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CA Real Estate Sales > GLOSSARY > Flashcards

Flashcards in GLOSSARY Deck (291):
1

A written summary of the chain of title.

ABSTRACT OF TITLE

2

Any clause in a loan requiring the loan to be paid off upon the occurrence of a certain event. An alienation clause is an example.

ACCELERATION CLAUSE

3

the acquisition of property by its being added to other property.

ACCESSION

4

the process of gradual or imperceptible additions to land bordering a river or stream.

ACCRETION

5

The declaration before a notary by a person who executed a document stating that he did
in fact sign the document. A deed must be {BLANK} to be recorded. Once {BLANK}ed, it is accepted as
prima facie evidence in court.

ACKNOWLEDGMENT

6

ACRE

43,560 square feet, or 4,840 square yards, or about 209 feet by 209 feet (if square)

7

the authority that a principal actually confers on the agent.

ACTUAL AUTHORITY

8

for income tax purposes, it is determined by subtracting the adjusted cost basis from the exchange value of a property.

ACTUAL GAIN (profit)

9

when a person actually knows something, such as when an agent knows someone has taken
possession of a property.

ACTUAL NOTICE

10

a property tax is an {BLANK} tax.

AD VALOREM (according to value)

11

for income tax purposes, it is the cost basis plus capital improvements, plus existing
assessment liens assumed by the buyer, minus depreciation, minus gain(s) deferred from prior transactions.

ADJUSTED COST BASIS

12

for income tax purposes, it is the selling price minus the expenses of the sale.

ADJUSTED SELLING PRICE

13

acquiring title by five years of exclusive, notorious, and open possession of a property (contrary to the best interests of the true owner) under a claim of right or color of title. When property is
acquired by adverse possession, a quiet title action would be used to perfect title.

ADVERSE POSSESSION

14

a person authorized to represent a principal in business dealings with other parties. Does not need to be paid consideration to be considered this.

AGENT

15

as of January 1, 1988, the California {BLANK} requires agents to disclose agency relationships as soon as their relationship with a buyer or seller becomes more than casual. This applies to transactions concerning the sale, or a lease (for more than one year), of four or less residential units.The three steps to agency disclosure are disclose, elect, and confirm.

AGENCY DISCLOSURE LAW

16

to sell, transfer or convey.

ALIENATE

17

requires the borrower to pay off the loan upon sale

ALIENATION (DUE ON SALE) CLAUSE

18

a junior lien which is subordinate to, yet includes, the liens to which it is subordinated. Commonly used with land contracts.

ALL INCLUSIVE TRUST DEED (AITD, wrap around trust deed, hold harmless trust deed, overriding trust deed)

19

the soil deposited by accretion.

ALLUVION (Alluvium)

20

requires the disclosure of earthquake fault lines on a map.

ALQUIST-PRIOLO ACT

21

a home. appraised by the Market Data Approach.

AMENITY PROPERTY

22

the federal law which requires equal access to public buildings for handicapped persons.

AMERICANS WITH DISABILITIES ACT (ADA)

23

the liquidation of a financial obligation, such as a loan.

AMORTIZATION

24

used to determine monthly payments.

AMORTIZATION TABLES

25

a promissory note which calls for periodic payments of both principal and
interest.

AMORTIZED INSTALLMENT NOTE

26

a change in geographic direction is often referred to by using an {BLANK} expressed in degrees, minutes and seconds; it is often described as "so many degrees from the North or South points of the compass."

ANGLES

27

used in the Capitalization Approach to appraisal and determined by this formula: Gross
Income - Vacancies - Expenses = {BLANK}

ANNUAL NET INCOME

28

the relative cost of credit expressed in percentage terms and disclosed under the Truth-In-Lending Law (also called Reg. Z).

ANNUAL PERCENTAGE RATE (APR)

29

an opinion of the value of a specific property on a given date; it is valid for that date only.

APPRAISAL

30

occurs when the government gives permission to a non-riparian owner to take water from a
public waterway.

APPROPRIATION

31

things used with the land for its benefit. {BLANKS} are real property.

APPURTENANCES

32

benefits the land of a dominant tenement. The buyer of the dominant tenement
automatically receives the {BLANK}.

APPURTENANT EASEMENT

33

a clause in a contract in which the parties agree to arbitrate a dispute rather than go to court.

ARBITRATION CLAUSE

34

a lien which is recorded by a local government when a property owner fails to pay for street improvement within 30 days of receipt of the bill.

ASSESSMENT LIEN

35

establishes the tax base. Property is assessed every year at 100% of its taxable value
(100% of fair market value or 100% of full cash value). If sold, property is reassessed during the year.

