Cleaned Glossary (A-G) Flashcards
(499 cards)
1
Q
1031 Exchange
A
The Internal Revenue Code Section that allows a taxpayer to sell an investment property and purchase another investment property in its place without paying capital gains on the proceeds from the sale. Also called Like-Kind Exchange or Tax-Deferred
2
Q
Abandonment
A
Non-payment of taxes.
3
Q
Absolute Auction
A
An auction where the property is sold to the highest qualified bidder; there is no minimum bid or reserve or right of confirmation. Also called Without Reserve.
4
Q
Abstract of Title
A
A brief, chronological summary of the recorded documents affecting title to a particular parcel of real property.
5
Q
Acceleration Clause
A
A contract clause that gives the lender the right to declare all outstanding payments immediately due upon a default by the borrower.
6
Q
Acceptance
A
When a party agrees to the terms of an offer to enter into a contract, thereby creating a binding contract.
7
Q
Accession
A
The acquisition of title to land by its addition to real estate already owned, through human actions or natural processes.
8
Q
Accounting
A
In an agency relationship, the agent’s fiduciary duty to the principal to strictly account for all monies received.
9
Q
Accretion
A
A gradual addition to dry land by the forces of nature, as when the tide deposits waterborne sediment onto shoreline property.
10
Q
Accrued
A
An accumulation.
11
Q
Accrued Expense
A
Item on a settlement statement for which the cost has been incurred, but the expense has not yet been paid. Such expenses are considered to be paid in arrears.
12
Q
Acknowledgment
A
Recognition of validity; a document signer’s declaration to an authorized official (usually a notary public) that he is signing voluntarily.
13
Q
Acre
A
A measure of land area that is equal to 43,560 square feet. One square mile contains 640 acres.
14
Q
Actionable Fraud
A
Fraud that meets certain criteria, so that a victim can successfully sue. The victim must prove the defendant concealed material facts or made false statements (intentionally or negligently) with the intent to induce the victim to enter a transaction, and the victim was harmed by relying on misrepresentations.
15
Q
Actual Eviction
A
The legal process of forcing someone off of a property or preventing someone from re-entering the property.
16
Q
Actual Fraud
A
An intentional misrepresentation or concealment of a material fact; when a person actively conceals material information or makes statements that he knows are false or misleading.
17
Q
Actual Notice
A
Personal knowledge of a fact, rather than knowledge imputed or inferred by law.
18
Q
Ad Valorem
A
Latin phrase meaning “according to value,” used to refer to taxes assessed on the value of property.
19
Q
Adequate Consideration
A
Consideration that is comparable in value to the consideration the other party to the contract is giving.
20
Q
Adjustable Rate Mortgage (ARM)
A
A type of loan structure that permits the lender to periodically change or vary the interest rate charged, based on a standard index.
21
Q
Administrator
A
A person appointed by the probate court to manage and distribute the estate of a deceased person when no executor is named in the will or there is no will.
22
Q
Adverse Possession
A
The open, notorious, hostile, adverse, exclusive, and continuous possession of another person’s property for a statutory number of years, after which time the adverse possessor may seek to obtain title to the property.
23
Q
Advertisement
A
A public notification in any type of media featuring property for sale or rent or marketing brokerage services; must follow guidelines of federal, state, and local fair housing laws.
24
Q
Affidavit of Title
A
A statement, sworn in front of a notary public or other authorized official, by the seller or grantor of property that identifies the grantor, identifies the grantor’s marital status, and certifies that the grantor has no new judgments, liens, divorces, unrecorded deeds, or other potential title defects since the title examination was completed. It also certifies that the grantor is indeed in possession of the property.
25
Affiliated Business Arrangement (AfBA)
A situation where a person in a position to refer settlement services—or an associate of that person—has either an affiliate relationship with or a direct or beneficial ownership interest of more than 1% in a provider of settlement services and who then refers business to that provider or in some way influences the selection of that provider.
26
Agency
A relationship of trust created when one person (the principal) gives another person (the agent) the right to represent the principal in dealings with third parties.
27
Agency Coupled with an Interest
A situation in which the agent has a personal interest in the subject of the agency, as when one co-owner has been authorized by the others to sell their property.
28
Agent
A licensed broker who represents another (the principal) in a real estate transaction; a person authorized to represent the principal in dealings with third parties (clients or customers).
29
Aggregate Rent
The total rent for the full term of the lease.
30
Air Rights
The right to undisturbed use and control of the airspace over a parcel of land (within reasonable limits for air travel); may be transferred separately from the land.
31
Alienation
The transfer of ownership or an interest in property from one person to another, by any means.
32
Alienation Clause
A mortgage clause allowing the lender to demand the full and immediate payment of the mortgage because the owner transferred or pledged to transfer ownership of the property. Also called Due on Sale Clause.
33
Allodial System
The system of land ownership that allows anyone to own land.
34
Alluvion
Solid material deposited along a shore by accretion. Also called Alluvium.
35
Amenity
A tangible or intangible feature that enhances or adds value to real estate.
36
Amenity Purchaser
A person who values a property based on its ability to fulfill their specific business needs or use, unlike investors who value a property based primarily on its investment return.
37
American Land Title Association (ALTA)
A national association of title companies, abstractors, and attorneys. Members agree to promote uniformity, quality, and professional standards in title insurance policies. Policies issued by ALTA members follow specific guidelines.
38
Americans with Disabilities Act (ADA)
A wide-ranging federal civil rights law, signed in 1990, that prohibits, under certain circumstances, discrimination based on disability.
39
Amortization
Occurs when a loan balance decreases because of periodic installments paid on the principal and interest.
40
Amortized Loan
A financial debt that is paid off over a period of time by a series of periodic payments. A loan can be fully amortized or partially amortized requiring a balloon payment to satisfy the debt at the end of the term.
41
Amperage
Amount of electricity going through electric wires, measured in amperes (amps).
42
Anchor Tenant
Major department or chain store strategically located at shopping centers to give maximum exposure to smaller satellite stores. A center may have several anchor tenants. Also called Magnet Store.
43
Annexation
Attaching personal property to land so that it becomes a fixture and the law views it as part of the real property.
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Annexation, Actual
The process of physically attaching personal property to land, causing it to be a fixture.
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Annexation, Constructive
Personal property associated with real property in such a way that the law treats it as a fixture, even though it is not physically attached to the real property.
46
Annexer
A person who owns an item as personal property and brings it onto real property, making it a part of the real property.
47
Annual Percentage Rate (APR)
Relationship between the total cost of borrowing and the amount financed, represented as a percentage. Also called Effective Rate of Interest.
48
Anticipation
An economic principle that says value is created by the expectation of future benefits, such as profit on resale, pleasure, tax shelter, production, income, etc. Anticipation is the foundation of the income approach.
49
Anticipatory Repudiation
When one party to a contract informs the other before the set time of performance that he or she doesn’t intend to perform as agreed. The other party may immediately file a lawsuit for breach of contract without making a tender offer. Also called Anticipatory Breach.
50
Antitrust
An area of federal law concerned with maintaining competition in private markets by prohibiting unlawful restraint on trade.
51
Appraisal
A professional estimate or opinion of the value of a piece of property (parcel of land), as of a certain date, that's supported by objective data.
52
Appraisal Foundation
Nonprofit organization recognized as the authority for professional appraisal standards.
53
Appraisal Management Company (AMC)
An entity that, for compensation, acts as a third party intermediary by contracting with independent real estate appraisers to perform appraisals for lenders.
54
Appraiser
A person who estimates the value of property, especially an expert qualified to do so by education and experience.
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Appreciation
The increase in value of an asset over time.
56
Appropriative Rights
Water rights allocated by government permit, according to an appropriation system. It is not necessary to own property beside the body of water in order to apply for an appropriation permit.
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Appurtenance
A right that goes along with ownership of real property; usually transferred with the property but may be sold separately.
58
Arbitration
An alternative to a court proceeding where the parties agree to submit facts and evidence to an impartial third party for a decision.
59
Area Variance
Entitles landowners to use land in a way that is typically not allowed by the dimensional or physical requirements of the zoning law.
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Length Transaction
A transaction that occurred under typical conditions in the marketplace, with each party acting in their own best interest.
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As of Right Zoning
A property owner’s right to use or develop the property if the proposed use accords with the zoning by-laws.
