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1091 Cards in this Set

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?shared appreciation(equity) mortgage
The lender not only collects interest on the loan, but when the property is sold, the lender will receive a portion of the profits from the increase in the property’s value since the time it was purchased.
4 Unities of Joint Tenancy
PITT: Possession, Interest, Time and Title. All four must exist simultaneously for joint tenancy to exist
abandonment
When a tenant leaves a property before the expiration of the lease agreement.
abrogation
To nullify or replace. Signing of the closing documents nullifies the real estate purchase contract except for warranties which extend beyond the closing date.
Abstract of Title
Certification by abstractor that condensed history of title to a particular parcel of real estate, including, conveyances and encumbrances, is correct
Acceleration clause
Allows a loan to become due and payable immediately if certain requirements are not met, such as making payments, maintaining the physical condition of the property or paying property taxes and hazard insurance. Clause in mortgage or deed of trust that can be enforced to make the entire debt payable immediately if borrower defaults
Accession
The process of adding to real property. 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 and or soil washed up naturally from a river, lake or sea
Accrued Items
On a closing statement, items of expense that are incurred but not not yet payable, such as interest on a mortgage loan or taxes on real property
Acknowledge
The legal process of having the signature on a contract or other legal document verified by a notary public.
Acknowledgment
Formal declaration by someone like a notary that the signature is both voluntary (no force) and genuine (no forgery)
Acre
43,560 square feet
Actual Delivery
transferring a deed from the grantor to the grantee by handing the deed to the grantee or sending it by certified mail.
Actual eviction
The legal process by which a lessor evicts the lessee and regains possession of the property. The legal process that results in the tenant's being physically removed from the leased premises
Actual Notice
Express information or fact; that which is known, direct knowledg
ad valorem tax
A tax levied according to the value of the property used to refer to real estate taxes
addendum
additions or changes incorporated into the REPC by reference.
adjustable rate mortgage (ARM)
A loan where the interest rate is periodically adjusted based on a specific economic indicator. Loan that has a fluctuating interest rate, usually one tied to a cost-of-funds index; the cost of doing business is the margin that stays fixed and is added to the base rate
Adjusted cost basis
cost basis plus improvements, minus depreciation claimed during the years the property was owned.
Administrator
A person appointed by the court to carry out the terms of a will.
Adverse Possession
The process whereby a non-owner can gain ownership of property by occupying it in hostile, continuous, open, and notorious possession, and in Utah, paying the property taxes for the statutory period of time (20 years in SC). Possession of another's land as if the owner for a statutory period which may lead to acquiring title
Affidavit of Title
Written statement, made under oath, that grantor identifies himself and marital status, certifies that there are no new defects on title
Agency
The relationship between a principal and an agent wherein the agent is authorized to represent the principal in certain transaction a relationship between two parties wherein the principal hires another person to represent him or her.
agency by estoppel
The principal seeks to deny an agency relationship, but the court stops him from denying the agency, and thereby confirms it.
agency by ratification
the agency is created by implication, or actions, and the principal approves it by agreeing after the agency service has been performed to compensate the agent.
agency by statute
the law has given rise to the agency, such as a sheriff appointed by the court to be the agent of the owner in a foreclosure sale.
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)
agent
The person hired by a principal to act for and in behalf of, or to represent the principal, always acting in the principal’s best interest.
Air Lot
Designated airspace over a piece of land; may be transferred; used in describing a condominium unit
Air Rights
The right to use the open space above a property usually allowing the surface to be used for another purpose
Alienation
The act of transferring property to another. Alienation may be voluntary, such as by gift or sale, or involuntary, as through eminent domain or adverse possession
Alienation Clause
Also know as “due on sale” clause permits lender to declare balance of loan immediately due if property is sold; prevents loan assumption without lender approval
alienation of title
a change of ownership. May be voluntary (sold the property) or involuntary (foreclosure sale.)
all-inclusive trust deed (AITD)
A state-approved document used for security, usually in seller financing, where the financing is structured as a wraparound.
Allodial
A socio-economic system that allows for private ownership off real property.
Allodial System
A system of land ownership in which land is held free and clear or any rent or service due to the government; commonly contrasted to the feudal system is held under the allodial system in the United States
alta or lender's policy
The lender’s title insurance policy which offers coverage in the amount to the loan which includes a site visit to discover unrecorded encumbrances.
amenity
A “nice, but not necessary” feature which provides personal pleasure to the owner of real property. It can be tangible or intangible.
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
americans with disabilities act (ADA)
created to make building more accesable to the handicapped Protects rights of disabled individuals in employment and public accommodation; requires reasonable accommodation that enable disabled persons to work with dignity
Amortized Loan
Loan in which the monthly payment consists of principal and interest that partially pay off both each month over the term of the loan
Annexation
Change personal property to real property, such as mising sand, stone and cement, and making a sidewalk
Annual percentage rate (APR)
The interest rate plus any other charges for the loan, including such things as discount points and origination fee; computed as a yearly This must be disclosed to borrowers by lenders under the Truth In Lending Actpercentage rate. It is used for comparing loans.
Anticipation
Appraisal principle that holds that value can increase or decrease based on the expectation that some future event may or may not occur
Antitrust Laws
Laws to minimize unfair competition. Illegal to conspire to fix prices, allocate customers or markets
Appraisal
An estimate of the quantity, quality, or value of something. The process through which conclusions of property value are obtained; also refers to the report that set forth the process of estimation and conclusion of value
Appraisal Report
An opinion of market value on a property given to a lender or client with detailed and accurate information
Appraiser
An independent person trained to provide an unbiased estimate of value
appreciation
a percentage of increase in the value of the property over it’s value when it was originally purchased.
Appurtenance
Right, privilege or improvement belong to, and passing with the land
Appurtenant
Attached to the land (such as a house) or the deed (such as a recorded easement).
Appurtenant Easement
Easement that is attached to and travels with the ownership of one parcel allowing the owner the use of the use of the neighbor's land
as is clause
The clause in the real estate purchase contract that stimulates the buyer is buying the property in its current condition and with the faults that have been disclosed.
Asbestos
Mineral used extensively in insulation; inhaling fibers can cause sever respiratory diseases; particularly dangerous if friable, i.e., easily crumbled
Assemblage
Combining of two or more adjoining lots into one larger tract to increase their total value
assessed value
A percentage of the appraised value, as determined by law, upon which the tax rate will be levied to determine the property tax.
Assessment
The imposition of a tax, charge, or levy, usually according to established rates
Assignment
Transfer in writing of interest in a bond, mortgage, lease
Assignment
In a lease, transferring all of one's remaining interest in the property, although the original lessee is till responsible for the financial obligations
assignment of contract
One party in a contract substitutes another party in his place. The original party retains secondary liability for the performance of the contract. It does not require the agreement of the other original party in the contract
assignment of lease
A contract that substitutes a new tenant in the lease. The assignee becomes liable for the remaining term of the lease. Unless prohibited by the lease contract, this can be done without the approval of the lessor, but the original lessee retains secondary liability.
associate broker
a person with a broker's license who works under the supervision of an employing principal broker.
Assumption of Mortgage
Acquiring title to property on which there is an existing mortgage and agreeing to be personally liable for the terms and condition of the mortgage, including payments
Attachment
The act of taking a person's property into legal custody by writ or other judicial order to hold it available for application to that person's debt to a creditor
attorney in fact
A person who has been given power to sign in behalf of another.
attorney's opinion
a lawyer’s examination and evaluation of the history of title. It includes a brief summary of all recorded instruments which affect the title, including records of taxes, special assessments, judgments, mortgages and trust deeds.
Automated Underwriting
Computer system that permits lender to expedite the loan approval process and reduce lending costs
Automatic Extension
A listing agreement clause stating that the agreement will continue automatically for a certain period of time after its expiration date. In many state this clause is discouraged or prohibited
Avulsion
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 each as well as the land
balloon mortgage
a loan with a balloon payment at the end of its term. It could be a partially amortized or a straight loan or note.
balloon payment
Required payments larger than the regular payment. These payments are often made at the end of the loan, retiring the loan early; but can be made at other times during the term of the loan.
Balloon Payment
Final payment of mortgage loan that is considerably larger than the required periodic payments because the loan amount was not fully amortized
Bargain and Sale Deed
This deed makes no guarantees as to the condition of the title, but unlike the Quit claims Deed, the grantor implies some actual interest in the property.
Bargain and Sale Deed
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
Base Line
Imaginary line running east and west used by surveyors as a reference in describing land under the rectangular survey system
Baseline
An east-west line which intersects the meridian and creates a point from which land can be measured under the Government or rectangular survey method.
Basis
The financial interest that the Internal Revenue Service attributes to an owner of an investment property for the purpose of determining annual depreciation and gain or loss on the sale of the asset. If a property was acquired by purchase, the owner's basis is the cost of the property plus the value of any capital expenditures for improvements to the property, minus any depreciation allowable or actually taken. This new basis is called the adjusted basis.
Benchmark
Permanent reference mark of point established for use by surveyors in measuring differences in elevation
beneficiary
the lender under a trust deed & note.
Beneficiary
(1) The person for whom a trust operates or in whose behalf the income from a trust estate is drawn. (2) A lender in a deed of trust loan transaction.
Bequest or Legacy
A gift of personal property given in a will.
bilateral contract
A contract wherein a promise is exchanged for a promise, thus making the contract binding on both parties.
Bilateral vs. Unilateral Contract
Bilateral contract: both parties are legally bound to act as they promised, i.e., lease, purchase agreement. Unilateral contract: only one party is bound to act (option, promissory note)
Bill of Sale
Evidence of transfer of ownership of personal property.
Binder
An agreement that may accompany an earnest money deposit for the purchase of real property as evidence of the purchaser's good faith and intent to complete the transaction
Blanket Loan
Mortgage loan secured by more than one parcel of real estate, provides for each parcel's partial release for mortgage lien upon some repayment; used by developers
blanket mortgage
A loan that uses two or more parcels of real property as security.
blind ad
An advertisement which fails to indicate that the advertiser is a real estate brokerage or that sales agents or brokers are selling their own property.
blockbusting
The illegal practice of inducing panic selling in a neighborhood by starting rumors involving minorities moving in.
Blockbusting
Illegal practice of inducing homeowners to sell their properties by telling them that a certain people of a certain race, national origin or religion are moving into the area
Blue Sky Law
Common name for those state and federal laws that regulate the registration and sale of investment securities
board of adjustment
The body to which one would appeal in order to obtain a variance to do something contrary to the current zoning law.
board of equalization
The body of appeal if you think your property tax appraisal is too high.
boot
Personal property or money needed to make up a difference in value when exchanging real property.
Boot
Money or property given to make up any difference in value or equity between two properties in an exchange
branch office
Any remote operation of the main real estate office which will be in operation more than 12 months and must be registered with the real estate division.
Branch Office
A secondary place of business apart from the principal or main office from which real estate business is conducted. A branch office usually must be run by a licensed real estate broker working on behalf of the broker
Breach of Contract
Failure to perform a condition of a contract, such as not paying the rent or mortgage payment
bridge, swing or gap loan
a short term loan to help the buyers have up-front funds to get into their new home, when the sale on the old one is going to close later than the closing to purchase the new one.
Broker
One who acts as an intermediary on behalf of others for a fee or commission
Broker Protection Clause
Protects broker from buyer and seller making contract behind broker's back. Provides for commission if broker's buyer purchases a period after listing expires.
Brokerage
Bringing together parties interested in a real estate transaction
Broker's Price Opinion
An opinion of real estate value commissioned by a bank or attorney and provided by a broker
Brownfields
Defunct, derelict, or abandoned commercial or industrial sites; many have toxic wastes
Brownfields Legislation
Provides federal funding to states and localities to clean up brownfields sites.
buffer zone
An area established by the zoning and planning commission to separate commercial and industrial areas from residential. Its purpose may be safety or economics.