ASSESSMENT ROLL

36

a contract is usually {BLANK}able. Leases can be {BLANK}ed; when a lease holder {BLANK}s a lease, the person who acquires the lease (the {BLANK}ee) becomes the tenant. Listings cannot be {BLANK}ed because a listing is a personal service contract calling for the personal performance of the broker.

ASSIGNMENT

37

a preexisting assessment lien which is assumed (taken over) by a buyer of real property.

ASSUMED ASSESSMENT LIEN

38

when a buyer assumes a loan, he or she becomes primarily liable. The seller is still liable, but is
in a secondary position.

ASSUMPTION

39

property is held by court order as security for a possible judgment in a pending lawsuit. An {BLANK} is valid for three years.

ATTACHMENT LIEN (WRIT OF ATTACHMENT)

40

acting for another with a duly executed and recorded power of attorney.

ATTORNEY-IN-FACT

41

sudden violent tearing away of land by water.

AVULSION

42

dirt used to fill in excavations or brace a foundation.

BACKFILL

43

partially amortized.

BALLOON NOTE

44

any payment which is significantly larger than the other payments.

BALLOON PAYMENT

45

based on a 30 day month and 360 day year, used for proration and loan calculations.

BANKER'S YEAR

46

a wall supporting any vertical load in addition to its own weight. It is normally left in place during remodeling and can be constructed at any angle to doorways. {BLANK} are real property.

BEARING WALL

47

the lender in a trust deed. A {BLANK} holds the promissory note and trust deed during the life
of the loan.

BENEFICIARY

48

statement by a lender disclosing the current loan balance.

BENEFICIARY STATEMENT

49

a contract in which the promise of one party is given in exchange for the promise of the
other party (a promise for a promise). Both parties are bound to perform. These promises are often the basis for a contract (for example, exclusive listings, deposit receipts).

BILATERAL CONTRACT

50

a real estate loan which covers (blankets or secures) more than one parcel of land; it
is commonly used when building new homes.

BLANKET ENCUMBRANCE

51

does not disclose that an agent is representing the seller. When advertising, a licensee must disclose that he is an agent. Additionally, the ad must name the broker.

BLIND ADVERTISING

52

a unit of measurement of lumber which is one foot wide, one foot long, and one inch thick (any
combination of 144 cubic inches) .

BOARD FOOT

53

loan instruments

BONDS

54

in good faith, without fraud or deceit, genuine. A {BLANK} land contract or listing has all the ele-
ments required by law.

BONA FIDE

55

cash, other "unlike" property, or "mortgage relief" used to balance the equities of the properties in a 1031 tax deferred exchange.

BOOT

56

provides the lender with information used to determine the risk inherent in the
loan.

BORROWER'S CREDIT HISTORY

57

a person employed for a fee by another to perform a real estate act requiring a license. A {BLANK} is the employer of salespersons.

BROKR

58

a measurement of heat used in rating the capacity of heating systems.

BTU (British Thermal Unit)

59

an appraiser uses the building residual technique when the value of a building is an unknown factor. The technique determines how the building contributes to the value of the entire property.

BUILDING RESIDUAL TECHNIQUE

60

a set of California laws regulating business, such as the real estate industry.

BUSINESS AND PROFESSIONS CODE

61

these are personal property. The document used to transfer title to personal property is a bill of sale, not a deed.

BUSINESS OPPORTUNITIES

62

the state purchases homes and sells them to California veterans using land contracts

CALIFORNIA VETERANS FARM AND HOME PURCHASE PLAN (Cal-Vet)

63

everyone is capable of contracting, except minors and those who are mentally incompetent. It is one of the four essential elements of a contract.

CAPABLE PARTIES

64

investment of money in physical improvements of a property (for example, adding a wall, remodeling, or upgrading a heating system) . It is not deductible as an expense, but is added to the cost basis and depreciated over the life of the improvements.

CAPITAL IMPROVEMENT

65

establishes the current value of future benefits which may be obtainedfrom an income producing property (apartments, commercial buildings, restaurants, etc.) . The value of an asset is determined by dividing the annual net income by a desired rate of return called the capitalization rate (V = I/R) .

CAPITALIZATION (INCOME) APPROACH

66

the rate of interest which is considered a reasonable return on an investment. The greater the risk, the higher the capitalization rate demanded by an investor. {BLANK}s consider the quantity, quality, and durability of the rent. The three methods of calculating capitalization rate are (C.B.S.) Market Comparison, Band of Investment, and Summation.

CAPITALIZATION RATE

67

covenants, conditions, and restrictions usually placed in a "declaration of restrictions" which restricts land use in a subdivision.

CC&R's

68

receipt from the State Board of Equalization showing that the seller of a business opportunity has paid all sales taxes.

CERTIFICATE OF CLEARANCE

69

government appraisal for a VA loan. The {BLANK} determines the amount of the down payment. Some VA loans do not require a down payment.

