Principles Book Glossary

Front 1

Abandonment

Back 1

Giving up possession or ownership of property by not using it, generally indicated through some affirmative act, like removing one's belongings from an apartment.

Front 2

Abstract of judgment

Back 2

Document that summarizes is the result of a legal action, which can be filed in any country where the judgement debtor owns a property.

Front 3

Abstract of title

Back 3

Summation of all recorded transfers, conveyances, legal proceedings, and any other facts relied on as evidence of title to show ownership continuity and signify any possible loss to title.

Front 4

Acceleration clause

Back 4

Provision in a real estate financing instrument allowing the lender to declare the full debt due immediately if the borrower breaches any of the provisions of the loan agreement. AKA "call provision".

Front 5

Accession

Back 5

The process of manufactured or natural improvement or addition to property.

Front 6

Acceptance

Back 6

A) agree to the terms of an offer to enter into a binding contract.

B) Receive a delivery of a deed from the grantor.

Front 7

Accretion

Back 7

A steady addition to dry land through the forces of nature, as when waterborne sediments get deposited on waterfront property.

Front 8

Acknowledgement

Back 8

Formal declaration made before an authorized person (generally a notary public) by an individual who has executed a written and instrument that it has been done voluntarily.

Front 9

Acquisition cost

Back 9

Amount of money required to acquire title to a property. It includes the purchase price as well as; closing costs, legal fees, escrow, service charges, title insurance, recording fees and other such expenses.

Front 10

Acre

Back 10

Area of land measuring;

160 square rods,

4,840 square yards,

43,560 square feet,

a tract of about 208.71 feet square.

Front 11

Actual age

Back 11

Number of years since a building was completed. AKA - historical or chronological age.

Front 12

Actual authority

Back 12

Authority actually given to an agent by the principal (expressly or by implication).

Front 13

Actual eviction

Back 13

Forcing someone physically off real property or preventing someone from re-entering the property or using legal action to make someone leave the premises.

Front 14

ADA

Back 14

Americans with Disabilities Act

Front 15

Addendum

Back 15

A page containing additional provisions attached to a purchase agreement or any other contract.

Front 16

Adjacent

Back 16

Next to, nearby, bordering, or neighboring (not necessarily in real contact).

Front 17

Adjustable-rate mortgage ARM

Back 17

Loan in which the interest rate increases or decreases to reflect changes in cost of money.

Front 18

Adjusted basis

Back 18

Purchase price of property plus cost of specified improvements, minus any depreciation deductions taken.

Front 19

Adjustment period

Back 19

The time period between when the interest rate or monthly payment for an adjustable-rate mortgage is changed.

Front 20

Administrative agency

Back 20

Government agency administering a complicated area of law and policy, implementing and enforcing detailed regulations that have the force of law. For example, the Bureau of Real Estate is the administrative agency charged with regulating the real estate business.

Front 21

Administrator

Back 21

Individual appointed by the probate court to manage and distribute the estate of a deceased person if no executor is named in the will or there is no will.

Front 22

Ad valorem

Back 22

Latin phrase meaning "according to value" referring to taxes assessed on the value of property.

Front 23

Adverse possession

Back 23

A way of acquiring title to real property belonging to someone else by occupying it without permission, and fulfilling other statutory requirements.

Front 24

Affidavit

Back 24

Acknowledged sworn statement in writing made before a notary public (or any other official authorized to administer an oath).

Front 25

Affiliated licensee

Back 25

A real estate salesperson or associate broker employed by a broker.

Front 26

Affirm

Back 26

A. To confirm or approve.

B. To make a sincere declaration that is not under oath.

Front 27

After-acquired title

Back 27

If the title is acquired by a grantor only after a conveyance to a grantee, the deed to the grantee becomes effective at the time the grantor actually receives title.

Front 28

Agency

Back 28

The association between a principal and the agent of the principal that is formed by way of a contract, that may be oral or written, express or implied, by which the agent is employed by the principal to do certain acts dealing with a third party.

Front 29

Agency apparent / ostensible

Back 29

When the impression given to a third party is that someone who hasn't been approved to represent another is that person's agent, or are given the idea that an agent has been approved to perform acts which are actually beyond the capacity of his authority. AKA - ostensible agency.

Front 30

Agency dual

Back 30

An agency relationship where the agent represents two principles in their dealings with each other.