Buffer Zone
Strip of land separating one type of use from another; i.e., a park or running trails between the commercial buildings and the residential neighborhood
Build Related Illness (BRI)
An illness due to air quality problems, typically toxic substances or pathogens and is a clinically diagnosed condition. Symptoms include asthma, allergies, and hypersensitivity
Building Code
Ordinance that specifies minimum standards of construction for buildings to protect public safety and health
building codes
Rules set by government to establish minimum standards of construction.
Building Permit
Written governmental permission for the construction, alteration, or demolition of an improvement, showing compliance with building codes and zoning ordinances
Bundle of Legal Rights
Ownership of all legal rights: control, possession, use, disposition, enjoyment
Bundle of Rights
All rights and interests that can be legally held in real property. They are separated in possession, use and control, quiet enjoyment and disposition.
business plan
A written overview that reveals the basic philosophy and strategy for an investment property.
buydown
a financing technique in which a borrower is able to obtain a lower interest rate by paying discount points at the time the loan is originated. (1point=1% of the loan amount.)
Buydown
A financing technique used to reduce the monthly payments for the first few years of a loan. Funds in the format of discount points are given to the lender by the builder or seller to buy down or loser the effective interest rate paid buy the buyer, thus reducing the monthly payments for a set time
Buyer Agency Agreement
Employment contract in which the buyer hires the broker to find a property to buy. Broker owes fiduciary responsibilities to buyer/client
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.
Buyer's Broker
A residential real estate broker who represents prospective buyers exclusively. As the buyer's agent, the broker owes the the buyer-principal the common law or statutory agency duties.
capital gain
The taxable profit derived from the sale of a capital asset, such as real property.
Capital Gain
Profit earned from the sale of an asset
Capitalization
A mathematical process for estimating the value of a property using a proper rate of return on the investment and the annual net operating incomes expected to be produced by the property. The formula is expressed as: Income ÷ Rate = Value.
Capitalization Rate
The rate of return a property will product on the owner's investment
capitalization rate or cap rate
The ratio created when the net operating income is divided by the value of the property. It is also called the rate of return.
Capping
Process of laying two to four feet of soil over the top of a landfill site and planting grass to enhance aesthetic value and to prevent erosion
Carbon Monoxide
Colorless, odorless poisonous gas produced as a by-product of incomplete combustion; can be dangerous if not properly ventilate
Cash Flow
The net spendable income from an investment, determined by deducting all operating and fixed expenses from the gross income. When expenses exceed incomer, a negative cash flow results
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 sharecropping
Casualty Insurance
Coverage against theft, burglary, vandalism and machinery dames; health and accident insurance; often written for specific risks, i.e., theft, rather than all inclusive
Categories of Real Property
Residential, Commercial, Industrial, Agricultural, Special Projects
caveat emptor
the philosophy that says "Let the buyer beware"
Caveat Emptor
A Latin phrase meaning Let the Buyer Beware
CC & R's
The abbreviation given to restrictions and requirements created in the Uniform Declaration of restrictions for condominiums.
certificate of eligibility
Endorsement from the veterans administration indicating the right of a veteran to obtain a VA loan and the amount of his eligibility.
certificate of reasonable value
The document required for a VA loan that verifies the value of property being used as security for the
Certificate of Reasonable Value (CRV)
A form indicating the appraised value of a property being financed with a VA loan
certificate of sale
The document given to the individual who successfully bids and purchases a property at a sheriff’s sale. It does not convey title to the property.
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.
Certificate of Title
Based on examination of public records, a statement of opinion on the status of the title to a parcel of real estate
Chain of Title
Succession of conveyances from some accepted starting point, whereby the present hold of title derives the title, there should be no “breaks” in the succession
chain of title or abstract of title
A historical record of land ownership and liens or encumbrances against the property.
Change
The appraisal principle that holds that no physical or economic conditions remains constant
change (cycle of change)
This appraisal principle involves activity which goes from growth or integration to equilibrium to disintegration and perhaps to growth again.
Chattel
A synonym for personal property. It comes for the word “cattle.”
chattel mortgage
a loan secured by personal property
Civil Rights Act of 1866
Act that prohibits any racial discrimination in the sale or rental of housing
Client
34-27-81 (6) A person who has an agency agreement with a broker for brokerage service, whether he or she be buyer or seller.
closing
When any loan funds are received from the lender and the applicable documents are recorded. This comes after the settlement.
Closing
An event where promises made in a sales contract are fulfilled and mortgage loan funds (if any) are distributed to the buyer
Closing Statement
Detailed cash accounting of a real estate transaction showing all cash received, all charges and credits made and all cash paid out in the transaction
cloud on the title
a term that refers to any kind of lien or encumbrance against the title.
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
Clustering
Grouping of home sites within a subdivision on smaller lots than normal with the remaining land used as common areas
Code of Ethics
Written system or moral standards for ethical behavior that often goes goes beyond the letter of the law
Codicil
An addition or change to an existing will.
Codicil
A supplement or an addition to a will, executed with the same formalities as a will, that normally does not revoke the entire will
Coinsurance Clause
Requires policyholder to maintain fire insurance, coverage equal to at least 80% of property's actual replacement value
collateral or Security
a term that refers to security used for a loan. it may be real or personal property.
Color of title
To all outward public appearance, or form a document that seems to be valid, the possessor of the property would seem to have ownership.
commingling
A broker puts personal funds in excess of
Commingling
The illegal act by a real estate broker of placing client or customer funds with personal funds. By law brokers are required to maintain a separate trust or escrow account for other parties funds held temporarily by the broker
commission
One entity of the division of real estate composed of five people, one of whom is a chairman.
Commission
Payment to broker for services rendered. In the sale of real property, often a percentage of the selling price.
Common Elements
Parts of a property that are necessary or convenient to the existence, maintenance, and safety of a condominium or are normally in common use by all of the condominium residents. Each condominium owner has an undivided ownership interest in the common elements
Common Law
The body of law based on custom usage and court decisions
communication
the process of notifying the offeror that the offer has been accepted.
Community Association Management
Provides a team of property manager, accounting staff, office staff and property consultants to manage property
Community Property
A form of ownership between husband and wife where each has an equal interest in property obtained during their marriage. The only way either can hold separate property is to obtain it before marriage, after the marriage is ended or during the marriage by gift or inheritance.
Community Property
System of ownership; each spouse has an equal interest in property acquired during marriage: separate property is that acquired before marriage
Community Reinvestment Act of 1977 (CRA)
Under the act, financial institutions are expected to meet the deposit and credit needs of their communities; participate and invest in local community develo0pment and rehabilitation projects; and participate in loan programs for housing, small business and small farms.
Comparable
Properties used in an appraisal report that are substantially equivalent to the subject property
competency or capacity
the ability to understand the terms of a contract and to make a rational decision as to whether or not to enter into it.
competition
An appraisal principle: when a particular use of property is bringing a high return, others enter into the same business or purchase property for the same purpose.
Competition
The appraisal principle that state that excess profits generate competition
Competitive Market Analysis (CMA)
Analysis of market activity among comparable properties; not an appraisal
Complaint, filing a
filing this document with thte court initiates foreclosure under a mortgage.
compound interest
Interest paid on earned interest as well as on the principal. It is used in savings accounts.
Comprehensive Environmental Response, Compensation and Liability Act (CERCLA)
Passed in 1980, established Superfund to clean up uncontrolled hazardous waste site and to respond to spills
Comprehensive Loss Underwriting Exchange (CLUE)
A database of consumer claim history that allows insurance companies to access prior claim information in the underwriting and rating process
Computerized Loan Origination
Electronic network for handling load applications through remote computer terminals linked to various lenders' computer; borrower must pay for this extra service
Condemnation
A judicial or administrative proceeding to exercise the power of eminent domain, through which a government agency takes private property for public use and compensates the owner
condemnation action
A legal action initiated by the government to seek the right to purchase land from a private individual by eminent domain.
Conditional Use Permit
Written governmental permission allowing the use inconsistent with the zoning, but necessary for the public good; i.e., emergency medical facility in residential area
Conditional Use Permit
Written governmental permission allowing a use inconsistent with zoning buy necessary for the common good, such as locating an emergency medical facility in a predominately residential area
condominium
one owns the air space of one’s own unit and own undivided interest in the common area.
condominium ownership act
The act which governs ownership and related issues when one owns airspace and undivided interest in the common area.
Condominiums
Ownership of the airspace of a unit, plus undivided interest in common elements
Confession of Judgment Clause
Permits judgment to entered against a debtor without the creditor's having to institute legal procedures
conformity
an appraisal principle which states that because all homes in a particular area are harmonious in design and value, their value is sustained and tends to increase over time.
Conformity
Appraisal principle that holds that the greater the similarity among properties in an area, the better they will hold their value
consideration
The process wherein each party to a contract makes a sacrifice and each party receives a benefit. It is an essential element of any contract.
Consideration
Something of value that gets a person to enter into a contract; owner of property promises to convey marketable title and the buyer promises a certain amount of money
construction loan
An open ended loan funded in installments as various portions of the work are completed.
Constructive Delivery
The process of transferring a deed from the grantor to the grantee by recording the deed at the country recorder’s office.
constructive eviction
When the landlord violates the terms of the lease by not keeping the property livable or habitable, the tenant can legally vacate the property and not be held liable for further rent payments.
Constructive Eviction
When the tenant is forced to vacate the property because the landlord failed to provide essential services; tenant is no longer obligated for any further rent
constructive fraud
A party misrepresents innocently, with no evil intention, but that misrepresentation could have been avoided with reasonable care.
Constructive Notice
Notice given to the world by recorded documents; possession of property may also be considered constructive notice
Contingency
A provision in a contract that requires a certain act to be done or a certain event to occur before the contract becomes binding
contingency clause
Sometimes know as a “subject to” clause, it requires completion of certain acts before the contract is fully binding.
contract
An agreement between two or more parties to do or not to do certain things. It may be oral or in writing.
Contract
A legally enforceable promise or set of promises that must be performed and for which, if a breach of the promise occurs, the law provide a remedy. A contract may be either unilateral, by which only one party is bound to act, or bilateral, by which all parties to the instrument are legally bound to act as prescribed
Contract Broker
34-27-81 (17) A licensee who assists one or more parties in a contemplated real estate transaction without being an agent or fiduciary or advocate for the interest of that party to a transaction.
contribution
The appraisal principle which states that an improvement to a property must add its cost to the value.
Contribution
The appraisal principle that states that the value of any component of a property is what it gives to the value of the whole or what its absence detracts from that value
Controlled Business Arrangement
One stop shopping for real estate consumers; consumer must be informed of relationship among the service providers and that other are available
Conventional Loan
Loan that is neither FHA nor VA; does not require insurance or guarantee, although today high LTV loans are made along with PMI (private mortgage insurance
Conveyance
A term used to refer to any document that transfers title to real property. The term is also used in describing the act of transferring
cooperative
A form of ownership in multiple unit housing where the owner purchases shares of stock in the entire development, then obtains exclusive use of a unit by means of a proprietary lease.
Cooperative
Multi tenant building owned by trust or corporation; tenants own share of stock and proprietary lease
Co-Ownership
Title ownership held by two or more persons who must agree on how the property is used
Co-Ownership
Title ownership held by two or more persons
corporation
A legal person. It cannot die or go to jail.
Corporation
An artificial entity created by operation of law whose rights in business are similar to those of an individual. Continuous existence until it is legally dissolved
Corporeal Rights
Something that is physical or tangible, such as land or buildings.
Correction Lines
Provisions in the rectangular survey system made to compensate for the curvature of the earth' surface. Every fourth township line (at 24 mile intervals) is used as a correction line on which the intervals between the north and south range lines are remeasured and correct to a full six mile
Corrective Maintenance
Actual repairs that keep building equipment functioning; i.e., repairing a boiler, fixing a leaky faucet, fixing an air conditioner
correlation (reconciliation)
An appraiser should use as many of the approaches to appraising as possible. This technique synthesizes the results into a single estimate of value. It is sometimes called correlation.
cost approach
an approach to appraisal which considers the price of resources necessary to build the same or a similar property. It is the only approach which places a separate value on the land.