CERTIFICATE OF REASONABLE VALUE (CRV)

70

the record of prior transfers and encumbrances affecting the title of a parcel. It is usually
searched by a title company employee.

CHAIN OF TITLE

71

items effecting title which may prevent transfer. For example, if a woman purchased a home prior to marriage, but sold it during the marriage and signed her married name on the grant deed, it would create a {BLANK}.

CLOUD ON TITLE

72

that which appears to be good title but isn't

COLOR OF TITLE

73

COMMERCIAL ACRE (Buildable Acre)

43,560 sq. ft. minus the space taken by streets, alleys, and sidewalks.

74

a single line of store buildings along a major route, also known as a strip commercial
development or a strip center.

COMMERCIAL AREA

75

occurs when an agent mixes a principal's or client's money with the agent's own money.

COMMINGLING

76

a subdivision in which an owner sells apartment units to the tenants, with the tenants owning the parking area, halls, walks, etc., in common.

COMMUNITY APARTMENT PROJECT

77

each spouse owns 50%. {BLANK} is assumed when title says "husband and wife." {BLANK} is also assumed whenever a husband and wife buy property, unless they specifically take title as joint tenants or tenants in common.

COMMUNITY PROPERTY

78

comes from the Treaty of Guadalupe Hidalgo between the United States and
Mexico.

COMMUNITY PROPERTY LAW

79

funded through the issuance of tax allocation bonds and secured by anticipated property tax revenues.

COMMUNITY REDEVELOPMENT AGENCY (CRA)

80

compressing fill dirt to bear the weight of a building. A report on soil stability should be obtained from a registered civil engineer if a building~s foundation is cracked, and the doors and windows do not close
properly.

COMPACTION

81

calculated by subtracting commissions paid to sales agents from the gross income of the
brokerage.

COMPANY DOLLAR

82

a provision in a loan requiring the borrower to keep a certain amount of money on deposit with the lender in return for the loan.

COMPENSATING BALANCE

83

occurs when all terms of the escrow instructions have been met.

COMPLETION OF ESCROW

84

ownership by two or more persons, with title held jointly and severally.

CONCURRENT ESTATES

85

something which must happen or be performed before an estate is vested in the grantee.

CONDITION PRECEDENT

86

something which will cause an estate to be lost should a certain event happens.

CONDITION SUBSEQUENT

87

a metal pipe in which electrical wiring is installed.

CONDUIT

88

the selling price minus any existing loans assumed by the buyer.

CONSIDERATION (Documentary Transfer Tax)

89

may be anything of value; it does not have to be money. It is one of the four essential elements of a contract.

CONSIDERATION (contract law)

90

any disturbance of a tenant's use or possession of a leased premises which is caused by the landlord. The property must be rendered wholly or substantially unsuitable for the use for which it
was leased.

CONSTRUCTIVE EVICTION

91

events which by law put people on notice. Recording a document gives {BLANK}. The act of taking possession of land, while holding an unrecorded deed, gives {BLANK}.

CONSTRUCTIVE (LEGAL) NOTICE

92

a statistical measure of changes in the prices of goods and services over time.

CONSUMER PRICE INDEX (CPI)

93

the date the contract was formed. A contract is formed when the final acceptance is communicated to the offeror.

CONTRACT DATE

94

loans made by lenders without governmental guarantees.

CONVENTIONAL LOAN

95

stealing client's money.

CONVERSION

96

an apartment building, owned by a corporation, in which tenancy in an apartment unit is obtained by purchase of shares of the stock of the corporation. The owner of the shares (a tenant or lessee) is entitled to occupy a specific apartment in the building.

COOPERATIVE APARTMENT (stock cooperative, co-op, stock co-op)

97

a {BLANK} on a deed implies that the person signing the deed is authorized to sign for the corporation.

CORPORATE SEAL

98

used by an appraiser when other approaches are inappropriate (special purpose buildings, new subdivision homes) . The cost approach is the least appropriate for appraising older buildings because as a building gets older, depreciation becomes difficult to calculate.

COST APPROACH

99

for tax purposes, it is the purchase price.

COST BASIS

100

an agreement or promise to do or not do a particular thing, such as an agreement to build a house of a particular architectural style or to use (or not use) property in a certain way.

COVENANT

101

measures the cost of living.

CPI (Consumer Price Index)

102

the distance between the ground and the first floor of a building. Most building codes require
them to be at least 18 inches high.

CRAWL SPACE

103

prepaid taxes appear as a credit to the seller in the escrow closing statement. A {BLANK} increases the account balance.

CREDIT (in Escrow Closing Statement)

104

used to determine the replacement cost of improvements in multistory structures when
the height between floors vary (for example, the replacement cost of a warehouse would be calculated by cost per {BLANK}) .

