onlineEd, Dictionary of Real Estate Terminology

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Dictionary of Real Estate Terminology


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


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.

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


and other appliances. less deductible expenses. 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. Blanket Mortgage: A mortgage covering more than one property. Brokerage: The act of bringing together principals (buyer-seller. Bill of Sale: An instrument by which one transfers personal property. Build to Suit: The building of a structure to meet the specifications of a purchaser. including design. Buy Down: A payment to the lender for the purpose of reducing the interest rate for the loan. construction. usually when more homes are for sale than there are interested buyers. and repair. but separable. or due prior to the end of the amortization period. etc. and generally the difference between cost and selling price. Bridge Loan: An interim loan.) for a fee. $10. Used mainly for income tax Bundle of Rights: All rights and interests of ownership in real property considered together. materials used. generally made between a short term loan and long term loan. Buyer's Market: A market condition favoring the buyer. Dictionary of Real Estate Terminology Page 3 of 26 insufficient to fully amortize the loan. Building Code: A comprehensive set of laws which control the construction of buildings.e.909).htm 5/20/2006 . dishwashers. Cash Flow: In investment property. financing.onlineEd. C Call: To demand payment due to default. framed into the home construction. stoves.onlineed. or permanent. the actual cash that the investor will receive after http://www. ovens. Cap: The maximum increase of an adjustable rate mortgage. use. when the borrower needs to have more time before taking the long term. Built-ins: Commonly.000 / 11% = $90. Capital Gains: Gains realized from the sale of capital assets. and dividing by a rate of return percentage which is commonly acceptable to buyers of similar properties (i. landlord-tenant. Capitalization Rate: The percentage used to determine the value of income property through capitalization.

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

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

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

F. 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 which enable an escrow agent to carry out the procedures necessary to transfer real property. Fee Simple: An estate under which the owner is entitled to unrestricted powers to dispose of the property.onlineEd. F. after the termination of an intermediate estate.A. which forbids discrimination in the sale or rental of residential property because of race. Escheat: A reversion of property to the state in the absence of an individual religion. http://www. Fair Housing Law: Title VIII of the Civil Rights Act.htm 5/20/2006 . Estate for Life: An estate in real property for the life of a living person. 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.onlineed. enabling lenders to loan a very high percentage of the sales price. Escalation Clause: A clause in a lease providing for an increased rental at a future time. The estate then reverts back to the grantor or to a third party. usually when a property owner dies without a will. Estate: The interest or nature of the interest which one has in property. Exchange: A reciprocal transfer of real property which has certain tax advantages over a sale. Estate of Inheritance: An estate which may descend to heirs.:A federal agency which insures first mortgages.A. regardless of whether or not the broker is the cause of sale. and which processes them according to instructions. sex. or national origin. color. and can be left by will or inherited. among other rights.H. F Fair Credit Reporting Act: A federal law giving one the right to see his or her credit report. such as a lease. Escrow: A neutral third party which receives all funds and instruments necessary to a sale. Estate for Years: Any estate for a definite period of time. Escrow Instructions: Instructions which are signed by both buyer and seller. Estate in Remainder: An estate which vests in one other than a grantor. 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.H. Dictionary of Real Estate Terminology Page 7 of 26 Equity Loan: A loan based upon the equity in a property.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

savings and loan. there are usually maximums as to the frequency and the amount of fluctuation. An appraisal. or other lender which is insured by the Veteran's Administration. Vendee: The purchaser. http://www. Writ of Execution: An action to carry out the judgment or decree of a court. 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. W Warehousing: The depositing of loans by a lender such as a mortgage company. Variable Interest Rate: An interest rate which fluctuates as the prevailing rate moves up or down. X Y Yield: Ratio of income from an investment to the total cost of the investment over a given time period.A.onlineEd. a mortgage or deed of trust. Warranty Deed: A deed used in many states to convey fee title to real property. Voluntary Lien: A lien placed against real property by the voluntary act of the owner. especially on a land contract. Valuation: The estimating of value.htm 5/20/2006 . for sale at a later date. Commonly used in land contract sales. Loan: Housing loan to a veteran by a bank. Variance: Change of a portion of zoning requirements for a specific property. In mortgages. V. Dictionary of Real Estate Terminology Page 25 of 26 V. Most in a bank. enabling the veteran to buy with little or no down payment. This is done when the mortgage company wishes to assemble a block of loans for sale. without changing the zoning. Vendor: The seller or person who transfers property by sale. Writ of Ejectment: An action for the recovery of real property. The mortgagee under the wrap-around collects a payment based on its face value and then pays the first mortgagee. 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.onlineed.A. or when the company believes that the discount rate is dropping and the loans may be sold for a higher price in the future. The mortgage company then borrows against these loans.

onlineEd. TOP OF PAGE http://www. Zoning: The division of a city or county by legislative regulations into areas or 5/20/2006 . specifying the uses allowable for the real property in those areas. Usually built on the front line.onlineed. 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. such as a store built to a sidewalk.

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