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Asbestos
A fibrous material that was once common in many building materials because of its insulating and heat-resistant properties; can cause breathing issues and illness when particles are inhaled.
63
Ascending Bid
An auction method where the bidding starts low and the auctioneer asks for more, allowing buyers to bid more until the item is sold to the highest bidder.
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As-Is Clause
A statement in a contract that indicates the property is being sold without warranty in its present condition at the time of the contract.
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Assemblage
The act of combining two or more parcels of land into one larger parcel.
66
Assessed Value
The value placed on a property by a taxing authority for the purpose of taxation.
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Asset
An item of economic value owned by an individual, especially those that can be converted to cash.
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Asset Class
A grouping of investments that have similar characteristics and are subject to the same laws and regulations.
69
Assignment
The transfer of rights or interests under a contract to another party.
70
Assignment of Mortgage
A situation in which the lender (mortgagee) transfers its rights under the agreement to another party (assignee), who receives the right to enforce the agreement's terms against the borrower (mortgagor).
71
Assistance Animal
An animal that provides emotional or physical support to an individual with a disability, lessening the effects of the disability. Also called Emotional Support Animal.
72
Association Fees
Monthly dues collected by homeowners associations from property owners to pay for common area expenses such as utilities, management, building maintenance, hazard and liability insurance, and amenities.
73
Assumable Loan
A financing arrangement in which a borrower transfers their outstanding loan and its terms to a subsequent buyer; requires the approval of the lender.
74
Assumption
When one party takes over the payments and primary liability for the loan of another party; usually lender approval is needed. A release is needed; without one, the original party remains secondarily liable for the loan.
75
Attachment Lien
A lien acquired on property by a creditor in order to prevent property transfer pending the outcome of litigation.
76
Attestation
The act of witnessing a person’s signing of an instrument by a notary public.
77
Attorney-In-Fact
A person specifically designated in an instrument (e.g., power of attorney) to act on behalf of another, but not necessarily authorized to practice law.
78
Attorney's Opinion of Title
A statement issued by an attorney after analyzing an abstract as to the quality of the title.
79
Attornment
An act in which tenants acknowledge their obligations to a new landlord.
80
Auctioneer
A person licensed or authorized to conduct a public auction of item(s) belonging to someone else. In some states, auctioneers selling real property must be licensed as real estate brokers, whereas in others they must be licensed auctioneers.
81
Automated Clearinghouse (ACH)
A settlement system used for financial transactions by U.S. commercial lenders; a nationwide network to exchange paperless payments among financial institutions and government agencies.
82
Automated Underwriting
A computerized evaluation of a borrower’s creditworthiness, based on statistical models.
83
Avulsion
A natural process in which land is removed from one person’s property and deposited onto another’s. Avulsion happens very suddenly, as in a flash flood.
84
Backup Offer
An offer made and accepted, after another offer has been accepted, that is contingent on the failure of the first contract.
85
Bad Title
Title with defects making it unmarketable.
86
Bait and Switch
A deceptive sales technique that involves advertising to a consumer a particular product, service, or rate, then persuading the consumer to accept something else.
87
Balance (Four Factors of Production)
The right mix of capital, entrepreneurship/management, labor, and land that results in the best return on investment from land (remember: C-E-L-L).
88
Balance Sheet
A financial statement (such as a property management report) that lists assets, liabilities, and ownership equity at a specific moment in time.
89
Balloon Framing
A technique of framing where the long vertical pieces (studs) are installed in a continuous piece from foundation to roofline.
90
Balloon Payment
A lump-sum payment made at the end of a loan term to pay off the remaining balance of principal and interest that was not covered by payments during the loan term.
91
Bankruptcy
A court process that cancels some debt and provides some relief for creditors.
92
Bargain and Sale Deed
A type of deed that implies that the grantor owns the property and has the right to convey it, but there are no warranties that go with it.
93
Base Rent
The minimum amount of rent indicated in a lease.
94
Base Year
A period for determining a property’s actual operating expenses, typically over the first year of a lease term, which is used as the point of reference against which increases in subsequent years are compared and then passed on to the tenant.
95
Baseline
The principle east-west line (i.e., a parallel) upon which all rectangular surveys in a defined area are based.
96
Basic Sector
The segment of a local economy that is made up of businesses and industries that bring income into the local economy by selling goods or services to consumers outside the community.
97
Basis Point
One hundredth of one percent, used chiefly to express differences in interest rates.
98
Beam
A long piece of timber or metal that spans an opening or part of a building and provides support to a roof or floor above it. Beams are installed horizontally.
99
Benchmark
A bronze disk permanently placed and precisely identified by government survey teams.
100
Beneficiary
One who receives a benefit; in real estate, the lender in a trust deed.
101
Bilateral Contract
A contract in which both parties make a binding promise to the other.
102
Bill of Sale
A document used to transfer ownership of personal property from one person to another.
103
Binder
A non-binding document used to communicate the terms of a buyer’s offer to purchase property; serves as a blueprint for creating a purchase agreement.
104
Biweekly Payment Plan
A fixed-rate mortgage set up like a standard 30-year conventional loan, but payments are made every two weeks instead of every month.
105
Blanket Mortgage
A mortgage loan that covers more than one parcel of real estate, usually used to finance entire subdivision developments rather than an individual unit or lot.
106
Blind Advertisement
A real estate advertisement used by a licensee regarding the sale or lease of real estate or of licensed activities that does not include the broker's name or business name. Prohibited in most states.
107
Blockbusting
The illegal practice of inducing owners to sell their homes (often at a deflated price) by suggesting the ethnic or racial composition of the neighborhood is changing, with the implication that property values will decline as a result. Also called Panic Selling or Panic
108
Blue Sky Laws
State laws regulating the sale of securities; intended to protect consumers from fraud.
109
Blueprint
A detailed diagram, usually created by an architect, which is used to evaluate design, determine feasibility, and guide the construction of a structure.
110
Boilerplate
Standardized language used in contracts for the sake of efficiency and completeness.
111
Book Value
The value of an asset, such as real estate or equipment, as indicated in the company’s financial records (may differ from market value).
112
Boot
Extra, non-like-kind property that can be a part of a like-kind exchange to make up for pricing disparity between like-kind properties.
113
Bounds
Refers to boundaries; used with the word “metes” in the metes and bounds method of land description.
114
Boycott
A concerted refusal by two or more people to deal with a particular person or company.
115
Breach
Violation of an obligation, duty, or law.
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Breach of Contract
An unexcused failure to perform according to the terms of a contract.
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Breach of Trust
The failure by someone entrusted with care or property of others to discharge the duties imposed on them under the terms of an agreement or other obligation; may be malicious or due to negligence or carelessness.
118
Breakdown Method
Estimating physical depreciation by estimating all items of depreciation individually and then adding the individual estimates together and deducting the sum from the estimated reproduction or replacement cost.
119
Bridge Mortgage
A mortgage loan that occurs between the termination of one mortgage and the commencement of another. When the next mortgage is taken out, the bridge is repaid.
120
British Thermal
Unit (BTU) The amount of heat needed to raise the temperature of one pound of water by one degree Fahrenheit; used to measure the capacity of furnaces and air- conditioning units.
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Broker
A real estate licensee with several years of experience who has received advanced training and passed a broker exam.
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Broker Price
Opinion (BPO) The estimated value of a property as determined by a real estate licensee or other qualified individual, often done at the request of a lender for non-federally related property transactions.
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Broker Protection Clause
A provision in an agency agreement that entitles the broker to a commission if the property is sold during a certain time period after the agency agreement expires. Also called Carryover Provision or Extender Clause.
124
Brokerage
A firm with real estate licensees who may be retained by consumers to negotiate the purchase, sale, and lease of real property
125
Broker -Dealer
A person or organization that engages in the business of trading securities, such as stocks and bonds, for its own account or on behalf of its customers.
126
Brownfield
A former industrial or commercial site where future use is affected by real or perceived environmental contamination.
127
Budget Mortgage
A mortgage agreement where payments include principal and interest on the loan, plus 1/12 of the year's ad valorem property taxes and hazard insurance premiums.
128
Buffer Zone
A means by which planners use space to separate two adjoining districts which have incompatible uses. A buffer zone consists of uses that are compatible with uses in each adjoining district.
