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Dictionary of Real Estate Terminology

Dictionary of Real Estate Terminology

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® "Educating the best in the business, and those who strive to be"

Dictionary of Real Estate Terminology

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

A
Abstract of Title: A compilation of the recorded documents which relate to a parcel of land, from which an attorney may give an opinion of the condition of title. Acceleration Clause: Clause used in a mortgage or deed of trust, which gives the lender the right to demand full payment upon a certain event, such as change of ownership without the lender's consent. Acceptance: Voluntary agreement to the price and terms of an offer, which creates a contract. Acre: A unit of land measure in any shape equal to 43,560 square feet. Acquisition Costs: The costs of acquiring property other than purchase price, such as escrow fees, title insurance, lenders fees, attorney fees, etc. Ad Valorem: A method of taxation using the value of the real estate to determine the amount of the tax. Addenda: Plural for ADDENDUM; more than one addendum. Addendum: Something added to a document, letter, escrow instructions, contractual agreement, etc. Adjustable Rate Loan: Loan in which the interest rate is periodically adjusted to more closely coincide with current rates. Adverse Possession: A method of acquiring title by possession under certain conditions. Generally, possession must be open, continuous, and hostile. Exact time of possession and specific requirements vary from state to state. Agency: Any relationship in which one party (Agent) acts for or represents another (Principal), under the authority of the latter. Alienation Clause: A type of acceleration clause, calling for a debt under a mortgage or

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onlineEd, Dictionary of Real Estate Terminology

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deed of trust to be due in its entirety upon transfer of ownership of the secured property. A.L.T.A. American Land Title Association, an organization composed of title insurance companies, which has adopted certain forms to standardize coverage on a national basis. Amortization: The payment of debt in regular and periodic installments of principal and interest, as opposed to interest only payments. Annual Percentage Rate: The yearly interest percentage of a loan, as expressed by the actual rate of interest paid, including up-front loan fees. Appraisal: An opinion of value based upon factual analysis. Appreciation: An increased value of property due to either a positive improvement of the area or elimination of negative factors, but not due to an increase in value from inflation. Appurtenance: Any part of real property which passes upon the transfer, either attached or not, such as a barn or an easement. Arbitration Clause: A clause in a contract calling for the decision of a third party in the event of a dispute. Asbestos: A hazardous material, used for fire resistance, once commonly used in insulation, flooring, and roofing materials. As Is Condition: Premises accepted by a buyer or tenant in the condition existing at the time of the sale or lease, including all physical defects. Asking Price: The price at which the seller is offering property for sale. Assessment: Estimate of value for tax purposes. Assessment District: An area whose boundaries are set for tax assessment purposes only. Assignment: A transfer to another of any property, real or personal, or of any rights or estates in said property. Assumption: Agreement by a buyer to assume the liability under an existing note secured by a mortgage or deed of trust. Assumption Fee: Lender's charge for paperwork involved in the processing for a new buyer to assume an existing loan.

B
Backup Offer: A secondary offer to buy property, used in case the first offer fails. Balloon Note: A note calling for periodic payments which are insufficient to fully amortize the loan, so that a principal sum known as a balloon is due at maturity. Balloon Payment: A lump sum payment, usually at the end of the term of a note with terms

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Buyer's Market: A market condition favoring the buyer. including design. materials used. use. Buy Down: A payment to the lender for the purpose of reducing the interest rate for the loan. when the borrower needs to have more time before taking the long term. generally made between a short term loan and long term loan. dishwashers. Bundle of Rights: All rights and interests of ownership in real property considered together.) for a fee. Cash Flow: In investment property.e. Cap: The maximum increase of an adjustable rate mortgage. stoves. Build to Suit: The building of a structure to meet the specifications of a purchaser. Dictionary of Real Estate Terminology Page 3 of 26 insufficient to fully amortize the loan. and generally the difference between cost and selling price. or permanent. Capitalization Rate: The percentage used to determine the value of income property through capitalization. etc. Bridge Loan: An interim loan. Blanket Mortgage: A mortgage covering more than one property. landlord-tenant. Capitalization: The determination of present value of income property by taking the annual net income. Cancellation Clause: A clause in a lease or other contract setting forth the conditions under which each party may cancel or terminate the agreement. Building Code: A comprehensive set of laws which control the construction of buildings. but separable. and dividing by a rate of return percentage which is commonly acceptable to buyers of similar properties (i. less deductible expenses. and other appliances. Used mainly for income tax purposes. or due prior to the end of the amortization period. ovens. Bill of Sale: An instrument by which one transfers personal property. the actual cash that the investor will receive after http://www. construction.000 / 11% = $90. Built-ins: Commonly.htm 5/20/2006 . framed into the home construction.onlineed. C Call: To demand payment due to default. and repair.com/schools/courses/or_p_lic/File_Cab/dictiona/re_terms. Capital Gains: Gains realized from the sale of capital assets. usually when more homes are for sale than there are interested buyers. financing.onlineEd. Brokerage: The act of bringing together principals (buyer-seller. $10.909).

Chattel Mortgage: A lien on personal property. title fees. if valid. with the balance of the property (both land and building) owned in common by the owners of each unit. recording fees. A term used to describe the limitations which may be placed on property. Condemnation: The taking of private property for public use without the consent of the owner.onlineEd. escrow fees.onlineed. but only upon payment of just compensation. including the signing and transfer of documents and the distribution of funds. such as loan fees. Comparative Analysis: A comparison of similar properties to a subject property for the purpose of evaluating market value and proper pricing. would affect the rights of ownership. Chattel: Personal property. such as in a deed of trust. The buyer only has equitable title during the contract term. Cloud on Title: An invalid encumbrance on real property. Closing: Process by which all parties to the transaction conclude the details of a sale.com/schools/courses/or_p_lic/File_Cab/dictiona/re_terms.C. Closing Statement: The computation of financial adjustment between buyer and seller as of the day of closing. conditions. Common Wall: A wall erected on a property boundary as a common support to structures on both sides.htm 5/20/2006 . Contract for Deed: An installment contract for the sale of real estate. Cash Out: To take the entire amount of a seller's equity in cash rather than to retain some interest in the property. Comparables: Similar properties used as comparisons to determine the value of a specific property. C. appraisal fees. Closing Costs: Expenses incidental to a sale of real estate. Chain of Title: The chronological order of conveying of a parcel of land. but which are under separate ownership. and restrictions. issued upon completion of improvements. starting from original owner. brokerage fees. Construction Loan: Short term financing of real estate construction which is generally followed by a long term loan. which. where the seller has legal title until paid in full. Dictionary of Real Estate Terminology Page 4 of 26 deduction of operating expenses and debt service from his gross income. Condominium: A structure of two or more units.& Rs: Covenants. the interior space of which are individually owned. transfer fees. Contingency: The dependence upon a stated event that must occur before a contract is binding. and other related costs. http://www.