Cost Approach
Process of estimating property value by adding to estimated land value the appraiser's estimate of the cost of the building new, less depreciation
cost basis
what you paid for the product or property when you bought it.
cost or cost basis
what you paid for the product or property when you bought it.
cost plus
A contract where payment Is for material and labor, with a profit factor added.
Cost Recovery
An Internal Revenue Service term for depreciation
cost recovery (depreciation)
An income tax deduction allowed on investment property to treat the improvements as thought they will waste away in a certain number of years. It cannot be applied to raw land or personal residence. Also known as depreciation.
counter offer
A response to an offer wherein the offeree changes one or more of the terms of the contract, becomes the offeror, and sends the offer back to the original offeror.
Counteroffer
A new offer made in response to an offer received. It has the effect of rejecting the original offer, which cannot be accepted thereafter unless revived by the offeror
Covenant
A written agreement between two or more parties in which a party or parties pledge to perform or not perform specified acts with regard to property; usually found in such real estate documents as deeds, mortgages, lasses and contracts for deed
Covenant Against Encumbrances
This covenant in a deed assures the grantee that the title has no leans for encumbrances except those that have been revealed by the grantor.
Covenant of further assurance
In the event someone makes a claim against the property, the grantor has the full responsibility to defend the title against the claimant. This includes producing the proper documents to substantiate the ownership of the grantee, and going to court if necessary.
Covenant of Quiet Enjoyment
in a deed, the guaranteed right of an owner or lessee legally in possession of property to uninterrupted use without interference from any third party claiming superior title.
Covenant of Quiet Enjoyment
The covenant implied by law by which a landlord guarantees that a tenant may take possession of leased premises and that the landlord will not interfere in the tenants;s possession or use of the property
Covenant of Seizin
This covenant in a deed guarantees the grantor holds title to the property and has the right to convey it to a grantee.
covenant of Warranty forever
If the grantor were to lose in defense of the title, this covenant guarantees payment for the defense of the title and for damages caused the grantee, including buying the property back from the grantee if necessary.
credit
An amount of money which will reduce what the buyer has to bring to closing, or increase the amount the seller gets at closing.
Credit
On a closing statement, an amount entered in a person;s favor – either an amount the party has paid or an amount for which the party must be reimbursed
Credit, Debit
On closing statement, amount entered in a person's favor; either an amount that party has paid or amount for which party must be reimbursed; debit is amount charged
cubic foot method
Under the cost replacement approach, this method determines the cost per unit of volume and then multiplies it by the number of units of volume. It is most often used with warehouses.
Curtesy
A life estate, usually a fractional interest, given by some states to the surviving husband in real estate owned by his deceased wife. Most states have abolished Curtesy
Customer
The third party or non represented consumer for whom some level of service is provided
damages
a money adjustment ordered by the court for actual losses suffered.
Datum
Horizontal plane from which heights and depths are measured
debit
an amount of money which will increase what the buyer brings to close, or will reduce what th seller gets at closing
debt service
loan payments of principle and interest.
Dedication
A private individual’s girt of property for public use. It may be voluntary (giving land for a public park) or statutory (subdivide giving land for roads).
Dedication
The voluntary transfer of private property by its owner to the some public use, such as for streets or schools
deductions
Items which the IRS allows to be subtracted from your gross taxable income in order to determine your taxable income.
Deed
The document that serves as evidence of ownership of real property, as well as the document of conveyance.
Deed
the document that serves as evidence of ownership of real property, as well as the document of conveyance.
Deed
Written document that, when executed and delivered, conveys title to or an interest in real estate
deed in Lieu of foreclosure
the defaulting borrower conveys title to the property to the lender. In return, the lender forgives the loan on the property.
Deed in Lieu of Foreclosure
Way for mortgagor to avoid foreclosure by returning deed to lender/mortgagee
Deed in Trust
An instrument that grants a trustee under a land trust full power to sell, mortgage, and subdivide a parcel of real estate. The beneficiary controls the trustee's use of these powers under the provisions of the trust agreement
Deed of Trust
Borrower conveys naked title to a trustee who holds it as security for the lender
Deed Restriction
Clause in deed limiting future use of property; may limit density of buildings, dictate types of structures or even prevent buildings from being used for a specific purpose
Default
The nonperformance of a duty, whether arising under a contract or otherwise; failure to meet an obligation when due
defeasance clause
A clause in most loans written in favor of the borrower. It requires the lender to reconvey all interest in the property after the loan has been paid off.
Defeasance Clause
A clause used in leases and mortgages that cancels a specified right upon the occurrence of a certain condition, such as cancellation of a mortgage upon repayment of the mortgage loan.
Defeasible Fee
Fee simple estate in which the holder may lose title if a certain event occurs or does not occur: “So long as ....., “ or “no alcohol sales,” etc.
deferred maintenance
When physical deterioration is repairable, but hasn’t yet been taken care of.
deficiency judgment
A judgment obtained when a foreclosure sale fails to completely pay off a debt.
Deficiency Judgment
Personal judgment levied against the borrower when a foreclosure sale does not produce sufficient funds to pay fully the mortgage debt
Delivery
The process of the grantor giving the deed to the grantee.
Demand
Amount of goods people are willing and able to buy
Density Zoning
Zoning ordinances that restrict the maximum average number of house per acre that may be built within a particular area, generally a subdivision
Department of Housing and Urban Development (HUD)
Governmental department that has established rules and regulations that further interpret the practices affected by the law. In addition, HUD distributes an equal housing opportunity poster.
depreciation
A loss of value in real property, regardless of the reason for the loss. Also an accounting process used for investment property taxation, referred to by the IRS as cost recovery.
Depreciation
(1) In appraisal, a loss of value in property due to any cause, including physical deterioration, functional obsolescence and external obsolescence. (2) In real estate investment, an expense deduction for tax purposes taken over the period of ownership of income property
Descent
The laws by which the court determines ownership of property of a person who has died intestate, but who has heirs.
Descent
Acquisition of an estate by inheritance in which an heir succeeds to the property by operation of law
designated agency
The principal (buyer or seller) who is hiring an agent specifies exactly which person(s) will act as agent or subagent and exercise fiduciary care in representing the principal’s best interest.
Designated Agent
A license authorized by a broker to act as the agent for a specific principal in a particular transaction
Developer
Person who attempt to put land to its most profitable use through the construction of improvements
Development
Construction of improvements on lnad, i.e., new homes, water lines
Devise
A gift of real property by will. The donor is the devisor and the recipient is the devisee
Devise (Devisor/Devisee)
A gift of real property given in a will.
director, real estate division
One of the entities in the real estate division. A full-time position responsible for submitting a budget for the division’s operation.
Discount Point
Unit of measurement used for various loan charges; one point equals one percent of the loan amount
Discount Point
A unit of measurement used for various loan charges; one point equals 1 percent of the amount of the loan
discount points
Money paid when a loan is initially obtained which is considered prepaid interest and permanently lowers the interest rate. Also know as a buy down.
discount rate
The rate charged by the Federal Reserve to member banks for money they borrow. It, along with reserve requirements, is one of the ways the Federal Reserve controls the economy.
discounted loan or note
Selling a loan to the secondary money market for less tan its face value. This increases the yield (profit) on the loan.
document receipt
A confirmation by the buyer and seller that they received a copy with all signatures.
dominant tenement
The name given to a property that encumbers a neighboring property with an easement.
double commissions
The seller pays a commission to the listing agent, as per their contract, and also a commission to the selling agent.
double contracts
the buyer and seller enter into a second sales contract in order to deceive the lender and enable the buyer to finance the purchase.
Dower
The legal right or interest, recognized in some states, that a wife acquires in the property her husband held or acquired during their marriage
Dual Agency
Representing both parties to a transaction. This is unethical unless both parties agree to it, and it is illegal in many states
dual agent (limited agent)
When the agent is representing both principals in a transaction with their informed consent. (also know as a limited agent.)
Due On Sale Clause
A provision in the mortgage that states that the entire balance of the note is immediately due and payable if the mortgagor transfers (sells) the property
Duress
Unlawful constraint or action exercised upon a person whereby the person is forced to perform an act against his or her will. A contract entered into under duress is voidable
duress or undue influence
the use offorce to obtain agreement. it can be physical or emotional.
Earnest Money
Money deposited by a buyer under the terms of a contract, to be forfeited if the buyers defaults but applied to the purchase price if the sale is closed
earnest money deposit
the deposit a buyer makes when submitting an offer to purchase real property. It shows he’s serious in the offer and will serve as liquidated damages if he defaults on the contract.
easement
A non-possessory interest which on person has in land owned by another, allowing limited use or enjoyment of the owner’s land. it may be referred to as a physical use or condition.
Easement
A right to use the land of another for a specific purpose, such as for a right of way or utilities; an incorporeal interest in land
easement appurtenant
An easement which attaches to the land and/or the deed, and passes from owner to owner with the deed.
Easement by Condemnation
An easement created by the government of government agency that has exercised the right under eminent domain
easement by implication
an unexpressed, but legally binding understanding regarding a right of way between the parties, created by their actions.
easement by necessity
Created by a court of law in situations where justice and need, not convenience, dictate the appropriateness of the easement; such as the case of land locked property.
Easement by Necessity
An easement allowed by law as necessary for the full enjoyment of a parcel of real estate; for example, a right of ingress and egress over a grantor's land
easement by prescription
An easement created by adverse use. The use must be adverse, hostile, open, notorious and continuous. This type of easement can be prevented by giving permission to the user, or by ordering the use to discontinue the use before the statutory period passes. (it requires 20 years in Utah.)
Easement by Prescription
Easement claimant has used another's land for a certain period of time (10 – 20 years) openly, continuously and without the owner's approva
easement in gross
an easement which is personal in nature and does not pass with the deed or the land. it runs with the persons who agreed to it for the term of their lives, or with the need for which it was created, such as a utility easement.
Easement in Gross
Individual interest in someone else's land; no dominant tenement. Commercial may be assigned, conveyed or inherited; examples: utility lines, sewer, water
economic life
The period of time during which improvements give a return on investment. It is generally considered to be shorter the physical life.
Economic Life
Number of years during which an improvement will add value to the land
economic obsolescence
A form of depreciation caused by forces outside the property boundaries. They may be political or social factors. It is considered to be incurable.
Economics Characteristics of Real Estate (4)
Scarcity, improvements, permanence of investment, area preference (location)
effective age
An age placed on property for appraisal purposes, based on the condition of the property. It may be more or less that the actual chronological age.
egress
Leaving a property by traveling across the servient tenement or property.
Electromagnetic Field EMFs
Generated by movement of electrical currents; prolonged exposure may cause cancer; major concern for property owners near high voltage line
Electronic Contracting
A process of integrating information in a real estate transaction between clients, lender, and title and cosing agents electronically
Electronic Signatures in Global and National Commerce Act (E-Sign)
An act that makes contracts (including signatures) and records legally enforceable regardless of the medium in which they are created
Emblements
Crops nurtured in the year of the transfer or sale of the property. They are considered personal property.
Emblements
Annual, harvestable crops such as corn, wheat; personal property
eminent domain
The right of the government to take title, at fair market value, to land owned by a private individual.
Eminent Domain
The right of a government or municipal quasi-public body to acquire property for public use through a court action called a condemnation, in which the court decides that the use is a public use and determines the compensation to be paid to the owner
Employee
Works for employer is responsible for withholding income taxes and FICA
Employment Contract
A document evidencing formal employment between employer and employee or between principal and agent. In the real estate business this generally takes the form of a listing agreement or management agreement
Enabling Acts
State legislation that confers zoning powers on municipal governments
Encapsulation
Sealing off of disintegrating asbestos or chipping and peeling lead based paint; may be preferable to removal; still leaves hazard behind
encroachment
the unauthorized intrusion of a building, tree, or other improvements onto a neighbor’s property.