129
Building Code
A set of regulations, written by city or county officials with the help of construction professionals, that governs design and construction standards and requires builders to use particular methods and materials.
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Building Department
An agency responsible for issuing building permits and seeing that building codes are followed and that construction and renovations are performed by licensed professionals.
131
Building Efficiency
The ratio of usable square footage to rentable square footage.
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Building Inspection
A process whereby local government officials ensure compliance with state and local building codes.
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Building Permit
An official document from a local government or other authority that allows a construction or remodeling project to proceed.
134
Bump Clause
A provision in a purchase agreement that allows the seller to keep the property on the market while the prospective buyer's purchase is contingent on the sale of the buyer’s property.
135
Bundle of Rights
All real property rights that are conferred with ownership, including the right of possession, right of quiet enjoyment, right of disposition, right of exclusion, and right of control. Also called Bundle of Sticks.
136
Buyer Agency Agreement
An employment contract between a buyer and a broker that grants the broker the right to represent the buyer in the purchase of property and stipulates the terms under which the broker will be compensated. Also called Buyer Broker Agreement.
137
Buyer's Agent
A real estate licensee who represents the interests of the buyer of a property.
138
Buyer's Choice
A type of auction for multiple parcels where the winning bidder gets to select which of the parcels they want.
139
Buyer's Market
A situation in the housing market where there are many homes available for sale, but few people looking to buy.
140
Buyer's Premium
A compensation structure in which the winning buyer at an auction pays the auctioneer/auction company, generally a percentage of the high bid in addition to the bid amount.
141
Bylaws
Homeowners association rules and regulations that govern property owners' activities, including rules for elections and voting, and frequency of board of directors’ or shareholders’ meetings.
142
Cancellation
Termination of a contract without undoing acts that have been performed under it; can be done without going to court.
143
CAN-SPAM Act
A federal law enacted to limit unsolicited commercial email and text messages, requiring senders to provide an opt-out option.
144
Cap
The maximum increase in the interest rate, or the maximum interest rate, that a lender can charge on an adjustable-rate mortgage.
145
Capital Expense
A cost incurred to improve a property with the expectation of long-term benefits; an investment in the business of the property. Also called Reserves for Replacement.
146
Capital Gain
Profit made from an investment.
147
Capitalization
Used in the income approach to value. To capitalize income means to convert future income into present (current) value.
148
Capitalization Rate
The rate of return considered to be a reasonable return on investment given the risk.
149
Carbon Monoxide
A colorless, odorless gas that is a natural byproduct of fuel combustion and is dangerous when inhaled.
150
Cash Flow
A measure of the money being transferred into and out of an investment, calculated as net operating income minus debt service.
151
Cash to Close
The amount of money a buyer must bring to settlement to close the transaction after all credits and debits have been reconciled.
152
Cash Return
The yield of an investment expressed as a percentage by dividing the investment’s cash flow by the total amount expended to acquire the property.
153
Caveat Emptor A
Latin phrase meaning “Let the buyer beware;” implies that a purchaser is expected to examine property carefully instead of relying on seller disclosures.
154
CC&Rs
A declaration of covenants, conditions, and restrictions; usually recorded by a developer to create private restrictions for a subdivision or condominium community.
155
Cease and Desist Order
An administrative agency directive to stop an offending activity.
156
Ceiling
The maximum increase or decrease in the periodic payment allowable over the life of an adjustable-rate mortgage. Also called Lifetime Cap.
157
Ceiling Height
The height in feet from the floor to the steel girders. Also called Feet Under
158
Certificate of
Eligibility (COE) A document issued by the Department of Veterans Affairs to establish status and amount of a veteran’s eligibility to qualify for a loan guarantee.
159
Certificate of Occupancy
A document issued to builders after all inspections have been made and the property is deemed fit for livability by meeting the appropriate standards for health and safety.
160
Certificate of Permanent Location
A document recorded in the county in which a manufactured home has been permanently affixed to real property with common ownership between the land and the home.
161
Certificate of Purchase
A document that is given to the winning bidder of a real estate tax or foreclosure sale. Once the sale is confirmed, a deed will be issued to convey title.
162
Certificate of
Title 1. A document prepared by an attorney, title company, or title abstractor stating their opinion of the status of the title to a piece of property after performing a title search and reviewing the public records. Also called Opinion of Title. 2. A document proving ownership of a vehicle.
163
Chain of Title
The chronological succession of changes in ownership of a piece of property from one owner to the next, as disclosed in the public record.
164
Change
A principle of value that says all factors that influence real estate—physical, economic, governmental, social (P-E-G-S)—are constantly changing and, thus, property value itself is subject to constant change as well.
165
Chant
The way in which an auctioneer verbally communicates to engage and inform prospective bidders, indicating the current bid and the desired bid.
166
Charrette
An intense work effort in which a team of design professionals across multiple disciplines works with community stakeholder participants within a highly focused, compressed timeframe to develop a plan.
167
Chattel
A piece of personal property.
168
Chattel Mortgage
A loan that uses only personal property as security.
169
City Planning
The effort on the part of the city to coordinate, direct, and control the type of development taking place so as to ensure maximum benefits to the populace.
170
Civil Rights
Fundamental rights guaranteed to all persons by the law, primarily in reference to constitutional and statutory protections against discrimination based on protected class status.
171
Civil Rights
Act of 1866 A federal law prohibiting discrimination based on race and color against all native-born Americans in all property transactions (personal, commercial, residential), without exception.
172
Clearspan
Open distance between inside faces of support members.
173
Client
A person being represented by a licensee. Also called Principal.
174
Closing
The transfer of real property ownership from seller to buyer, according to terms and conditions in a purchase agreement or escrow instructions; the final stage in a real estate transaction. Also called Settlement.
175
Closing Costs
The expenses incurred and paid at the time of settlement in the transferring of property.
176
Closing Disclosure
A standardized document that presents a final, detailed accounting for a real estate transaction, listing each party’s debits and credits and the amount each will receive or be required to pay at closing; required for all RESPA-related transactions. Also called Settlement Staement
177
Cloud on the Title
A claim, encumbrance, or defect that could place the title to real property in question, reducing its marketability.
178
Cluster Zoning
A method that allows developers to provide a varied selection of lot sizes and housing choices within a single area.
179
Code of Ethics
A set of principles and standards based on core values by which a group of professionals are expected to conduct themselves.
180
Insurance
A common clause or provision in building insurance policies under which the insured agrees to maintain insurance on their property in an amount equal to at least 80% of the replacement cost. If the property is not insured to that amount and a loss is incurred, the insurance company will make the insured share in the loss on a pro–rata basis.
181
Cold Calling
The practice of making unsolicited phone calls to possible customers with whom there is no prior relationship or inquiry.
182
Collateral
Property pledged as security for a debt.
183
Collusion
Secret agreement or cooperation among people, especially for deceitful or fraudulent purposes.
184
Combined
Loan-to-Value (CLTV) The relationship between the unpaid principal balances of all mortgage loans and the appraised value or sales price, whichever is lower, of the property.
185
Commercial Banks
The largest financial intermediaries directly involved in the financing of real estate. Their primary real estate activity involves short–term loans.
186
Commercial Property
Property zoned and used for business purposes, such as warehouses, restaurants, and office buildings (as distinguished from residential, industrial, or agricultural property). Commercial residential property has five or more units.
187
Commingling
Illegally mixing personal or business funds with money held in trust on behalf of a third party.
188
Commission
Compensation paid to a broker for services in a real estate transaction; usually a percentage of the sales price. Commission is negotiable and should be clearly spelled out in a written brokerage agreement.
189
Commission Association Manager
Provides a large range of services for communities, typically tailoring those services to the needs of an individual community.
190
Common Area
Maintenance (CAM) All costs incurred in maintaining the common areas of a commercial property, including parking lot sweeping and repair, snow removal, common utilities, landscaping, and other maintenance tasks. CAM costs are usually prorated among all tenants.
191
Common Areas
The land and improvements in a condominium or cooperative that all residents use and own as tenants in common, such as the parking lot, hallways, and recreational facilities.
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Common Interest Ownership
A situation where individual ownership (fee simple) and group ownership (tenants in common) are present in the same community subject to an owners association.
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Common Law
Law that has developed over many years through court decisions and other precedents.
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Community Property
In some states, property acquired during marriage that is owned jointly by the married couple.
