a piece of land. An air lot, like surface property, may be transferred.

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Air Rights

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The right to use the open space above a property, usually allowing the surface to be used for another purpose.

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Alienation

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The act of transferring property to another. Alienation may be voluntary, such as by gift or sale, or involuntary, as through eminent domain or adverse possession

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alienation clause

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The clause in a mortgage or deed of trust that states that the balance of the secured debt becomes immediately due and payable at the lender's option if the property is sold by the borrower. In effect this clause prevents the borrower from assigning the debt without the lender's approval.

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allodial system

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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

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American Land Title Association (ALTA) policy

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A title insurance policy that protects the interest in a collateral property of a mortgage lender who originates a new realestate loan.

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Americans with Disabilities Act

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Act addresses rights of individuals with disabilities in employment and public accommodations

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Amortized loan

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A loan in which the principal as well as the interest is payable in monthly or other periodic installments over the term of the loan.

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Annexation

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Process of converting personal property into real property.

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Annual percentage rate (APR)

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The relationship of the total finance charges associated with a loan. This must be disclosed to borrowers by lenders under the Truth-in-Lending Act.

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Anticipation

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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.

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Antitrust laws

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Laws designed to preserve the free enterprise of the open marketplace by making illegal certain private conspiracies and combinations formed to minimize competition. Most violations of antitrust laws in the real estate business involve either price-fixing(brokers conspiring to set fixed compensation rates) or allocation of customers or markets (brokers agreeing to limit their areas of trade or dealing to certain areas or properties).

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Appraisal

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An estimate of the quantity, quality, or value of something. The process through which conclusions of property value are obtained; also refers to the report that sets forth the process of estimation and conclusion of value.

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Appraiser

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An independent person trained to provide an unbiased estimate of value.

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Appreciation

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An increase in the worth or value of a property due to economic or related causes, which may prove to be either temporary or permanent' opposite of depreciation.

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Appurtenance

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A right, privelege, or improvement belonging to, and passing with, the land.

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Appurtenant easement

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An easement that is annexed to the ownership of one parcel and allows the owner the use of the neighbor's land.

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asbestos

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A mineral once used in insulation and other materials that can cause respiratory diseases.

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Assemblage

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The combining of two or more adjoining lots into one larger tract to increase their total value.

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Assessment

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The imposition of a tax, charge, or levy, usually according to established rates.

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Assignment

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The transfer in writing of interest in a bond, mortgage, lease, or other instrument.

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Assumption of mortgage

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Acquiring title to property on which there is an existing mortgage and agreeing to be personally liable for the terms and conditions of the mortgage, including payments.

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Attachment

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The act of taking a person's property into legal custody by writ or other judicia order to hold it available for application to that person's debt to a creditor.

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Attorney's opinion of title

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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.

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Automated underwriting

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Computer systems that permit lenders to expedite the loan approval process and reduce lending costs.

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Automatic extension

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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.

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Avulsion

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The sudden tearing away of land, as by earthquake, flood, volcanic action, or the sudden change in the course of a stream.

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Balance

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The appraisal principle that states that the greatest value in a property will occur when thetype and size of the improvements are proportional to each other as well as the land.

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Balloon payment

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A final payment of a mortgage loan that is considerably larger than the required periodic payments because the loan amount was not fully amortized.

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Bargain and sale deed

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A deed that carries with it no warranties against liens or other encumbrances 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.

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base line

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The main imaginary line running east and west and crossing a principal meridian at a definite point, used by surveyors for reference in locating and describing land under the rectangular (government) survey system of legal description.

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basis

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the financialinterest that the internal revenue service attributes to an owner of an investment property for the purpose of determining

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benchmark

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a permanent reference mark or point established for use by surveyors in measuring differences in elevation

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beneficiary

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(1) The person for whom a trust operates or in whose behalf the income from a trust estate is drawn. (2) A lender in a deed of trust loan transaction.

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bilateral contract

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see contract

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binder

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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.

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blanket loan

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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.