Delivery: In conveying. Depreciation: A decrease in value to real estate improvements caused by deterioration or obsolescence. which binds all future owners. the placing of the property in the actual or constructive possession of the grantee. Depreciable Life: A tax term meaning the number of years used to determine the depreciation of an asset. including interest and principal payments. less depreciation. Deferred Maintenance: Repairs necessary to put a property in good condition. Cooperating Broker: The broker who finds the buyer and so shares in the commission with the listing broker. mortgaged. Dictionary of Real Estate Terminology Page 5 of 26 Conventional Loan: A mortgage or deed of trust not obtained under a government program. Courtesy to Brokers: Willingness of a seller to pay a commission to any broker supplying a suitable buyer. or assigned. Discount Points: The amount of money the borrower or seller must pay the lender to get a http://www. D Debt Service: The amount of financing. Includes most instruments by which an interest in real estate is created.htm 5/20/2006 . Covenant: Assurances set forth in a deed by the grantor.com/schools/courses/or_p_lic/File_Cab/dictiona/re_terms. usually accomplished by delivery of a deed to the buyer. or a loss in value as an accounting procedure to use as a deduction for income tax purposes. or by the recording of the deed. Devise: Real estate left by will. or implied by law. Conveyance: Transfer of title to land. Cost Approach: An appraisal method.onlineEd. plus land value. on a property.onlineed. a security instrument whereby real property is given as security for a debt. Deed of Trust: Similar to a mortgage. Deed: A conveying instrument used to pass title to property upon sale. Counter Offer: An offer (instead of acceptance) in response to an offer. Deed Restrictions: Limitations on the use of property placed in the conveying deed by the grantor. Creative Financing: A general term which encompasses any method of financing property going beyond traditional real estate lending. estimating the replacement cost of a structure.

such as a vendee under a land sales contract. Economic Life: The profitable life of an improvement. which one has in the land of another. Eminent Domain: A governmental right to acquire property for public use by condemnation. fence. Dictionary of Real Estate Terminology Page 6 of 26 mortgage at a stated interest rate. or necessary implication. construction onto the property of another.htm 5/20/2006 . agreement. Ejectment: A court action to recover real property. Equal Credit Opportunity: Federal act granting women certain independent status. reservation. Economic Obsolescence: Loss of desirability and useful life of a property through economic forces. Down Payment: Cash portion paid by the buyer from his own funds. viewed from the front. Effective Age: Age of a structure as estimated by condition rather than actual age. Easement: A right created by grant. and the payment of just compensation.com/schools/courses/or_p_lic/File_Cab/dictiona/re_terms.. Encroachment: Generally. http://www. Dual Agency: The representation by an agent of opposing principals (buyer and seller) at the same time. A point is equal to one percent of the loan amount. rather than deterioration. traffic pattern changes.onlineEd. and preventing lenders from considering such negative credit aspects as the possibility of a woman having children and dropping out of the labor market. charge. etc. This practice is illegal in some states. Equitable Ownership: Ownership by one who does not have legal title. which is generally shorter than the physical life. usually but not always. less the amount of existing loan balances. E Earnest Money: The money from a purchaser which is deposited into escrow upon the signing of the agreement of sale to show that the purchaser is serious about buying the property. as of a wall. building. Distress Sale: A sale of property when the seller is under extreme pressure to sell. prescription.onlineed. etc. Elevation: The exterior design of a structure. such as zoning changes. Economic Rent: The market rental value of a property at any given time. as opposed to that portion of the purchase price which is financed. or liability attached to and binding real property. lien. Encumbrance: A claim. Equity: Market value of real property. and which generally results in the property selling for less than market value. even though the actual rent may be different.

F Fair Credit Reporting Act: A federal law giving one the right to see his or her credit report.A. and which processes them according to instructions.H.htm 5/20/2006 . Escrow Instructions: Instructions which are signed by both buyer and seller. Escape Clause: A clause stating that the borrower shall not be obligated to buy nor shall any deposit be lost if the appraisal is less than purchase price. after the termination of an intermediate estate. Exchange: A reciprocal transfer of real property which has certain tax advantages over a sale. regardless of whether or not the broker is the cause of sale. http://www. Fair Housing Law: Title VIII of the Civil Rights Act. Fee Simple: An estate under which the owner is entitled to unrestricted powers to dispose of the property. such as a lease. Estate for Life: An estate in real property for the life of a living person. Estate in Remainder: An estate which vests in one other than a grantor. Escalation Clause: A clause in a lease providing for an increased rental at a future time. F. religion. color. Escrow: A neutral third party which receives all funds and instruments necessary to a sale. Exclusive Agency Listing: A listing under which the broker's commission is protected against a sale by other agents but not by a sale by the principal. The estate then reverts back to the grantor or to a third party.com/schools/courses/or_p_lic/File_Cab/dictiona/re_terms. which forbids discrimination in the sale or rental of residential property because of race. sex.:A federal agency which insures first mortgages. Estate of Inheritance: An estate which may descend to heirs.onlineed. Estate: The interest or nature of the interest which one has in property.onlineEd. and which enable an escrow agent to carry out the procedures necessary to transfer real property. usually when a property owner dies without a will. Escheat: A reversion of property to the state in the absence of an individual owner. Exclusive Right to Sell: A listing contract whereby the owner promises to pay a commission to the broker if property is sold during a stated period. and can be left by will or inherited.A. F. Dictionary of Real Estate Terminology Page 7 of 26 Equity Loan: A loan based upon the equity in a property. among other rights. Estate for Years: Any estate for a definite period of time.H. enabling lenders to loan a very high percentage of the sales price. or national origin.