Encroachment
A building or some portion of it – a wall or fence for instance – that extends beyond the land of the owner and illegally intrudes on some land of an adjoining owner or a street or alley
encumbrance
Anything which burdens the title to real property so as to restrict, limit, or otherwise affect an owner’s rights.
Encumbrance
Anything – such as a mortgage, tax or judgment lien, an easement, a restriction on the use of the land, or an outstanding dower right -that may diminish the value or use and enjoyment of a property
Encumbrance Claim
Charge or liability that attaches to real estate liens, restrictions, easements, encroachments
enforceability
the issue of whether a contract dispute could be taken into the court to be settled.
environmental protection agency (EPA)
the government entity which deals with the impact of commercial, industrial and residential development on the environment.
equal credit opportunity act
Federal act which prohibits discrimination in financing, based on race, age, sem, or martial status.
Equal Credit Opportunity Act (ECOA)
Federal law that prohibits discrimination in the extension of credit because of race, color, religion, national origin, sex, receipt of public assistance, age, marital status
Equal Credit Opportunity Act (ECOA)
Prohibits discrimination in lending based on race, color, religion, national origin, sex, receipt of public assistance, age and marital status
Equalization
The raising or lowering of assessed values for tax purposes in a particular county or taxing district to make them equal to assessments in other countries or districts
Equalization Factor
A factor (number) by which the assessed value of a property is multiplied to arrive at a value for the property that is in line with statewide tax assessments. The ad valor em tax would be based on this adjusted value
equitable period of redemption
In foreclosure, the period of time during which the borrower can reinstate the loan before the foreclosure sales takes place. It is sometimes referred to as equity of redemption.
Equitable Right of Redemption
The right of a defaulted property owner to recover the property prior to its sale by paying the appropriate fees and charges
equitable title
The legal interest held in a property by the buyer between the time the contract is signed and conveying the actual deed.
Equitable Title
The interest held by a vendee under a contract for deed or an installment contract; the equitable right to obtain absolute ownership to property when legal title is held in another's name
equity
the market value of a property minus the debts secured by the property.
Equity
The interest an owner has in a property over and above any outstanding loans (Market Value – Loans = Equity)
Equity Buildup
That portion of the loan payment directed toward the principal rather than the interest, plus any gain in property value due to appreciation
Errors and Omissions Insurance
Liability insurance to cover broker for errors and negligence in general business; usually does not cover civil rights or antitrust violations
escalation cause
A clause written into a loan or lease that allows for payments to be increased at specified times by state amounts.
escalation clause
A clause written into a loan or lease that allows for payments to be increased at specified times by stated amounts.
escheat
This occurs when someone dies without a will, having no heirs.
Escheat
The reversion of property to the state or county, as provide by state law, in cases where a decedent dies intestate without heirs capable of inheriting , or when the property is abandoned
escrow
a depository where a neutral third party is used to hold money or documents.
Escrow
Closing of transaction through third party called escrow agent; who receives funds and documents to be delivered upon performance of certain instructions
Escrow Account
The trust account established by a broker under the provisions of the license law for the purpose of holding funds on behalf of the broker's principal or some other person until the consummation or termination of a transaction
Escrow Contract
An agreement between a buyer, seller and escrow holder setting forth rights and responsibilities for each. An escrow contract is entered into when Earnest money is deposited in a broker's escrow account.
Escrow Instructions
A document that sets forth the duties of the escrow agent, as well as the requirements and obligations of the parties, when a transaction is closed through an escrow
Estate at Sufferance
Tenant remains on the property, without the landlord's permission, after the lease has expired
Estate at Will
Term is indefinite; i.e., “I will rent to you until I sell the house,” will be terminated by death of either party or sale of property
Estate for Years
Leasehold interest for specific period of time; definite beginning, definite ending; not terminated by death of either party, nor sale of property; no notice required
Estate from Period to Period
Leasehold interest that automatically renews until either party gives notice to change the terms; month to month; not terminated by death of either party, nor sale of property
Estate in Land
The degree, quantity, nature, and extent of interest a person has in real property
estate or tenancy for years
a lease which contains a termination date. Its term can be for any agreed-upon period of time. (it can be more or less than one year.)
Estate Taxes
Federal taxes on decedent's real and personal property
Estoppel
Method of creating an agency relationship in which someone states incorrectly that another person is his or her agent and a third person relies on that representation
estoppel certificate
A document provided by a lender which reveals all the terms of a loan as requested by the borrower or ordered by the court.
Estoppel Certificate
A document in which a borrower certifies the amount owed on a mortgage loan and the rate of interest
estovers
The right of a tenant to use natural resources on leased land, such as timber, water, etc. When required as necessities.
Ethics
The system of moral principles and rules that becomes standards for professional conduct
Eviction
A legal process to oust a person from possession of real estate
Evidence of Title
Proof of ownership of property; commonly a certificate of title, an abstract of title with lawyer's opinion, title insurance, or a Torrens registration certificate
Exception and Reservations Clause
In a deed, it indicates rights in the real property which will not be conveyed to the grantee and is another name for the habendum clause.
Exchange
A transaction in which all or part of the consideration is the transfer of like-kind property (such as real estate for real estate)
exclusive agency listing
One broker is named as the exclusive agent of the seller, but the seller reserves the right to locate a buyer without paying a commission.
Exclusive Right To Sell Listing
A listing contract under which the owner appoints a real estate broker as his or her exclusive agent for a designated period of time, to sell the property on the owner's stated terms, and agrees to pay the broker a commission when the property is sold, whether by the broker, the owner, or another broker.
exclusive right-to-sell
one principal broker is designated to represent the seller and receive a commission when the buyer is found, regardless of who finds the buyer.
Exclusive-Agency Listing Agreement
One agent (broker) is hired; broker receives a commission only if he or she is the procuring cause; seller retains right to sell without obligation to pay commission
Exclusive-Right-To-Sell Listing Agreement
One agent (broker) is hired; broker receives a commission regardless of who finds the buyer for the property
execute
to put a contract into effect by signing it.
executed contract
a contract with all of th terms completed by all parties.
Executed Contract
A contract in which all parties have fulfilled their promise and thus performed the contract
executive director, department of commerce
The person who appoints the director of the Utah division of real estate.
Executor or Executrix
The title of a person named in a will to carry out the terms of the will after the death of the testator.
executory contract
a contract that is not fully performed, but which is not in default.
Executory Contract
A contract which something remains to be done by one or more of the parties
Expiration of listing
Specific termination of listing; in most states, failure to specify specific date is grounds for suspension or revocation of license
express agency
Agency created through words, written or oral, between the principal and the agent, such as a listing agreement.
Express Agency
An agency relationship based on a formal agreement between the parties
Express Agreement
An oral or written contract in which the parties state the contract's terms and express their intentions in words
Express vs. Implied Contract
Express is oral or written contract in which parties express intention in words. An implied contract is a result of the actions of the parties
extended coverage title insurance
Covers claims both on and off the record. It includes a site visit to give protection against unrecorded liens and encumbrances, such as mechanic’s liens, as well as defects in the land itself, such as unrecorded easements, encroachments, and information based on incorrect surveys,. It can be obtained by private individuals.
External Depreciation
Reduction in a property's value caused by outside factors (those that are off the property)
Fair Housing Act
The federal law that prohibits discrimination in housing based on race, color, religion, sex, handicap, familial status, and national origin
Fair Housing Violation Enforcement
Unlimited punitive damages, actual damages, injunction, fines ranging from
fair market value
What a willing buyer is willing to pay, and a willing seller is willing to accept, with neither of them under duress and the property has been on the market for sufficient time to verity its value.
familial status
One of the protected classes under fair housing referring to families with children under 18.
Familial Status
In fair housing, at least one person over the age of 18 having legal custody of one person under 18, includes pregnant women and foster children
Fannie Mae
Quasi-government agency buys any kind of mortgage loans in secondary market from primary lenders; guarantees timely principal and interest to security holders
Fannie Mae
/
Farm Credit
A federal agency of the Department of Agricultural that offers programs to help families purchase or operate family farms
Farm Service Agency (FSA)
An agency of the federal government that provides credit assistance to farmers and other individuals who live in rural areas
Farmer Mac
A government sponsored enterprise that operates similarly to Fannie Mae and Freddie Mac but for agricultural loans
Federal Deposit Insurance Corporation
An independent federal agency that insures the deposits in commercial banks
federal fair housing act of 1968
Extended the federal fair housing act of 1866 by adding the prohibition of discrimination according to color, sex, religion, and natural or national origin. It specifically stated that no discrimination should take place relative to sale or rental of real estate, or real estate brokerage services.
federal fair housing amendment of 1988
Added two new protected classes to fair housing: handicapped and familial status.
Federal Home Loan Mortgage Corporation
Corporation buys primarily conventional mortgage loans in secondary market, does not guarantee principal and interest payments of these mortgages
Federal Home Loan Mortgage Corporation
/
Federal Home Loan Mortgage Corporation (FHLMC) (FANNIE MAE)
Federal Home Loan Mortgage Corporation; a privately owned secondary money market player. It is federally regulated.
Federal National Mortgage Association
/
Federal National Mortgage Association (FNMA)
Federal national mortgage association, a major secondary money market player. It is privately owned, but federally regulated.
Federal Reserve Bank
The bankers’ bank; it regulates the money supply by establishing discount rates (cost of money to lending institutions) and setting a reserve requirement (how much cash lenders must keep on hand).
Federal Reserve System
Country's central banking system, responsible for nations monetary policy by regulating supply of money and interest rates; requires member banks to keep a reserve
Federal Reserve System
The country's central banking system, which is responsible for the nation's monetary policy by regulating the supply of money and interest rates
Fee for Service
Arrangement where a consumer asks a licensee to perform specific real estate services for a set fee
Fee Simple
The highest interest in real estate recognized by the law; the holder is entitled to all rights to the property
Fee Simple Absolute
Maximum possible estate or right of ownership of real property, continuing forever
Fee Simple Defeasible Estate, Defeasible Fee Estate
A fee simple estate which has conditions attached, the violation of which could cause the grantee to lose title. If written in the deed with the words “so long as,” it automatically reverts back to the grantor or his heirs if the conditions are violated. It may also be referred to as “Fee Simple Qualified.”
Fee Simple Determinable
A fee simple estate qualified by a special limitation. Language used to describe limitation includes the words, “so long as” or “while” or “during.”
Fee Simple, Fee Estate, Fee simple absolute
The highest or most complete form of ownership that can be held under the law. The ownership rights go on forever.
Feudal System
A system of ownership usually associated with pre-colonial England, in which the king or other sovereign is the source of all rights. The right to possess real property was granted by the sovereign to an individual as a life estate only. Upon the death of the individual, title passed back to the sovereign, not to the decedent's heirs.
FHA loan
A government loan with a low down payment, insured by the borrower’s payment of the mortgage insurance premium (MIP)
FHA Loan
Loan insured by Federal Housing Administration; made by approved lender with FHA's regulation; borrowers pay mortgage insurance premium (MIP)
fiduciary
The word which describes the responsibility of an agent toward the principal, involving trust, loyalty, confidence, care and diligence.
Fiduciary
One in whom trust and confidence is placed; a reference to a broker employed under the terms of listing contract or buyer agency agreement
Fiduciary Relationship
Relationship of trust and confidence between principal and agent; agent owes duties of care, obedience, accounting, loyalty and disclosure
Financial Institutions, Reform, Recovery, and Enforcement Act (FIRREA)
This act restructured the savings and loan association regulatory system; enacted in response to the savings and loan crisis of the 1980s
Fiscal Policy
The government's policy in regard to taxation and spending programs. The balance between these two areas determines the amount of money the government will withdraw from or feed into the economy, which can counter economic peaks and slumps
fixed cost
a contract where the price is established up front and there is no allowance for overruns.
Fixture
That which is attached without losing its identity. It is always real property.
