N.B. This glossary is provided with the understanding that the author is not providing any legal, or other professional services. If legal or real estate advice is required, the services of a competent professional person should be sought.
1. A reduction or decrease. 2. The removal of a nuisance.
the notes made by a title examiner based on his examination of the land records. These notes are a concise summary of the transactions affecting the property. The title agency produces a binder from the information in the abstract.
The total number of vacant square feet of office space divided by the square footage leased per year historically. Used to analyze demand of office space in a given market area.
Abstract of Title
A full summary of all consecutive grants, conveyances, wills, records and judicial proceedings affecting title to a specific parcel of real estate, together with a statement of all recorded liens and encumbrances affecting the property and their present status. The abstract of title does not guarantee or ensure the validity of the title of the property. Rather, it is a condensed history that merely discloses those items about the property that are of public record; thus, it does not reveal such things as encroachments and forgeries. (See abstracter, title insurance policy, certificate of title)
Abstract of Judgment
A full summary by the court of a judgment. It becomes a general lien on all of a debtor’s property in the county where it is recorded. (See general lien, judgment)
The person preparing the abstract of title. The abstracter searches the title as recorded or registered with the county recorder, county registrar, circuit court and/or other official sources. He or she then summarizes the various instruments affecting the property and arranges them in the chronological order of recording, starting with the original grant of title.
the buildup of land from natural forces such as wind or water.
A provision in a mortgage, trust deed, promissory note or contract for deed (agreement of sale) that, upon the occurrence of a specified event, gives the lender (payee, obligee or mortgagee) the right to call all sums due and payable in advance of the fixed payment date. (See alienation clause)
An acceptance is a promise by the offeree to be bound by the exact terms proposed by the offeror. The acceptance must be communicated to the offeror. (See offeree, offeror)
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.
Accord and Satisfaction
The settlement of an obligation. An accord is an agreement by a creditor to accept less than bargained for from a debtor. The creditor’s acceptance of the accord constitutes satisfaction of the debt.
The agent must be able to report the status of all funds received from or on behalf of the principal. Most state real estate license laws require a broker to give accurate copies of all documents to all parties affected by them and to keep copies on file for a specified period of time. Most license laws also require the broker to deposit immediately, or within 24 to 48 hours, all funds entrusted to the broker (such as earnest money deposits) in a special trust or escrow account. Commingling such monies with the broker’s personal or general business funds is strictly illegal.
The increase or addition of land by the deposit of sand or soil washed up naturally from a river, lake or sea. The gradual and imperceptible addition of land by alluvial deposits of soil through natural causes, such as shoreline movement caused by streams or rivers. This added land upon a bank or stream, navigable or not, becomes the property of the riparian or littoral owner, and it also becomes subject to any existing mortgages.
1. In accounting, a bookkeeping account that shows the total amount of depreciation taken on an asset since it was acquired; also called accumulated depreciation. (See depreciation) 2. For appraisal purposes, the difference between the cost to reproduce the property (as of the appraisal date) and the property’s current value as judged by its “competitive condition.” In this context, accrued depreciation is often called diminished utility.
In a closing statement, items of expense that are incurred but not yet payable, such as interest on a mortgage loan or taxes on real property.
The first step in a disciplinary action against a licensee.
A formal declaration made before a duly authorized officer, usually a notary public, by a person who has signed a document; also, the document itself. The confirmation by a party executing a legal document that this is his signature and voluntary act.
The amount of money or other valuable consideration expended to obtain title to a property. It includes the purchase cost, plus such items as appraisal fees, closing costs, finance charges, mortgage loan origination fees and title insurance. (See title)
A measure of land equal to 43.560 square feet, 4,840 square yards, 4,047 square meters, 160 square rods or 0.4047 hectares.
Real, substantial and just damages, or the amount awarded to a complainant in compensation for his actual and real loss or injury.
The legal process that results in the tenant’s being physically removed from the leased premises. (See eviction, constructive eviction, lease)
Express information or fact; that which is known; direct knowledge.
Additional material attached to and made part of a document. If there is space insufficient to write all the details of a transaction on the sales contract form, the parties will attach an addendum or supplement to the document. The sales contract should incorporate the addendum by referring to it as part of the agreement. The addendum should refer to the sales contract and be dated and signed or initialed by all the parties.
Interest charged on a principal amount for specified term, regardless of any repayments of principal. The borrower is paying interest on the full principal sum for the entire loan period, even though the principal is being reduced each month.