Freehold: An estate. Grace Period: A period of time past the due date for a payment.M.onlineed. http://www.H. especially voluntary liens. Fixed Rate Loan: A loan having a rate of interest which remains the same for the life of the mortgage.htm 5/20/2006 . that is. usually regarding financial transactions.L. at discounts. including any known property defects or problems. Free and Clear: Real property against which there are no liens. Front Foot Cost: The determination of the value of real property based on a value per foot as measured along the frontage of a parcel.Federal National Mortgage Association. at least of duration of a lifetime. It is usually used for commercial property. to extinguish all rights. G Gap Financing: Loans secured as interim financing until more permanent financing can be obtained. Full Disclosure: The act of revealing all known facts which may affect the decision of a buyer. and is legally treated as real property while it is so attached. also called Freddie Mac. First Refusal Right: A right which gives the lessee a first chance to buy the property if the owner decides to sell. First Mortgage: A mortgage having priority over all other voluntary liens against certain property.C. Front Footage: Linear measurement along the front of a parcel. both conventional and federally insured. secured under the same instrument and by the same real property. during which time a payment may be made and not considered delinquent. and interest of the owners of property in order to sell the property to satisfy a lien against it.M. Fixtures: Personal property which is attached to real property. A federal agency which purchases first mortgages.A. also called Fannie Mae. Foreclosure: A procedure in or out of court. Future Advance Clause: A clause in a mortgage or deed of trust which allows the borrower to borrow additional sums at a future time. F. the portion fronting on a major road.com/schools/courses/or_p_lic/File_Cab/dictiona/re_terms. from members of the Federal Reserve System and the Federal Home Loan Bank System. title. Functional Obsolescence: The need for replacement because a structure or equipment has become inefficient because of improvements since discovered or invented.N. whereby the lessee can match a legitimate offer. Fiduciary: One acting in a relationship of trust. A private corporation which deals in the purchase of first mortgages. Dictionary of Real Estate Terminology Page 8 of 26 F.onlineEd.Federal Home Loan Mortgage Corporation.

derived from a business or property. generally the buyer. will theoretically determine the market value. If the property is improved. either actual or estimated. or land exclusive of any buildings on it. etc. which. business.471 acres). Gross Area: In building measurement.000 square meters (2. some natural causes. etc. Gross Income: The scheduled total income. vandalism. One who gives a deed. http://www. is not now permissible. Ground Lease: A lease of vacant land. Dictionary of Real Estate Terminology Page 9 of 26 Graduated Lease: A lease calling for a varying rental. Highest and Best Use: The use of land which will bring the greatest economic return over a given time. when multiplied by the annual gross income. equaling 10. Hazard Insurance: Real estate insurance protecting against loss caused by fire.560 square feet). irrespective of the area inside actually usable or rentable. Holdback: Portion of a loan held back by the lender until a certain contingency is met. depending upon the terms of the policy. utilities. when established. Gross Acre: An acre (43.com/schools/courses/or_p_lic/File_Cab/dictiona/re_terms.onlineEd.onlineed. insurance. A general rule of thumb which varies with specific properties and areas. Gross Income Multiplier: A figure which. as distinguished from a net (usable) acre. Grantor: One who transfers property or property rights. H Habendum Clause: The clause in a deed which defines the extent of the estate of the grantee. graduated payment loan. Grandfather Clause: The clause in a law permitting the continuation of a use. the outside dimensions determine the gross area. etc. Grantee: One to whom property or property rights is given.htm 5/20/2006 . Gross Lease: A lease which obligates the lessor to pay all or part of the expenses of the leased property. Hectare: A unit of measurement. such as taxes. usually based on periodic appraisal or simply the passage of time. was permissible. ground rent is that portion which is attributable to the land only.. Ground Rent: Rent paid for vacant land. allowing low beginning payments and a shorter term because of higher payments as loan progresses.. but because of a change in the law. Gross Rent Multiplier: A method of obtaining an approximate value of income property by using gross yearly rents. Growing Equity Mortgage: A fixed rate.

A. payment or rate. and other such coverage. H. normally including improvements but not land or other indestructible parts. A federal cabinet department responsible for the major housing programs in the United States. such as a street. Improved Land: Land having either on-site improvements.H.S. Hypothecate: To mortgage or pledge without delivery of the security to the lender. Insured Mortgage: A mortgage which is insured against loss to the mortgagee in the event of default and a failure of the property to satisfy the balance owing plus the costs of foreclosure.The Department of Housing & Urban Development. or both. Some states grant statutory exemptions.R. utilities. Interest: Money charged for the use of money (principal). protecting homestead property (usually to a set maximum amount) against the rights of creditors. buildings. Improvements: Generally. Homestead: The dwelling (house and contiguous land) of the head of a family. formed for the purpose of improving or maintaining the quality of the area. insurance. Income Property: Property which produces income. electrical. such as F. Insurable Value: Value of property for insurance purposes. I Implied Agency: An agency which is not expressly set out but must be deduced from the circumstances. usually from rental. to determine a long or short term capital gain. and heating) in the home he has purchased. or other periodic debts against real property. The period during which the taxpayer owns the asset. etc.com/schools/courses/or_p_lic/File_Cab/dictiona/re_terms. according to inflation or suitable rate index.onlineEd. http://www. Dictionary of Real Estate Terminology Page 10 of 26 Holding Period: The time period used by the I. but may include any permanent structure or other development.onlineed. Homeowners' Association: An association of people who own homes in a given area.htm 5/20/2006 .U. Income Approach: An appraisal method to determine the value of rental property by use of the estimated net income over the life of the structure.D. Indexing: Altering the mortgage term. offsite improvements. Impound Account: Account held by a lender for payment of taxes. Home Warranty Insurance: Private insurance insuring a buyer against defects (usually in plumbing. Homeowners' Insurance: Includes the coverage of personal liability and theft from the home.