195
Comparables
Recently sold properties with similar characteristics (size, room count, design, utility, etc.) that are in close proximity to the property being valued. Also called Comps.
196
Comparative Unit Method
A method for determining the replacement cost of a building based on the cost of recently built comparable buildings.
197
Compensation
Valuable consideration given by one person or entity to another person or entity in exchange for the performance of some activity or service.
198
Compensatory Damages
An award of damages intended to compensate a plaintiff for harm caused by the defendant’s act or failure to act, including personal injuries, property damage, and financial loss.
199
Competency
The ability to do something successfully or efficiently.
200
Competent Parties
Those who are legally capable of entering into contracts.
201
Competition
The act or process of trying to obtain or win something that others are also trying to obtain or win.
202
Competitive Market
Analysis (CMA) A method of determining the probable selling price of a property by comparing it to similar properties that have sold, are presently for sale, or did not sell in a given area. Also called Comparative Market Analysis.
203
Complaint
A formal allegation, generally in writing, accusing someone of misdeeds, usually to formally begin a legal or administrative action.
204
Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA)
A federal law enacted by Congress in 1980 to provide broad authority to respond directly to releases or threatened releases of hazardous substances that may endanger public health or the environment. Also called Superfund.
205
Comprehensive Loss Underwriting Exchange (C.L.U.E.)® Report
A report available from Lexis/Nexis® that tracks insurance claim history on real property and automobiles.
206
Comprehensive Plan
A long-term plan (e.g., 20 or 30 years) prepared by a local planning board that identifies the goals, objectives, principles, guidelines, policies, standards, and strategies for the growth and development of a community, including its housing needs. Also called Master Plan.
207
Concealment
Failing to disclose or intentionally hiding information that is material to a decision by a party.
208
Conciliation
A mediation between two parties to settle a dispute and/or seek voluntary compliance in an attempt to avoid a legal court case.
209
Condemnation
The legal proceeding of taking private property for public use, through the government’s power of eminent domain. Condemnation is the action; eminent domain is the right. Also called Appropriation.
210
Condition
Provision in a deed or other document that makes the parties’ rights and obligations dependent on the occurrence or non-occurrence of some event.
211
Conditional Approval
A lender's agreement to fund a loan, provided certain contingencies are met.
212
Conditional Use
A land use that does not comply with the general zoning rules for the zone in which it is located, but is permitted because it benefits the public, such as allowing a hospital in a residential neighborhood.. Also called Special Exception or Special Use.
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Condominium
A property developed for co-ownership, with each co-owner having a separate interest in an individual unit, combined with an undivided interest in the common areas of the property and air space consisting of the area between the walls, floor, and ceiling.
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Condominium Declaration
The document that developers must file in the public record when they develop or convert existing property to a condominium; specifies common and private spaces lists easements, and describes the land, bylaws, and house rules.
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Confidentiality
A duty that requires an agent to protect the client’s confidential information (this duty lasts even after the agency relationship has terminated).
216
Conforming Loan
A loan that meets the qualifying standards of Fannie Mae or Freddie Mac, and thus can be sold on the secondary market.
217
Conformity
The principle of value that says a particular property achieves its maximum value when surrounded by properties similar in style, function, and utility. Also called Homogeneity.
218
Consent Decree
A binding agreement reached before judgment in a court case by which the accused party consents to change its behavior without admitting wrongdoing.
219
Consideration
Anything of value—such as money, goods, services, or promises—that is given to induce another person to enter into a contract. Also called Valuable Consideration.
220
Construction Loan
A temporary loan used to finance the construction of improvements and buildings on land.
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Constructive Eviction
Occurs when a landlord does not physically or legally evict a tenant but takes actions that interfere with the tenant's use and enjoyment of the premises; may provide legal cause for a tenant's release from the lease.
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Constructive Fraud
Concealment of a material fact; when a person carelessly fails to disclose material information or makes statements that they should realize are false or misleading.
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Constructive Notice
Knowledge of a fact imputed to a person by law because they could have or should have known it, even if they did not actually know it; this includes notice given by recording a document in the public record or by taking physical possession of property.
224
Consumer
A person or entity seeking or receiving licensed activities.
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Consumer Financial Protection Bureau (CFPB)
An independent government agency within the Federal Reserve System, established under Title X of the Dodd-Frank Act, with rulemaking and enforcement authority regarding many consumer financial laws.
226
Consumer Price Index (CPI)
An index published monthly by the United States Bureau of Labor Standards (BLS) considered by many to be the basic indicator of inflation in the U.S.
227
Contemporaneous Offers
Competing offers submitted by the same buyer agent on behalf of competing buyers for the same property; requires disclosure to the buyer clients.
228
Contingency
A provision in a contract, deed, law, regulation, guideline, etc. that makes the parties’ rights and obligations depend on the occurrence (or nonoccurrence) of a specified event. Also called Condition, Escape Clause, Subject to Clause, or Kick-Out Clause.
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Continuation
A title search performed just prior to settlement to bring a preliminary title report up to date and ensure that no intervening rights to the property have arisen. Also called Bring-Down or Continuance
230
Contract
An agreement between two or more parties to do, or not do, something; a legally enforceable promise, with the law providing remedies for breach.
231
Contract for Deed
An installment contract in which the seller passes possession but retains title to the property until the total or a substantial portion of the purchase price is paid. The two parties are the vendor (seller) and the vendee (buyer). Also called Land Contract, Agreement for Sale, or Installment Sales Contract.
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Contract Rent
What tenants are actually paying in rent, as stated in the terms of the lease.
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Contractual Capacity
The legal ability to enter into a contract.
234
Contribution
The economic principle that a specific item or feature of a property is worth only as much as it increases the value of that parcel of real estate.
235
Conventional Loan
A loan made by an institutional lender or a private party with real estate as security for the loan that the government neither guarantees nor insures.
236
Conversion
The illegal use of another’s funds or other property for one’s own personal or business purposes.
237
Conveyance
The act of transferring an interest in property from one person to another.
238
Cooperating Agent
An agent who works with a listing agent to sell property in a real estate transaction, usually through participation in a multiple listing service. This agent could represent either the buyer or the seller, but a cooperating broker is generally the buyer's agent. Also called Cooperating Broker
239
Cooperative
A type of property ownership under which residents have the right to occupy a unit by purchasing stock shares in the corporation that owns the property. These individuals own stock shares, not real estate.
240
Ownership
Any form of ownership in which two or more people share title to a piece of property, holding undivided interests. Also called Co-Tenancy or Concurrent Ownership.
241
Corporation
A legal entity organized according to strict regulations, in which individuals purchase ownership shares; regarded by the law as an artificial person, separate from the individual shareholders; centralized management is provided via a board of directors.
242
Correction Deed
A deed used to correct minor mistakes in an earlier deed, such as misspelled names or errors in the legal description of the property. Also called Deed of Correction or Deed of Confirmation
243
Correction Line
In the government survey system, lines that are established at 24-mile intervals (or at every four township lines) north and south of a baseline, re-establishing the six- mile width between the range lines to account for the curvature of the earth.
244
Corrective Maintenance
Repairing or restoring broken or failed equipment to a specified condition.
245
Cosmetic Maintenance
Maintenance that increases a property's aesthetic appeal.
246
Cost
The dollars needed to develop, produce, or build something.
247
Cost Approach
An appraisal method in which an opinion of the value of real property is derived by estimating the expense of constructing a replacement or reproduction of the building, deducting an amount for depreciation, and adding the value of the land or site.
248
Cost Manuals
Books, electronic media, and online sources that give estimated construction costs for various types of buildings in different areas of the country.
249
Cost of Money
The interest rate that people or businesses must pay to use another’s money for their own purposes.
250
Costing Service
Books, electronic media, and online sources that give estimated construction costs for various types of buildings in different areas of the country.
251
Counteroffer
A response to an offer to enter into a contract, changing some of the terms of the original offer. A counteroffer is a rejection of the original offer (not a form of acceptance).
252
Counterofferee
A person who receives a counteroffer or to whom a counteroffer is made.
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Counterofferor
A person who makes a counteroffer.
254
Covenant
A contract, promise, or a guarantee (express or implied) in a document such as a deed or lease.
255
Covenant
A contract, promise, or a guarantee (express or implied) in a document such as a deed or lease.
256
Covenant Against Encumbrances
The assurance that no encumbrances other than those specified in the deed exist.