Disposal by a testator in his or her lifetime of a specific property bequeathed in his or her will so the bequest is revoked. (See testator)
Adjustable Rate Mortgage
A broad term for a loan (mortgage or deed of trust) with rates and terms that can change. The adjustable rate loan has become commonplace, with allowable ranges as to time intervals, percentage of increase or decrease and total increases or decreases likely to change as market conditions change. (See caps, index rate, initial rate, rate cap, rate factor)
The original cost basis of a property reduced by certain deductions and increased by certain improvement costs. The original basis determined at the time of acquisition is reduced by the amount of allowable depreciation or depletion allowances taken by the taxpayer, and by the amount of any uncompensated property losses suffered by the taxpayer. It then increases by the cost of capital improvements plus certain carrying costs and assessments. The amount of gain or loss recognized by the taxpayer upon sale of the property is determined by subtracting the adjusted basis on the date of sale from the adjusted sales price. (See basis, capital gain)
Decrease or increase in the sales price of a comparable property to account for a feature that the property has or does not have in comparison with the subject property.
In an adjustable rate mortgage (ARM), the “adjustment period,” is the period of time (i.e., one month, three months, six months, one year, etc.) between changes in one interest rate charged and the next interest rate to be charged. (See adjustable rate mortgage (ARM))
Administered Price System
Federal National Mortgage Association securities purchasing procedure where required yields are adjusted daily to reflect financial market factors. (See Federal National Mortgage Association)
A government agency that makes rules and regulations to carry out the law. A state’s real estate commission develops regulations to complement license law.
A legal document signed by the EPA directing an individual, business, or other entity to take corrective action or refrain from an activity. The order describes the violations and action to be taken and can be enforced in court.
a person appointed by the court to settle the estate of a person who dies without a will. Sometimes referred to as the personal representative. The feminine form is administratrix.
A female person appointed by the court to settle the estate of a person who has died intestate (leaving no will). Sometimes referred to as the personal representative. (See executrix)
A fee paid before any services are rendered. Specifically, it is a practice of some brokers to obtain a nonrefundable fee from the seller in advance to cover the advertising of properties or businesses for sale while giving no guarantee that a buyer will be found, which is often held to be improper conduct. Brokers must keep accurate records of expenditures.
Advance Fee Addendum
An agreement specifying services for which an agent or broker will be compensated including a provision for payment of an advance fee. (See advance fee)
The Latin word for “according to value.”
Ad valorem Tax
A tax levied according to value, generally used to refer to real estate tax. Also called the general tax.
A denial or revocation of credit, a change in the terms of an existing credit arrangement, or a refusal to grant credit either on the amount requested or on the terms requested.
The acquiring of title to real property owned by someone else by means of open, notorious, hostile and continuous possession for a statutory period of time. A claim made against land titled in another person based on open, notorious and hostile possession and use of the land to the exclusion of the titled owner.
the periodic principal pay down of a loan. The gradual repayment of a debt by means of systematic payments of principal and/or interest over a set period, so that at the end of the period there is a zero balance.
An addition to property by the act of joining or uniting one thing to another, as in attaching personal property to real property, thereby creating a fixture. For example, a sink becomes a fixture when it is annexed to the plumbing outlet.
Annual Debt Service
Monthly loan payments (principal and interest, if any) times 12 months.
Annual Operating Expenses
The actual costs it takes to run the property, such as property tax, insurance, maintenance, repairs, management fees, utilities, and supplies.
Annual percentage rate
An expression of the relationship of the total finance charge to the total amount to be financed as required under the federal Truth-in-Lending Act. Tables available from any Federal Reserve bank may be used to compute the rate, which must be calculated to the nearest one-eighth of 1 percent. Use of the APR permits a standard expression of credit costs, which facilitates easy comparison of lenders.
A sum of money recieved by an annuitant in a series of fixed periodic payments.
The appraisal principle which holds that value can increase or decrease based on the expectation of some future benefit or detriment produced by the property. (See appraisal)
A clause in a mortgage or deed of trust specifying that the senior lienholder will retain lien priority in the event of a merger.
State and federal laws designed to maintain and preserve business competition. The Sherman Antitrust Act (1890) is the principal federal statute covering competition, which is defined by most courts as “that economic condition in which prices are determined by market forces without interference from private concerns and there is reasonable freedom of entry into most businesses.”
A building having separate units for permanent tenants who rent or lease them. The owner of the building provides common facilities, such as lights, heat, elevator and garbage disposal services, and maintains common entrances and hallways.
An estimate of the monetary value of a property on the open market; an estimate of a property’s type and condition, its utility for a given purpose or its highest and best use.
An independent person trained to provide an unbiased estimate of value, such as a professional service performed for a fee.
An increase in the worth or value of a property due to economic or related causes, which may prove to be either temporary or permanent; opposite of depreciation. (See depreciation)
Appropriation is the way a taxing body authorizes the expenditure of funds and provides for the sources of funding. Appropriation generally involves the adoption of an ordinance or the passage of a law that states the specific terms of the proposed taxation.