Front 31

Agency exclusive

Back 31

Listing agreement that employs a broker as sole agent for a seller of real property for which the broker is entitled to compensation if the property is sold via any other broker, but not if a sale is negotiated by the owner without the services of an agent.

Front 32

Agency ostensible / apparent

Back 32

When the impression given to a third party is that someone who hasn't been approved to represent another is that person's agent, or are given the idea that an agent has been approved to perform acts which are actually beyond the capacity of his authority. AKA agency apparent.

Front 33

Agency confirmation statement

Back 33

Written statement indicating the representation of a real estate agent of a party. It should be signed by both the buyer and the seller before they enter into a residential purchase agreement.

Front 34

Agency disclosure form

Back 34

Form explaining the duties of a seller's agent, a buyer's agent, and a dual agent, required to be signed by both the buyer and the seller before they enter into a residential purchase agreement.

Front 35

Agency law

Back 35

Body of legal rules governing the relationship between agent and principal by imposing fiduciary duties on the agent as well as liability for the actions of the agent on the principle.

Front 36

Agent

Back 36

Individual authorized to represent another (known as the principal) in dealings with third parties.

Front 37

Agents in production

Back 37

Elements necessary to generate income and establish a value in real estate: labor, coordination, capital, and land.

Front 38

Age of majority

Back 38

Age of a person when he / she becomes legally competent (usually the age is 18 years).

Front 39

Agreement

Back 39

Contract between two or more persons to do or not do a certain thing, for consideration.

Front 40

Air rights

Back 40

The right to unobstructed use and possession of the air space over a parcel of land. This right may be transferred separately from the land.

Front 41

Alienation

Back 41

The transfer of ownership or an interest in property from one person to another, in any way

Front 42

Alienation involuntary

Back 42

Transfer of an interest in property against the will of the owner, or without any action by the owner (ensuing through operation of law, natural processes, or adverse possession).

Front 43

Alienation voluntary

Back 43

When an interest in property is voluntarily transferred by the owner to someone else (generally by deed or will).

Front 44

Alienation clause

Back 44

A security instrument provision giving the lender the right to declare the full loan balance due immediately if the borrower sells or else transfers the security property. AKA: due-on-sale clause

Front 45

All-inclusive deed of trust

Back 45

Mortgage, wrap around

Front 46

Alluvion

Back 46

Increase of soil along the banks of a body of water by natural forces.

Front 47

Alquist-Priolo Act

Back 47

A law in California that requires applications for development of property in an earthquake fault zone to include a geologic report.

Front 48

ALTA

Back 48

American Land Title Association is a nationwide organization of title insurance companies.

AKA: extended coverage title policy

Front 49

Amendment

Back 49

A supplementary agreement that changes one or more terms of a contract. It needs to be signed by all the parties to the original contract.

AKA: contract modification

Front 50

Amenities

Back 50

The features of a property that adds to the pleasure and/or convenience of owning it, such as a swimming pool, a beautiful view, a gym and so on.

Front 51

Americans with Disabilities Act

Back 51

Federal law mandating that public facilities must be accessible to disabled people.

Front 52

Amortization negative

Back 52

The adding of interest - not - paid to the principal balance of a loan.

Front 53

Amortize

Back 53

To pay off a debt gradually, with installments that include both principal as well as interest.

Front 54

Annexation

Back 54

When personal property is attached to real property, so that the personal property becomes part of the real property by law.

Front 55

Annexation actual

Back 55

Physically attaching personal property to real property, so that it can be made part of the real property.

Front 56

Annexation constructive

Back 56

Associating personal property with real property so that it is treated as a fixture by law, although not attached physically. Example: Jewelry

Front 57

Annual percentage rate APR

Back 57

All the charges paid by the borrower for the loan (including the interest, origination fee, discount points and mortgage insurance costs) expressed as an annual percentage of the amount borrowed.

Front 58

Annuity

Back 58

Sum of money received in a series of payments at regular intervals (usually annually).

Front 59

Anticipation, principal of

Back 59

In appraisal, when value is created by the expectation of benefits to be obtained in the future.

Front 60

Anticipatory repudiation

Back 60

Action taken by one party to a contract to inform the other party, before the time set for performance, that he does not intend to fulfill the contract.