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Covenant of Further Assurance
A promise that the grantor will perform further acts reasonably necessary to correct any defects in the title or in the deed instrument.
258
Covenant of Quiet Enjoyment
A guarantee that a buyer has the right to exclusive, undisturbed possession of an estate, and will not be disturbed by the previous owner or anyone else claiming an interest in the property.
259
Covenant of Seisin
An assurance that the grantor has the exact estate in the quantity and quality which is being conveyed, i.e., “I own, and I have the right to sell it.”
260
Crawl Space
Unfinished space below the first floor of a house, less than a full story in height, usually containing plumbing and other functional elements.
261
Credit
A sum of money that is to be received.
262
Credit History
Record of debt repayment, detailing how a borrower has paid debts and obligations in the past, used to predict whether the borrower is likely to pay debts in the future.
263
Credit Report
A listing of a borrower's credit history, including the amount of debt, record of repayment, job info, address info, etc.
264
Credit Reporting Agencies
Agencies that gather debt service information to calculate an individual’s credit score. The largest credit bureaus are Experian™, Equifax® and TransUnion® and although they use similar information, they calculate their scores differently so that each individual may have three separate and slightly different scores. Also known as credit bureaus.
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Credit Score
A three-digit number in the range of 300 to 850 used by lenders to estimate a borrower’s creditworthiness. These are calculated by credit reporting agencies based on several factors including payment history, length of credit history, amount owed, recent inquiries, recent credit activity, types of accounts.
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Credit Scoring
A method in which numerical values are assigned to different aspects of a borrower’s loan application and used by lenders to gauge creditworthiness and assess credit risk.
267
Cubic Feet
Length × Width x Depth = Cubic Feet. Divide cubic feet by 27 to find cubic yards.
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Culpable Negligence
Occurs if a licensee operates in a reckless, careless, and excessively negligent manner. Culpable negligence is for which one can be held legally accountable.
269
Curable Depreciation
Depreciation is considered curable if the cost of the repair is less than what the repair adds to the value of property.
270
Curtesy Rights
The interest held by a married person in the real property owned by a spouse; refers to a husband’s interest in their wife’s property (not recognized in all states).
271
Customer
A party to a transaction with whom a real estate licensee does not have a fiduciary duty or relationship, but with whom a licensee must be honest and fair.
272
Dangling Commission
Compensation that licensees may accept from a broker with whom they are no longer associated, assuming they were licensed with that broker at the time the commission was earned and the right to any commission under such circumstances is spelled out in the licensee’s agreement with the broker.
273
Database
Contact information for prospects, collected and maintained in an organized manner.
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Days on Market (DOM)
The time period between listing a property and either selling or removing it from the market.
275
DD-214
Certificate of Release or Discharge from Active Duty issued by the Department of Defense. The DD-214 identifies the character of service and reason for discharge (honorable, dishonorable, etc.).
276
Debit
A sum of money that is owed.
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Debt
The amount of money owed on a note or other promise to pay.
278
Debt Service
The amount of money paid at regular intervals toward reducing the principal and interest owed on a debt.
279
Debt-to-Income Ratio
The relationship of a borrower's total monthly debt to gross monthly income, expressed as a percentage (Total Debt ÷ Income = Ratio %). Debt obligations include housing and long-term debts with more than 10 payments remaining. Also called Total Debt Service Ratio or Back-End Ratio
280
Decree
Court order.
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Dedication
The donation of real property by a private owner to the public.
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Deed
A written instrument transferring the grantor's ownership of, or interest in, real property.
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Deed in Lieu of Foreclosure
A document that transfers the title of a property from the property owner to the lender, in exchange for relief from the mortgage debt.
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Deed of Release
A deed given by lien holders, remaindermen, or mortgagees to relinquish their claims on the property.
285
Deed of Trust
A security instrument in financed real estate transactions that transfers the legal title of a property to a third party—such as a bank, escrow company, or title company—to hold until the borrower repays the debt to the lender. Also called Trust Deed.
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Deed Restriction
Limitations placed in a deed by a grantor that restrict the way in which the land may be used, improved, or maintained.
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Default
Failure to fulfill an obligation, duty, or promise, as when a borrower fails to make payments, a tenant fails to pay rent, or a party fails to perform a contract. A mortgage, note, or other document will define what constitutes default.
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Defeasance Clause
A clause used to defeat or cancel a certain right upon the occurrence of a specific event.
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Defeasible Fee Estate
A type of freehold estate conveying ownership interest that comes with a condition. Also called Fee Simple Defeasible Estate or Qualified Fee Estate.
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Defect in Title
Any lien, claim or encumbrance, on a particular piece of real estate that has been properly recorded in the public records. Recorded defects impair clear title and may result in the title being unmarketable.
291
Deficiency Judgment
A personal judgment against a borrower if the lender/creditor does not receive the amount of the lien plus the costs associated with foreclosure at a foreclosure sale.
292
Deficiency Statement
A statement in a home inspection report that describes a deficiency, explains its implications, and advises the client about what to do.
293
Delivery and Acceptance
A requirement for the legal transfer of property through a deed.
294
Demand
The need or desire for a specific good or service.
295
Demographics
Socioeconomic data regarding employment, education, marriage rates, birth and death rates, and family dynamics.
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Department of Housing and Urban Development (HUD)
An agency of the federal government that oversees many federal housing programs.
297
Deposit
A sum of money placed or kept in a bank account.
298
Depreciation
A loss in property value for any reason—physical deterioration, functional obsolescence, or external obsolescence. Also, a loss in value as an accounting procedure for use as a tax deduction for income tax purposes. Also called Cost Recovery.
299
Deregulation
A process whereby restrictions imposed by a ruling authority are gradually relaxed.
300
Derogatory Credit
Credit history showing previous problems in meeting financial obligations.
301
Descending Bid
An auction method in which the auctioneer begins with a high asking number, and gradually lowers the asking price until the first person speaks, thereby winning the auction. Also called Dutch Auction.
302
Descent
An operation of law in which real property is transferred to an heir after the death of the owner who leaves no will (intestate).
303
Designated Agency
A contractual relationship between a broker and a client available in some states in which one or more licensees associated with the broker are appointed to represent the client in an in-house transaction. Also called Split Agency.
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Designated Agent
A licensee appointed by a broker as the legal agent of a client. Also called Split Agent.
305
Desk Copy
A payment agreement through which a real estate licensee pays their employingbroker; an alternative to a commission split.
306
Devise
To transfer real property by will; real property transferred in a will.
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Direct Capitalization Rate
A rate of return, stated as a percent, used to derive a value opinion from the anticipated net operating income a property could generate. It is used for direct capitalization in the income approach. Also called Cap Rate or Rate.
308
Disability
A physical or mental impairment that substantially limits or curtails one or more major life activities.
309
Discharge of Mortgage
The lender’s release of all further obligations on the part of a borrower; required once a borrower’s loan is paid off. The lender issues the discharge of contract, and the borrower should record this document. Also called Release of Lien or Satisfaction of Mortgage
310
Disclosure
Revelation of material facts or defects.
311
Discount Point
A form of pre-paid interest that is charged by a lender to increase the yield on a lower-than-market interest rate loan; one point equals 1% of the loan amount. Important: while discount points cost 1% of the loan amount, they don’t buy down a full 1% of the interest rate. A typical 1% discount point may only buy down 0.25% or so of the interest rate.
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Discount Rate
The interest rate charged by Federal Reserve Banks on loans to member commercial banks.
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Discrimination
Treating people differently because of their race, religion, sex, national origin, age, or some other characteristic of a protected class, in violation of civil rights laws.
314
Disintermediation
When depositors bypass traditional depository institutions and invest directly in the stock market, mutual funds, artwork, etc., thereby reducing the mortgage money supply and causing interest rates to rise.
315
Disparate Impact
When a law that isn’t discriminatory on the face of it has The disproportionate effect impact on one or more protected classes. Also called Disparate Effect.
316
Disparate Intent
An intentional decision to treat some people differently from others in a similar situation. Also called Disparate Treatment.
317
Disposal Rule
A provision of the federal Fair and Accurate Credit Transaction Act that requires businesses to take reasonable measures to dispose of sensitive consumer information.
318
Distress Code
A pre-defined signal, word, or phrase used by someone in a vulnerable or unsafe situation to communicate to others that they are in danger.