Fixture
Item that was once personal property and is now permanently affixed and is real property, such as a chandelier or ceiling fan
flat lease
the lessee makes periodic, equal rent payments
foreclosure
The legal process a lender uses to recover the investment from a defaulting borrower where the loan was secured by the property.
Foreclosure
A legal procedure whereby property used as security for a debt is sold to satisfy the debt in the event of default in payment of the mortgage note or default of other terms in the mortgage document. The foreclosure procedure bring the rights of all parties to a conclusion and passes the title in the mortgaged property to either the holder of the mortgage or a third party who may purchase the realty at the foreclosure sale, fee of all encumbrances affecting the property subsequent to the mortgage.
forfeiture
In a default situation when the lender may repossess the property, this is the effect to the borrower.
Formal Will
Most valid form of a will, usually prepared by an attorney. It is the least likely form of a will to be challenged.
Fractional Section
A parcel of land less than 160 acres, usually found at the edge of a rectangular survey
fraud
An act intended to deceive or misrepresent in order to gain some unfair or dishonest advantage over another and induce someone to give up something of value.
Fraud
Intentional misrepresentation of a material fact in order to harm or take advantage of another person
Freddie Mac
/
Freddie Mac
A government sponsored enterprise established to purchase primarily conventional mortgage loans in the secondary market
Freehold Estate
An interest in property in which some form of ownership is held.
Freehold Estate
An estate in land in which ownership is for an indeterminate length, in contrast to a leasehold estate.
Front Footage
The measurement of a parcel of land by the number of feet of street or road frontage
Fully amortized loan
a loan that requires payments of both principal and interest. When the last payment is made, the loan is retired.
fully disclosed principal
the “other party” knows there is a principal, knows who it is, and that there is an agent.
functional obsolescence
The item in question is working fine, but is not what people want in their homes anymore. Examples are a poor floor plan, four bedrooms and one bath, inadequate insulation, insufficient electrical outlets, etc.
Functional Obsolescence
Loss of value to an improvement to real estate because of functional problem, often caused by changing tastes or poor design
Future Interest
A person's present right to an interest in real property that will not result in possession or enjoyment until some time in the future, such as a reversion or right of re-entry
Gap
A defect in the chain of tile of a particular parcel of real estate; a missing document or conveyance that raises doubt as to the present ownership of the land
general agent
An agent hired by contract to use the agent’s expertise to fulfill the objectives of the principal.
General Agent
Agent hired to represent principal in specific range of matters: long-term broad authority
General Lien
The right of a creditor to have all of a debtor's property - both real and personal - sold to satisfy a debt
General or Full Warranty Deed
A deed that contains all five covenants and covers the period of time from the date of transfer back to the date of the patent.
General Partner
A partner who has full authority to make decisions, acts for the partnership, and has full liability of the business dealings of the partnership.
General partnership
A partnership composed only of general partners.
General Real Estate Tax
A tax that is made up of the taxes levied on the real estate by government agencies and municipalities
General Warranty Deed
Deed that offers the most protection in which grantor fully warrants good clear title to the premises
General Warranty Deed
A deed in which the grantor fully warrants good clear title to the premises. Used in most real estate deed transfers, a general warranty deed offers the greatest protection of any deed
Gift Deed
A transfer of ownership made for love and affection. Creditors of the donor could still use the property for payment of the grantor’s debts if it can be shown that the donor was insolvent and transferred the property to evade creditors.
Ginnie Mae
HUD division, corporation without stock; administers special-assistance programs and works in tandem with Fannie Mae by guaranteeing payments
good consideration
consideration given in the form of love, friendship, loyalty, etc.
Good Faith Estimate (GFE)
Settlement costs that borrower is likely to incur; must be given within three business days after loan application; should be pretty accurate
Government Check
The 24 mile square parcels composed of 16 townships in the rectangular (government) survey system of legal description
Government natioal morgage association (GNMA) (GINNIE MAE)
Government national mortgage association. A secondary money market player which is government owned and purchases loan pools of FHA and VA loans
Government National Mortgage Association
Ginnie Mae
Government Powers (4)
Police powers, eminent domain, taxation, escheat
graduated lease
A lease where the rent will increase periodically in amounts specified in the lease, as contained in the escalation clause.
Graduated Payment Mortgage (GPM)
Payments begin below the normal, fully amortized payment and are then increased for a set period of years. Some lead to negative amortization.
Graduated Payment Mortgage (GPM)
A loan in which the monthly principal and interest payments increase by a certain percentage each year for a certain number of years and then levels off for the remaining loan term
Grant Deed
A type of deed used in some states which contains limited warranties. The grantor usually also provides title insurance.
Grantee
One who receives property or property rights from a grantor.
Grantee
The person who receives a conveyance of real property from a grantor
Granting Clause
Words in deed on conveyance that state the grantor's intention to convey the property at the present time. This clause is generally worded as “convey and warrant”; “grant”; “grant, bargain, and sell”; or the like
Grantor
one who conveys property or property rights to a grantee.
Grantor
The person transferring title to or an interest in real property to a grantee
Grantor, Grantee
n a deed, the grantor is the person transferring title in real estate to the grantee
Gross Income Multiplier
A figure used as a multiplier of the gross annual income of a property to produce an estimate of the property's value
gross lease
The tenant pays a set amount of rent. From this rent, the lessor is required to pay some or all operation expenses.
Gross Lease
Tenant pays rents, landlord pays all expenses of property; most common form of residential lease
Gross Lease
A lease of land only, on which the tenant usually owns a building or is required to build as specified in the lease. Such leases are usually long term net leases; the tenant's rights and obligation continue until the lease expires or is terminated through default
gross operating income (GOI)
the total income received from an investment property after subtracting vacancies and lost rents.
gross rent multiplier (GRM)
A “quick and dirty” estimate of value based only on a relationship between the value of the property and the gross rents. It is referred to as the GRM.
gross scheduled income (GSI)
What an investor would receive if there were no vacancies or lost rents.
ground lease
the landlord leases the land to the tenant, and the tenant builds improvements on the leased land.
Groundwater
Water that exists under earth's surface in tiny spaces or crevices in geological formations; if contaminated, threatens source of clean drinking water
Group boycotts
Illegal antitrust activity. Two or more businesses conspire against another business or agree not to work with another company in order to reduce competition
Growing Equity Mortgage
A loan where payments increase each year, thereby allowing the loan to be paid off many years sooner and a substantial amount of interest dollars to be saved.
Growing Equity Mortgage (GEM)
A loan in which the monthly payment increase annually, with the increased amount being used to reduce directly the principal balance outstanding and thus shorten the overall term of the loan
Habendum Clause
“To have and to hold” clause in a deed defining the extent of ownership bing granted; i.e., a life estate or a defeasible fee
Habendum Clause (Subject to clause)
Know as the “to have and to hold clause,” and sometimes as a “subject to” clause, it defines and limits the estate which the grantee will receive when the property is transferred.
habitability clause
If not actually written in the lease, there is an unwritten or implied warrant of this in every lease, that says the property is livable.
hazard or home owner's insurance
An insurance policy which indemnifies real property against loss resulting from physical damage to the property such as fire, vandalism, etc.
Heir
One who might inherit or succeed to an interest in land under the state law of descent when the owner dies without leaving a valid will
highest and best use
The appraisal principle which states that value should be based on the utilization of the property which will bring the greatest return to the owner. That use must be legal and feasible.
Highest and Best Use
Possible use of a property that would produce the greatest net income and thereby develop the highest value; making an office building where a parking lot once stood
Holder of a Life Estate
The receiver of a life estate who has the property for the duration of the grantee’s own life.
Holdover Tenancy
A tenancy whereby a lessee retains possession of leased property after the lease has expired and the landlord, by continuing to accept rent, agrees to the tenant's continued occupancy as defined by state law
holdover tenant
The lessee had an estate for years which has new terminated. The lessor accepted a rent check so now the tenant is on periodic tenancy basis.
Holographic will
A handwritten will, which must be dated, written entirely in the handwriting of the testator, and does not need witnesses in order to be valid. It can pass both real and personal property.
Holographic Will
A will that is written, date, and signed in the testator's handwriting
Home Equity Loan
A loan (sometimes called a line of credit) under which a property owner uses his or her residence as collateral and can then draw funds up to a prearranged amount against the property
Homeowner's Insurance Policy
A standardized package insurance policy that covers a residential real estate owner against financial loss from fire, theft, public liability and other common risks
Homestead
Land that is owned and occupied as the family home. In many states a portion of the area or value of this land is protected or exempt from judgments for debts
HUD 1 settlement statement
The required form to be used when closing a real estate transaction.
hypothecation
Using property as collateral or security for a debt without giving up possession of the property.
Hypothecation
To pledge property as security for loan obligation without giving up possession of it; opposite of practice in a pawn shop
Implied Agency
Based on the actions of the parties that imply that they have mutually consented to an agency relationship, an implied agency relationship is formed
implied agency (ostensible agency)
Agency which is created through the actions of the parties , rather than through an express agreement. Also called implied agency.
Implied Agreement
A contract under which the agreement of the parties is demonstrated by their acts and conduct
Implied Warrant of Habitability
A theory in landlord/tenant law in which the landlord renting residential property implies that the property is habitable and fit for its intended use
impound(also escrow or reserve acct.)
A trust account established to set aside funds for future needs relating to a parcel of real property. Those needs typically include such things as property tax and hazard insurance.
Improvement
Man-made attachment to the land, such as a building, streets, utilities
Improvements
A term that refers to any additions to the land made by man. It includes building, roads and utilities and landscaping.
income (capitalization) approach
An appraisal approach based on the cash flow the property produces. It addresses the question, “how much will a potential investor pay for the cash flow?”
Income approach
The process of estimated the value of an income producing property through capitalization of the annual net income expected to be produced by the property during its remaining useful life
Income Property
Property held for current income as well as a potential profit upon its sale
Incorporeal Right
A nonpossessory right in real estate; for example, an easement or a right of way
Incorporeal Rights
Intangible or non-possessory rights in the real property, such as easements, licenses, mining claims, etc.
incurable depreciation
Physical deterioration that cannot be repaired in a cost-effective manner.
Indemnification
In a listing, a clause that states that the seller and broker will not sue each other for any incorrect information supplied by one to the other
Independent Contractor
Person hired to perform a certain act, only end result is under control and direction of another. Most real estate licensees are treated as independent contractors
index lease
Rent payments are periodically adjusted based on an economic indicator, such as the consumer price index.
Index Method
The appraisal method of estimating building costs by multiplying the original cost of the property by a percentage factor to adjust for current construction costs
Informed Consent
34-27-81 (9) A consumer's agreement to allow something to happen which is based upon full disclosure of facts needed to choose appropriate brokerage services.
ingress
Entering by traveling across the servient tenement property.
Inheritance Taxes
State imposed taxes on a decedent's real and personal property
injunction
Legal action taken to enforce the restrictive covenants in the uniform declaration of restrictions or to prevent a neighbor from encroaching.
Inquiry Notice
Notice the law presumes a reasonable person would obtain by inquiring into a property
Installment Contract
Also know as land contract, contract for deed, selling under contract. Purchaser receives possession but not legal title until all payments have been made
Installment Contract
A contract for the sale of real estate whereby the purchase price is paid in periodic installments by the purchaser, who is in possession of the property even though title is retained by the seller until a future date, which may be not until final payment. Also, called a contract for deed or articles of agreement for warranty deed.
Installment Sale
A transaction in which the sales price is paid in two or more installments over two or more years. If the sale meets certain requirements, a taxpayer can postpone reporting such income until future years by paying tax each year only on the proceeds received that year
Interest
Charge made by lender for use of money; a charge to “rent” the money
Interest Only Mortgage
A mortgage that only requires the payment of interest for a stated period of time with the principal due at the end of the term
interest rate
Money paid during the term of a loan that is profit to the lender. It represents the return, or yield, on the lender’s investment.
Interim Financing
A short term loan usually made during the construction phase of a building project (in this case often referred to as a construction loan).
intermediate theory
A combination of title theory and lien theory that allows the lender to sell the property in case of default, but does not allow it to keep any equity.