Front 61

Anti-deficiency rules

Back 61

Laws prohibiting a secured lender from suing the borrower for a deficiency judgment in certain circumstances.

Front 62

Apportionment

Back 62

A division of property or liability to proportionate parts (may not be equal parts).

Front 63

Appraisal

Back 63

An estimate or opinion of the value of a piece of property as of a specific date.

Front 64

Appraiser

Back 64

Person who evaluate the value of the property, especially a trained and experienced person who has expertise in this field.

Front 65

Appraiser fee

Back 65

A self-employed appraiser hired to appraise real estate for a fee, as opposed to an appraiser who works for a lender, a government agency, or some other entity as a salaried employee.

Front 66

Appreciation

Back 66

An increase in value; the opposite of depreciation.

Front 67

Appropriation

Back 67

Keeping property or reducing it to a personal possession, excluding others from it.

Front 68

Appropriative rights system

Back 68

A water rights allocation system, in which a person wanting to make use of water from a certain body of water (like a river or lake) is supposed to have a permit. A permit that is issued earlier has precedence over a newer permit.

AkA: the prior appropriation system

Front 69

Appropriated rights

Back 69

A person's right to a water appropriation permit.

Front 70

Appurtenances

Back 70

Rights that go along with ownership of a particular piece of property, such as air rights or mineral rights. These are generally transferred with the property, but in some cases they may be sold separately.

Front 71

Appurtenances intangible

Back 71

Rights concerning ownership of a piece of property that does not comprise physical objects or substances. An access easement is a good example of this.

Front 72

APR

Back 72

Annual percentage rate

Front 73

Area

Back 73

A) Locale or region.

B) The size of a surface, normally in square units of measure, as in square feet or square miles.

Front 74

Arm's length transaction

Back 74

Transaction where there is no family relationship, friendship, or pre-existing business relationship between the two parties.

Front 75

Arranger of credit

Back 75

Real estate licensee or attorney who arranges a transaction for credit to be extended by seller of residential property.

Front 76

Artificial person

Back 76

A legal unit, such as a corporation, treated as an individual having legal rights and responsibilities by the law; as distinguished from a normal being, a human.

AKA: a legal person.

Front 77

Assemblage

Back 77

Merging two or more adjoining properties into one expanse.

Front 78

Assessment

Back 78

Property valuation for taxation purposes.

Front 79

Assessor

Back 79

Officer responsible for determining the value of the property for taxation.

Front 80

Asset

Back 80

A thing of value owned by a person.

Front 81

Assets capital

Back 81

Assets that a taxpayer holes, other than

A) property held for sale to customers.

B) depreciable property or real property used in the taxpayer's trade or business. Real property is a capital asset if it is used for personal use or for profit

Front 82

Assets liquid

Back 82

Any assets or cash that can be turned into cash (liquidated) such as stock in a company.

Front 83

Assets section 1231

Back 83

Properties used in a trade or business or held for the production of income. (Referred to as Section 1231 in a federal income tax code.)

Front 84

Assign

Back 84

Transfer of rights (particularly contract rights) or interests to another.

Front 85

Assignee

Back 85

One to whom rights or interests are assigned.

Front 86

Assignment

Back 86

A) Transferring contract rights from one person to another.

B) In case of a lease, the transfer of the entire leasehold estate by the original tenant to another.

Front 87

Assignment of contract and deed

Back 87

The instrument through which a new vendor is substituted for the original vendor in a land contract.

Front 88

Assignor

Back 88

Someone who assigns his rights or interest to another.

Front 89

Assumption

Back 89

Action by a buyer to take on personal liability for paying off the seller's existing mortgage or deed of trust.

Front 90

Assumption fee

Back 90

A fee paid to the lender, generally by the buyer, when a mortgage or deed of trust is assumed.

Front 91

Attachment

Back 91

Court-ordered seizure of property belonging to a defendant in a lawsuit, so it will be available to satisfy a judgement if the plaintiff wins. An attachment creates a lien in case it is real property.

Front 92

Attestation

Back 92

The act of witnessing the execution of an instrument, such as a deed or will.

Front 93

Attorney general

Back 93

The principal legal advisor for state government, including legal advisor to the Department of Real Estate on matters regarding the real estate law.

Front 94

Attorney in fact

Back 94

Someone who is authorized to represent another by a power of attorney, not necessarily a lawyer.