CUBIC FOOT METHOD

105

economically and physically possible to correct.

CURABLE DEPRECIATION

106

the date of the final writing or delivery of an appraisal report.

DATE OF THE APPRAISAL

107

the date a property is inspected is generally used as the date of {BLANK}.

DATE OF VALUE

108

the fictitious business statement filed by a broker. It must be approved by the Real Estate Commissioner. Good for five years.

DBA (Doing Business As)

109

the selling price appears as a {BLANK} on the buyer's closing statement. A {BLANK} decreases the account balance.

Debit

110

used by lenders as a loan qualifying tool.

DEBT-INCOME RATIO

111

plants that lose their leaves in autumn and winter. It is not a type of soil.

DECIDUOUS

112

the written instrument which, when properly executed, delivered, and accepted, conveys title to real property from one person (the grantor) to another (the grantee) . {BLANKS} are indexed by the names of the parties (grantor and grantee) .

DEED

113

a borrower voluntarily deeds property back to a lender to stop foreclosure. Junior liens against the property remain in place.

DEED-IN-LIEU OF FORECLOSURE

114

- usually requires court foreclosure. After a court foreclosure sale on a mortgage, the mortgagor (borrower) can redeem the property by paying the loan in full (statutory right of redemption) . The
mortgagor retains possession of the property until the right of redemption expires.

DEFAULT ON A MORTGAGE

115

is possible only when there is a court foreclosure on a non-purchase money loan and the fair market value is less than the loan amount (this rarely occurs).

DEFICIENCY JUDGMENT

116

prices decrease. A decrease in prices causes an increase in the value of money.

DEFLATION

117

construction, sales financing, and refinancing are all {BLANK} sources of borrowers for mortgage money.

DEMAND SOURCES

118

a federal agency overseeing the nation's
housing.

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT (HUD)

119

the state agency which regulates the real estate industry.

BUREAU OF REAL ESTATE (BRE)

120

the contract used to write an offer, the contract selling real property.

DEPOSIT RECEIPT

121

any loss in value. {BLANK} accrues over time. Accrued {BLANK} is the most difficult kind to measure accurately. Unlike taxation, for appraisal purposes land can and does {BLANK}.

DEPRECIATION (appraisal)

122

allowed on improved income, trade, or business property. It is based on the cost of
improvements. For taxation purposes, land never {BLANKS}.

DEPRECIATION (taxation)

123

calculated by dividing the operating expenses of the office by the number of agents.

DESK COST

124

prepaid interest demanded by lender when a loan is negotiated. Each {BLANK} costs one percent of the face amount of the loan.

DISCOUNT POINTS

125

the interest rate charged by the Federal Reserve Board when banks borrow money from it.
Raising the {BLANK} tightens the money market.

DISCOUNT RATE

126

selling a note for less than the face amount or the current balance. When an investor buys a loan at a {BLANK} and later forecloses, the lender forecloses for the current loan balance, not the {BLANK} amount.

DISCOUNTING A NOTE

127

collected when a deed is recorded. The tax is based on consideration (selling price minus any existing loans assumed by the buyer).

DOCUMENTARY TRANSFER TAX

128

the land that gets the benefit of an easement.

DOMINANT TENEMENT

129

changing zoning from high density use to a lower density use, such as changing from commercial C-1 zoning to residential R-1, or from R-3 to R-1.

DOWNZONING

130

panels made of gypsum.

DRYWALL

131

acting as an agent for more than one party (principal) in a real estate transaction. {BLANK}
is illegal unless the agent has obtained the knowledge and consent of both parties.

DUAL AGENCY

132

occurs when an agent promises to search for a buyer in an exclusive listing. It includes an
obligation to advertise the property.

DUE DILIGENCE

133

the right to enter or use another person's land within definable limits; it may be created for any
length of time and is irrevocable during the time limit specified. All {BLANKS} are real property.

EASEMENT

134

Benefits a person or corporation (such as a utility {BLANK} for power lines).

EASEMENT IN GROSS

135

the court case that held that a seller and his or her agent must disclose to a buyer all facts materially affecting the value or desirability of the property. This decision led to the passage of the Seller Transfer Disclosure law.

EASTON V. STRASSBURGER

136

the period of time in which an income property generates income in excess of its expenses.
The {BLANK} of a property is usually shorter than its physical life.

ECONOMIC LIFE

137

the apparent age of an improvement as opposed to its actual age (for example, a property
which is 20 years old, but has been superbly maintained, may have an {BLANK} age of 9 years) .

EFFECTIVE AGE

138

used to appraise income property, it is the income left over after vacancies are subtracted from gross income, but before expenses are subtracted (used in the Capitalization Approach).

