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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.
Table funding
Simultaneous conveyance of purchase price and title as well as all loan papers
at a closing.
Tacking
Adding or combining successive periods of continuous occupation of real property
by adverse possessors. This concept enables someone who has not been in
possession for the entire statutory period to establish a claim of adverse
possession.
Take-out financing
Long-term permanent financing. In the usual large construction project, the
developer obtains two types of financing. The first is the interim loan, a
short-term loan to cover construction costs. Before lending any money, however,
the interim lender normally requires a commitment by a permanent lender to agree
to "take out" the interim lender in which the lender pays off the construction
loan and leaves the developer with a permanent long-term loan when the building
has been completed.
Taking
The concept of taking comes from the Takings clause of the fifth amendment of
the United States Constitution. The clause reads, "nor shall private property be
taken for public use, without just compensation." This means that when land is
taken for public use through the government's power of eminent domain or
condemnation, the owner must be compensated. (See eminent domain)
Talking sign
A radio transmitter with a range of up to 250 feet that broadcasts a description
of a property to prospects listening to a radio tuned to the transmitter's
frequency.
Tandem plan
A mortgage subsidy program offered from time to time by the United States
Congress. The Government National Mortgage Association (GNMA) purchases certain
mortgages at below market interest rates, granting borrowers low-interest loans.
GMNA sells the loans on the secondary market at a discount, the discount being
the amount of the subsidy. These programs are offered "in tandem" with local
mortgage lenders. (See GNMA, secondary mortgage market)
Taxation
1. The process by which a government or municipal quasi-public body raises
monies to fund its operation. 2. The impact an investment has on the investor's
liability for the payment of federal, state, and local taxes.
Tax Bill
A property owner's tax bill is computed by applying the tax rate to the assessed
valuation of the property.
Tax credit
An amount by which tax owed is reduced directly.
Tax deed
An instrument, similar to a certificate of sale, given to a purchaser at a tax
sale. (See certificate of sale)
Tax deferred exchange (1031 exchange)
Under Section 1031 of the Internal Revenue Code, some or all of the realized
gain from the exchange of property may not need to be immediately recognized for
tax purposes. Both properties in an exchange must be held for productive use in
trade or business or for investment and must be of a like-kind. (See like-kind,
realized capital gain)
Tax-free gifts
Gifts that are free from federal gift taxes.
Tax levy
The amount to be raised from the general real estate tax is then imposed on
property owners through a tax levy. A tax levy is the formal action taken to
impose the tax, usually a vote of the taxing district's governing body.
Tax lien
A charge against property, created by operation of law. Tax liens and
assessments take priority over all other liens. (See assessments, lien)
Tax rate
The tax rate for each taxing body is computed separately. To arrive at a tax
rate, the total monies needed for the coming fiscal year are divided by the
total assessments of all real estate located within the taxing body's
jurisdiction.
Tax Reform Act of 1986 (TRA 86)
Sweeping revisions to the income tax laws, enacted by the United State Congress
in 1986, that lowered tax rates and eliminated many tax shelters.
Taxpayer Relief Act of 1997 (TRA 97)
Enacted by the United State Congress and effective May 7, 1997, TRA '97 provides
for broader exemption from capital gains taxes on the profits on the sale of a
personal residence. Replaces the old provision for a "one-time" exemption of
$125,000 for sellers over age 55.
Tax sale
A court-ordered sale of real property to raise money to cover delinquent taxes.
Tax shelter
A phrase often used to describe some of the tax advantages of real estate or
other investments, such as noncash deductions for cost recovery (depreciation),
interest, taxes and postponement or even elimination of certain taxes. The tax
shelter not only may offset the investor's tax liability relevant to the real
estate investment but also may reduce the investor's other ordinary income,
which reduces overall tax liability.
Tenancy at sufferance
A tenancy (or estate) in which a person wrongfully holds or occupies a property
after the expiration of a lease without the consent of the landlord. No notice
of termination is required for the landlord to evict the tenant.
Tenancy at will
A tenancy (or estate) in which a person holds or occupies real estate with the
permission of the owner, for a term of unspecified or uncertain duration i.e.,
there is no fixed term to the tenancy.
Tenancy by the entirety
Some states allow husbands and wives to use a special form of co-ownership
called tenancy by the entirety. In this form of ownership, each spouse has an
equal, undivided interest in the property. (The term entirety refers to the fact
that the owners are considered one indivisible unit because early common law
viewed a married couple as one legal person).