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blockbusting

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the illegal practice of inducing homeowners to sell their properties by making representations regarding the entry or prospective entry of persons of a particular race or national origin into the neighborhood.

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blue-sky laws

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common name for those state and federal laws that regulate the registration and sale of investment securities.

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boot

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money or property given to make up any difference in value or equity between two properties in an exchange

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branch office

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a secondary place of business apart from the principal or main office from which real estate business is conducted. A branch office usuallly must be run by a licensed real estate broker working on behalf of the broker.

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breach of contract

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violation of any terms or conditions in a contract without legal excuse; for example, fairure to make a payment when it is due.

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breach of contract

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violation of any terms or conditions in a contract without legal excuse; for example, failure to make a payment when it is due.

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broker

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one who acts as an intermediary on behalf of others for a fee or commission

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brokerage

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the bringing together of parties interested in making a real estate transaction

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brownfields

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defunct, derelict, or anbndoned commercial or industrial sites; many have toxic wastes

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brownfields legislation

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provides federal funding to states and localities to clean up brownfields sites.

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buffer zone

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a strip of land, usually used as a park or designated for a similar use, separating land dedicated to one use from land dedicated to another use (e.g., residential from commercial).

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building code

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an ordinance that specifies minimum standards of construction for buildings to protect public safety and health.

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building permit

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written governmental permission for the construction, alteration, or demolition of an improvement, showing compliance with building codes and zoning ordinances.

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building code

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an ordinance that specifies minumum standards of construction for buildings to protect public safety and health

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building permit

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written governmental permission for the construction, alteration, or demolition of an improvement, showing compliance with building codes and zoning ordinances

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bulk transfer

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see uniform commercial code

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bundle of legal rights

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the concept of land ownership that includes ownership of all legal rights to the land-for example, possession, control within the law, and enjoyment.

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buydown

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a financing technique used to reduce the monthly payments for the first few years of a loan. Funds in the form of discount points are givien to the lender by the builder or seller to buy down or lower the effective interest rate

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buyer-agency agreement

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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.

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buyer's agent

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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.

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buyer's broker

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a residential real estate broker who represents prospective buyers exclusively. As the buyer's agent the broker owes the buyer/principal the commonlaw or staturory agency duties.

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capital gain

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profit earned from the sale of an asset.

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capitalization

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a mathematical process for estimating the value of a property using a proper rate of return on the investment and the annual net operating income expected to be produced by the property. The formula is expressed as; Income

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capitalization rate

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the rate of return a property will produce on the owner's investment

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cash flow

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the net spendable income from an investment, determined by decuting all operating and fixed expenses from the gross income. When expensed exceed income, a negative cash flow results.

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cash rent

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in an agricultural lease, the amount of money givien as rent tothe landowner at the outset of the lease, as opposed to sharecropping.

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caveat emptor

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A Latin phrase meaning "let the buyer beware"

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certificate of reasonable value (CRV)

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A form indicating the appraised value of a property being financed with a VA

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Certificate of sale

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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 tothe property after the redemption period passed and that the holder paid the property taxes for that interim period.

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certificate of title

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a statement of opinion on the status of real property based on an examination of specified public records

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chain of title

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the succession of conveyances, from some accepted starting point, whereby the present holder of real property derives title.

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change

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the appraisal principle that holds that no physical or economic condition remains constant

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chattel

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see personal property

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Civil Rights Act of 1866

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An act that prohibits racial discrimination in the sale and rentalof housing.

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client

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the principal

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closing

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An event where promises made in a sales contract are fulfilled and mortgage loan funds (if any) are distributed to the buyer

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closing statement

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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

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cloud on title

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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.

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clustering

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the grouping of homesites within a subdivision on smaller lots than normal, with the remaining land used as common areas

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code of ethics

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a written system of stnadards for ethical conduct

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codicil

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a supplement or an addition to a will, that normally does not revoke the entire will

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coinsurance clause

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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

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commingling

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the illegal act by a real estate broker of placing client or customer funds with personal funds. By law brokers are qequired to maintain a separate trust or excrow account for other parties' funds held temporarily by the broker

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Commission

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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