EFFECTIVE GROSS INCOME (Adjusted Gross Income)

139

the interest rate that is actually paid by the borrower for the use of the money.

EFFECTIVE RATE

140

shows the front and side views of homes in a subdivision.

ELEVATION SHEET

141

married minors and veterans who are minors are considered {BLANK} and can enter into contracts.

EMANCIPATED

142

Occurs when the government takes property, also called condemnation. It is the power of government to take private property for public use; fair market value is paid for property taken under {BLANK}. {BLANK} is not part of police power or zoning.

EMINENT DOMAIN

143

wrongful placement of an improvement on the property of another, a type of trespass. An
owner is allowed three years in which to sue a neighbor to have the {BLANK} removed.

ENCROACHMENT

144

burdens on property, including money burdens (liens, such as trust deeds, mortgages, taxes,
judgments, etc.) and non-money burdens (zoning, easements, deed restrictions, etc.).

ENCUMBRANCES

145

measures the efficiency of appliances, such as air conditioners. The higher the ratio, the more efficient the unit.

ENERGY EFFICIENT RATIO (EER)

146

when a contract is required to be in writing, the authority of an agent to enter into a contract for his principal must also be in writing.

EQUAL DIGNITIES RULE

147

the difference between the value and the loan on a property, the owner's share of the total value of the
property, or the initial down payment.

EQUITY

148

the gradual wearing away of land by natural forces. It results in the loss of title.

EROSION

149

occurs when a person dies, leaving no heirs and no will, and the state gets his or her property. Land
may never be acquired by escheat.

ESCHEAT

150

the deposit of instruments and/or funds with a neutral third party who has been instructed to carry out the provisions of an agreement or contract. The purpose of {BLANK} is to make sure that the conditions of transfer are met prior to closing.

ESCROW

151

a detailed accounting of all money received and distributed at close of escrow.

ESCROW CLOSING STATEMENT

152

are not usually notarized or recorded.

ESCROW INSTRUCTIONS

153

created when a lessee stays in possession of the premises after the proper time.

ESTATE AT SUFFERANCE

154

a lessee can stay as long as both the lessor and the lessee mutually agree.

ESTATE AT WILL

155

any lease creates an {BLANK}. An {BLANK} must have a termination date.

ESTATE FOR YEARS (lease)

156

held by the original grantor if a property is to revert to him.

ESTATE IN REVERSION

157

rental agreement that continues from period to period.

ESTATE QF PERIODIC TENANCY (month-to-month)

158

ownership rights and interests.

ESTATES (what is owned)

159

a legal and equitable doctrine under which a person is barred from asserting or denying a fact
because of the person's previous acts or words.

ESTOPPEL

160

and others.

ET AL

161

and wife.

ET UX

162

a contract in which a seller agrees to pay a commission to a listing agent if a property is sold by any agent; the seller also retains the right to sell directly to a buyer and pay no commission.

EXCLUSIVE AGENCY LISTING

163

a contract in which an owner agrees to sell
through the listing broker only. If property is sold by anyone (the listing broker, another broker, the owner, or any other source) during the term of the listing, the listing broker is entitled to a commission.

EXCLUSIVE AUTHORIZATION AND RIGHT TQ SELL LISTING

164

a contract employing a broker to find a loan for a borrower. It may not exceed a term of more than 45 days.

EXCLUSIVE LOAN LISTING

165

when escrow instructions are "{BLANK}" by both buyer and seller, they are signed. When escrow
instructions are "{BLANK" by an escrow agent, they have been fulfilled. When an escrow officer records a deed, he or she is {BLANK}ing escrow instructions.

EXECUTED

166

a contract in which both parties have completely performed their duties.

EXECUTED CONTRACT

167

occurs when property is sold under a "writ of execution" to satisfy a judgment.

EXECUTION SALE

168

there is no such thing as an {BLANK}. This is used in a trick question.

EXECUTIVE SALE

169

a contract in which something remains to be done by one or both parties.

EXECUTQRY CONTRACT

170

merchants prefer properties on the south and west sides of the street, and the southwest corner of
intersections. The north and east sides are less desirable.

EXPOSURE

171

a contract expressed in words, either oral or written.

EXPRESS CONTRACT

172

a title insurance policy that includes a survey and protects against unrecorded
events.

EXTENDED COVERAGE POLICY

173

obsolescence caused by external events occurring outside property lines.

EXTERNAL (ECONOMIC OR SOCIAL) OBSOLESCENCE

174

prohibits discrimination in supplying housing accommodations based on race, color, religion, sex, marital status, national origin, ancestry, age, familial status or disability.

FAIR EMPLOYMENT AND HOUSING ACT (Rumford Act)

175

- an untrue statement about what a promisor is going to do. A {BLANK} and a misrepresentation are not the same thing. A misrepresentation is a false statement of fact.