Involuntary Lien: A lien.com/schools/courses/or_p_lic/File_Cab/dictiona/re_terms. including both income and resale. Interest is figured on the declining principal balance. As the interest decreases. The interests must be equal. based on declining principal balance. the interest passes to the surviving joint tenants. The buyer (vendee) has equitable title during the contract term. The amount applied to principal remains the same. the total payment decreases. plus interest. such as a tax lien or judgment lien. Landlord's Warrant: A warrant enabling a landlord to levy upon a tenant's personal property. Intestate: Without leaving a will. Interest Included Note: A note having equal payments (usually monthly). Interim Financing: Temporary financing. taken by two or more joint tenants. Periodic interest payments are made. to which the owner agrees. Interest Rate: The percentage of an amount of money which is paid for its use for a specified time.onlineed.onlineEd. interest also decreases. Junior Mortgage: Any mortgage of lesser priority than a first mortgage. Investment Yield: The gain from an investment in real property. occurring under the same conveyance. rather than to the heirs of the deceased. which attaches to property without the consent of the owner. Interest Only Mortgage: A mortgage under which the principal amount borrowed is repaid in one payment. and to sell property at a public sale to collect delinquent rent. rather than a mortgage lien. applying more of each payment to the principal.htm 5/20/2006 . As the principal decreases. http://www. Judgment Lien: An involuntary lien against the property of someone who has been made a debtor on the basis of a judgment. Expressed as a percentage of the amount invested. K L Land Sales Contract: An installment contract for the sale of land. Landlord: An owner of leased real estate. Upon the death of a joint tenant. J Joint Tenancy: An undivided interest in property. and beginning at the same time. The seller (vendor) has legal title until paid in full. Usually expressed as an annual percentage. usually for construction. Dictionary of Real Estate Terminology Page 11 of 26 Interest Extra Note: A note requiring an equal (usually monthly) payment on principal.

Property may be exchanged for like in kind property and the tax deferred. Lessee: The party to whom a lease is given in return for consideration (rent). and giving notice that anyone acquiring an interest in said property subsequent to the date of the notice may be bound by the outcome of the litigation. The term does not refer to the physical similarity of the properties. Lease: An agreement by which the owner of real property gives the right of possession to another. using reasonable care.onlineed.htm 5/20/2006 . Lien: An encumbrance against property for money. either voluntary or involuntary. as opposed to a selling agent.com/schools/courses/or_p_lic/File_Cab/dictiona/re_terms. is interested in property. Dictionary of Real Estate Terminology Page 12 of 26 Land Use Planning: The development of long range plans for the use of land in a given area. under certain conditions. Lien Theory: A theory followed in several states that assumes a mortgage has only a lien on the mortgaged property. but to purpose and intent (investment) of the taxpayer. Loan Package: The file of all items necessary for the lender to consider giving a loan. Like Kind Property: A tax term used in exchanges. Lis Pendes: A legal notice recorded to show pending litigation related to real property. which is acceptable in a court of law. Leasehold: An estate held under a lease for a fixed term. Lessor: The party (usually the owner) who gives the lease in return for consideration (rent). which could not be discovered by inspection. for a specified period of time. Legal Description: A method of geographically identifying a parcel of land. but not all encumbrances are liens. Not an offer and creates no obligation. Letter of Intent: A formal method of stating that a prospective developer. Lease-Purchase Option: A lease under which the lessee has the right to purchase the property. whereby the agent agrees to secure a buyer or tenant for specific property at a certain price and terms in return for a fee. Leverage: The use of financing to allow a small amount of cash to purchase a large property investment. Listing Agent: A real estate agent who obtains a listing. or lessee. and for consideration. These http://www. who finds a buyer. and usually a percentage of the loan amount. Listing: An agreement between the owner of real property and a real estate agent. such as through zoning plans. Latent Defect: A hidden or concealed defect.onlineEd. buyer. Loan Origination Fee: A one time set-up fee charged by the lender. All liens are encumbrances. and the mortgagor has legal title.

thus enabling the lender to loan a higher percentage of the sales price. M.onlineEd. The federal government writes this form of insurance through the F. Usually refers to a portion of a subdivision. and the V. Mechanic's Lien: A lien created by statute for the purpose of securing priority of payment for the price or value of work performed and materials furnished in construction or repair of improvements. Market Value: The highest price a willing buyer would pay and a willing seller would accept. expressed as a percentage.htm 5/20/2006 . employment letters. Dictionary of Real Estate Terminology Page 13 of 26 items would include the information on the prospective borrower (loan application. with their terminal points and angles. as distinguished from interim loans or construction loans. Lock-In: The prohibition of a loan secured by a mortgage or deed of trust. etc. Long Term Financing: A mortgage or deed of trust for a term of ten years or more.).).A. survey. M Market Approach: Appraising the value of property by comparing the price of similar properties (comparables) recently sold.H. The price paid for insurance protecting the mortgage lender against loss incurred by a mortgage default. Marketable Title: Title which can be readily marketed (sold) to a reasonably prudent purchaser aware of the facts and their legal meaning concerning liens and encumbrances. any portion or parcel of real property. Metes and Bounds: Description of land by boundary lines. Master Lease: A lease controlling subsequent leases. etc. five years or longer.com/schools/courses/or_p_lic/File_Cab/dictiona/re_terms. rent being paid http://www. financial statement. so that the borrower is 'locked-in' to the loan for a specified period. both being fully informed. Master Plan: A zoning plan for an entire governmental entity. and which attaches to land as well as improvements.P. or in some areas. of the amount of a loan to the value or selling price of real property. Month to Month Tenancy: A tenancy where no written lease is involved. Lot: Generally. Master Policy: An insurance policy to a lender covering property in more than one location.Mortgage insurance premium.onlineed. credit report. and the property exposed for a reasonable period of time.I. Long Term Lease: A general term which may refer to a lease ten years or longer in term.A. and information on the property (appraisal. Maturity: Termination period of a note. Loan Ratio: The ratio.

