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A conditional transfer or pledge of real estate as security for the
payment of a debt. Also, the document creating a mortgage lien.
Mortgage loan companies that originate, service and sell loans to investors.
An agent of a lender who brings the lender and borrower together. The broker receives a fee for this service.
A lender in a mortgage loan transaction
A lien or charge on the property of a mortgagor that secures the underlying debt obligations.
A borrower in a mortgage loan transaction.
A marketing organization composed of member brokers who agree to share
their listing agreements with one another in the hope of procuring
ready, willing and able buyers for their properties more quickly than
they could on their own. Most multiple-listing services accept
exclusive-right-to-sell or exclusive agency listings from their member
Multiple Listing Service (MLS)
A written promise or order to pay a specific sum of money that may be
transferred by endorsement or delivery. The transferee then has the
original payee's right to payment.
A lease requiring the tenant to pay not only rent but also costs
incurred in maintaining the property, including taxes, insurance,
utilities and repairs.
A listing based on the net price the seller will receive if the property
is sold. Under a net listing the broker can offer the property for sale
at the highest price obtainable to increase the commission. This type
of listing is illegal in many states.
The income projected for an income-producing property after deducting losses for vacancy and collection and operating expenses.
Net Operating Income (NOI)
A use of property that is permitted to continue after a zoning ordinance prohibiting it has been established for the area.
A lack of uniformity; dissimilarity. Because no two parcels of land
are exactly alike, real estate is said to be non-homogeneous.
Substituting a new obligation for an old one or substituting new parties to an existing obligation.
The loss of value due to factors that are outmoded or less useful. It may be functional or economic.
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.
Two essential components of a valid contract; a "meeting of the minds."
Offer and Acceptance
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 loan
A listing contract under which the broker's commission is contingent on
the broker's producing a ready, willing and able buyer before the
property is sold by the seller or another broker.
An agreement to keep open for a set period an offer to sell or purchase property.
A form of implied agency relationship created by the actions of the
parties involved rather than by written agreement or document.
A real estate loan used to finance the purchase of both real property
and personal property, such as in the purchase of a new home that
includes carpeting, window coverings and major appliances.
A rule of evidence providing that a written agreement is the final
expression of the agreement of the parties, not to be varied or
contradicted by prior or contemporaneous oral or written negotiations.
Parol Evidence Rule
A mortgage loan wherein the lender has a partial equity interest in the
property or receives a portion of the income from the property.
The division of covenants' interests in real property when the parties
do not all voluntarily agree to terminate the co-ownership; takes place
through court procedures.
An association of two or more individuals who carry on a continuing
business for profit as co-owners. Under the law it is
regarded as a group of individuals rather than as a single entity. it is a typical form of joint venture in which each
general partner shares in the administration, profits and losses of the
operation. A limited partnership is a business arrangement whereby the
operation is administered by one or more general partners and funded, by
and large, by limited or silent partners, who are by law responsible
for losses only to the extent of their investments.
A wall that is located on or at a boundary line between two adjoining
parcels of land and is used or is intended to be used by the owners of
A lease, commonly used for commercial property, whose rental is based on
the tenant's gross sales at the premises; it usually stipulates a base
monthly rental plus a percentage of any gross sales above a certain
A test of the soil to determine if it will absorb and drain water adequately to use a septic system for sewage disposal.
Items, called chattels, that do not fit into the definition of real property; movable objects.
A reduction in a property's value resulting from a decline in physical
condition; can be caused by action of the elements or by ordinary wear
A planned combination of diverse land uses, such as housing, recreation
and shopping, in one contained development or subdivision.
Planned Unit Development (PUD)
A map of a town, section or subdivision indicating the location and boundaries of individual properties.
Plat map or Subdivision Plat
The increase in value or utility resulting from the consolidation (assemblage) of two or more adjacent lots into one larger lot.
In a metes-and-bounds legal description, the starting point of the
survey, situated in one corner of the parcel; all metes-and- bounds
descriptions must follow the boundaries of the parcel back to the point
Point of Beginning (POB)
The government's right to impose laws, statutes and ordinances,
including zoning ordinances and building codes, to protect the public
health, safety and welfare.
A written instrument authorizing a person, the attorney-in-fact, to act
as agent for another person to the extent indicated in the instrument.
power of attorney
On a closing statement, items that have been paid in advance by the
seller, such as insurance premiums and some real estate taxes, for which
he or she must be reimbursed by the buyer.