FALSE PROMISE

176

A major participant in the secondary mortgage market.

FEDERAL HOME LOAN MORTGAGE CORPORATION (FHLMC, Freddie Mac)

177

created by the National Housing Act to encourage home ownership. {BLANK} loans enable buyers to purchase homes with a small down payment, while insuring lenders against loss.

FEDERAL HOUSING ADMINISTRATION (FHA)

178

the best source for farm loans and loans on large tracts of land.

FEDERAL LAND BANK SYSTEM

179

a major participant in the secondary mortgage market. Formerly a government agency, it is now a corporation with stock traded on the New York Stock Exchange.

EDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA, Title 3, Fannie Mae)

180

regulates banks and influences the money supply of the economy.

FEDERAL RESERVE BOARD

181

the greatest estate one can have in real property.

FEE SIMPLE ABSOLUTE

182

conditions or limits on the use of the property.

FEE SIMPLE DEFEASIBLE

183

an estate which is indefinite in duration and can be sold or inherited.

FEE SIMPLE ESTATE (of inheritance, perpetual estate, estate in fee)

184

a recorded trust deed or mortgage containing details which apply to later loan documents.

FICTITIOUS TRUST DEED OR MORTGAGE

185

a relationship of trust and good faith. The relationship is similar to a trustee and a beneficiary; however, a trustor does not necessarily have a {BLANK} relationship with a beneficiary.

FIDUCIARY RELATIONSHIP

186

issued by the Commissioner when all his requirements for a subdivision have been met.
It is valid for five years unless there is a material change.

FINAL PUBLIC REPORT

187

property taxes and insurance.

FIXED EXPENSES

188

objects attached to the land. Fixtures may become real property.

FIXTURES

189

sheet metal used to protect a building from seepage of water, such as in the valley of a roof.

FLASHING

190

the concrete base or bottom of a foundation wall.

FOOTING

191

occurs when an appraiser projects or estimates the annual expenses for an income producing property in a reconstructed operating statement.

FORECASTING

192

requires that a buyer of real property must
withhold and send to the Internal Revenue Service (IRS) 10% of the gross sales price if the seller of the real property is a foreign person.

FOREIGN INVESTMENT IN REAL PROPERTY TAX ACT (FIRPTA)

193

shows the location of the footings and piers under a house.

FOUNDATION PLAN

194

a misrepresentation which usually makes a contract voidable. The buyer or seller must have relied upon the misrepresentation to claim fraud.

FRAUD

195

an estate of indeterminable duration.

FREEHOLD ESTATE

196

an offer which no rational person would accept.

FRIVOLOUS OFFER

197

the deeper the lot, the greater the front foot value.

FRONT FOOT VALUE

198

the measurement of property on its street line, used for sale or valuation purposes.

FRONT FOOTAGE

199

the distance a property adjoins a street or thoroughfare.

FRONTAGE

200

crops which must be planted annually.

FRUCTUS INDUSTRIALES

201

occurs when escrow notifies lender to release funds for the loan.

FUNDING OF THE BUYERS LOAN

202

a pitched roof, sloping on two sides.

GABLE ROOF

203

government loan instruments. When the Federal Reserve Board sells existing {BLANK} through the Federal Open Market Committee, it tightens the money supply.

GOVERNMENT BONDS

204

major participant in the secondary mortgage market. It is a federal agency within the Department of Housing and Urban Development (HUD).

GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GNMA, Ginnie Mae)

205

allows an owner to continue to use structures which do not conform with new zoning laws.

GRANDFATHER CLAUSE

206

the most commonly used deed, containing two implied warranties: (1) the grantor has not conveyed title to any other person, and (2) the estate is free from undisclosed encumbrances. These facts are warranted by the {BLANK} and not covered by title insurance.

GRANT DEED

207

the lessor pays expenses (a fixed amount).

GROSS LEASE

208

Found by dividing the sale price of comparable
properties by their gross monthly or gross annual incomes.

GROSS MULTIPLIER (rent multiplier, gross rent multiplier)

209

the measure of goods and services produced by the nation during any one calendar year.

GROSS NATIONAL PRODUCT (now called the Gross Domestic Product)

210

a seller or agent guarantees the yield or return; it is classified as a real property security.

GUARANTEED NOTE

211

a cash loan in which the borrower receives cash using a new note secured by a trust deed
(for example, a home equity loan) . The commissions, costs, and expenses to negotiate {BLANK} first trust deeds of less than $30,000, and {BLANK} junior loans of less than $20,000, are limited by law.

HARD MONEY LOAN

212

a roof sloping on all four sides.

HIP ROOF

213

an innocent party who purchases a negotiable instrument without knowledge of any
defects.