319
Doctrine of Emblements
A rule that allows a tenant farmer to re-enter the land to harvest crops that were planted by the tenant farmer even after the land has been sold to a new owner.
320
Doctrine of Part Performance
A legal doctrine that allows a court to enforce an oral agreement that should have been in writing, when one party has taken irrevocable steps to perform their side of the bargain, and failure to enforce the contract would result in an unjust benefit for the other party.
321
Days on Market
The period between when a property is listed and when it goes under contract.
322
Dominant Tenant
A person with easement rights on another's property; either the owner of a dominant tenement or someone who has an easement in gross.
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Dominant Tenement
Property that receives the benefit of an appurtenant easement. Also called Dominant Estate.
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Double Net Lease
A lease in which the tenant pays two of the expenses associated with property ownership, in addition to paying the rent. Also called Net-Net.
325
Dower Rights
The interest held by a married person in the real property owned by a spouse; generally refers to a wife’s interest in her deceased husband’s property (not recognized in all states).
326
Down Payment
The amount of money a buyer pays to obtain a property, in addition to the money that the buyer borrows.
327
Dual Agency
An agency relationship in which a licensee represents both buyer and seller (or both landlord and tenant) in the same transaction. Usually requires advance informed written consent from both parties.
328
Dual Agent
A licensee who represents both the buyer and the seller (or both landlord and tenant) in a single real estate transaction.
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Due Diligence
Investigation to discover facts or liabilities about a property prior to its purchase.
330
Due on Sale Clause
A clause, included in many mortgages, permitting the lender to require the borrower to repay the outstanding balance when the property is sold. Prevents loan assumption.
331
Duress
The use of force or improper actions, against a person or property, in order to induce a party to enter into a contract.
332
Early Termination Clause
A clause, term, or condition in a contract that allows a party to that contract to avoid having to perform the contract. Also called Escape Clause.
333
Earned Increment
An increase in value of real property due to some effort of the owner such as remodeling or other property improvements.
334
Earnest Money
Money offered as an indication of good faith regarding the future performance of a purchase agreement.
335
Easement
A nonpossessory interest and an encumbrance on property that grants the right to use another person’s real property for a particular purpose.
336
Easement Appurtenant
The right acquired by the owner of one parcel of land to use another's adjacent land for a specific purpose. There must be two tracts of land; one becomes the dominant tenement (it benefits from the easement), and the other becomes the servient tenement.
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Easement by Condemnation
An easement created through the government’s power of eminent domain when necessary to benefit the public.
338
Easement by Implication
An easement that occurs because of necessity, such as the conveyance of a land–locked property.
339
Easement by Prescription
An easement created by open, notorious, hostile, and uninterrupted use of another person’s land for a specific period of time determined by state law. Also called Prescriptive Easement.
340
Easement for Light and Air
A negative easement that prohibits the servient tenant from doing something that would obstruct the view or prevent light or air from reaching the dominant tenement. Also called View Easement.
341
Easement in Gross
An easement that benefits a person or company, rather than benefiting another parcel of land, such as a utility company easement to access the property to repair or replace utility equipment.
342
Economic Base
The main business or industry in an area that supports and sustains the community.
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Economic Base Analysis
A study of an area’s current business and employment situation, conducted to determine the likelihood of continued stability, growth, or decline.
344
Economic Life
The time during which a building can be used for its intended purpose and generate more income than is paid out for operating expenses. Also called Useful Life.
345
Economic Obsolescence
A loss in value due to factors outside the subject property, such as changes in competition or surrounding land use. Also called External Obsolescence.
346
Economic Rent
The amount of rental which a building would receive, if set by the market, as opposed to contract rent set by the lease.
347
Effective Age
The age of a structure based on the actual wear and tear that the building shows from physical, functional, or external obsolescence; not necessarily the structure's actual age.
348
Effective Date
The date for which value was established when doing an appraisal.
349
Effective Demand
When prospective buyers have enough disposable income to satisfy their purchase needs or desires. Also called Purchase Ability.
350
Effective Gross Income
An investment property’s potential gross rental income plus other income, less vacancy and collection losses.
351
Efflorescence
A white powdery deposit on the surface of foundation walls or floor slabs, created when water penetrates the wall or floor, combines with salts within the masonry, and brings those salts to the surface.
352
EIFS (Exterior Installation and Finish Systems)
A stucco-like material that was subject of a class action lawsuit due to moisture penetration issues .
353
Elevation
Vertical measurement above or below a fixed reference point, most commonly sea level.
354
Emblement
An annual crop that is planted and cultivated by a tenant farmer and is always the personal property of the tenant farmer. Also called Fructus Industriales.
355
Eminent Domain
The government’s constitutional power to take private property for public use, as long as the owner is paid just compensation. (Condemnation is the action; eminent domain is the right.)
356
Employee
Someone who works under the control of, and at the direction of, a business or manager and is compensated for their time.
357
Employing Broker
A broker under whom affiliated licensees are contracted to work.
358
Employment
Agreement (Independent Contractor Agreement) A written contract between a self-employed real estate licensee and a broker under whose license the licensee will work.
359
Enabling Law
Legislation in which a governmental body grants another entity the authority or power to take certain actions.
360
Encapsulation
The process of applying a sealant to asbestos-containing material, which penetrates the material’s surface, preventing the release of the dangerous fibers into the air.
361
Encroachment
A physical object intruding onto neighboring property, often due to a mistake regarding the boundary.
362
Encumbrance
Any claim, lien, charge, or liability that attaches to, or burdens, real property.
363
ENERGY STAR
A program, managed by the U.S. Environmental Protection Agency, that sets standards for energy-efficient consumer products and homes.
364
Enforceable Contract
A contract that would be upheld by the courts; the requirements are capacity, mutual consent, lawful objective, consideration, and, for real estate contracts, in writing.
365
Entitlement
The maximum dollar amount of guaranty that applies to an eligible veteran on a VA-guaranteed loan.
366
Environmental Impact
Statement (EIS) A study required by the National Environmental Policy
367
Environmental Protection
Agency (EPA) The federal agency tasked with creating and enforcing environmental protection standards, helping others with environmental pollution problems, and providing research on environmental issues.
368
Environmental Site
Assessment (ESA) A report prepared for a real estate transaction that identifies potential or existing environmental contamination liabilities. An ESA can have up to four phases: I-Investigation; II-Testing; III-Remediation; IV-Management.
369
Equal Credit Opportunity
Act (ECOA) A federal law that requires all lenders to make credit available with fairness and without discrimination based on race, color, religion, national origin, age, sex, marital status, or receipt of income from public assistance programs.
370
Equitable Lien
A lien created when justice and fairness would require a court of equity to declare such a lien exists or when the conduct of the parties would imply that a lien was intended.
371
Equitable Right of Redemption
The right of a debtor to redeem the property from foreclosure proceedings prior to confirmation of sale.
372
Equitable Title
Any present right to acquire legal title to property.
373
Equity
An owner’s unencumbered interest in property; the difference between the value of the property and the liens, such as a mortgage, against it.
374
Erosion
A gradual loss of soil due to the action of wind, water, or other forces.
375
Errors and Omissions (E&O) Insurance
A type of liability insurance that helps cover the expenses of a lawsuit if a client claims a real estate licensee was at fault.
376
Escalation Clause
A lease clause that provides for an increase in rent to reflect increases in expenses paid by the landlord, such as real estate taxes, operating costs, and cost of living expenses. Also called Escalator.
377
Escape Clause
A clause, term, or condition in a contract that allows a party to that contract to avoid having to perform the contract.
378
Escheat
The reversion of property to the state (or, in some states, the county) after a person dies without leaving a valid will or having any heirs.
379
Escrow
A neutral third party that holds things of value on behalf of the parties to a transaction until the specified conditions have all been met.
380
Escrow Account
1. A separate account maintained by a broker for the deposit of clients’ money (i.e., good faith deposits). Also called Trust Account. 2. An account a lender maintains to hold a borrower’s monthly payments for property insurance and property tax until those bills are due. Also called Reserve Account or Impound Account.
381
Escrow Closing
A settlement procedure conducted by a disinterested third party, often an escrow agent, where the buyer and seller are not present.
382
Escrow Company
A neutral third party who safeguards funds on behalf of a buyer or seller until a transaction is ready to close.