Front 95

Attractive nuisance

Back 95

A dangerous feature appealing to children, thus posing a potential source of liability for the property owner.

Front 96

Auditing

Back 96

Verifying and examining records, particularly the financial accounts of a business or other organization.

Front 97

Avulsion

Back 97

A) A sudden (not slow) tearing away of land by the action of water.

B) A sudden shift in a water course.

Front 98

Bad debt / Vacancy factor

Back 98

A percentage deducted from a property's potential gross income to find the effective gross income, estimating the income that will probably be lost due to vacancies and non non-payment of rents by the tenants.

Front 99

Balance, principal of

Back 99

An appraisal principle which holds that the maximum value of real estate is achieved when the agents in production (labor, capital, land, and co-ordination) are in proper balance.

Front 100

Balloon payment

Back 100

A payment on a loan (usually the final payment) that is substantially larger than the regular installment payments.

Front 101

Bankruptcy

Back 101

A) A condition resulting when the liabilities of an individual, corporation, or firm exceeds assets. B) A court declaration that an individual, corporation, or firm is insolvent, resulting in the assets and debts being administered under bankruptcy laws.

Front 102

Barter

Back 102

To exchange or trade one commodity or piece of property for another without the use of money.

Front 103

Bass line

Back 103

Main east-west line in the government survey system from which township lines are established. Each principal meridian has one base line associated with it.

Front 104

Basis

Back 104

Figure used in calculating the gain on the sale of real estate for federal income tax purposes.

AKA: cost basis

Front 105

Basis adjusted

Back 105

The initial basis of the owner in the property, plus capital expenditures for improvements and minus any allowable depreciation deductions.

Front 106

Basis initial

Back 106

The amount of the owner's original investment in the property: the cost of acquiring the property including closing costs and other expenses along with the purchase price.

Front 107

Bearer

Back 107

A person in possession of a negotiable instrument.

Front 108

Beneficiary

Back 108

A) One for whom a trust is created and on whose behalf the trustee administers the trust.

B) The lender in a deed of trust transaction.

C) Someone who is entitled to receive real or personal property under a will (a legatee or devisee).

Front 109

Beneficiary's statement

Back 109

Document in which a lender confirms the status of the loan (the interest rate, principal balance, etc.) and describes any claims that could affect an interested party.

Front 110

Bequeath

Back 110

To transfer personal property to someone by will.

Front 111

Bequest

Back 111

Personal property (including money) that is transferred by will.

Front 112

Betterment

Back 112

An improvement to real property that is more extensive than ordinary repair or replacement which increases the value of the property.

Front 113

Bilateral contract

Back 113

Contract under which each party promises performance.

Front 114

Bill of sale

Back 114

A document used to transfer title to personal property from a seller to a buyer.

Front 115

Blanket mortgage

Back 115

Mortgage that include more than one property parcel as security.

Front 116

Blind ad

Back 116

An advertisement placed by a real estate licensee that does not indicate the ad is from a licensee.

Front 117

Block

Back 117

A group of lots surrounded by streets or unimproved land in a subdivision.

Front 118

Blockbusting

Back 118

Attempting to lure owners to list or sell their homes by predicting that the members of another race or ethnic group, or people suffering from some disability, will be moving into the neighborhood. AKA: panic selling. It is a violation of the antidiscrimination laws.

Front 119

Blue sky laws

Back 119

Laws regulating the promotion and sale of securities in order to protect the public from fraud.

Front 120

Board of Directors

Back 120

The body responsible for governing a corporation on behalf of the shareholders.

Front 121

Bonafide

Back 121

In good faith; genuine, not fraudulent.

Front 122

Bond

Back 122

A) A written obligation, normally interest-bearing, to pay a certain sum at a specified time.

B) Money put up as a surety, protecting against failure to perform, negligent performance, or fraud.

Front 123

Bonus

Back 123

An additional payment, over and above the due payment.

Front 124

Boot

Back 124

Something given or received in a tax-free exchange, which is not like-kind property. For instance, in an exchange of real property where one party gives another one cash in addition to real property, the cash is the boot.

Front 125

Boundary

Back 125

The perimeter or border of a parcel of land; the dividing line between two pieces of property.

Front 126

Branch manager

Back 126

An associate broker appointed by a firm's primary broker to manage the operations of a branch office.