Intermediate Theory
Adopted by a number of states, a theory based on the principles of title theory but requires the mortgagee foreclose to obtain legal title.
Internet Listing Display Policy
A policy from the National Association of REALTORS ® that allows all MLS members to have equal right to display MLS data, and respects the rights of property owners and their listing brokers to market a property as they wish.
Interstate Land Sales Full Disclosure Act
Federal law that regulates the sale of certain real estate in interstate commerce
Intestate
The condition of a person who dies and leaves no will.
Intestate
Person dies without a valid will; his or her property will pass to heirs as provided in the state law of descent
inverse condemnation
The legal process by which a private individual sues to have the property taken by eminent domain.
Inverse Condemnation
An action brought by a property owner seeking just compensation for land taken for public use when the taker of the property does not intend to bring eminent domain proceedings. Property is condemned because its use and value have been diminished due to an adjacent property's public use.
investment property
Property which is generating a cash flow, such as a strip mall or a single or multi-family rental property.
Involuntary Alienation
See alienation
Involuntary Lien
A lien placed on property without the consent of the property owner
Joint and Several Liability
Each of the individual owners is personally responsible for the total damages
Joint Tenancy
A form of concurrent ownership where all owners have equal rights of possession, equal interest, took title at the same time, there is one deed, and each owner has full rights of survivorship.
Joint Tenancy
Co-ownership of real estate; when one of the owners dies, that interest goes to the remaining owners (right of survivorship)
Joint Venture
A “temporary” partnership between individuals and/or companies to accomplish a particular project or business activity.
Jones v. Mayer
Supreme Court decision upholding Civil Right Act of 1866; under no circumstances is anyone exempted from the law prohibiting racial discrimination
judgment
the decision given by a court after a case has been heard
Judgment
The formal decision of a court upon the respective rights and claims of the parties to an action or suit. After a judgment has been entered and recorded with the county recorder, it usually becomes a general lien on the property of the defendant.
Judgment Lien
After judgment entered and recorded with county recorder, becomes a general lien on defendant's real and personal property
Judicial Precedent
In law, the requirements established by prior court decision
Junior Lien
An obligation, such as a second mortgage, that is subordinate in rights or lien priority to an existing lien on the same realty
junior liens
any loans or encumbrances which come after the one which was recorded first aginst the property.
Kickbacks
Prohibited unearned fees when no service has been rendered; i.e., receiving fees for making referrals to lenders, attorneys, surveyors, appraisers, etc
Laches
An equitable doctrine used by courts to bar a legal claim or prevent the assertion of a right because of undue delay or failure to assert the claim or right.
Land
The earth's surface, extending downward to the center of the earth and upward infinitely into space, including things permanently attached by nature, such as trees and water.
land contract
a document wherein the lender (usually the seller) retains title to the property until the debt is paid. It is know in Utah as a uniform real estate contract.
Land Contract
See installment contract
Landfill
An enormous hole to store hazardous materials, lined to prevent leakage of waste materials; includes underground drainage pipes to monitor for leaks and leaching
Latent Defect
Hidden structural defect that would not be discovered by ordinary inspection
Lateral Support
The duty to give support to a neighbor’s property, such as building a retaining wall.
Lead
Metal in body can cause serious damage to brain, kidneys, nervous system; used extensively in paint; must be discussed when selling a house built before 1978
lease
A contract for a less-than-freehold estate or right in real property. Rent is paid for the right of possession in someone else’s property.
Lease
A written or oral contract between a landlord (the lessor) and a tenant (the lessee) that transfers the right to exclusive possession and use of the landlord's real property to the lessee for a specified period of time and for a stated consideration (rent). By state low leases for longer than a certain period of time (generally one year) must be in writing to be enforceable.
Lease Option
A lease under which the tenant has the right to purchase the property either during the lease term or at it end.
Lease Purchase
Purchase of real property after a period of a lease, usually long term; usually done for tax or financing purposes
Lease Purchase
The purchase of real property, the consummation of which is preceded by a lease, usually long term that is typically done for tax or financing purposes.
lease with an option to purchase
A lease contract which allows the lessee there right to purchase the property. Sometimes a portion of the rent will apply to the establishment of the current zoning category.
Lease, Lessor, Lessee
Contract (lease) between landlord (lessor) who gives up possession and tenant (lessee) who pays rent
Leasehold Estate
Tenant's right to occupy real estate during the term of a lease, generally considered to be a personal property interest
Leasehold Estate
Tenant's right to occupy real estate during term of lease, generally held to be a personal property interest
Leasehold Estate
A tenant's right to occupy real estate during the term of a lease, generally consider to be a personal property interest.
Legacy
A disposition of money or personal property by will
Legal Description
Description of a specific parcel of real estate complete enough for an independent surveyor to locate and identify it
Legal Description
A description of a specific parcel of real estate complete enough for an independent surveyor to locate and identify
Legal Life Estates (3)
Curtesy (husband's rights), dower (wife's interest, homestead (protect family home from certain creditors)
legal non-conforming use
The right of an individual to continue a use of land contrary to current zoning regulations because the use existed prior to the establishment of the current zoning category.
legal purpose
the essential element of a contract that protects the public
Legally Competent Parties
People who are recognized by law as being able to contract with others; those of legal age and sound mind
less then freehold
An estate or legal interest in real property that is not an ownership interest.
letter form report
An appraisal report that provides a short, written statement giving the bare essentials of the appraisal.
Leverage
Using as much of other people’s money and as little of your own as possible in order to buy property.
Leverage
The use of borrowed money to finance an investment
Levy
To assess; to seize or collect. To levy a tax is to asses a property and set the rate of taxation. To levy an execution is to officially seize the property of a person in order to satisfy an obligation.
Liability Coverage
Insurance protecting property owner in case of damage to a person or another's property due to owner's negligence
License
(1) A privilege or right granted to a person by a state to operate as a real estate broker or salesperson. (2) The revocable permission for a temporary use of land – a personal right that cannot be sold.
license interest
A limited, revocable interest in property. It grants a privilege, not a right, and ss often an oral agreement granting a short term use of real property. Examples would include an owner allowing someone to hunt, boat, or fish on his property; or attendance at movie theaters and sporting events.
License Laws
State laws enacted to protect the public by ensuring a standard of competence and professionalism in the real estate industry
license renewal
Two years after the month in which a licensee receives a real estate license this action is necessary to continue practicing real estate.
lien
an encumbrance for money against real property.
Lien
Monetary interest in real property; example are mortgage liens, mechanics liens
Lien
Right given by law to certain creditors to have their debts paid out of the property of a defaulting debtor, usually by court sale
lien theory
a legal doctrine or theory of mortgage law, used in most states, which gives lenders an interest in the property and allows them to force the owner to sell the property to pay the debt in the event of default.
Lien Theory
Some states interpret a mortgage as being purely a lien on real property. The mortgagee thus has not right of possession but must foreclose the lien and sell the property if the mortgagor defaults.
lien waiver
When the owner of the property pays the general contractor for the work done, this form should be given by the mechanic who did the work.
Life Cycle Costing
Initial and operating costs of equipment over its expected life must be measured to compare total cost of one type of equipment with that of another
Life Cycle Costing
In property management, comparing one type of equipment with another based on both purchase cost and operating cost over its expected useful lifetime
Life Estate
A form of freehold estate wherein the holder acts as though he owns the property so long as he lives.
Life Estate
An interest in real or personal property that is limited in duration to the lifetime of its owner or some other designated person or persons
Life Estate Pur Autre Vie
A life estate based on the life of a person other than the holder of the life estate.
Life Tenant
A person in possession of a life estate
Limited Consensual Dual Agent
test
Limited Partner
A partner who has no authority to make decisions or act for the partnership. He is financially liable only for the amount of his investment.
Limited Partnership
A partnership with at least one general partner and on limited partner. Beyond that, there can be as many general or limited partners as desired.
liquidated damages
In anticipation of a particular default, clauses are sometimes written into a contract to specify the default and its penalty.
Liquidated Damages
Amount predetermined by parties to contract as total compensation due injured party should the other party breach the contract
Liquidity
The ability to sell an asset and convert it into cash, at a price close to its true value, in a short period of time
lis pendens
It gives constructive notice that an action affecting a particular parcel of property has been filed in court. The property can be sold, leased or otherwise disposed of, but all transactions are subject to the outcome of the court action.
lis pendens
Recorded legal document giving constructive notice that the property is the subject of an action filed in a state or federal court
listing
An agency agreement between a seller and a principal broker. The owner authorizes the broker to place the property on the market and seek a ready, willing, and able buyer and agrees to pay consideration if the broker is successful.
Listing Agreement
A contract between an owner (as Principal) and a real estate broker (as agent) by which the broker is employed as agent to find a buyer for the owner's real estate on the owner's terms, for which service the owner agrees to pay a commission
Listing Broker
The broker in a multiple listing situation from whose office a listing agreement is initiated, as opposed to the cooperating broker, from whose office negotiations leading up to a sale are initiated. The listing broker and the cooperating broker may be the same person
littoral rights
Rights of an owner of property bordering a lake, river, ocean or body of water subject to tides.
Littoral Rights
(1) A land owner's claim to use water in large navigable lakes and ocean's adjacent to his or her property. (2) The ownership rights to land bordering these bodies of water up to the high water mark.
Living Trust
A trust that is created during one's lifetime
Loan Origination Fee
A fee charged to the borrower by the lender for making a mortgage loan. The fee is usually computed as a percentage of the loan amount.
Loan to Value Ratio
Relationship between amount of mortgage loan and value of the real estate being pledged as collateral
loan to value ratio (LTVR)
The amount of debt secured by the property compared to the worth of the property, expressed as a percentage.
Local improvement District (LID)
An assessment (i.e., tax) on a local improvement district for a public improvement project the district has approved
Lot and Block (Recorded Plat)
Method of describing property that identifies a parcel of land by reference to lot and block numbers within a subdivision, as specified on a recorded subdivision plat
Lot, Block, and Plat
A method of land descriptoin used for subdivisions, identifying the location of a particular parcel in the subdivision or tract.
Management Agreement
Document setting up an agency relationship between owner and property manager who is general agent establishing the rights and duties of each party
Management Agreement
A contract between the owner of income property and a management firm or individual property manager that outlines the scope of the manager's authority
management contract
An employment contract between a property manager and an owner of investment property.
Management Plan
A highly detailed plan that lays out the owner's objectives with the property, as well as what the property manager wants to accomplish and how, including all budgetary information
Manufactured Housing
Dwellings that are built off-site and trucked to a building lot where they are installed or assembled
Market
Place where goods are bought and sold, price is established
market data (comparison) approach
an appraisal approach that contrasts the subject property with other properties that have recently sold. Adjustments are made to account for variations between the subject property and the others.
Market Data Approach
(also known as the sales comparison approach) An estimate of value obtained by comparing property being appraised with recently sold comparable properties
Market Value
Most probable price the property will sell for in an arm's-length transaction under normal conditions on the open market
Market Value
Most probable price a property would bring in an arm's length transaction under normal market conditions on the open market; market price is what is actually paid
marketable record title act
The law that allows the simplification and stabilization of title searches by allowing old liens and encumbrances to be removed after 40 years.
Marketable Title
Good or clear title, reasonably free from the risk of litigation over possible defects
Material Fact
34-27-81 (12) A fact that is of significance to a reasonable party which affects the party's decision to enter into a real estate contract.
mechanic's lein
A lien placed by a person who has integrated labor or materials into a property and has not been paid.
Mechanic's Lien
Statutory lien in the property where contractors or materialmen have labor or materials in a given property
mediate
a non-binding process of meeting with a disinterest third party to try to resolve a dispute between the two principals in the transaction or contract.
mediation
A non-bidding process of meeting with a disinterested third party to try to resolve a dispute between the two principals in the transaction or contract.
merger
The joining of two contiguous properties so as to extinguish a lesser right. For instance, this process can terminate an easement on land locked property.