383
Escrow Reserves
An account maintained by a lender for the deposit of borrowers’ extra 1/12 monthly deposits to cover next year’s insurance and tax payments.
384
Established Business Relationship (EBR)
A relationship that may allow a telemarketer or seller to call a consumer for up to 18 months after the consumer's last business transaction or payment or up to three months after the consumer makes an inquiry or submits an application— even if the consumer’s number is on the National Do Not Call Registry.
385
Estate
A possessory interest in real property; may be either a freehold estate or a leasehold estate.
386
Estate at Sufferance
Possession of property by a tenant who once had a valid lease but stays on after the lease expires without the property owner’s permission. Also called Tenancy at
387
Estate at Will
Possession of property by a tenant with the owner’s permission, but with no definite lease term and no rent being paid or rent not paid on a regular basis; e.g., a property owner lets a holdover tenant remain on the premises without paying rent until a new tenant is found. Also called Tenancy at Will.
388
Estate for Years
A leasehold estate set to last for a definite period (e.g., one week, three years), after which it automatically terminates. Also called Term Tenancy.
389
Estate from Period to Period
A leasehold that is automatically renewed for the same term as in the original lease, requiring notice to terminate. Also called Periodic Tenancy, Estate from Period to Period, or Month to Month Rental
390
Estate in Fee
The maximum possible estate one can possess in real property. Also called Fee Simple or Fee Simple Absolute
391
Estoppel
A legal doctrine that prevents a person from asserting rights or facts that are inconsistent with their earlier actions or statements when they failed to object (or attempt to “stop”) another person’s actions.
392
Estoppel Certificate
A document, often used in real estate and mortgage activities, that establishes certain facts that may later not be contradicted, disputed, or recanted.
393
Ethics
The fundamental principles of honesty and integrity that guide a person’s behavior.
394
Eviction
The process of forcing someone off property or preventing someone from re-entering property; can be classified as actual, constructive, retaliatory, or self-help.
395
Evidence of Title
Evidence of title to real estate is provided through a title report or issuance of title insurance.
396
Excess Land
Land that is not needed to support the highest and best use of a property and adds no value to the property.
397
Exclusive Agency Buyer Agency Agreement
An employment contract between a buyer and broker in which the broker earns a commission when the buyer purchases property unless the property was specifically exempted.
398
Exclusive Agency Listing
An employment contract between a seller and a broker that entitles the broker to a commission if anyone other than the seller finds a buyer for the property during the listing term.
399
Exclusive Buyer Agency Agreement
An employment contract between a buyer and a broker that grants only one broker the right to represent the buyer in the purchase of property and entitles the broker to the negotiated fee even if the buyer purchases property through another broker; depending on the language of the contract, the broker may also be entitled to compensation if the buyer finds the property and purchases it directly from the owner.
400
Exclusive Right to Rent Agreement
An employment contract between a landlord and a broker giving the brokerage exclusive rights, for a specified period of time, to locate a tenant to rent the landlord’s property. If the property is rented during this time, the broker is paid a commission.
401
Exclusive Right to Sell Listing
An employment contract between a seller and a broker that entitles the broker to a commission if anyone, including the seller, finds a buyer for the property during the term of their agency relationship.
402
Executed Contract
A contract in which both parties have fully performed their contractual obligations.
403
Executor
A person appointed in a will to carry out the provisions of the will. Sometimes called
404
Executory Contract
A contract in which one or both parties have not yet completed performance of their contractual obligations.
405
Expired Listing
A listing that did not sell during its listing period.
406
Express Agency
An agency relationship in which the principal clearly communicates the authority to the agent, in spoken words or in writing.
407
Express Authority
Actual consent to represent intentionally given by agreement—either oral or written—by a principal to an agent.
408
Express Contract
An agreement that’s been expressed in words, either spoken or written.
409
Extended Coverage
A title insurance policy that includes standard coverage and additional protections, including defects that may be discovered only through actual inspection; usually required by lenders (mortgagees).
410
External Obsolescence
When something outside of a property and outside of the control of a property owner makes it less desirable. Also called Economic Obsolescence.
411
Facilitator
A licensee who assists in the successful completion of a real estate transaction but has no agency relationship with and, therefore, no fiduciary obligation to either party.
412
Fair Credit Reporting Act
The federal law promoting the accuracy, fairness, and privacy of consumer information contained in the files of consumer reporting agencies.
413
Fair Housing Act Common name for Title VIII of the Civil Rights
Act of 1968 and its amendments that prohibits discrimination by governments and private parties in the sale or lease of residential real property.
414
Fair Market Value
The price negotiated for a parcel of real estate in a competitive market where both buyer and seller are free to act and under no undue pressure.
415
Familial Status
A protected group under the federal Fair Housing Act, making it illegal to discriminate because they are the parent or guardian of a child under 18 years of age.
416
Farm Area
A focused area, such as a neighborhood, that a real estate licensee continues to prospect (multiple contacts over time increase the likelihood of success).
417
Federal Deposit Insurance Corporation (FDIC)
A federal agency established to insure the deposits in member commercial banks. It determines the maximum insurance amount per account.
418
Federal Fair Housing Act of 1968
An act prohibiting discrimination in the sale or rental of housing on the basis of race, color, religion or national origin sex, handicap, and familial status.
419
Federal Home Loan Bank System (FHLB)
A government-sponsored enterprise, created by Congress but privately funded, that supports mortgage lending and related community investment for its member banks and financial institutions.
420
Federal Home Loan Mortgage Corporation (FHLMC)
Commonly known as “Freddie Mac,” a government-sponsored entity regulated by the Federal Housing Finance Agency that operates in the secondary mortgage market to purchase mortgage loans from lenders.
421
Federal Housing Administration (FHA)
A federal agency established in 1943 to increase home ownership by providing an insurance program to safeguard the lender against the risk of non-payment. Currently part of HUD.
422
Federal National Mortgage Association (FNMA)
Commonly known as “Fannie Mae,” a government-sponsored entity regulated by the Federal Housing Finance Agency; the largest buyer of existing mortgages in the secondary mortgage market.
423
Federal Reserve System (FRS)
A federal agency which oversees and regulates monetary policy, which in turn affects interest rates and the availability of credit. All federally chartered commercial banks must be members.
424
Fee Appraiser
An independent valuation professional hired by a client to value a particular property for a fee.
425
Fee Simple Determinable Estate
A type of defeasible fee that terminates automatically if certain conditions occur. The grantor (or grantor’s heirs) has a possibility of reverter (reclaiming ownership and possession). Also called Determinable Fee Estate.
426
Fee Simple Estate
The greatest estate (ownership) one can have in real property because it is freely transferable and inheritable, and of indefinite duration, with no conditions on the title. Also called Fee Estate, Fee Simple Absolute Estate, or Estate in Fee.
427
Fee Simple Estate Subject to a Condition Precedent
A condition in which the grantor retains title to the estate until a specific condition occurs.
428
Fee Simple Estate Subject to a Condition Subsequent
A type of defeasible fee that may be terminated by the grantor through legal action if conditions stated in the deed are not met; the grantor (or grantor’s heirs) has the right of re-entry. Also called Fee on Condition.
429
Insured Loan
A home financing option available to qualified borrowers through which the Federal Housing Administration insures approved lenders against loss from borrower default.
430
FICO
Fair Isaac Corporation (FICO), provides a three-digit number calculated from information on a credit report and nothing else. It summarizes the credit report into a number lenders use to consider the level of risk in providing a loan to a borrower.
431
Fictitious Name
A business name that is different from its owner’s legal name. Also called Trade Name or Doing Business as (DBA) Name
432
Fiduciary
A person in a position of trust, held by law to high standards of good faith and loyalty.
433
Fiduciary Deed
A deed used to transfer property when the grantor is a fiduciary such as a trustee, guardian, conservator, or executor acting in their official capacity. A fiduciary deed usually only warranties that the fiduciary is acting in their appointed capacity and within their allotted authority. Also called Judicial Deed or Bargain and Sale Deed.
434
Finance Charge
The cost of consumer credit as a dollar amount, including any charge imposed directly or indirectly by the creditor as an incident to or a condition of the extension of credit.
435
Financing Contingency
A clause in a purchase agreement that states the contract is contingent on the buyer obtaining approval for a loan on specified terms.
