real estate glossary

The condensed history of a title to a particular parcel of real estate,
consisting of a summary of the original grant and all subsequent
conveyances and encumbrances affecting the property and a certification
by the abstractor that the history is complete and accurate.

The clause in a mortgage or deed of trust that can be enforced to make
the entire debt due immediately if the borrower defaults on an
installment payment or other covenant.

The increase or addition of land by the deposit of sand or soil washed up naturally from a river, lake or sea.

On 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.

A formal declaration made before a duly authorized officer, usually a notary public, by a person who has signed a document.

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.

The legal process that results in the tenant's being physically removed from the leased premises.

Express information or fact; that which is known; direct knowledge

A loan characterized by a fluctuating interest rate, usually one tied to
a bank or savings and loan association cost-of-funds index.

A tax levied according to value, generally used to refer to real estate tax. Also called the general tax.

The actual, open, notorious, hostile and continuous possession of
another's land under a claim of title. Possession for a statutory period
may be a means of acquiring title.

The relationship between a principal and an agent wherein the agent is
authorized to represent the principal in certain transactions.

One who acts or has the power to act for another. A fiduciary
relationship is created under the law of agency when a property owner,
as the principal, executes a listing agreement or management contract
authorizing a licensed real estate broker to be his or her agent.

The right to use the open space above a property, usually allowing the surface to be used for another purpose.

The act of transferring property to another. Alienation may be
voluntary, such as by gift or sale, or involuntary, as through eminent
domain or adverse possession.

The clause in a mortgage or deed of trust that states that the balance
of the secured debt becomes immediately due and payable at the lender's
option if the property is sold by the borrower. In effect this clause
prevents the borrower from assigning the debt without the lender's
approval.

A system of land ownership in which land is held free and clear of any
rent or service due to the government; commonly contrasted to the feudal
system.

A loan in which the principal as well as the interest is payable in
monthly or other periodic installments over the term of the loan.

The relationship of the total finance charges associated with a loan.
This must be disclosed to borrowers by lenders under the
Truth-in-Lending Act

The appraisal principle that holds that value can increase or decrease
based on the expectation of some future benefit or detriment produced by
the property.

Laws designed to preserve the free enterprise of the open marketplace by
making illegal certain private conspiracies and combinations formed to
minimize competition. Most violations of antitrust laws in the real
estate business involve either price-fixing (brokers conspiring to set
fixed compensation rates) or allocation of customers or markets (brokers
agreeing to limit their areas of trade or dealing to certain areas or
properties)

An estimate of the quantity, quality or value of something. The process
through which conclusions of property value are obtained; also refers
to the report that sets forth the process of estimation and conclusion
of value.

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.

A right, privilege or improvement belonging to, and passing with, the land.

An easement that is annexed to the ownership of one parcel and allows the owner the use of the neighbor's land.

The combining of two or more adjoining lots into one larger tract to increase their total value.

The imposition of a tax, charge or levy, usually according to established rates.

The transfer in writing of interest in a bond, mortgage, lease or other instrument.

Acquiring title to property on which there is an existing mortgage and
agreeing to be personally liable for the terms and conditions of the
mortgage, including payments.

The act of taking a person's property into legal custody by writ or
other judicial order to hold it available for application to that
person's debt to a creditor.

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

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.

The appraisal principle that states that the greatest value in a
property will occur when the type and size of the improvements are
proportional to each other as well as the land.

A final payment of a mortgage loan that is considerably larger than the
required periodic payments because the loan amount was not fully
amortized.

A deed that carries with it no warranties against liens or other
encumbrances but that does imply that the grantor has the right to
convey title. The grantor may add warranties to the deed at his or her
discretion

The main imaginary line running east and west and crossing a principal
meridian at a definite point, used by surveyors for reference in
locating and describing land under the rectangular (government) survey
system of legal description.

The financial interest that the Internal Revenue Service attributes to
an owner of an investment property for the purpose of determining annual
depreciation and gain or loss on the sale of the asset. If a property
was acquired by purchase, the owner's basis is the cost of the property
plus the value of any capital expenditures for improvements to the
property, minus any depreciation allowable or actually taken. This new
basis is called the adjusted basis.

A permanent reference mark or point established for use by surveyors in measuring differences in elevation.

(1) The person for whom a trust operates or in whose behalf the income
from a trust estate is drawn. (2) A lender in a deed of trust loan
transaction.

A mortgage covering more than one parcel of real estate, providing for
each parcel's partial release from the mortgage lien upon repayment of a
definite portion of the debt.

The illegal practice of inducing homeowners to sell their properties by
making representations regarding the entry or prospective entry of
persons of a particular race or national origin into the neighborhood.

Violation of any terms or conditions in a contract without legal excuse; for example, failure to make a payment when it is due

One who acts as an intermediary on behalf of others for a fee or commission.

The bringing together of parties interested in making a real estate transaction.

A strip of land, usually used as a park or designated for a similar use,
separating land dedicated to one use from land dedicated to another use
(e.g., residential from commercial).

An ordinance that specifies minimum standards of construction for buildings to protect public safety and health.