HOLDER IN DUE COURSE

214

a method of protecting a limited amount of equity in a personal residence from subsequent unsecured creditors. A {BLANK} must be recorded, and may be recorded by either spouse without
the knowledge or consent of the other. A {BLANK} is not an encumbrance.

HOMESTEAD EXEMPTION

215

improved or unimproved real property used or intended to be used as a residence by the owner; it consists of no more than four dwelling units.

HOUSING ACCOMMODATIONS

216

California state law making discrimination in lending practices illegal.

HOUSING FINANCIAL DISCRIMINATION ACT (Holden Act)

217

the Heating, Ventilation, Air Conditioning system in a commercial lease.

HVAC

218

the borrower retains possession of the item securing the debt (for example, a trust deed,
mortgage, or the pink slip for a car loan).

HYPOTHECATE

219

a trust account established to hold funds for future needs relating to a parcel of real estate. {BLANK} means to hold, reserve, or impress.

IMPOUND ACCOUNT

220

property which produces income to the owner.

INCOME, TRADE OR BUSINESS PROPERTY

221

either too expensive or physically impossible to correct.

INCURABLE DEPRECIATION

222

caused when there is more money available than there are goods for sale.

INFLATION

223

transaction in which both the buyer and the seller are represented by agents working for one
broker. When a brokerage has a property listed for sale, no agent in the brokerage may be the agent for the buyer only, because the brokerage has an agency relationship with the seller.

IN-HOUSE SALE

224

a court order restricting a party from doing an act (such as violating private restrictions). A court
order saying "Stop that!"

INJUNCTION

225

they receive most of their deposits from "household savings" of individual depositors.

INSTITUTIONAL LENDERS (insurance companies, savings and loans, and commercial banks)

226

the "R value" measures the insulation~s resistance to heat. The higher the R value, the greater the {BLANK}. Wall {BLANK} is considered adequate if the inside of an exterior wall is about the same temperature as interior walls.

INSULATION

227

finances construction. The terms "{BLANK}" and "construction loan" are synonymous (they mean the same thing).

INTERIM LOAN (short-term)

228

the current use, when the highest and best use is expected to change.

INTERIM USE

229

caused by events occurring within the property lines and observable during an inspection by an appraiser.

INTERNAL (FUNCTIONAL) OBSOLESCENCE

230

escrow would file an interpleader action in court to settle a dispute between a buyer and seller over the deposit.

INTERPLEADER ACTION

231

occurs when a person dies without a will, but with heirs.

INTESTATE SUCCESSION

232

occurs when a private party forces government to purchase, (for example, as a result of freeway or airport noise). It is the opposite of eminent domain.

INVERSE CONDEMNATION

233

vacant land held for an investment. When it is sold, losses can be deducted. {BLANK} cannot be depreciated.

INVESTMENT PROPERTY

234

when there is more than one obligator (borrower) on a promissory note, the lender will include the terms "{BLANK}"

JOINT AND SEVERAL LIABILITY

235

created when two or more persons take title as {BLANK}. Four unities are required for {BLANK} (T-TIP) -Time, Title, Interest, Possession.

JOINT TENANCY

236

TTIP -- For joint tenants

Unity of Time, Title, Interest, Possession.

237

one of a series of parallel beams used to support the ceiling and floors. It is a parallel.

JOIST

238

the U.S. Supreme Court case (decided in 1968) which upheld anti-discrimination laws on the basis of the Thirteenth Amendment to the U.S. Constitution.

JONES VS. MAYER

239

when an abstract of judgment is recorded, it creates a court ordered general, involuntary lien
upon all real property of the debtor located in the county of recordation. A {BLANK} is valid for ten years and enforced by way of an execution sale. The court orders the sale of property to satisfy a judgment with a writ of execution.

JUDGMENT LIEN

240

any loan which is not first (for example, a second trust deed, or third trust deed, etc.)

JUNIOR LOAN

241

any type of compensation from escrow companies, termite companies and title companies given to a licensee for referring business. {BLANK}s are illegal.

KICKBACKS

242

a free-standing information booth in a mall.

KIOSK

243

an unfair delay in asserting legal rights which will not be excused by the court.

LACHES

244

a written contract where the seller (vendor) agrees to transfer title to real property (give a grant deed) to the buyer (vendee) after the buyer has met the contract conditions.

LAND CONTRACT (real property sales contract, installment sales contract, agreement to convey, agreement for purchase and sale, or land contract of sale)

245

an appraiser uses the {BLANK} Method when the unknown factor is the value of the land.

LAND RESIDUAL METHOD

246

a contract must be legal in formation and operation. Both its consideration and its object must be lawful.

LAWFUL OBJECT

247

includes a survey and provides the lender with extended coverage protection.

