A - Real Estate Glossary
1. A reduction or decrease. 2. The
removal of a nuisance.
Mortage loans are rated as A, B, C, or D paper.
"A" paper loans are the highest quality, lowest risk loans;
"B" quality are loans where the borrower has minor credit problems;
"C" quality are borrowers with marginal or poor credit; "D"
quality indicates very high risk loans.
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.
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
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
The first step in a disciplinary action against a licensee.
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. An acknowledgment is designed to prevent forged and
fraudulently induced documents from taking effect.
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.
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.
Real, substantial and just damages, or the amount awarded to
a complainant in compensation for his actual and real loss or injury.
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.
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.
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.
Disposal by a testator in his or her lifetime of a specific
property bequeathed in his or her will so the bequest is revoked.
adjustable
rate mortgage (ARM):
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.
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.
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.
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.
Federal National Mortgage Association securities purchasing
procedure where required yields are adjusted daily to reflect financial market
factors.
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.
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.
A male 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.
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.
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.
An agreement specifying services for which an agent or
broker will be compensated including a provision for payment of an advance fee.
The Latin word for "according to value."
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.
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. The burden to prove title is on the possessor, who
must show that four conditions were met: 1. He or she has been in
possession under a claim of right. 2. He or she was in actual, open and
notorious possession of the premises so as to constitute reasonable notice to
the record owner. 3. Possession was both exclusive and hostile to the
title of the owner (that is, without the owner's permission and evidencing an
intention to maintain the claim of ownership against all who may contest it). 4.
Possession was uninterrupted and continuous for at least the prescriptive
period stipulated by state law.
Zoning for beauty. May regulate architectural styles, colors
or signage.
A formal declaration that an affidavit is true.
Gives the owner of the dominant tenement the right to use
the servient tenement.
A sworn written statement made under oath before a notary public
or other official authorized by law to administer an oath. The term literally
means "has pledged one's faith." The affiant (person making the oath,
sometimes called the deponent") must swear before the notary that the
facts contained in the affidavit are true and correct.
A written statement, made under oath by a seller or grantor
of real property and acknowledged by a notary public, in which the grantor 1.
identifies himself or herself and indicates marital status, 2. certifies
that since the examination of the title on the date of the contracts no defects
have occurred in the title and 3. certifies that he or she is in
possession of the property (if applicable).
Title or interest acquired by the grantor after a property
has been conveyed.
A relationship created when one person, the principal,
delegates to another, the agent, the right to act on his or her behalf in
business transactions and to exercise some degree of discretion while so
acting. An agency gives rise to a fiduciary relationship and imposes on the
agent, as the fiduciary of the principal, certain duties, obligations, and high
standards of good faith and loyalty.
agency coupled with an interest:
An agency relationship in which the agent is given an estate
or interest in the subject of the agency (the property).
One authorized to represent and to act on behalf of another
person (called the principal). Unlike an employee, who merely works for a
principal, an agent works in the place of a principal. The main difference
between an agent and an employee is that the agent may bind his or her
principal by contract, if within the scope of authority, whereas an employee
may not unless given express authorization.
A questionnaire filled out by real estate agents while
reviewing a listed property. Often completed during the course of a caravan.
One whose legal right is invaded by an act(s) of another.
The word "aggrieved" refers to a substantial grievance, a denial of
some personal or property right, or the imposition upon a party of a burden or
obligation.
Agricultural landowners often lease their land to tenant
farmers, who provide the labor to produce and bring in the crop. An owner can
be paid by a tenant in one of two ways: an agreed cash in advance rental amount
(cash rents) or as a percentage of the profits from the sale of the crop when
it is sold (sharecropping).
Attention, Interest, Desire,
Action. In real estate advertising, creating ads that get the Attention
of prospects, stimulating their Interest in a property, generating a Desire
to purchase, and motivating the prospect to take Action.
Persons with acquired immunodeficiency syndrome are
protected under most federal and state discrimination laws. If buyers ask the
real estate agent whether a prior occupant had AIDS, most agents point out that
the law prevents responding one way or the other. Many states have emended
their licensing laws to include that someone who has AIDS is not deemed a
material fact, and therefore, does not form the basis for a claim that a broker
concealed a material fact. Also protected are persons with AIDS-related complex
(ARC) or human immunodeficiency virus infection (HIV).
A designated airspace over a piece of land. An air lot, like
surface property, may be transferred.
Rights to the use of
the open space or vertical plane above a property. Ownership of land includes
the right to all air above the property. Until the advent of the airplane, this
right was unlimited, but now the courts permit reasonable interference with
one's air rights, such as is necessary for aircraft, so long as the owner's
right to use and occupy the land is not lessened. Thus, low-flying aircraft
might be unreasonably trespassing, and their owners would be liable for any
damages. Governments and airport authorities often purchase air rights adjacent
to an airport, called an avigation easement, to provide glide patterns for air
traffic.
The air itself is not real property; however, air space is
real property when described in three dimensions with reference to a specific
parcel of land, as in a condominium unit. A Maryland case has decided that
separate owners of the land and the air rights may be separately assessed for
tax purposes. Air rights may be sold or leased and buildings constructed
thereon, such as was done with the Pam Am Building constructed above Grand
Central Station in New York City.
Air rights may also be transferred by way of easements, such
as those used in constructing elevated highways or in acquiring scenic
easements or easements of light and air. Because of the scarcity of land, many
developers are examining the possibilities for developing properties in the airspace
above prime properties owned by schools, churches, railways and cemeteries.
The level of selected pollutants set by law that may not be
exceeded in outside air. Used to determine the amount of pollutants that may be
emitted by industry
The act of transferring ownership, title, interest, or
estate in real property from one person to another. Property is usually sold or
conveyed by voluntary alienation, as with a deed or assignment of lease.