Written governmental permission for the construction, alteration or
demolition of an improvement, showing compliance with building codes and
zoning ordinances.

The concept of land ownership that includes ownership of all legal
rights to the land--for example, possession, control within the law and
enjoyment.

A financing technique used to reduce
the monthly payments for the first few years of a loan. Funds in the
form of discount points are given to the lender by the builder or seller
to buy down or lower the effective interest rate paid by the buyer,
thus reducing the monthly payments for a set time.

A principal-agent relationship in which the broker is the agent for the
buyer, with fiduciary responsibilities to the buyer. The broker
represents the buyer under the law of agency.

Profit earned from the sale of an asset.

A mathematical process for estimating the value of a property using a
proper rate of return on the investment and the annual net operating
income expected to be produced by the property. The formula is expressed
as: Income -------- = Value Rate

The rate of return a property will produce on the owner's investment.

The net spendable income from an investment, determined by deducting all
operating and fixed expenses from the gross income. When expenses
exceed income, a negative cash flow results.

A Latin phrase meaning "Let the buyer beware."

A form indicating the appraised value of a property being financed with a VA loan.

The document generally given to the purchaser at a tax foreclosure sale.
It does not convey title; normally it is an
instrument certifying that the holder received title to the property
after the redemption period passed and that the holder paid the property
taxes for that interim period.

A statement of opinion on the status of the title to a parcel of real
property based on an examination of specified public records.

The succession of conveyances, from some accepted starting point, whereby the present holder of real property derives title.

An act that prohibits racial discrimination in the sale and rental of housing.

A detailed cash accounting of a real estate transaction showing all cash
received, all charges and credits made and all cash paid out in the
transaction.

Any document, claim, unreleased lien or encumbrance that may impair the
title to real property or make the title doubtful; usually revealed by a
title search and removed by either a quitclaim deed or suit to quiet
title.

A written system of standards for ethical conduct.

The illegal act by a real estate broker of placing client or customer
funds with personal funds. By law brokers are required to maintain a
separate trust or escrow account for other parties' funds held
temporarily by the broker.

Parts of a property that are necessary or convenient to the existence,
maintenance and safety of a condominium or are normally in common use by
all of the condominium residents. Each condominium owner has an
undivided ownership interest in the common elements.

The body of law based on custom, usage and court decisions.

A system of property ownership based on the theory that each spouse has
an equal interest in the property acquired by the efforts of either
spouse during marriage. A holdover of Spanish law found predominantly in
western states; the system was unknown under English common law.

Properties used in an appraisal report that are substantially equivalent to the subject property.

The appraisal principle that states that excess profits generate competition.

A comparison of the prices of recently sold homes that are similar to a
listing seller's home in terms of location, style and amenities.

A judicial or administrative proceeding to exercise the power of eminent
domain, through which a government agency takes private property for
public use and compensates the owner.

Written governmental permission allowing a use inconsistent with zoning
but necessary for the common good, such as locating an emergency medical
facility in a predominantly residential area.

The absolute ownership of a unit in a multi-unit building based on a
legal description of the airspace the unit actually occupies, plus an
undivided interest in the ownership of the common elements, which are
owned jointly with the other unit owners

The appraisal principle that holds that the greater the similarity among
properties in an area, the better they will hold their value

(1) That received by the grantor in exchange for his or her deed.
(2) Something of value that induces a person to enter into a contract.

Actions of a landlord that so materially disturb or impair a tenant's
enjoyment of the leased premises that the tenant is effectively forced
to move out and terminate the lease without liability for any further
rent.

Notice given to the world by recorded documents. All people are charged
with knowledge of such documents and their contents, whether or not they
have actually examined them. Possession of property is also considered
 _________that the person in possession has an interest in the
property.

A provision in a contract that requires a certain act to be done or a
certain event to occur before the contract becomes binding.

A legally enforceable promise or set of promises that must be performed
and for which, if a breach of the promise occurs, the law provides a
remedy. A contract may be either unilateral, by which only one party is
bound to act, or bilateral, by which all parties to the instrument are
legally bound to act as prescribed.

The appraisal principle that states that the value of any component of a
property is what it gives to the value of the whole or what its absence
detracts from that value.

A loan that requires no insurance or guarantee.

A term used to refer to any document that transfers title to real
property. The term is also used in describing the act of transferring.

A residential multi-unit building whose title is held by a trust or
corporation that is owned by and operated for the benefit of persons
living within the building, who are the beneficial owners of the trust
or stockholders of the corporation, each possessing a proprietary lease.

Title ownership held by two or more persons.

An entity or organization, created by operation of law, whose rights of
doing business are essentially the same as those of an individual. The
entity has continuous existence until it is dissolved according to legal
procedures.An entity or organization, created by operation of law, whose rights of
doing business are essentially the same as those of an individual. The
entity has continuous existence until it is dissolved according to legal
procedures.

The process of estimating the value of a property by adding to the
estimated land value the appraiser's estimate of the reproduction or
replacement cost of the building, less depreciation.