A. as does a mortgage broker. Even though payments are made on time.onlineed. Servicing may be done by the lender or a company acting for the lender. Mortgage Banker: A company providing mortgage financing with its own funds rather than simply bringing together lender and borrower. Multifamily Dwelling: A building designed as a dwelling for more than one family. Mortgage: The instrument by which real estate is hypothecated as security for the repayment of a loan.htm 5/20/2006 . through legislation. releasing the lien upon payment in full. as opposed to that area which is not usable or must be used for off-site improvements such as streets. foreclosing if in default.com/schools/courses/or_p_lic/File_Cab/dictiona/re_terms. Mortgagor: The party who borrows the money and gives the mortgage.H.R.A. Mortgage Life Insurance: A term life insurance policy for the amount of the declining balance of a loan secured by a mortgage or deed of trust. and handles the necessary applications for the borrower to obtain a loan against real property by giving a mortgage or deed of trust. Negative Amortization: A condition created when a loan payment is less than interest alone. Mortgage Broker: One. The federal government writes this type of insurance through the F.onlineEd. an association of people dedicated to the betterment of the real estate industry. and V. Mortgagee: The party lending the money and receiving the mortgage. National Association of Realtors®. Dictionary of Real Estate Terminology Page 14 of 26 monthly. making sure taxes are paid and insurance is in force. The beneficiary is the mortgagee. In the event of death of the insured. Negative Cash Flow: When the income from an investment property does not equal the usual expenses. brings together borrower and lender. N N. Net Acre: An acre which may be used for the building of structures. sidewalks. and high ethical standards. etc. the amount owing increases. who for a fee. submitted to all members of an association. thus enabling the lender to loan a higher percentage of the sales price. Mortgage Servicing: Controlling the necessary duties of a mortgagee.A. the mortgage is paid in full. Mortgage Insurance: Insurance written by an independent mortgage insurance company protecting the mortgage lender against loss incurred by a mortgage default. for a fee. education. Multiple Listing:An exclusive listing. so that each may have the opportunity to sell the property. such as collecting payments. etc. http://www.

such as taxes. recorded to show that a construction job has been completed.onlineed. the broker has no exclusive right to sell. Open House: A house which is open without an appointment to prospective buyers or tenants. which does not usually repeat itself. O Offer: A presentation or proposal for acceptance. insurance. To be legally binding an offer must be definite as to price and terms. with certain conditions. Note: A unilateral agreement containing an express and absolute promise of the signer to pay a named person a definite sum of money at a specified date. but before debt service. Notice of Completion: A notice. in order to form a contract. Used in zoning requirements. Notice of Cessation: A notice stating that work has stopped on a construction project. Dictionary of Real Estate Terminology Page 15 of 26 Net Income: The difference between adjusted gross income and operating expenses. between the same or different parties. Illegal in some states. Usually provides for interest and is secured by a mortgage or deed of trust. in addition to a fixed rental. for inspection.htm 5/20/2006 . usually as to the assets of the mortgage. Open Listing: A written authorization to a real estate broker by a property owner. http://www. stating that a commission will be paid to the broker upon presentation of an offer which meets a specified price and terms. Notice to Quit: A notice by a landlord to a tenant to vacate rented property. for an existing one. during certain hours and days of the week. Offer and Acceptance: Necessary elements of a contract to sell real estate. the expenses of the property leased.onlineEd. debt. Open Mortgage: A mortgage that can be prepaid without penalty. However. Novation: Substitution of a new contract. Open-End Mortgage: A mortgage permitting the mortgagor to borrow additional money under the same mortgage. Net Lease: A lease requiring the tenant to pay. Open Space Ratio: Ratio of land area to floor area of an apartment building. with the secured property as the only recourse. etc.com/schools/courses/or_p_lic/File_Cab/dictiona/re_terms. and must bring in his offer before any other offer is accepted. Net Listing: A listing under which a real estate broker receives any amount over a given net amount to the seller. Non-recourse Loan: A loan not allowing for a deficiency judgment. Non recurring Expense: An expense. or obligation. such as a fire or other natural disaster.

negative amortization is created. Usually part of an existing escrow. usually over ten years. P. The four main portions of a usual monthly payment. If the payment is less than the interest alone. as well as interest on the loan. Partition: Any division of real property between co-owners. Patent Defect: A defect plainly visible. There is usually a minimum base rental.onlineEd. Used to indicate what's included in a monthly payment on real property. Physical Life: An improvement's life.com/schools/courses/or_p_lic/File_Cab/dictiona/re_terms. Plat Book: A book which contains the plat maps for an area. taxes.onlineed. When the escrow agent has all instruments and instructions necessary to carry out the transaction. Perfect Escrow: A complete escrow. P.htm 5/20/2006 .I.I. when properly maintained. regardless of the increase in the interest rate. in the event of poor sales. Participation: Lender involvement in a development for a percentage of the gross sales or profit. Payoff: The payment in full of an existing loan balance or other lien. and called a sub escrow. or one that would be discovered by the exercise of ordinary care. usually on a retail business property. Planned Unit Development: A subdivision of five or more individually owned lots with one or more other parcels owned in common or with reciprocal rights in one or more other parcels. resulting in individual ownership and interests.I. as in a subdivision.Principal. Piggyback Loan: Loan made jointly by two or more lenders on the same property under one mortgage or trust deed. Percentage Lease: A lease. Payment Cap: The maximum amount for a payment under an adjustable mortgage loan. Permanent Mortgage: A mortgage on completed construction for a long period of time. Payoff Escrow: An escrow specifically for the purpose of paying off an existing loan. http://www. Performance Bond: A bond posted by a builder to insure completion of a project. using a percentage of the gross or net sales to determine the rent. and insurance. interest.T. Plat Map: A map dividing a parcel of land into lots. Dictionary of Real Estate Terminology Page 16 of 26 P Partial Release: A release of a portion of property covered by a mortgage.Principal and interest. Also called a take out loan.