Meridian
A north-south line which intersects a baseline and crates point from which land can be measured under the Government or rectangular survey method.
Metes and Bounds
A method of land description that uses measurements and monuments and utilizes angles.
Metes and Bounds
Legal description that begins at a well marked point and follows the boundaries around the tract, back to the place of beginning
Mile
5,280 linear feet
Mill
One-tenth of one cent used in some states to compute real estate taxes; i.e., 52 mills =
Mineral Rights
Subsurface right of an owner of real property which extend downward to the center of the earth. These rights are real property.
Mixed Unit Developments (MUD)
Often self contained, combine variety of uses from commercial to retail to residential
Month to Month Tenancy
A periodic tenancy under which the tenant rents for one month at a time. In the absence of a rental agreement (oral or written) a tenancy is generally considered to be month to month
Monument
A fixed surveyor’s marker for a metes and bounds description. It can be natural or manmade and marks the corners of the property.
Monuments
Fixed natural or artificial object used to establish real estate boundaries for a metes and bounds description
mortgage
A document used to secure a loan. It is a judicial agreement, meaning if non-payment takes place, the holder of the promissory note can take it to court and the court will order the sheriff to foreclose.
Mortgage
A conditional transfer or pledge of real estate as security for the payment of a debt. Also, the document creating a mortgage lien.
Mortgage Banker
Mortgage loan companies that originate, service and sell loans to investors
Mortgage Lien
Lien on the property of a mortgagor (owner) that provides security for a loan
Mortgage, Mortgagor, Mortgagee
Document creating a pledge of real estate as security for the payment of the debt; borrower is the mortagor; lender is the mortgagee
mortgagee
the lender who receives a mortgage as security for a loan or debt.
Mortgagee
A lender in a mortgage loan transaction
mortgagor
a borrower who hypothecates property as security for a loan throught the use of a promissory note and a mortgage.
Mortgagor
A borrower in a mortgage loan transaction
Multiperil Policies
Insurance policies that offer protection from a range of potential perils, such as those of a fire, hazard, public liability and casualty
Multiperil Policy
Insurance package for apartment, commercial buildings; standard fire, hazard, public liability and casualty, require special coverage for earthquakes and floods
Multiple Listing Clause
A provision in an exclusive listing for the authority and obligations on the part of the listing broker to distribute the listing to other brokers in the multiple listing organization
Multiple-Listing Service (MLS)
Marketing organization in which brokers share information and commission with other brokers; sellers gain because of greater exposure to larger market
mutual agreement
The essential element of a contract achieved through the offer and acceptance process.
nactive License
34-27-35 (g) The commission shall prescribe a license renewal form, which shall accompany renewal fees which shall be filed on or before August 31 of the final year of each license period in order for the respective license to be renewed on a timely basis for the following license period. If any of the foregoing are filed during the period from September 1 through September 30 of the final year of a license period, the one hundred fifty dollar (
narrative report
The longest form of appraisal report which uses a variety of supporting documentation.
National Association of Real Estate Brokers (NAREB)
Dedicated to equal housing opportunity, members are REALISTS
National Flood Insurance Act
Requires flood insurance when financing with federally related loans on properties located in flood-prone areas
Natural Person
An individual. The opposite of a legal person.
negative or passive intentional fraud
When a person covertly hides facts, thus leading the other contracting party to believe certain things which are not true.
Negative or reverse amortization
A loan that requires payments of no principal and only part of the interest. The unpaid interest is added to the principal. This technique is used on some graduated payment mortgages.
Negligent Misrepresentation
Misrepresentation occurring when the broker should have know that the statement about a material fact was false
Negotiable Instrument
A written promise or order to pay a specific sum of money that may be transferred by endorsement or delivery. The transferee then has the original payee's right to payment.
net lease
Tenants pay the landlord rent; and , in addition, also pay their portion of the operating expenses (such as utilities.)
Net Lease
Lease requiring tenant to pay not only rent but also taxes, insurance, utilities and repairs
net listing
An illegal listing wherein the seller identifies an acceptable amount for the property and everything above that figure will be commission to the agent.
Net Listing
Broker entitled to any amount above the seller's stated net; often illegal; potential conflict of interest between broker's interest and seller's interest
net operating income (NOI)
the profit that remains after the operating expenses have been subtracted from the gross effective income.
Net Operating Income (NOI)
The income projected for an income producing property after deducting losses for vacancy and collection and operating expenses
Nonagent
An intermediary between a buyer and seller, or landlord and tenant, who assists one or both parties with a transaction without representing either. Also known as a facilitator, transaction broker, transaction coordinator and contract broker.
Nonconforming Use
Use of property that is permitted to continue after a zoning ordinance prohibiting it has been established for the area
Nondisturbance Clause
A mortgage clause that states the mortgagee agrees not to terminate the tenancies of the lessees in the event the mortgagee forecloses on the mortgagor-lessor's building.
non-disturbance clause
A clause in a mortgage which protects the right of the lessee if the property should be foreclosed by the lender upon the owner’s default.
non-disturbance clause
a clause in a mortgage which protects the rights of the lessee if the property should be foreclosed by the lender upon the owner’s default.
Non-homogeneous
A term that means no two parcels of land are exactly alike.
non-investment property
A property that has no cash flow; for example, you home or a vacant lot.
non-recourse loan
The terms of the loan stipulate that even if the lender receives less than the balance owed as a result of a foreclosure action, the debt is satisfied and the lender may not go after the borrower’s personal assets.
non-resident license
a real estate license from another state acquires this kind of a license to enable him to practice real estate in Utah.
notice of default
the action filed to initiate foreclosure under a trust deed and note
notice of interest
Holders of junior liens against a property would file this. If the senior lien holder foreclosed, they would be notified and could protect their interest.
notice to quit
The first step a lessor mush take against a tenant before filing an unlawful detainer with the courts.
novation
The substitution of a new party or a new obligation in a contract. This process requires the agreement of all original parties in the contract, but once it has been agreed to, the original obligate Is released from liability.
Novation
Substituting a new obligation for an old one or substituting new parties to an existing obligation
Nuncupative will
Oral will, written down by someone and witnessed by two non-beneficiaries. It can only convey personal property.
Nuncupative Will
An oral will declared by the testator in his or her final illness, made before witnesses and afterward reduced to writing
Offer and Acceptance
Two essential components of a valid contract; a “meeting of the minds”
Office of Thrift Supervision (OTS)
A government agency that governs the practices of fiduciary lenders. OTS was created by the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA)
Open End Loan
A mortgage loan that is expandable by increments up a maximum dollar amount, the full loan being secured by the same original mortgage
open end mortgage
a loan which can be increased up to an agreed upon maximum, similar to the way a credit card works. It is often used for construction loans and home equity loans.
open listing
A listing agreement that can be given to as many principal brokers, on the same property, as the seller desires. It is a nonexclusive listing.
Open Listing
Multiple agents; only the selling agent (broker) entitled to commission; seller retains right to sell independently without obligation to pay anyone a commiss
operating budget
A projection of the financial operation of an investment property.
Option
Agreement to keep open for a set period an offer to sell or purchase property; usually a unilateral contract; one party must perform if the other so decides
option contract
a contract wherein a seller agrees to sell property for a set amount at specified terms, if the buyer chooses to exercise that right to purchase during the contracted period of time. In return for the seller taking this property off the marker, the buyer pays valuable, non-refundable consideration.
Option Listing
Broker has the right to purchase the property; broker must be very honest to avoid charges of fraud
Option Listing
Listing with a provision that gives the listing broker the right, but not the obligation, to purchase the listed property within a certain time.
optionee
One who receives an option; a potential buyer who may or may not buy by the end of the term of the option.
optionor
one who gives an option; the potential seller
Origination fee
a fee (profit) charged by the lender to initiate a loan.
ostensible agency
Agency which is created through the actions of the parties , rather than through an express agreement. Also called implied agency.
Ostensible Agency
A form of implied agency relationship created by the actions of the parties involved rather than by written agreement or document
Package Loan
Real estate loan secured by both real and personal property; i.e., new home that includes window treatments and major appliances
package mortgage
a loan that useds both real and personal property as security
par(interest rate)
the interest rate charged on a loan when there are no discount points involved
Parol Evidence
Oral or verbal evidence
parol evidence rule
Prevents the admission into court of oral agreements reached prior or subsequent to the written contract and which contradict the terms in the written contract.
Parol Evidence Rule
A rule of evidence providing that a written agreement is the final expression of the agreement of the parties, not to be varied or contradicted by prior or contemporaneous oral or written negotiations
partially amortized loan
a loan requiring payments of both principal and interest, but when the final payment is made, a balloon payment is required to retire the loan.
partially disclosed principal
The “other party” knows who the agent is, knows there is a principal, but is not told who the principal is.
Participation
A mortgage loan wherein the lender has a partial equity interest in the property or receives a portion of the income from the property
participation loan
a loan where the lender becomes an investor or owner in the project for which the money is being loaned.
Partition
Court procedure dividing up cotenants' interest in real property when the parties do not all voluntarily agree to terminate the co-ownership
Partition Suit
A court process where property owned concurrently can be divided into distinct portions so each co-owner may hold his or her portion in severalty. The court may order the property sold.
Partnership
Under law, a group of individuals who carry on a continuing business for profit as co-owners; regarded as a single entit
party wall
A common wall between two properties, usually involving a zero lot line.
Party Wall
A wall that is located on or at a boundary line between two adjoining parcels of land and is used or is intended to be used by the owners of both properties
Patent or Public Grant Deed
The instrument issued when the property is first conveyed from public or government ownership to a private individual.
Payment Cap
The limit on the amount the monthly payment can be increased on an adjustable rate mortgage when the interest rate is adjusted
Payoff Statement
See Reduction Certificate
Percentage Lease
Common lease for retail property; often a base monthly rent plus a percentage of any gross sales over that amount
perecentage lease
A lease used in commercial leasing. The tenant pays a percent of the net or gross income derived from the use of the property, or the tenant may be paying a flat rate plus a stated percent of the gross or net income.
Periodic Estate (Tenancy)
See Estate from Period to Period
periodic tenancy (month-to-month)
a lease which automatically renews itself. The period for legal notice is established by statue in each state, or can be agreed upon as one of the terms of the lease (15 days in Utah.)
Personal Property
The opposite or real property, it is moveable and destructible. Synonyms are chattel and personalty.
Personal Property
Movable objects, not real property, sometimes called chattels, such as cars, cash, stock
Personal Representative
a term used in Utah for the Administrator or Executor of a will.
Personalty
A synonym for personal property. The opposite of “realty.”
Physical Characteristics of Real Estate (3)
Immobility, Indestrucibility, Uniqueness (nonhomogeneity)
physical deterioration
a type of depreciation that occurs when something wears out and will no longer perform the function or give the service that was originally intended.
physical life
The time span during which an improvement is still standing through it no longer has economic life.
plain language policy
Title insurance covering the borrower, which will cover mechanic’s liens.
Planned Unit Developments (PUD)
Planned combination of diverse land uses, such as housing, recreation and shipping, in one contained development or subdivision.
Plat Map
Map of a town, section or subdivision indicating the location and boundaries of individual properties
pledge
the borrower gives up possession of the property being used as collateral for the loan (the way a pawn shop works.)
plottage
Combining two or more parcels of land with a resulting increase in total value.
Plottage
The increase in value or utility resulting from the consolidation (assemblage) of two or more adjacent lots into one large lot
Point of Beginning
In the metes and Bounds method, this is the corner at which the boundary description starts.
Point of Beginning
The starting point in a metes and bounds legal description; these description must follow the boundaries back to the point of beginning
police power
The right of government, such as in zoning, to exercise control over private property without their consent and without compensation.
positive intentioal fraud
When a person deliberately and overtly deceives or misrepresents facts pertinent to a contract.
power of attorney
What an attorney-in-fact holds which authorizes actions in behalf of another person, including signature authority.