Tenancy for years
A tenancy for a definite period of time. The tenant must vacate the property at
the end of the lease unless an extension or new lease has been agreed upon.
Tenancy in severalty
Ownership of a property by one person, rather than held jointly with others.
Also called sole tenancy.
Tenant
In general, one who exclusively holds or possesses property, such as a life
tenant or a tenant for years; commonly used to refer to a lessee under a lease.
A tenant's occupancy, although exclusive, is always subordinate to the rights of
the owner. Tenant refers to an occupant, not necessarily a renter.
Tenant emergency procedures manual
A printed manual outlining emergency procedures, including evacuation plans and
contact information for emergency personnel. The manual is used by building
managers in the event of accident, illness, fire, natural disaster or other
emergency situation.
Tenants in Common
A form of concurrent ownership of property between two or more persons, in which
each has an undivided interest in the whole property. This form is frequently
found when the parties acquire title by descent or by will. Each cotenant is
entitled to the undivided possession of the property, according to his or her
proportionate share and subject to the rights of possession of the other
tenants. No cotenant can exclude another cotenant, or claim ownership of a
specific portion of the property.
Each cotenant holds an estate in land by separate and distinct titles, but with
unity of possession. Their interests may be equal, as in joint tenancy, or
unequal. Where the conveyance document does not specify the extent of interest
of each cotenant, there is a rebuttable presumption that the shares are equal.
Tenant improvements
A commercial or an industrial property manager often is called on to make tenant
improvements. These are alterations to the interior of the building to meet a
tenant's particular space needs. Such construction alterations range from simply
repainting or recarpeting to completely gutting the interior and redesigning the
space by erecting new walls, partitions and electrical systems.
Tenement
A common law real estate term that describes those real property rights of a
permanent nature. These rights relate to the land and pass with conveyance of
the land, such as buildings and improvements.
Termite Inspection
A visible check of a property for the presence of termites. Usually performed by
a licensed exterminator. Buyers often make a termite inspection a condition of a
sales contract, and require a pest control report or a clearance letter showing
the property to be clear of any live, visible infestation. The VA, FHA and
Fannie Mae all require a termite inspection as a condition of a loan.
Term Loan
A short-term loan requiring interest-only payments until maturity, at which time
the entire principal is due and payable.
Testamentary trust
A trust established by will.
Testate
Having made and left a valid will.
Testator
A person who has made a valid will. A woman often is referred to as a testatrix,
although testator can be used for either gender.
Thermal mass
Thermal mass is a property that enables building materials to absorb, store, and
later release significant amounts of heat. Buildings constructed of concrete and
masonry have a unique energy savings advantage because of their inherent thermal
mass.
Third party originator
Third-party originators prepare loan applications for borrowers and submit the
applications to lenders.
Thirteenth Amendment to the United States Constitution (1868)
Section 1. Neither slavery nor involuntary servitude, except as a punishment for
crime whereof the party shall have been duly convicted, shall exist within the
United States, or any place subject to their jurisdiction.
Section 2. Congress shall have power to enforce this article by appropriate
legislation. (See Fourteenth Amendment)
Constitution of the United States of America
3-way switch
A light switch that allows a person to turn the light on or off from either end
of a hallway or stairway.
30-day notice
Notice to vacate a premises under a periodic tenancy. Notice must be for the
rent period, but not more than 30 days. (See periodic tenancy)
three-day notice
Notice to quit, quit or cure, or quit or pay rent. Three-day notice must be
given before an unlawful detainer action. (See unlawful detainer action)
Threshold notification
Notification by brokers that they have met the threshold requirements for filing
status and fiscal year reports on trust fund activities.
Thrift
Another name for a savings and loan association; a financial institution
established to promote "thrift" by accepting savings deposits, and to make home
mortgage loans. (See savings and loan association)
Tier (township strip)
A strip of land six miles wide, extending east and west and numbered north and
south according to its distance from the base line in the rectangular
(government) survey system of legal description.
Timing
Refers to the length of time one must wait to receive cash flow from an
investment.
Time is of the essence
A contract clause that emphasizes punctual performance as an essential
requirement of the contract. Thus, if any party to the instrument does not
perform within the specified time period (the drop-dead date), that party is in
default, provided the nondefaulting party has made a valid tender of
performance. If no tender is made, then the clause may be waived. The clause may
also be waived by the subsequent acts of the parties such as accepting tardy
payments or signing escrow instructions that allow for extensions of time in
which to perform.