A charge imposed on a borrower who pays off the loan principal early.
This penalty compensates the lender for interest and other charges that
would otherwise be lost.
The mortgage market in which loans are originated and consisting of
lenders such as commercial banks, savings and loan associations and
mutual savings banks.
Primary Mortgage Market
1) A sum loaned or employed as a fund or an investment, as distinguished
from its income or profits. (2) The original amount (as in a loan) of
the total due and payable at a certain date. (3) A main party to a
transaction--the person for whom the agent works.
The order of position or time. The priority of liens is generally
determined by the chronological order in which the lien documents are
recorded; tax liens, however, have priority even over previously
Insurance provided by private carrier that protects a lender against a loss in the event of a foreclosure and deficiency.
Private Mortgage Insurance (PMI)
A legal process by which a court determines who will inherit a decedent's property and what the estate's assets are.
The effort that brings about the desired result. Under an open listing
the broker who is the cause of the sale receives the
A financing instrument that states the terms of the underlying
obligation, is signed by its maker and is negotiable (transferable to a
Someone who manages real estate for another person for compensation.
Duties include collecting rents, maintaining the property and keeping up
A lease given by the corporation that owns a cooperative apartment
building to the shareholder for the shareholder's right as a tenant to
an individual apartment.
Expenses, either prepaid or paid in arrears, that are divided or distributed between buyer and seller at the closing.
Any group of people designated as such by the Department of Housing and
Urban Development (HUD) in consideration of federal and state civil
rights legislation. Currently includes ethnic minorities, women,
religious groups, the handicapped and others
Exaggerated or superlative comments or opinions.
A life estate pur autre vie is a life estate that is measured by the life of a person other than the grantee.
Pur Autre Vie – “For the Life of Another”
A note secured by a mortgage or deed of trust given by a buyer, as
borrower, to a seller, as lender, as part of the purchase price of the
Purchase Money Mortgage (PMM)
The appraisal method of estimating building costs by calculating the
cost of all of the physical components in the improvements, adding the
cost to assemble them and then including the indirect costs associated
with such construction.
Court action to remove a cloud on the title.
A conveyance by which the grantor transfers whatever interest he or she
has in the real estate, without warranties or obligations.
The limit on the amount the interest rate can be increased at each
adjustment period in an adjustable-rate loan. The cap may also set the
maximum interest rate that can be charged during the life of the loan.
One who is prepared to buy property on the seller's terms and is ready to take positive steps to consummate the transaction.
Ready, Willing, and Able Buyer
A portion of the earth's surface extending downward to the center of the
earth and upward infinitely into space, including all things
permanently attached to it, whether naturally or artificially.
Real Estate Land
Trust ownership of real estate by a group of individuals who purchase
certificates of ownership in the trust, which in turn invests the money
in real property and distributes the profits back to the investors free
of corporate income tax.
Real Estate Investment Trust (REIT)
The federal law that requires certain disclosures to consumers about
mortgage loan settlements. The law also prohibits the payment or receipt
of kickbacks and certain kinds of referral fees.
Real Estate Settlement Procedures Act (RESPA)
The interests, benefits and rights inherent in real estate ownership.
The final step in the appraisal process, in which the appraiser combines
the estimates of value received from the sales comparison, cost and
income approaches to arrive at a final estimate of market value for the
A deed used by a trustee under a deed of trust to return title to the trustor.
The act of entering or recording documents affecting or conveying
interests in real estate in the recorder's office established in each
county. Until it is recorded, a deed or mortgage ordinarily is not
effective against subsequent purchasers or mortgagees.
A system established in 1785 by the federal government, providing for
surveying and describing land by reference to principal meridians and
Rectangular (Government) Survey System
The right of a defaulted property owner to recover his or her property by curing the default.
A period of time established by state law during which a property owner
has the right to redeem his or her real estate from a foreclosure or tax
sale by paying the sales price, interest and costs. Many states do not
have mortgage redemption laws.
The illegal practice of a lending institution denying loans or restricting their number for certain areas of a community.
The document signed by a lender indicating the amount required to pay a
loan balance in full and satisfy the debt; used in the settlement
process to protect both the seller's and the buyer's interests.
Reduction Certificate (Payoff Statement
Implements the Truth-in-Lending Act requiring credit institutions to inform borrowers of the true cost of obtaining credit.
A document, also known as a deed of reconveyance, that transfers all
rights given a trustee under a deed of trust loan back to the grantor
after the loan has been fully repaid.