a title insurance policy is issued. such as taxes.onlineed. Power of Sale: Clause in a mortgage or deed of trust giving the mortgagee or trustee the power to sell the property in the event of default. Prepaid Items: Those expenses of property which are paid in advance and will usually be prorated upon sale. setting forth price and terms of sale. http://www. Debt amount.htm 5/20/2006 . Dictionary of Real Estate Terminology Page 17 of 26 Plottage Increment: The increase in value created by joining smaller adjacent properties into one large parcel.onlineEd. P. based on the presumption that a written easement was given. Prospectus: A brochure. less the interest. but intended to enhance the value of property. which presents for a prospective investor. rental income. rent. Proration: The dividing of property tax. mortgage. Prepayment Penalty: A penalty under a note. After completion of the transaction. Point: One percent of the amount of the loan. It may be necessary to have a prime tenant to obtain construction financing. Principal: 1. etc. Purchase Agreement: An agreement between a buyer and seller or real property. see Private Mortgage Insurance. insurance.com/schools/courses/or_p_lic/File_Cab/dictiona/re_terms. either in full or in part.I. 2. Purchase Money Mortgage: A mortgage given from buyer to seller to secure all or a portion of the purchase price. Prepayment Privilege: The right to prepay a loan without penalty. or trust deed imposed when the loan is paid before it is due. Prime Tenant: The major tenant in an office building or shopping center. usually to accommodate low income families. The person who gives authority to an agent or attorney. Prepaid Interest: Interest paid before coming due. insurance. Puffing: An opinion not made as a representation of fact. Preliminary Title Report: A report showing the condition of title before a sale or loan transaction. although none existed. closing date. Prime Lending Rate: The most favorable interest rates charged by a commercial bank on short term loans. after a period of open and continuous use of land. the details of an offering.M. or other agreed upon time. and other items between buyer and seller proportionately to time of use. under a single ownership. Prescriptive Easement: The granting of an easement by a court. Public Housing: A governmental housing project.

and income received. Dictionary of Real Estate Terminology Page 18 of 26 Q Quitclaim Deed: A deed operating as a release. when title is held as secured collateral. It is usually realized when the property is sold. fences. as distinguished from remodeling. interest. Real Estate: Land and anything permanently affixed to the land. and used in legal descriptions. May be a subdivision map or describe a nonsubdivided parcel. Realtor®: A designation given to a real estate broker or agent who is a member of a board associated with the National Association of Realtors®. Recorded Plat: A subdivision map filed as a matter of public record. or other improvements. http://www. from the reduction of loan principal. or other such items. Reconditioning: Restoring a property to good condition without changing its plan or character. R Range: A division of land in the government survey system.onlineed. appreciation. but not containing any warranty of a valid interest or title by the grantor. light fixtures.htm 5/20/2006 . running North and South. Recorded Map: A map recorded in a county recorder's office. Recordation: Filing instruments for public record and notice with a county recorder. Recorder's Office: A county office where instruments are recorded. such as heating and plumbing fixtures. and those things attached to the buildings. Rate Index: An index used to adjust the interest rate of an adjustable rate mortgage.com/schools/courses/or_p_lic/File_Cab/dictiona/re_terms. Reassessment: Re-estimating the value of all property in a given area for tax assessment purposes. utilities. Reconveyance: An instrument used to transfer title from a trustee to the equitable owner of real estate. Reclamation: A process of bringing economically unusable land to a higher value by physically changing it.onlineEd. being a six mile wide row of townships. Rate of Return: The annual percentage of return on investment of income property. intended to pass any title. Recapture: The return of money invested in property. Raw Land: Land in its natural state. and does not have streets. or claim which the grantor may have in the property. trees. such as buildings. which has not been subdivided into lots.

or contract can be redeemed. giving notice to future purchasers.htm 5/20/2006 . public restrooms. Release: An instrument releasing property from a lien of a mortgage. such as created by a mortgage foreclosure or tax sale. Rehabilitation: Synonymous with reconditioning. the instrument's called a reconveyance. Dictionary of Real Estate Terminology Page 19 of 26 Recording: Filing documents affecting real property as a matter of public record. Regulation Z: A regulation issued under the Truth-In-Lending Law. Red Lining: An outlining on a map of certain high risk areas for real estate loan purposes. and after judicial foreclosure. Redemption Period: A time period during which a mortgage. creditors. Illegal in most states. Usually set by statute. at which time it encompasses all types of changes. which requires that a credit purchaser be advised in writing of all costs connected with the credit portion of the purchase. R. etc. judgment. Reissue Rate: A charge for a title insurance policy if a previous policy on the same property was issued within a specified time period.T. and not including stairways.I. Release Clause: A clause in a blanket encumbrance allowing for the release of certain parcels upon payment of a specified amount. elevators hallways. or function. meaning that lenders will not extend credit in those areas. The reissue rate is less than the original charge. or other interested parties. at current market rates. Reinstatement: Payment of a note. A method of investing in real estate in a group. Rent: Consideration paid for the occupancy and use of real property.E. Rentable Area: The area (square footage) for which rent can be charged. etc. Recording Fee: An amount paid to the recorder's office in order to make a document a matter of public record. and even street changes. http://www. Real estate investment trusts. or mortgage to bring it from default to good standing.onlineEd.com/schools/courses/or_p_lic/File_Cab/dictiona/re_terms. Remaining Economic Life: Number of years between the time of an appraisal and the point in time when an improvement becomes economically valueless. except when used in connection with urban renewal. Redemption: The process of canceling a defeasible title to land. When a deed of trust is used. deed of trust. with certain tax advantages.onlineed. deed of trust. Refinance: The renewing of an existing loan with the same borrower and lender. as opposed to reconditioning. Remodeling: Improving the structure by changing the plan. including structural. characteristics.