Involuntary alienation takes place when property is sold against the
owner's will, as in a foreclosure sale or a tax sale.
A provision sometimes found in a promissory note or mortgage
that provides that the balance of the secured debt becomes immediately due and
payable at the option of the mortgagee upon the alienation of the property by
the mortgagor. Alienation is usually broadly defined to include any transfer of
ownership, title, interest, or estate in real property, including a sale by way
of a contract for deed. Also called a due-on-sale clause
See Wrap-Around Mortgage
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. Land is held under the allodial system in the United States.
Alquist-Priolo
Special Study Zone:
A California law requiring a real estate agent or owner to
disclose to prospective buyers that a property is located within a special
studies zone (geological hazard zone) and if the property contains or will
contain a dwelling (a residentally zoned lot). "Special study zones"
cover an area 660 feet on each side of fault lines and are indicated on maps
prepared by the California Department of Mines and Geology.
Any unconfined portion of the atmosphere; open air; outside
surrounding air.
amendment to the escrow instructions:
A change to escrow instructions requiring the agreement of
both buyer and seller.
An amendment is a change to the existing content of a
contract. Any time words or provisions are added to or deleted from the body of
the contract, the contract has been amended.
The qualities and state of being pleasant and agreeable. In
residential appraising, those peculiar and intangible benefits of home
ownership such as satisfaction of possession and use arising from architectural
excellence, scenic beauty, and desirable social environment.
American
Institute of Real Estate Appraisers (AIREA):
A professional
organization formerly affiliated with the National Association of REALTORS.
AIREA promoted professional practice and ethics in the real estate appraisal
industry and identified experienced, competent, ethical appraisers by awarding
the MAI (Member Appraisal Institute) and RM (Residential Member) designations.
In 1991, AIREA was merged with the Society of Real Estate Appraisers into the
Appraisal Institute. The only designations awarded now are the MAI and SRA
(Senior Residential Appraiser)
American
Land Title Association (ALTA) policy:
A title insurance policy that protects the interest in a
collateral property of a mortgage lender who originates a new real estate loan.
American
Society of Appraisers (ASA):
A professional organization of appraisers engaged in the
appraisal of both real and personal property. It confers the designations ASA
and FASA (Fellow).
American
Society of Real Estate Counselors (ASREC):
A professional organization, affiliated with the National
Association of REALTORS, composed of individuals with proven success in real
estate counseling who serve clients on a fee basis. The society offers its
members exclusive use of the professional designation CRE (Counselor of Real
Estate).
Americans
with Disabilities Act (ADA):
On July 26, 1990,
President Bush signed into law the Americans with Disabilities Act of 1990
("ADA"), a federal law which prohibits discrimination against
individuals with disabilities. The ADA addresses discrimination in four general
areas:
1.
Employment
(Title I);
2.
Public
services (Title II);
3.
Public
accommodations and commercial facilities (Title III); and,
4.
Telecommunications
(Title lV).
The purpose of the ADA is to give individuals with disabilities civil rights
protection against discrimination similar to those afforded to individuals on
the basis of race, color, national origin, sex, and religion.
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. The principal is thus directly reduced or
amortized over the life of the loan. Some loans are not fully amortized, and
require a balloon payment at the end of the term of the loan.
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.
Monthly loan payments (principal and interest, if any) times
12 months.
The actual costs it takes to run the property, such as
property tax, insurance, maintenance, repairs, management fees, utilities, and
supplies.
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.
A sum of money recieved by an annuitant in a series of fixed
periodic payments.
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.
A clause in a mortgage or deed of trust specifying that the
senior lienholder will retain lien priority in the event of a merger.
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."
Certain real estate
brokerage activities have come under public scrutiny by the Federal Trade
Commission. These activities include the fixing of general commission rates by
local boards or groups of brokers and the exclusion of brokers from membership
in local boards or in multiple-listing arrangements due to unreasonable
membership requirements. As a result of court cases, local real estate boards
no longer directly or indirectly influence fixed commission rates or commission
splits between cooperating brokers. Moreover, in some states, clients must be
specifically informed that the commission rates are negotiable between client
and broker.
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.
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
An independent person trained to provide an unbiased
estimate of value, such as a professional service performed for a fee.
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.
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.
A water right favored in some states where an owner has the
exclusive rights to take all the water for specific beneficial uses.
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.
An easement that is annexed to the ownership of one parcel
and allows the owner the use of the neighbor's land.
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.
Borrowing at one interest rate and investing at a higher
rate.
A nonjudicial 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.
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.
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.
The part of the Business and Professions Code governing
transactions in real property sale contracts and trust deeds.
The part of the Business and Professions Code governing real
property securities dealers.
The part of the Business and Professions Code governing
commissions, loan costs, and payment requirements in loan brokerage activities.
A mineral once used in insulation and other materials that
can cause respiratory diseases. Asbestos has been classified as carcinogenic.
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.
A disease associated with inhalation of asbestos fibers. The
disease makes breathing progressively more difficult and can be fatal.
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.
The combining of two or more adjoining lots into one larger
tract to increase their total value.
The imposition of a tax, charge or lein, usually according
to established rates.
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).
The assembly, management and disposition of a portfolio of
investment properties.
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.
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.
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.
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.
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.
The chief law officer of the federal or state government,
who appears for the people in criminal court.
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.
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.
An owner has a duty to reasonably protect children from
injury when his or her property is likely to attract children.
Selling property to the highest bidder.
Computer systems that permit lenders to expedite the loan approval
process and reduce lending costs.
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.
Copyright 2009. Artisan REA, LLC. All rights reserved.