The remnant of an estate that has been conveyed to take effect and be
enjoyed after the termination of a prior estate, such as when an owner
conveys a life estate to one party and the remainder to another.
A fixed, periodic payment made by a tenant of a property to the owner
for possession and use, usually by prior agreement of the parties.
A statement of proposed rental rates, determined by the owner or the
property manager or both, based on a building's estimated expenses,
market supply and demand and the owner's long-range goals for the
The construction cost at current prices of a property that is not
necessarily an exact duplicate of the subject property but serves the
same purpose or function as the original.
The construction cost at current prices of an exact duplicate of the subject property.
A clause in a deed that limits the way the real estate ownership may be used.
A loan under which the homeowner receives monthly payments based on his
or her accumulated equity rather than a lump sum. The loan must be
repaid at a prearranged date or upon the death of the owner or the sale
of the property.
Reverse-Annuity Mortgage (RAM)
The remnant of an estate that the grantor holds after granting a life estate to another person.
The return of the rights of possession and quiet enjoyment to the lessor at the expiration of a lease.
Clause in a lease which gives the lessee (tenant) the right to purchase
the rented property if during the term of the lease the lessor
(landlord) receives an offer to purchase from a buyer. Usually the
lessee must purchase on the terms and conditions of the buyer's offer.
Right of First Refusal
The right given by one landowner to another to pass over the land,
construct a roadway or use as a pathway, without actually transferring
An owner's rights in land that borders on or includes a stream, river or
lake. These rights include access to and use of the water.
A transaction in which an owner sells his or her improved property and,
as part of the same transaction, signs a long-term lease to remain in
possession of the premises.
sale and leaseback
The process of estimating the value of a property by examining and comparing actual sales of comparable properties.
Sales Comparison Approach
A person who performs real estate activities while employed by or associated with a licensed real estate broker.
A document acknowledging the payment of a mortgage debt.
Satisfaction of Mortgage
A market for the purchase and sale of existing mortgages, designed to
provide greater liquidity for mortgages; also called the secondary money
market. Mortgages are first originated in the primary mortgage market.
Secondary Mortgage Market
A portion of township under the rectangular (government) survey system. A
township is divided into 36 sections, numbered one through 36. A
section is a square with mile-long sides and an area of one square mile,
or 640 acres.
A payment by a tenant, held by the landlord during the lease term and
kept (wholly or partially) on default or destruction of the premises by
Land on which an easement exists in favor of an adjacent property (called a dominant estate); also called a _______ estate.
The amount of space local zoning regulations require between a lot line and a building line.
Ownership of real property by one person only, also called sole ownership.
Changing an item of real estate to personal property by detaching it from the land; for example, cutting down a tree.
A mortgage loan in which the lender, in exchange for a loan with a
favorable interest rate, participates in the profits (if any) the
borrower receives when the property is eventually sold.
Shared-Appreciation Mortgage (SAM)
The personal preference of people for one area over another, not necessarily based on objective facts and knowledge
One who is authorized by a principal to perform a single act or
transaction; a real estate broker is usually a special agent authorized
to find a ready, willing and able buyer for a particular property.
A tax or levy customarily imposed against only those specific parcels of
real estate that will benefit from a proposed public improvement like a
street or sewer.
A deed in which the grantor warrants, or guarantees, the title only
against defects arising during the period of his or her tenure and
ownership of the property and not against defects existing before that
time, generally using the language, "by, through or under the grantor
but not otherwise."
Special Warranty Deed
A lien affecting or attaching only to a certain, specific parcel of land or piece of property.
: A legal action to compel a party to carry out the terms of a contract.
The appraisal method of estimating building costs by multiplying the
number of square feet in the improvements being appraised by the cost
per square foot for recently constructed similar improvements.
Square Foot Method
That part of a state law that requires certain instruments, such as
deeds, real estate sales contracts and certain leases, to be in writing
to be legally enforceable.
statute of frauds
That law pertaining to the period of time within which certain actions must be brought to court.
Statute of Limitations
A lien imposed on property by statute, a tax lien, for example--in
contrast to an equitable lien, which arises out of common law.
The right of a defaulted property owner to recover the property after its sale by paying the appropriate fees and charges.
The illegal practice of channeling home seekers to particular areas,
either to maintain the homogeneity of an area or to change the character
of an area, which limits their choices of where they can live.