Front 127

Breach

Back 127

Violation of an obligation, duty, or law.

Front 128

Breach of contract

Back 128

Failure to perform a contractual obligation.

Front 129

Broker associate

Back 129

Someone who is qualified as a broker and is affiliated with another broker.

Front 130

Broker cooperating

Back 130

A broker belonging to a multiple listing service who helps sell a property listed with another member of the listing services.

Front 131

Broker designated

Back 131

A corporate officer or a general partner who is authorized to act as the broker for a licensed corporation or for a partnership.

Front 132

Broker, fee

Back 132

A real estate broker who allows the use of his license to another person to carry on a brokerage, in violation of the license law.

Front 133

Broker listing

Back 133

A broker having a listing agreement with a property seller.

Front 134

Broker, real estate

Back 134

Someone who is licensed to represent members of the public in real estate transactions in exchange for compensation.

Front 135

Brokerage

Back 135

Business of a real estate broker.

Front 136

Brokerage fee

Back 136

Service charges of a real estate broker that is paid as a commission or as other compensation.

Front 137

Buffer

Back 137

Undeveloped area that separates two areas zoned for incompatible uses.

Front 138

Building codes

Back 138

Regulations that set minimum standards for construction methods and materials.

Front 139

Building restrictions

Back 139

These are rules that apply to building size, type, or placement. They may be public restrictions, such as in a zoning ordinance or private restrictions, like CC&R's.

Front 140

Bulk transfer

Back 140

The sale of all or a substantial part of the merchandise, equipment, or any other inventory of a business that is not in the ordinary course of business.

Front 141

Bulk transfer law

Back 141

A law that requires a seller who negotiates a bulk transfer (generally connected with the sale of the business itself) to furnish the buyer with a list of creditors and a schedule of the property being sold, and to notify creditors of the impeding transfer.

Front 142

Bump clause

Back 142

A provision in the purchase agreement allowing a seller to keep the property on the market while waiting for a contingency clause to be fulfilled. In the meantime, if the seller receives another good offer, he can ask the buyer either to waive the contingency clause or terminate the contract.

Front 143

Bundle of rights

Back 143

The rights inherent in ownership of property, including the right to use, lease, enjoy, encumber, will, sell, or do nothing with the property.

Front 144

Business opportunity

Back 144

A business that is for sale.

Front 145

Buy down

Back 145

Discount points paid to a lender to reduce (buy down) the interest rates charged to a borrower, especially when the seller pays discount points to help the buyer (borrower) qualify for financing.

Front 146

Buyer representation agreement

Back 146

A contract in which a prospective buyer hires a real estate broker to act as his agent for locating desirable property and negotiating its purchase, or in negotiating the purchase of a property that the buyer has already found.

AkA: Buyer Agency Agreement.

Front 147

California Coastal Act CCA

Back 147

Law that is designed to protect and control development along the California coastline.

Front 148

California Fair Housing Law CFHL

Back 148

Law that guarantees equal treatment for everyone in all business establishments.

AKA: The Rumford Act

Front 149

CA highest and lowest points

Back 149

Mt. Whitney at 14,494 ft and Death Valley at 282 ft below sea level (also lowest in USA). These are 85 miles apart.

Front 150

CA Veterans Farm and Home Purchase Program

Back 150

State sponsored residential finance program utilized to provide cheap home and farm loans to veterans. AKA: Cal-Vet Program

Front 151

Call

Back 151

A specification that describes a segment of the boundaryin a metes and bounds description; for example, "South 20* west 100 ft" is a call.

Front 152

Cancellation Clause

Back 152

Terminating a contract without undoing acts that have already been performed under the contract.

Front 153

Cap

Back 153

A limit on how much a lender may raise an adjustable rate mortgages interest rate or monthly payment per year, or over the life of the loan.

Front 154

Capacity

Back 154

The legal ability or competency to perform any act, such as enter a binding contract (contractual capacity) or execute a valid will (testamentary capacity).

Front 155

Capital

Back 155

Money or other forms of wealth available for use in producing more money.

Front 156

Capital Assets

Back 156

Assets held by a taxpayer other than property held for sale to customers in the normal course of the taxpayer's business. It also comprises depreciable property of real property used in the taxpayer's trade or business. Therefore, real property is a capital asset if owned for personal use or for profit.