Appropriative Water rights
A water right favored in some states where an owner has the exclusive rights to take all the water for specific beneficial uses.
an attorney authorized by a title insurance company to handle closings and render title opinions.
anything attached to the land or used with it passing to the new owner.
Belonging to; adjunctive; appended or annexed to. For example, the garage is appurtenant to the house, and the common interest in the common elements of a condominium is appurtenant to each apartment. Appurtenant items run with the land when the property is transferred.
An easement that is annexed to the ownership of one parcel and allows the owner the use of the neighbor’s land.
An underground water-bearing layer of rock, including gravel and sand, that will yield water in usable quantity. Aquifers are sources of water for wells and springs.
Borrowing at one interest rate and investing at a higher rate.
A non-judicial method of resolving disputes by selecting a neutral party to make a final determination. This method was either previously agreed to by the disputing parties or stipulated by law.
Arranger of Credit
As defined under the federal Truth-in-Lending Law, a person who regularly arranges for the extension of consumer credit by another person if a finance charge will be imposed, if there are to be more than four installments, and if the person extending the credit is not a creditor. At present, the term does not include a real estate broker who arranges seller financing of a dwelling or real property.
1. The state of being delinquent in paying a debt. 2. At or after the end of the period for which expenses are due or levied; the opposite of in advance. Mortgage interest and real estate taxes are often paid in arrears.
A mineral once used in insulation and other materials that can cause respiratory diseases. Asbestos has been classified as carcinogenic. (See carcinogen)
Asbestos Containing Material (ACM)
The EPA defines asbestos containing material as any material or product that contains more than one percent asbestos. Some states regulate smaller percentages of asbestos containing material.
A disease associated with inhalation of asbestos fibers. The disease makes breathing progressively more difficult and can be fatal. (See asbestos)
Words in a contract intended to signify that no guarantees, whatsoever, are given regarding the subject property and that it is being purchased exactly as it is found. An “as-is” indicator is intended to be a disclaimer of warranties or representations. The recent trend in the courts to favor consumers tends to prevent sellers from using “as-is” wording in a contract to shield themselves from possible fraud charges brought on by neglecting to disclose material defects in the property.
The combining of two or more adjoining lots into one larger tract to increase their total value.
The imposition of a tax, charge or lein, usually according to established rates.
An asset is something of value, encumbered or not, owned by a person, corporation or other entity. Assets are financial (cash or bonds), tangible or intangible, or physical (real or personal property).
The assembly, management and disposition of a portfolio of investment properties.
The transfer of the right, title and interest in the property of one person (the assignor) to another (the assignee). There are assignments of, among other things, mortgages, sales contracts, contracts for deeds, leases and options.
one who receives an assignment or transfer of rights. An assignment of a contract transfers the right to buy property.
the one who assigns to another person.
A real estate license classification used in some states to describe a person who has qualified as a real estate broker but still works for and is supervised by another broker; also called a broker-salesperson, broker-associate or affiliate broker.
Assumption of Mortgage
The acts of acquiring title to property that has an existing mortgage and agreeing to be personally liable for the terms and conditions of the mortgage, including payments. (See acceleration clause, due-on-sale clause, novation, subrogation)
When a loan is taken “subject to,” the seller agrees to remain liable and the buyer accepts no liability in the event of a deficiency on a foreclosure. Assumptions is taking over a loan and becoming personally liable for the repayment.
The seizure of property through court process to repay a debt. The legal process of seizing the real or personal property of a defendant in a lawsuit by levy or judicial order, and holding it in court custody as security for satisfaction of a judgment. The lien is thus created by operation of law, not by private agreement. The plaintiff may recover such property in any action upon a contract, express or implied.
The chief law officer of the federal or state government, who appears for the people in criminal court.
Attorney in Fact
A type of agency relationship where one person holds a power of attorney allowing him to execute legal documents on behalf of another. Decisions made by the attorney in fact are binding on the principal. A competent and disinterested person who is authorized by another person to act in his or her place. In real estate conveyance transactions, an attorney-in-fact, who has a fiduciary relationship with his or her principal, should be so authorized by way of a written, notarized and recordable instrument called a power of attorney.
Attorney’s Opinion of Title
An abstract of title that an attorney has examined and has certified to be, in his or her opinion, an accurate statement of the facts concerning the property ownership. (See abstract of title)
Attractive Nuisance Doctrine
An owner has a duty to reasonably protect children from injury when his or her property is likely to attract children.
Selling property to the highest bidder.
Computer systems that permit lenders to expedite the loan approval process and reduce lending costs.
A clause in a listing agreement that states that the agreement will continue automatically for a certain period of time after its expiration date. In many states, use of this clause is discouraged or prohibited.
The sudden tearing away of land, as by earthquake, flood, volcanic action or the sudden change in the course of a stream.