which lien is secondary to another mortgage or trust deed. created and retained by a grantor of property.E.A. as part of the same transaction. http://www. enabling lenders to keep adequate supplies of money for new loans. Reservation: A right. Reproduction Cost: The cost of reproducing a property at current prices using similar materials. Dictionary of Real Estate Terminology Page 20 of 26 Replacement Cost: In appraising. such as satisfaction of a judgment. Secondary Financing: A loan secured by a mortgage or trust deed.htm 5/20/2006 .onlineed. from the buyer back to the seller. S Sale-Leaseback: A sale and subsequent lease. either permanent or temporary. the cost of a substitute property.onlineEd. Revenue Stamps: Formerly federal tax on the sale of real estate. Restriction: A use or uses prohibited to the owner of land. R. The mortgages are normally sold at a discount. or payment of a debt awarded. a federal statute. Thirty-six sections comprise a township. as on a mortgage or trust deed.P. Restoration: Repair to a building to cause it to look like it did at an earlier time. Section: A division or parcel of land on a government survey. Replaced by state tax stamps. Revaluation Clause: A clause in a lease calling for a periodic revaluation (appraisal) of the leased property. they are affixed to the deed to show the amount of the tax. Right of Survivorship: The right of the survivor of a deceased person to the property of the deceased. Restrictions are set forth by former orders in a deed or by a recorded declaration of restrictions by a developer of a subdivision. comprising one square mile (640 acres). Resident Manager: A manager of an apartment project who lives at the property. either identical or of equal utility. Satisfaction: Discharge of an obligation by payment of the amount due. which requires disclosure of certain costs in the sale of residential property that is financed by a federally insured lender.com/schools/courses/or_p_lic/File_Cab/dictiona/re_terms. and subsequent adjustment of rent. Right of Anticipation: The right to prepay without penalty. Second Mortgage: A mortgage which ranks after a first mortgage in priority. Secondary Mortgage Market: The buying and selling of first mortgages or trust deeds.S. Real Estate Settlement Procedures Act.

T. The listing and selling agent may be the same person or company. Standard Depth: Depth of a lot considered to be the normal depth. Shared Appreciation: The gaining or retaining of equity in a property by someone other than the buyer. usually for a term of one to five years. policy. in the event a permanent loan can not be obtained. Dictionary of Real Estate Terminology Page 21 of 26 Security: Real or personal property pledged or hypothecated by a borrower. There are nine square feet in one square yard. which regulates the distance from the lot line to the point where improvements may be constructed. Also given at a court ordered sale.onlineed. pursuant to the execution of a judgment. or lender. indicating a lease under five years in some states. Settlement Statement: A statement prepared by the broker. The giving of said deed begins a statutory redemption period. Sheriff's Deed: Deed given at sheriff's sale in foreclosure of mortgage. Usually used to determine rental price of a building. Square Foot: The area contained by boundaries of one foot long by one foot wide.com/schools/courses/or_p_lic/File_Cab/dictiona/re_terms. Traditionally. Short Term Capital Gain: Profit from the sale of a capital asset not held long enough to qualify as a long term capital gain.A. for appraisal purposes. as additional protection for the lender's interest. under ten in others. Special Assessment: Lien assessed against real property by a public authority to pay costs of public improvements which directly benefit the assessed property. after completion of construction. some expenses are shared. escrow. Standard Coverage Policy: Title insurance policy used in some states. Square: A unit of measure in roofing or siding which equals ten feet by ten feet (100 square feet). By agreement. and a standby fee is http://www. Short Term Lease: A general term.htm 5/20/2006 . not having as broad of coverage as A. 100 feet for a residential lot. giving a complete breakdown of costs involved in a real estate sale. Standby Commitment: A commitment to issue a loan. Severalty: An estate of property held by one person alone.L. Selling Agent: The real estate agent obtaining the buyer rather than listing the property. The standby loan is usually at a higher interest rate than a permanent loan. Specific Performance: An action to compel the performance of a contract when money damages are inadequate. The seller and buyer receive separate settlement statements.onlineEd. Square Foot Cost: The cost of one square foot of floor space in a building or of land. Set Back Ordinance: Part of a zoning ordinance. as well as any increase in value when the property is sold.

Tax Roll: A list. such an electrical. Statute of Frauds: Laws requiring certain types of contracts to be in writing. over the economic life of the property. Standing Loan: A loan requiring interest payments only. 2. Straight Lease: A lease calling for the same amount of rent to be paid periodically for the entire lease term. usually published by the county. Step-Up Lease: A lease calling for set increases in rent at set intervals. Sublease: A lease. its area. has become to be expressed as a percentage of valuation. which contains the descriptions of all parcels within the county. Modernly. the assessed values. mechanic's liens. or cement contractor. plumbing. http://www. created by law rather than by contract.com/schools/courses/or_p_lic/File_Cab/dictiona/re_terms. the principal being paid in full at maturity. A federal income tax lien. Tax Rate: Traditionally. the ratio of dollars of tax per hundred or per thousand dollars of valuation. Subcontractor: One who works under a general contractor. including tax liens.htm 5/20/2006 . A lien for nonpayment of property taxes.onlineed. Statutory Lien: An involuntary lien. Survey: The measurement of the boundaries of a parcel of land. Sweat Equity: A program which allows a purchaser to do work on the property in place of all or part of the down payment and other costs of the purchase.onlineEd. under which the lessor is the lessee of a prior lease of the same property. and leases for more than one year must be in writing. etc. and obtaining approval from a governmental commission. Subdivision: A division of a single parcel of land into smaller parcels or lots. Straight-Line Depreciation: A method of replacing the capital investment of income property. Tax Lien: 1. Dictionary of Real Estate Terminology Page 22 of 26 charged. judgment liens. Survivorship: Gaining an interest in property by outliving another who had the interest. and sometimes its topography. All contracts for the sale of real property must be in writing. attaching to all property of one owing taxes. and the tax amounts. attaching only to the property upon which the taxes are unpaid. by filing a map which describes the division. T Take Out Loan: The permanent or long term financing of real estate after completion of construction. the names of the owners. by reducing the value of the property by a set amount annually from the income.

