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Real Estate Dictionary/Glossary A,
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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.
Abatement
1. A reduction or decrease. 2. The removal of a nuisance.
Abstract
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.
Absorption Rate
The total number of vacant square feet of office space divided by the square
footage leased per year historically. Used to analyze demand of office space in
a given market area.
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)
Abstracter
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.
Accretion
the buildup of land from natural forces such as wind or water.
Acceleration Clause
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)
Acceptance
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)
Accession
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.
Accounting
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.
Accretion
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.
Accrued Depreciation
1. In accounting, a bookkeeping account that shows the total amount of
depreciation taken on an asset since it was acquired; also called accumulated
depreciation. (See depreciation) 2. For appraisal purposes, the difference
between the cost to reproduce the property (as of the appraisal date) and the
property's current value as judged by its "competitive condition." In this
context, accrued depreciation is often called diminished utility.
Accrued Items
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.
Accusation
The first step in a disciplinary action against a licensee.
Acknowledgment
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.
Acquisition Cost
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)
Acre
A measure of land equal to 43.560 square feet, 4,840 square yards, 4,047 square
meters, 160 square rods or 0.4047 hectares.
Actual Damages
Real, substantial and just damages, or the amount awarded to a complainant in
compensation for his actual and real loss or injury.
Actual Eviction
The legal process that results in the tenant's being physically removed from the
leased premises. (See eviction, constructive eviction, lease)
Actual Notice
Express information or fact; that which is known; direct knowledge.
Addendum
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.
Add-on Rate
Interest charged on a principal amount for specified term, regardless of any
repayments of principal. The borrower is paying interest on the full principal
sum for the entire loan period, even though the principal is being reduced each
month.
Ademption
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)
Adjusted Basis
The original cost basis of a property reduced by certain deductions and
increased by certain improvement costs. The original basis determined at the
time of acquisition is reduced by the amount of allowable depreciation or
depletion allowances taken by the taxpayer, and by the amount of any
uncompensated property losses suffered by the taxpayer. It then increases by the
cost of capital improvements plus certain carrying costs and assessments. The
amount of gain or loss recognized by the taxpayer upon sale of the property is
determined by subtracting the adjusted basis on the date of sale from the
adjusted sales price. (See basis, capital gain)
Adjustment
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.
Adjustment Period
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)
Administrative Agency
A government agency that makes rules and regulations to carry out the law. A
state's real estate commission develops regulations to complement license law.
Administrative Order
A legal document signed by the EPA directing an individual, business, or other
entity to take corrective action or refrain from an activity. The order
describes the violations and action to be taken and can be enforced in court.
Administrator
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.
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)
Advance Fee
A fee paid before any services are rendered. Specifically, it is a practice of
some brokers to obtain a nonrefundable fee from the seller in advance to cover
the advertising of properties or businesses for sale while giving no guarantee
that a buyer will be found, which is often held to be improper conduct. Brokers
must keep accurate records of expenditures.
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)
Ad valorem
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.
Adverse Action
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.
Adverse Possession
The acquiring of title to real property owned by someone else by means of open,
notorious, hostile and continuous possession for a statutory period of time. 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.
Amortization
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.
Annexation
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.
Annuity
A sum of money recieved by an annuitant in a series of fixed periodic payments.
Anticipation
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)
Antimerger Clause
A clause in a mortgage or deed of trust specifying that the senior lienholder
will retain lien priority in the event of a merger.
Antitrust Laws
State and federal laws designed to maintain and preserve business competition.
The Sherman Antitrust Act (1890) is the principal federal statute covering
competition, which is defined by most courts as "that economic condition in
which prices are determined by market forces without interference from private
concerns and there is reasonable freedom of entry into most businesses."
Apartment Building
A building having separate units for permanent tenants who rent or lease them.
The owner of the building provides common facilities, such as lights, heat,
elevator and garbage disposal services, and maintains common entrances and
hallways.
Appraisal
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.
Appraiser
An independent person trained to provide an unbiased estimate of value, such as
a professional service performed for a fee.
Appreciation
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
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.
Approved Attorney
an attorney authorized by a title insurance company to handle closings and
render title opinions.
Appurtenance
anything attached to the land or used with it passing to the new owner.
Appurtenant
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.
Appurtenant Easement
An easement that is annexed to the ownership of one parcel and allows the owner
the use of the neighbor's land.
Aquifer
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.
Arbitrage
Borrowing at one interest rate and investing at a higher rate.
Arbitration
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.
Arrears
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.
Asbestos
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.
Asbestosis
A disease associated with inhalation of asbestos fibers. The disease makes
breathing progressively more difficult and can be fatal. (See asbestos)
"As-is"
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.
Assemblage
The combining of two or more adjoining lots into one larger tract to increase
their total value.
Assessment
The imposition of a tax, charge or lein, usually according to established rates.
Asset
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).
Asset Management
The assembly, management and disposition of a portfolio of investment
properties.
Assignment
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.
Assignee
one who receives an assignment or transfer of rights. An assignment of a
contract transfers the right to buy property.
Assignor
the one who assigns to another person.
Associate Broker
A real estate license classification used in some states to describe a person
who has qualified as a real estate broker but still works for and is supervised
by another broker; also called a broker-salesperson, broker-associate or
affiliate broker.
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)
Assumption
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.
Attachment
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.
Attorney General
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.
Auction
Selling property to the highest bidder.
Automated Underwriting
Computer systems that permit lenders to expedite the loan approval process and
reduce lending costs.
Automatic Extension
A clause in a listing agreement that states that the agreement will continue
automatically for a certain period of time after its expiration date. In many
states, use of this clause is discouraged or prohibited.
Avulsion
The sudden tearing away of land, as by earthquake, flood, volcanic action or the
sudden change in the course of a stream.
Real Estate Dictionary/Glossary A,
B,
C,
D,
E,
F,
G,
H,
I,
J,
K,
L,
M,
N,
O,
P,
Q,
R,
S,
T,
U,
V,
W,
X,
Y,
Z
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