A new offer made in response to an offer received. It has the effect of
rejecting the original offer, which cannot be accepted thereafter unless
revived by the offeror.

A written agreement between two or more parties in which a party or
parties pledge to perform or not perform specified acts with regard to
property; usually found in such real estate documents as deeds,
mortgages, leases and contracts for deed

The covenant implied by law by which a landlord guarantees that a tenant
may take possession of leased premises and that the landlord will not
interfere in the tenant's possession or use of the property.

On a closing statement, an amount entered in a person's favor--either an
amount the party has paid or an amount for which the party must be
reimbursed.

On a closing statement, an amount charged; that is, an amount that the debited party must pay.

The voluntary transfer of private property by its owner to the public for some public use, such as for streets or schools.

A written instrument that, when executed and delivered, conveys title to or an interest in real estate.

A deed given by the mortgagor to the mortgagee when the mortgagor is in
default under the terms of the mortgage. This is a way for the mortgagor
to avoid foreclosure.

An instrument that grants a trustee under a land trust full power to
sell, mortgage and subdivide a parcel of real estate. The beneficiary
controls the trustee's use of these powers under the provisions of the
trust agreement.

Clauses in a deed limiting the future uses of the property. Deed
restrictions may impose a vast variety of limitations and conditions,
for example, they may limit the density of buildings, dictate the types
of structures that can be erected or prevent buildings from being used
for specific purposes or even from being used at all.

The nonperformance of a duty, whether arising under a contract or otherwise; failure to meet an obligation when due.

A clause used in leases and mortgages that cancels a specified right
upon the occurrence of a certain condition, such as cancellation of a
mortgage upon repayment of the mortgage loan.

An
estate in which the holder has a fee simple title that may be divested
upon the occurrence or nonocurrence of a specified event. There are two
categories of defeasible fee estates: fee simple on condition precedent
(fee simple determinable) and fee simple on condition subsequent.

Point levied against the borrower when a foreclosure sale does not produce sufficient funds to pay the mortgage debt in full.

The amount of goods people are willing and able to buy at a given price; often coupled with supply.

Zoning ordinances that restrict the maximum average number of houses per
acre that may be built within a particular area, generally a
subdivision.

(1) In appraisal, a loss of value in property due to any cause,
including physical deterioration, functional obsolescence and external
obsolescence.
(2) In real estate investment, an expense deduction for tax purposes taken over the period of ownership of income property.

Acquisition of an estate by inheritance in which an heir succeeds to the property by operation of law.

One who attempts to put land to its most profitable use through the construction of improvements.

A gift of real property by will. The donor is the devisor, and the recipient is the devisee.

A property that includes in its ownership the appurtenant right to use
an easement over another person's property for a specific purpose.

The legal right or interest, recognized in some states, that a wife
acquires in the property her husband held or acquired during their
marriage. During the husband's lifetime the right is only a possibility
of an interest; upon his death it can become an interest in land.

Representing both parties to a transaction. This is unethical unless both parties agree to it, and it is illegal in many states.

A provision in the mortgage that states that the entire balance of the
note is immediately due and payable if the mortgagor transfers (sells)
the property.

Unlawful constraint or action exercised upon a person whereby the person
is forced to perform an act against his or her will. A contract entered
into under it is voidable.

Money deposited by a buyer under the terms of a contract, to be
forfeited if the buyer defaults but applied to the purchase price if the
sale is closed.

A right to use the land of another for a specific purpose, such as for a
right-of-way or utilities; an incorporeal interest in land.

An easement created by the government or government agency that has exercised its right under eminent domain.

An easement allowed by law as necessary for the full enjoyment of a
parcel of real estate; for example, a right of ingress and egress over a
grantor's land.

An easement acquired by continuous, open and hostile use of the property for the period of time by state law.

An easement that is not created for the benefit of any land owned by the
owner of the easement but that attaches personally to the easement
owner. For example, a right granted by Eleanor Franks to Joe Fish to use
a portion of her property for the rest of his life

The number of years during which an improvement will add value to the land.

Growing crops, such as corn, that are produced annually through labor and industry; also called fructus industriales.

The right of a government or municipal quasi-public body to acquire
property for public use through a court action called condemnation, in
which the court decides that the use is a public use and determines the
compensation to be paid to the owner.

A building--or some portion of it--a wall or fence for instance, that
extends beyond the land of the owner and illegally intrudes on some land
of an adjoining owner or a street or alley.

Anything, such as a mortgage, tax, or judgment lien, an easement, a
restriction on the use of the land or an outstanding dower right that
may diminish the value or use and enjoyment of a property.

The federal law that prohibits discrimination in the extension of credit
because of race, color, religion, national origin, sex, age or marital
status.

A factor (number) by which the assessed value of a property is
multiplied to arrive at a value for the property that is in line with
statewide tax assessments. The ad valorem tax would be based on this
adjusted value.

The right of a defaulted property owner to recover the property prior to its sale by paying the appropriate fees and charges.

The interest held by a vendee under a contract for deed or an
installment contract; the equitable right to obtain absolute ownership
to property when legal title is held in another's name.