In the event of the death of one. mortgage. For example. Title Search: A review of all recorded documents affecting a specific piece of property to determine the present condition of title. etc. each one mile square. Tenancy for Years: Any estate for a definite time period (a lease). as one of many similar homes in a subdivision.com/schools/courses/or_p_lic/File_Cab/dictiona/re_terms. paralleling the records of the county recorder's office.onlineEd. Title: Evidence one has of right to land possession. synonymous with a subdivision. being six miles square and containing 36 sections. Terms: The considerations. etc. Tract House: A house built using the plan of the builder. http://www. lease. the survivor owns the property without probate. Tenant in Severalty: One who owns property alone. possession and closing dates. Title Insurance: Insurance against loss resulting from defects of title to a specifically described parcel of real property. the survivor owns the property without probate. as opposed to a custom house. Tenancy in Common: An undivided ownership in real estate by two or more persons. Dictionary of Real Estate Terminology Page 23 of 26 Tenancy by the Entirety: A form of ownership by husband and wife whereby each owns the entire property. in a sale. and in the event of the death of one.htm 5/20/2006 . Tenant at Sufferance: One who comes into possession lawfully.onlineed. The interests need not be equal. Tenant for Life: An estate in real property for the life of a living person. other than price. Township: A territorial division of land established by federal survey. the specific payment schedule. Testate: Having written a last will and testament. Title Plant: A filing of all recorded information to real property. conditions of sale. but without agreement for a fixed term of possession. The estate then reverts back to the grantor or on to a third party. pro ration dates. Title Theory: A theory followed in several states that the mortgagee has legal title to the mortgaged property and the mortgagor has equitable title. Tract: A parcel of land. In some states. Tenant at Will: One who holds possession by permission of the owner or landlord. Time-Share: The purchase of an undivided interest (usually in a resort area condominium) for a fixed or variable time period. which is built to the specifications of the owner. but who holds over after termination of his interest.

Unencumbered: Free of liens and other encumbrances. Trustee: One who holds title to real property under the terms of a deed of trust. Vacant Land: Land without buildings. a new life could begin with a new owner. for sale purposes. or anyone holding money in trust for another. http://www. Unimproved Land: Most commonly. etc. Property is transferred to a trustee by the borrower (trustor). or contract prior to new security instruments on the same property. Trust Account: An account used by brokers. 2. in favor of a lender (beneficiary). Trustee's Deed: A deed by a trustee under a deed of trust. escrow agents. For tax purposes.com/schools/courses/or_p_lic/File_Cab/dictiona/re_terms. Trust Deed: An instrument used in many states in place of a mortgage. usually foreclosure. Upset Price: A legal term signifying the minimum price at which a property can be sold at auction. Use Density: The relationship of the number of buildings of a particular use to a given land area. sewers. and reconveyed upon full payment.htm 5/20/2006 .onlineed. Useful Life: 1. whether the interest of each is equal or unequal. the life set for depreciation. such as grading. Trustor: The borrower under a deed of trust. For example. At any time during that period. Free and clear. U Underlying Financing: A mortgage. V Vacancy Factor: The estimated percentage of vacancies in a rental project. In appraisal. deed of trust. One who deeds his property to a trustee as security for the repayment of a loan. Undivided Interest: A partial interest by two or more people in the same property. land without buildings. pursuant to foreclosure. a small title company may buy insurance from a larger one (underwriter) for all or part of the liability of its policies. Underwriter: One who insures another. Dictionary of Real Estate Terminology Page 24 of 26 Transfer Tax: A state tax on the transfer of real property. It can also mean land in its natural state. May or may not have improvements.onlineEd. the true economic value of a building in terms of years use to the owner.

or when the company believes that the discount rate is dropping and the loans may be sold for a higher price in the future. In mortgages. V. http://www. Loan: Housing loan to a veteran by a bank.A. Warranty Deed: A deed used in many states to convey fee title to real property. Writ of Ejectment: An action for the recovery of real property. This is done when the mortgage company wishes to assemble a block of loans for sale. in a bank. there are usually maximums as to the frequency and the amount of fluctuation.com/schools/courses/or_p_lic/File_Cab/dictiona/re_terms. The mortgagee under the wrap-around collects a payment based on its face value and then pays the first mortgagee.A. without changing the zoning. Dictionary of Real Estate Terminology Page 25 of 26 V. Vendor: The seller or person who transfers property by sale. Valuation: The estimating of value. especially on a land contract.onlineEd.htm 5/20/2006 . The mortgage company then borrows against these loans. enabling the veteran to buy with little or no down payment. Most commonly. Vendee: The purchaser. Wrap-Around Mortgage: A second or junior mortgage with a face value of both the amount it secures and the balance due under the first mortgage. or other lender which is insured by the Veteran's Administration. a mortgage or deed of trust. An appraisal. for sale at a later date. savings and loan. Escape Clause: A clause stating that the borrower shall not be obligated to buy nor shall any deposit be lost if appraisal is less than the agreed upon price. Variance: Change of a portion of zoning requirements for a specific property. Commonly used in land contract sales. Variable Interest Rate: An interest rate which fluctuates as the prevailing rate moves up or down. Voluntary Lien: A lien placed against real property by the voluntary act of the owner. Writ of Execution: An action to carry out the judgment or decree of a court. X Y Yield: Ratio of income from an investment to the total cost of the investment over a given time period. W Warehousing: The depositing of loans by a lender such as a mortgage company.onlineed.

such as a store built to a sidewalk. Dictionary of Real Estate Terminology Page 26 of 26 Z Zero Lot Line: The construction of a building on any of the boundary lines of a lot.onlineEd.htm 5/20/2006 . Zoning: The division of a city or county by legislative regulations into areas or zones. Usually built on the front line.onlineed.com/schools/courses/or_p_lic/File_Cab/dictiona/re_terms. specifying the uses allowable for the real property in those areas. TOP OF PAGE http://www.

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