A loan in which only interest is paid during the term of the loan, with
the entrie principal amount due with the final interest payment.
Straight (Term) Loan
One who is employed by a person already acting as an agent. Typically a
reference to a salesperson licensed under a broker (agent) who is
employed under the terms of a listing agreement.
One who buys undeveloped land, divides it into smaller, usable lots and sells the lots to potential users.
A tract of land divided by the owner, known as the subdivider, into
blocks, building lots and streets according to a recorded subdivision
plat, which must comply with local ordinances and regulations.
Municipal ordinances that establish requirements for sub- divisions and development.
Subdivision and Development Ordinances
The leasing of premises by a lessee to a third party for part of the lessee's remaining term. See also assignment.
Relegation to a lesser position, usually in respect to a right or security.
A written agreement between holders of liens on a property that changes
the priority of mortgage, judgment and other liens under certain
The substitution of one creditor for another, with the substituted
person succeeding to the legal rights and claims of the original
claimant. it is used by title insurers to acquire from the
injured party rights to sue in order to re- cover any claims they have
An appraisal principle that states that the maximum value of a property
tends to be set by the cost of purchasing an equally desirable and
valuable substitute property, assuming that no costly delay is
encountered in making the it.
A court suit initiated by a landlord to evict a tenant from leased
premises after the tenant has breached one of the terms of the lease or
has held possession of the property after the lease's expiration.
Suit for Possession
A court action intended to establish or settle the title to a particular
property, especially when there is a cloud on the title.
Suit to Quiet Title
A pictorial depiction of land and the improvements on it and shows
boundary lines with measurements and bearings, buildings, easements,
To levy an assessment against, usually by government powers. Unpaid
taxes usually form a special lien on property owned by the taxpayer,
ahead of registered mortgages.
The instrument of conveyance when a property is sold by a government body to pay for arrears of taxes.
A claim registered against a property by a government authority for non-payment of assessed taxes.
Sale of property by a government body for non-payment of taxes, either by tender or auction.
Ownership of property in which several owners each own a stated portion
of the property (a percentage). Each owner may deal with her portion of
the property as she wishes (giving it away, mortgaging it, bequeathing
it, etc.) and, upon her death, her share becomes part of her estate.
Tenancy in Common
To die leaving a valid will: opposite meaning is to die intestate.
The person who makes a will.
A standard statement in a contract which ensures that all dates and
times of day noted in the contract are important and cannot be ignored
by any of the parties without the consent of the others except in breach
of the contract.
Time is of the Essence
A form of joint ownership of property where numerous owners share title
and enjoy use or occupation of the property according to a specific
The legal term for one's ownership interest in land.
A form of insurance contract which guarantees to indemnify an owner or
mortgagee of property for damages suffered as a result of undiscovered
title defects which arise later
The act of examining in detail the public records relating to ownership
of a parcel of land to ensure that the current owner has clear title,
free of any liens, claims, mortgage or competing and adverse interests.
Usually performed by a lawyer, qualified title searcher, or title
insurance company on behalf of a proposed purchaser or mortgagee.
An instrument of conveyance of title to property wherein the transferee
will be holding the title to the property on behalf on another person
A person who holds title to property on behalf of another.
An agreement to exchange payment for services, where payment becomes due
only once the service has been successfully performed. A listing
agreement for the sale of real property may be it
The illegal act of charging extremely high interest rates on a loan.
Legally binding; authorized
An indulgence granted by a local zoning commission or authority to allow a non-conforming use of a property to continue.
A contract that may be treated as legally unenforceable at the option of
a party (usually the injured party) but remains enforceable until that
party exercises her option.
Transfer of title to an asset with the consent of the owner.
A claim that is recorded/registered with the consent of the owner.
Allowing or causing a property to suffer damage or
undue wear and tear to the detriment of another person who has an
interest in or claim to the property.
A written statement of a person's wishes for the disposition of that person's estate after their death.
A secondary financing option in which new
money borrowed is blended with money already owed and registered on
title to the property. A second mortgage is registered as security for
the new money but the old mortgage remains in existence and the rate of
interest is a blend of the rate chargeable on the old mortgage and the
rate chargeable on the newly borrowed money.
A set of rules passed by local
government which regulates the use of property according to its location
within the municipality, placement of structures on the property,
maximum floor area, minimum lot area, minimum floor-to-lot area ratios,
An item of personal property that has been converted to real property by being permanently affixed to the realty.