Power of Attorney
A written instrument authorizing a person, the attorney-in-fact, to act as agent for another person to the extent indicated in the instrument
power of sale (bare, naked, legal title)
The authority (conveyed from the trustor to the trustee at the time the trust deed and note are signed) to sell the property in the event of default.
Prepaid Item
On closing statement, items that have been paid by the seller, such as real estate taxes, for which he or she must be reimbursed by the buyer (credit seller, debit buyer)
Prepayment Penalty
A charge imposed on a borrower who pays off the loan principal early. This penalty compensates the lender for interest and other charges that would otherwise be lost
prepayment penalty claue
This clause in a loan penalizes the borrower for paying off the loan earlier then agreed.
prepayment privilege
this clause in a loan allows the borrower to pay the loan off early. The amount of the monthly payments can be increased with all of the extra payment applying to the principal; refinance without penalty; or make balloon payments from time to time.
Preventative Maintenance
Regularly scheduled maintenance to prevent costly breakdowns; i.e., paining and seasonal servicing of appliances and system.
price
The amount of money being asked for a product or property, or the amount it sells for.
Price Fixing
Brokers conspiring to set fixed compensation rates
Primary Money or mortgage market
Those who originate loans of any type, regardless of the priority of the loan, are in this financial market.
Primary Mortgage Market
Mortgage market in which loans are originated; includes commercial banks, savings banks, mutual banks; the market that meets borrowers face to face
Prime Rate
The interest rate that is charged a lender’s most favored clients and is established by the major banks or lenders of America.
principal
the agent works for this person. This person is also sometimes referred to as a client.
Principal
One who hires; in real estate, the broker (principal) hires salespeople; seller (principal) hires the broker/agent; or buyer (principal) hires broker/agent
principal broker
The broker who manages the offices and is responsible for supervising the activities of the licensed and unlicensed staff.
principle of substitution
The appraisal principle which states that no prudent buyer will pay more than he has to get what he wants. This is the basic principle of the market data or comparison approach to appraisal
prior appropriation
the legal doctrine used in Utah for distribution of water based on the “first come, first served” idea.
Prior Appropriation
A concept of water ownership in which the landowner's right to use available water is based on a government administered permit system
Priority
Order of position or time; priority of liens is by chronological order, first recorded having first claim except that taxes always have first place even if not recorded
Private Mortgage Insurance
PMI; insurance provided by private carrier that protects a lender against loss if a foreclosure and deficiency; usually insures top 10 – 20 percent of the loan
Probate
Legal process by which a court determines who will inherit a deceased person's property and what the assets of the estate are
Procuring Cause
In order to be paid, the broker starts an uninterrupted chain of events that results in a sale
procuring cause doctrine
a doctrine governing who gets the selling portion of the commission. It says the agent who set up an uninterrupted chain of events that led to the closing earned the commission.
Progression, Regression
Value of properties near a better property see their values rise; the opposite is regression; a rundown property will negatively affect neighboring properties
Promissory Note
Evidence that a loan was made; states terms of obligation, signed by its maker and is negotiable (transferable to a third party)
promisssory note
the document given as evidence of the loan. It contains all information relative to the money: payment, term, interest rate, etc.
property management
This activity occurs when a licensee manages investment property for the owner.
Property Management
Management of another's property for compensation
property manager
One who represents the interests of the owner of investment property. The property could be for residential or commercial purposes. This person must have a real estate license.
Property Manager
Property manager (agent) is hired by the owner (principal) to maintain owner's investment and ensure that the property produces income
Property Reports
The mandatory federal and state documents compiled by subdivides and developers to provide potential purchasers with facts about a property, prior to their purchase
property tax
The tax levied by government against real estate. These taxes are due in Utah on November 30 and cover the full calendar year. They are also referred to as real property tax.
proprietary lease
Sometimes called an “owner’s” lease. It is held by a person who owns shares in a stock cooperative. They own personal property which entitles them to this type of lease.
Proprietary Lease
A lease given by the corporation that owns a cooperative apartment building to the shareholder for the shareholder's right as a tenant to an individual apartment
proration
the process of computing the buyer’s and seller’s portion of an obligation owed by both, such as property tax.
proration
The process of computing the buyer’s and seller’s portion of an obligation owed by both, such as property tax.
Proration
Expenses, either prepaid or paid in arrears, that are divided or distributed between buyer and seller at closing
Protected Classes
Any group of people designated by HUD in consideration of federal and state law; currently includes ethnic minorities, women, religious groups, handicapped and others
puffing
Sales talk, or exaggerated statement that reflect an obvious overstatement by the agent and are not considered misrepresentation or fraud.
Puffing
Exaggerated comments about a property: “This is the best view of the valley.”
Pur Autre Vie
“For the life of another.” A life estate pur autre vie is a life estate that is measured by the life of a person other than the grantee
Purchase Money Mortgage
the seller is the lender and may be lending all or only part of the purchase price.
Purchase Money Mortgage
Form of seller financing; note and mortgage from buyer are given to seller (lender) as part of the purchase price of the real estate
Pyramiding
The process of acquiring additional property by refinancing properties already owned and investing the loan proceeds in additional properties
Qualifying Broker
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quantity survey method
the appraiser determines the cost of the materials; labor; management fees, and profit. These are used to determine the value of improvements when using the cost approach in appraisal.
Quantity Survey Method
The appraisal method of estimated building cost by calculating the cost of all of the physical components in the improvements, adding the cost to assemble them and then including the indirect costs associated with such construction
Quiet Enjoyment
One of the rights in the “bundle of rights.” The right of an owner or lessee to uninterrupted legal use of the property without interference or disturbances caused by defective title.
Quiet Enjoyment Covenant
Clause in deed guaranteeing that the grantee's title will be good against third parties who might bring court action
Quiet Title
A court action to remove a cloud on the title
Quiet Title Action
A court action to determine the actual ownership of real property. This type of proceeding would be conducted to transfer title to an adverse possessor.
Quit Claim Deed
A deed that conveys all interest in a property which the grantor may or may not have, and gives no warranties as to the condition of title. Its primary use is to remove clouds from the title.
Quitclaim Deed
Offers the least protection of any deed; conveys a real estate interest, if any; often used to correct misspelled names, etc.
Radon
Radioactive odorless, tasteless gas; with long term exposure may cause lung cancer
Range
A vertical column of townships, counted east and west form the meridian in the Government or Rectangular Survey Method.
Ranges
Strip of land six mile wide in rectangular survey system of land description, going north and south and numbered according to its distance from the principal meridian
Rate Cap
The limit on the amount the interest rate can be increased at each adjustment period in an adjustable rate loan. The cap may also set the maximum interest rate that can be charged during the life of the loan.
rate of return
Same as capitalization rate or cap rate.
Ratification
Method of creating an agency relationship in which the principal accepts the conduct of someone who acted without prior authorization as the principals agent
Ready, Willing and Able Buyer
One who is prepared to buy property on the seller's terms and is ready to take positive steps to consummate the transaction
Real Estate
Land; a portion of the earth's surface extending downward to the center of the earth and upward infinitely into space, including all things permanently attached to it, whether naturally or artificially
Real Estate Investment Syndicate
See Syndicate
Real Estate Investment Trust (REIT)
Its purpose is to avoid double taxation. It must have at least 100 members, and return at least 90% of the profits to the investors.
Real Estate Investment Trust (REIT)
Trust ownership of real estate by a group of individuals who purchase certificates of ownership in the trust, which in turn invests the money in real property and distributes the profits back to the investors free of corporate income tax
Real Estate License Law
State law enacted to protect the public from fraud, dishonesty and incompetence in the purchase and sale of real estate
Real Estate Mortgage Investment Conduit (REMIC)
A tax entity that issues multiple classes of investor interests (securities) back by a pool of mortgages.
real estate purchase contract
A state approved from which must be filled out by all licenses which is used when writing an offer to buy real property. When accepted, it becomes the sales agreement.
Real Estate Recovery Fund
A fund established in some states from real estate license revenues to cover claims of aggrieved parties who have suffered monetary damage thought the actions of a real estate license.
real estate recovery fund act
The purpose of this act is to protect the public from dishonest licensees.
Real estate Settlement Procedures Act (RESPA)
Federal law requires certain disclosure to consumers about mortgage loan closings; prohibits kickbacks, certain referral fees, requires good faith estimate in 3 business day
Real Estate Settlement Procedures Act (RESPA)
Federal law that requires certain disclosures to consumers about mortgage loan settlement; prohibits paying or receiving kickbacks and certain kinds of referral fees
real estate trust account
A special bank account where money is deposited when it is being held for other people involved in a real estate transaction.
Real Property
Land and appurtenances, air space to infinity, and the subsurface to the center of the earth.
Real Property
Interests, benefits, and rights associated with real estate ownership
Real Property
Interests, benefits and rights inherent in real estate ownership
Realtor (r)
Member of National Association of REALTORS, adhere to Code of Ethics
reappraisal lease
A lease wherein the rent is determined by a periodic reevaluation of the property’s value.
reciprocity
When states agree to recognize each others; education requirements for real estate licensing.
Reconciliation
The final step in the appraisal process, in which the appraiser combines the estimates of value received from the sales comparison cost, and income approaches to arrive at a final estimate of market value the subject property.
reconciliation (see Correlation)
An appraiser should use as many of the approaches to appraising as possible. This technique synthesizes the results into a single estimate of value. It is sometimes called correlation.
Reconveyance Deed
A deed used by a trustee under a deed of trust to return title to the trustor
Reconveyance of Deed
The document a lender uses to return all interest in the property after the debt has been satisfied under a trust deed and note. This is in accordance with the defeasance clause.
Recording
A form of delivery of a deed, also known as constructive delivery or notice.
Recording
Act of entering documents affecting ownership or interests in real estate in the recorder's office established in each county
Rectangular Survey
A method of land description that uses base and meridian lines, townships and sections. It is also referred to as the government Survey Method.
Rectangular Survey System
System for surveying and describing land by reference to principal meridians and base lines; also called government survey system
Redemption
The right of a defaulted property owner to recover his or her property by curing the default
Redemption Period
Time frame in which property owners in some states have the right to redeem their real estate by paying the sales price, interest and costs
redlining
The discriminatory practice of refusing to make loans in certain neighborhoods.
Redlining
Illegal practice of refusing to make mortgage loans or issue insurance policies in specific areas for reasons other than economic qualifications of applicants
Reduction Certificate (Payoff Statement)
The document signed by a lender indicating the amount required to pay a loan balance in full and satisfy the debt; used in the settlement process to protect both the seller's and the buyer's interest.
refinance
Obtaining a new loan, often at a lower interest rate, out of which the old loan is paid off.
Regression
An appraisal principle that states that, between dissimilar properties, the value of the better quality property is affected adversely by the presence of the lower quality property
Regulation Z
Implements Truth in Lending Act requiring credit institutions to inform borrowers of true cost of obtaining a load (APR); certain advertising “triggers” disclosure in ads
Release clause / partial release clause
When a blanket loan has been given, this clause will allow part of the property to be removed as security for the loan when certain requirements have been met, sometimes called a partial release clause.
Release Deed
A document, also know as a deed of reconveyance, that transfers all rights given a trustee under a deed of trust loan back to the grantor after the loan has been fully repaid.
release of lien
If a mechanic had previously placed a claim against the property where the work was done, when payment is made, this form must be filled with in ten days.
Remainder Interest
The remnant of an estate that has been conveyed to take effect and be enjoyed after the termination of a prior estate, such as when an owner conveys a life estate to one party and the remainder to another.
Remainderman
The person who will receive the life estate when the current holder of the life estate dies. There can be more than one of these.
Renewal Option
A clause in a lease that grants the lessee the privilege of renewing the lease.
Rent
Fixed, periodic payment make by tenant to owner for possession and use, usually by prior agreement of the parties
Replacement Cost
Current cost to reconstruct a building to serve the same function but not an exact duplicate of the original
Reproduction Cost