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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.
Obedience
The fiduciary relationship obligates the agent to act in good faith at all
times, obeying the principal's instructions in accordance with the contract.
However, that obedience is not absolute. The agent may not obey instructions
that are unlawful or unethical. Because illegal acts do not serve the
principal's best interests, obeying such instructions violates the broker's duty
of loyalty. On the other hand, an agent who exceeds the authority assigned in
the contract will be liable for any losses that the principal suffers as a
result.
Obligor
A promisor; one who incurs a lawful obligation to another (the obligee). The
maker of a promissory note is an obligor. In a performance bond, the contractor
is the obligor. One who guarantees the performance of the obligation is a
surety; also called a guarantor. (See payor)
Obligatory Advance
Any advance which, under the terms of the credit line deed of trust or other
agreement, the secured party has legally obligated itself to make in the absence
of a default, breach, or other such event. Obligatory advances include, but are
not limited to, advances which the secured party has agreed to make as a term or
condition of the credit line deed of trust or other related agreement;
obligations arising out of the occurrence of a condition, event or circumstance
contemplated by the agreement; obligations arising on a specified date or time;
or advances made upon application therefor by the grantor under the credit line
deed of trust or by another obligor whose indebtedness is secured by the deed of
trust.
Obsolescence
The loss of value due to factors that are outmoded or less useful. Obsolescence
may be functional or economic.
Occupancy Permit
A permit issued by the appropriate local governing body to establish that the
property is suitable for habitation by meeting certain safety and health
standards.
Occupational Health and Safety Act 2000
The objects of the Occupational Health and Safety Act 2000 are to:
1. Secure and promote the health, safety and welfare of people at work
2. Protect people against workplace health and safety risks
3. Provide for consultation and cooperation between employers and workers in
achieving the objects of the Act
4. Ensure that risks are identified, assessed and eliminated or controlled
5. Develop and promote community awareness of occupational health and safety
issues
6. Provide a legislative framework that allows for progressively higher
standards of occupational health and safety to take account of new technologies
and work practices
7. Protect people against risks arising from the use of plant (ie. machinery,
equipment or appliances).
Offer
An offer is a promise made by one party, requesting something in exchange for
that promise. The offer is made with the intention that the offeror will be
bound to the terms if the offer is accepted. The terms of the offer must be
definite and specific and must be communicated to the offeree.
Offer and Acceptance
Two essential components of a valid contract; a "meeting of the minds." (See
acceptance, offer)
Offeree
The person to whom an offer is made - usually the owner.
Offeror
The party who makes an offer - usually the buyer.
Offsite Improvements
Improvements made outside of a property's boundaries, such as sidewalks and
streets.
Oil and Gas Lease
A grant of the sole and exclusive right to extract oil and/or gas from beneath
the surface of land. Such a lease is generally for a designated term of years
and is subject to a payment of royalties in the event of production, the
commencement of drilling operations on or before a specified date and the
performance within a specified time of a certain amount of development work.
Typically, an express or implied easement is granted to enter the property in
order to drill.
One-Hundred-Percent Commission Plan
Some firms have adopted a 100 percent commission plan. Salespersons in these
offices pay a monthly service charge to their brokers to cover the costs of
office space, telephones and supervision in return for keeping 100 percent of
the commissions from the sales they negotiate. The 100 percent commission
salesperson pays all of his or her own expenses.
One Stop Shopping
An arrangement where settlement and service providers are all available through
the broker.
Open-Buyer-Agency-Agreement
This agreement is a nonexclusive agency contract between a broker and a buyer.
It permits the buyer to enter into similar agreements with an unlimited number
of brokers. The buyer is obligated to compensate only the broker who locates the
property the buyer ultimately purchases.
Open-End Loan
A mortgage loan that is expandable by increments up to a maximum dollar amount,
the full loan being secured by the same original mortgage.
Open-End Trust Deed
An expandable loan in which the borrower is given a limit up to which he or she
may borrow, with each incremental advance to be secured by the same trust deed.
Open House
The common real estate practice of showing listed homes to the public during
established hours.
Open Listing
A listing given to any number of brokers who can work simultaneously to sell the
owner's property. The first broker to secure a buyer who is ready, willing and
able to purchase at the terms of the listing earns the commission. In the case
of a sale, the seller is not obligated to notify any of the brokers that the
property has been sold.
Unlike an exclusive listing, an open listing need not contain a definite
termination date. The listing terminates after a reasonable time, usually
whatever is customary in the community. Either party can, in good faith,
terminate the agency at will. (See listing agreement)
Open-Market Operations
The buying and selling of government securities by the Federal Reserve to
control the amount of money in circulation.
Operating Budget
A projection of income and expenses for the operation of a property over a one
year period.
Operating Expenses
Those recurring expenses that are essential to the continuous operation and
maintenance of a property. Operating expenses are generally divided into the
following categories fixed expenses such as real property taxes and building
insurance; variable costs such as utilities, payroll, administration and
property management fees; and reserves for replacement. Operating expenses do
not include items such as mortgage payments, capital expenditures and
depreciation.
Opportunity Cost
Earnings that may be available on alternative investments.
Option
An agreement to keep open, for a set period, an offer to sell or lease real
property.
Opinion of Title
An opinion of the marketability of a title given by an attorney based on the
abstract of title. (See abstract of title)
Option Listing
A listing in which the broker also retains an option to purchase the property
for the broker's own account. In view of the body of litigation involving breach
of fiduciary duties by brokers who conceal offers from buyers until after the
broker has exercised the option, full and fair disclosure must be given to the
seller. (See listing agreement)
Ordinance
A military weapon or item of destruction (e.g. bullets). (See military ordinance
location)
Original Basis
The sum of the purchase price of a property plus buying expenses on acquisition.
(See basis)
Ostensible Agency
A form of implied agency relationship created by the actions of the parties
involved rather than by written agreement or document. (See implied agency)
Other Income
Refers to income other than rent, such as vending and laundry machines, storage
or parking space income, and so on.
Overriding Trust Deed
See wraparound mortgage
Owner-Occupied
A property where the owner physically occupies the property.
Ownership
The right to use, possess, enjoy, transfer, and dispose of a thing to the
exclusion of all others.
Owner's Title Insurance
An insurance policy protecting the buyer for the amount of the purchase price in
the event of a future title dispute. (See mortgagee's title insurance, title
insurance)
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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