436
First Lien
Claim with highest priority against property; also known as a superior to the rights of subsequent lenders. (Recorded first)
437
First Mortgage
A mortgage on real estate in which the lender's rights are superior to the rights of subsequent lenders. (Recorded first)
438
First Substantive Contact
An event triggering agency disclosure, for example, prior to entering into a listing agreement, or when showing a property, or at an open house when a buyer displays serious interest.
439
Fixed Expenses
Ongoing operating expenses that do not vary based on occupancy levels of the property (e.g., taxes, insurance).
440
Fixed Fee
Commission agreement by which a fixed dollar amount is paid for the performance of specific real estate services; payment usually requires the successful completion of the transaction.
441
Fixed-Rate Loan
A loan for which the interest rate remains constant for the duration of the loan.
442
Fixture
An item of personal property that has been attached to or closely associated with real property in such a way that it has legally become part of the real property.
443
Flat Fee
A specific fee paid out once or in specific increments.
444
Flipping
Purchasing a property and quickly reselling it for a profit.
445
Floodplain
Land areas adjacent to rivers and streams that are subject to recurring flooding.
446
Floor Area Ratio
The maximum size of a building permitted on a development site according to zoning requirements. The floor area ratio (FAR) is typically stated as a percentage, such as 25%, 30%, etc.
447
Floor Duty
An assignment to take calls from consumers who call the brokerage for assistance or who walk into the brokerage looking for help.
448
Floor Load Capacity
The weight (pounds per square foot) or load that the floor of a structure can handle.
449
Footer
The support for the foundation of a building. Footers are installed below the frost line and are wider than the foundations that they support.
450
For Sale by Owner (FSBO)
A property offered for sale directly by the seller, who is not represented by a listing agent.
451
Forbearance Agreement
When the lender agrees to temporarily reduce, postpone, or suspend a borrower’s mortgage payment and not proceed with foreclosure as long as the borrower brings the loan current within the specified time.
452
Forced-Air System
A type of heating system consisting of furnaces, blowers, ducts, and registers.
453
Forcible Entry and Detainer Action
A summary legal action to regain possession of real property; especially, a lawsuit filed by a landlord to evict a defaulting tenant and regain possession of property. Also called Unlawful Detainer Action.
454
Foreclosure
The process used by a lienholder to force a property to be sold so that the proceeds of the sale can be applied toward debt satisfaction.
455
Foreclosure Action
A lawsuit filed by a creditor to begin foreclosure proceedings.
456
Foreign Investment in Real Property Tax Act of 1980 (FIRPTA)
A federal law that imposes income tax on foreign persons selling or otherwise disposing of their interest in real property.
457
Foundation
The basic structure on which the rest of the building will sit. A foundation can be concrete slab, pier and beams, crawl space, or basement.
458
Framing
The basic load-bearing skeleton of the house to which interior walls, exterior walls, and roof are attached.
459
Fraud
An intentional or negligent misrepresentation or concealment of a material fact; making statements that a person knows, or should realize, are false or misleading. Also called Fraudlent Deadling
460
Freehold Estate
A possessory interest in real property of uncertain (and often unlimited) duration; an ownership estate in real property; either a fee simple or life estate. The holder of a freehold estate has title.
461
Friable
A characteristic of asbestos in which it can crumble easily or become powdery when manipulated by hand, releasing particles into the air.
462
Frontage
The dimension across the access side of a parcel of land. The access could be a road, railroad tracks, or a body of water. In lot size dimensions, frontage is the first number listed. Also called Front Foot.
463
Fructus Industriales
Plants planted and cultivated by people (“fruits of industry”), generally considered personal property.
464
Fructus Naturales
Naturally occurring plants (“fruits of nature”) generally considered part of real property. Also called Natural Attachments.
465
Fully Amortized Loan
A loan in which regular payments of principal and interest are applied until the loan is paid off when the last scheduled payment is made.
466
Functional Obsolescence
Something inherent in the design of a structure that makes it less desirable.
467
Gender Identity
Actual or perceived appearance, expression, identity, or behavior of a person as being male or female, whether or not that appearance, expression, identity, or behavior is different from that traditionally associated with the person’s designated sex at birth.
468
General Agent
A person authorized to handle a variety of activities for the principal in one area or in specified areas on a continuing basis, for example, a real estate broker who is a property manager.
469
General Liability Insurance
Insurance that protects against bodily injury and property damage claims.
470
General Lien
A lien against all property of a debtor, instead of a particular piece of property.
471
General Partnership
An association organized by two or more persons engaged in a business for the purpose of joint profit. General partners assume unlimited joint and several personal liability; as such, a general partner may be personally liable for the actions of other general partners.
472
General Warranty Deed
A deed in which the grantor warrants the title against any and all defects that might have arisen before or during their period of ownership. Also called Standard Warranty Deed or Simple Warranty Deed.
473
Genuine Assent
Consent given freely to create a binding contract.
474
Geographic Information System (GIS)
A computer-based system for gathering, analyzing, and displaying geographic data, typically on a map.
475
Good Consideration
Love and affection (as opposed to monetary consideration).
476
Good Faith
The general presumption that the parties in a contract or other business transaction will deal with each other honestly and fairly, adhering to the terms of any contract and acting without any intent to defraud, deceive, or otherwise take advantage of the other party.
477
Good Title
Title that is free from encumbrances such as liens, pending litigation, and other such defects.
478
Government National Mortgage Association (GNMA)
Commonly known as “Ginnie Mae,” an agency of the Department of Housing and Urban Development (HUD) that operates in the secondary mortgage market. It is involved with special government financing programs, e.g.,
479
Government Survey System
Legal description for land referencing principal meridians and baselines designated throughout the country. Also called Rectangular Survey System.
480
Government-Sponsored Enterprise (GSE)
A quasi-governmental, privately held agency established by Congress to improve credit flow in some areas of the country’s economy. A GSE provides financial services to the public for various things, particularly mortgages, through capital market liquidity.
481
Graduated Lease
A lease under which rental increases are made at scheduled intervals for specific amounts.
482
Graduated Payment Buydown
A temporary buydown plan where payment subsidies, usually from a seller or developer, in the early years of the loan keep payments low, but payments increase each year until they're sufficient to fully amortize the loan.
483
Graduated Payment Mortgage (GPM)
A financing technique for residential real estate in which monthly payments start at a lower rate and increase periodically over the life of the mortgage; an example is the FHA 245 loan.
484
Grandfather Clause
An exemption from the application of a new law due to previously existing circumstances; a nonconforming use.
485
Grant
Transferring real estate by means of a deed.
486
Grantee
Person receiving a grant of real property.
487
Granting Clause
A deed clause stating a grantor's intent to transfer an interest in real property.
488
Grantor
A person who conveys their interest in real property.
489
Gratuitous Agency
An agency relationship where a real estate licensee is not compensated for their services, but still owes the principal all legal obligations due to every client. Can occur with implied agency.
490
Gross Income
The actual income received from property before the deduction for any expenses.
491
Gross Income Multiplier
A conversion factor derived from the sales price of comparable rental properties divided by their gross rent and any other miscellaneous income. This factor is multiplied by the estimated gross income of the subject to estimate its value.
492
Gross Lease
A lease for which the tenant pays a fixed amount to the property owner and the property owner is responsible for paying all associated expenses (taxes, insurance, maintenance); most common for residential leases.
493
Gross Living Area
Residential space that is finished, heated, and above grade. Garages, finished basements, and storage areas do not count in GLA. Also called Livable Area.
494
Gross Rent
The amount a property owner receives from a tenant for leasing a property before the owner deducts any operating expenses.
495
Gross Rent Multiplier (GRM)
A conversion factor derived from the sales prices of comparable rental properties divided by their gross income received from lease payments. This factor is multiplied by the estimated gross rent of the subject property to arrive at an opinion of value.
496
Ground Lease (Land Lease)
A lease under which the tenant leases only the land from the owner, but the tenant owns the building during the lease term.
497
Group Home
A residential property where a small number of unrelated people in need of care, support, or supervision can live together.
498
Growing Equity Mortgage
A fixed-rate mortgage with payments that increase by a predetermined amount, with the increased payment amount applied to principal reduction.
499
Guardian's Deed
A deed authorized by a guardian, which is a person assigned by the court to handle the affairs of an incapacitated person.