Time-sharing
A modern approach to communal ownership and use of real estate that permits
multiple purchasers to buy undivided interests in real property (usually in a
resort condominium or hotel) with a right to use the facility for a fixed or
variable time period. Under time-sharing forms of ownership, potential
purchasers of property buy fixed or floating time periods for use of a specific
apartment within a project.
Title
1. The right to or ownership of land.
2. The evidence of ownership of land. (See ownership)
Title defects
An unresolved claim against the ownership of property, which prevents
presentation of a marketable title. Such claims may arise from failure of the
owner's spouse or former partner to sign a deed, current liens against the
property or an interruption in the title records to a property.
Title insurance
A comprehensive indemnity contract under which a title insurance company
warrants to make good a loss arising through defects in title to real estate or
any liens or encumbrances thereon. Unlike other types of insurance, which
protect a policyholder against loss from some future occurrence (such as a fire
or auto accident), title insurance in effect protects a policyholder against
loss from some occurrence that has already happened, such as a forged deed
somewhere in the chain of title.
Title insurance fees
The costs involved in purchasing title insurance. May include title insurance
policy and search fees.
Title search
The examination of public records relating to real estate to determine the
current state of the ownership.
Title theory
Some states interpret a mortgage to mean that the lender is the owner of
mortgaged land. Upon full payment of the mortgage debt the borrower becomes the
landowner.
Torrens system
1. A method of evidencing title by registration with the proper public
authority, generally called the registrar, named for its founder, Sir Robert
Torrens, an Australian who developed the system in 1857. Torrens took the idea
from the system of registering title to shipping vessels.
2. A legal system for the registration of land, used to verify the ownership and
encumbrances (except tax liens), without the necessity of an additional search
of the public records. The purpose of the Torrens Act pertaining to registration
of title to land is to conclusively establish an indefeasible title to the end
that anyone may deal with such property with the assurance that the only rights
or claims of which he or she need take notice are those so registered. The
Torrens system of registration is the title itself; it differs from a title
insurance policy, which is only evidence of title. In other words, a person does
not acquire title to Torrens-registered real property unless that person
registers the title.
Tort
A wrongful act; a violation of a legal right.
Town house
A type of dwelling unit normally having two floors, with the living area and
kitchen on the base floor and the bedrooms located on the second floor; a series
of individual houses having architectural unity and a common wall between each
unit.
Township
A division of territory, used in the government (rectangular survey system of
land description, which is six miles square, and contains 36 sections, each of
which is one mile square and consists of 23,040 acres.
Township line
Lines running east and west, parallel to the base line and six miles apart. (See
base line)
Township squares
When the horizontal township lines and the vertical range lines intersect, they
form squares. These township squares are the basic units of the rectangular
survey system. Townships are 6 miles square and contain 36 square miles (23,040
acres).
Township tiers
Township lines form strips of land called township tiers. These township tiers
are designated by consecutive numbers north or south of the base line. (See base
line, township line)
Toxic Substance Control Act
Enacted by Congress in 1976, the act authorizes EPA to secure information on all
new and existing chemical substances and to control any of these substances
determined to cause an unreasonable risk to public health or the environment.
The act was established to ensure that the human health and environmental
effects of chemical substances were identified and properly controlled prior to
placing these materials into commerce.
Tranche
A series of bonds issued for a CMO. (See CMO)
Trade fixture
An article of personal property annexed or affixed to leased premises by the
tenant as a necessary part of the tenant's trade or business. At the termination
of a lease, a tenant must leave most fixtures in the premises; however, trade
fixtures are removable by the tenant before expiration of the lease, and the
tenant is responsible for any damages caused by their removal.
However, a tenant cannot usually remove replacement fixtures, that is,
improvements installed to replace worn-out ones. For instance, if a tenant
installs a new bar to replace an old bar in a tavern the tenant leases, the
tenant cannot remove the bar upon termination of the lease. If the tenant fails
to remove trade fixtures within a reasonable time of lease expiration, the
fixtures will be considered abandoned and will become the property of the
landlord.
Trading on the equity
The practice of agreeing to buy real estate and then assigning the purchase
agreement to another buyer before closing takes place; thus turning a profit by
"selling the paper."
Transaction broker
A transaction broker (also referred to as a nonagent, facilitator, coordinator
or contract broker) is not an agent of either party. A transactional broker's
job is simply to help both the buyer and the seller with the necessary paperwork
and formalities involved in transferring ownership of real property. The buyer
and the seller negotiate the sale without representation.
Transfer tax
A state tax imposed on the transfer or conveyance of realty or any realty
interest by means of deed, lease, sublease, assignment, contract for deed or
similar instrument. One purpose of the tax is to acquire reliable data on the
fair market value of the property to help establish more accurate real property
tax assessments.
Treasury bill, note, bond
Treasury bill issued for less than a year; Treasury note issued from one to five
years; Treasury bond issued from five to ten years.
Trespass
Unlawful entry or injury to the property of another.
Trigger terms
Terms in an advertisement which trigger additional disclosure of all credit
terms.
Trip hazard
Any situation where there is an increased likelihood of tripping (e.g. stairs
that do not have a uniform tread or riser height all the way along the stairs).
Triple-net lease
A net-net-net lease where, in addition to the stipulated rent, the lessee
assumes payment of all expenses associated with the operation of the property.
This includes both fixed expenses, such as taxes and insurance, and all
operating expenses, including costs of maintenance and repair. In some cases,
the triple-net tenant even pays the interest payments on the lessor's mortgage
on the property leased.
Strictly speaking, the term triple-net lease is redundant because "net lease"
adequately describes the situation. Rather than rely on labels, however, the
parties must examine the provisions of the lease to discover the extent of the
tenant's responsibilities.
Triplex
A building comprised of three dwelling units, each having a front and rear (or
side) door and yard; similar to row houses.
Truss
A roof structural support system made up from "2 by" wood components that are
attached using press-on metal plates (as opposed to rafters that are nailed
together). (See rafter)
Trust
An arrangement whereby legal title to property is transferred by the grantor (or
trustor) to a person called a trustee, to be held and managed by that person for
the benefit of another, called a beneficiary.
Trustee
1) One who holds property in trust for another as a fiduciary and is charged
with the duty to protect, preserve and enhance the value and the highest and
best use of the trust property. 2) One who holds property in trust for another
to secure the performance of an obligation. In those states using trust deeds as
security devices, the trustee holds bare legal title to the property pending the
borrower/trustor paying off the underlying debt or promissory note. The trustee
is usually a lending institution, trust company or title insurance company.
Trust deed
Also called a deed of trust. A legal document in which title to property is
transferred to a third-party trustee as security for an obligation owed by the
trustor (borrower) to the beneficiary (lender). A trust deed is similar to a
mortgage—the main difference is that it involves three parties. When a borrower
repays the note secured by a trust deed, the trustee must reconvey title back to
the borrower by way of a deed of reconveyance. (See deed of reconveyance)
Trust deed lien
A lien on the property of a truster that secures a deed of trust loan. (See
lien)
Trustee's deed
A deed executed by a trustee conveying land held in a trust.
Trust funds
Money or other things of value that are received by a broker or salesperson on
behalf of a principal or any other person, and which are held for the benefit of
others in the performance of any act(s) for which a real estate license is
required.
Trust fund bank account
An account set up by a broker, attorney or other agent at a bank or other
recognized depository, into which the broker deposits all funds entrusted to the
agent by the principal or others; also called an earnest money or escrow
account. (See earnest money, escrow account)
Trust ledger
Ledger where a property manager records monies paid out on behalf of an owner.
Trustor
The person who creates a trust and gives the instructions to the trustee.
Truth-in-lending law
A body of federal law effective July 1969 as part of the Consumer Credit
Protection Act, and implemented by the Federal Reserve Board's Regulation Z. It
was amended in 1982 by the Truth-in-Lending Simplification and Reform Act and
later amendments. The main purpose of this law is to ensure that borrowers and
customers in need of consumer credit are given meaningful information with
respect to the cost of credit. In this way consumers can more readily compare
the various credit terms available to them and thus avoid the uninformed use of
credit. This law creates a disclosure device only, and does not establish any
set maximum or minimum interest rates or require any charges for credit. (See
Regulation Z)
Truth-In-Lending Law
Two-step mortgage
A hybrid loan between a fixed-rate and adjustable-rate loan where a lower rate
remains in effect for seven years and is then adjusted once for the balance of
the loan period. (See hybrid financing)
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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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