LENDER~S (ALTA) POLICY

248

personal property, not real property. It is the
legal interest in real property held by a tenant who is leasing or renting.

LESS-THAN-FREEHOLD ESTATE (leasehold estate or chattel real)

249

tenant

LESSEE

250

landlord

LESSOR

251

using borrowed money (financing) to the maximum extent possible.

LEVERAGE

252

the personal and nonassignable right to do a particular act (or acts) on the land of another.

LICENSE

253

money encumbrances placed against a property either voluntarily (with the owner's consent) or involuntarily (without the owner's consent). A {BLANK} is a "charge" against real property.

LIENS

254

a freehold estate, limited to the duration of someone's life.

LIFE ESTATE

255

holder of the life estate.

LIFE TENANT

256

in a 1031 tax deferred exchange it is "income, trade, business, or investment
properties."

LIKE FOR LIKE PROPERTIES

257

a clause in a contract fixing the amount of damages in case one of the parties defaults.

LIQUIDATED DAMAGES CLAUSE

258

describes how quickly an investment can be converted into cash.

LIQUIDITY

259

measured by subtracting current liabilities from current assets.

LIQUIDITY OF A BUSINESS

260

notice of pending litigation concerning title or possession of real property.

LIS PENDENS

261

an employment contract between a principal (usually the seller) and an agent (broker) employing the agent to do certain things for the principal.

LISTING

262

An agent who has an {BLANK} a property which he has also listed for sale has a conflict of interest. To exercise his option to buy, the agent must reveal to the seller (in writing) any offers on the property and the amount of his profit. Additionally, to exercise his {BLANK}, the agent must obtain the written consent of the seller.

LISTING WITH OPTION TO BUY

263

refer to non-movingwater (a pond, lake, ocean).

LITTORAL RIGHTS

264

the percentage of the appraised value which a lender will lend on a property. If a lender requires a 80/20 {BLANK}, the lender will lend 80% of the lender's appraised value and require a 20% cash down
payment.

LOAN TO VALUE RATIO (LTV)

265

a borrower is prohibited from paying off a loan in advance.

LOCK-IN CLAUSE

266

the tax rate on the next dollar earned.

MARGINAL TAX RATE

267

the most important test of functional utility.

MARKETABILITY

268

the rent a property would bring in the open market on the date of appraisal. It represents the potential gross income the property can produce.

MARKET RENT (economic rent, scheduled gross income)

269

sales of similar properties in the area are studied to form an opinion of value. The {BLANK} approach is the oldest, quickest, and easiest to learn
approach. It is very adaptable and commonly used to appraise of residences and land. The {BLANK} approach is also used to appraise amenity properties.

MARKET DATA APPROACH (Comparison, Comparative or Substitution Method)

270

based on a "willing buyer" and "willing seller" concept. It is the most likely price the property should bring on the open market within a reasonable length of time.

MARKET VALUE (objective value)

271

facts which are likely to influence or persuade a party to enter into a contract.

MATERIAL FACTS

272

liens recorded by persons who have performed work or furnished materials for the improvement of real property, for which they were not paid. They must be verified and recorded.

MECHANIC'S LIENS

273

a legal description of land created by a survey. Metes and bounds describes boundaries
but does not measure land or buildings.

METES AND BOUNDS

274

the Federal Reserve Board requires banks to keep a small percentage of money deposited in their vaults as a reserve to meet cash requirements of depositors. Raising the {BLANK}
requirement tightens the money market.

MINIMUM CASH RESERVE

275

failure to disclose material facts, lying.

MISREPRESENTATION

276

contract is void or voidable.

MISTAKE

277

a document used to secure payment of a promissory note; it is seldom used in California. Mortgages are not negotiable instruments.

MORTGAGE

278

a loan secured (collateralized) by real estate.

MORTGAGE LOAN

279

provides a borrower with detailed information about a loan, including all costs and expenses that will be charged to the borrower. This statement must be given to the borrower when signed, for every loan negotiated by a broker.

MORTGAGE LOAN DISCLOSURE STATEMENT (Loan Broker Statement)

280

the interest (not the principal) which a lender receives from a mortgage.

MORTGAGE YIELD

281

the lender in a mortgage.

MORTGAGEE

282

the borrower in a mortgage.

MORTGAGOR

283

for a contract to be valid, there must be {BLANK} or assent to the terms. In real
estate contracts, {BLANK} is created by three steps: (1) offer, (2) acceptance, (3) communication of acceptance back to offeror.

MUTUAL CONSENT

284

Mutual consent for a valid contract.

(1) offer, (2) acceptance, (3) communication of acceptance back to offeror.

285

required for FHA loans. It protects the lender in case of foreclosure and is paid by the borrower, either as a lump sum or amortized.

MUTUAL MORTGAGE INSURANCE

286

occurs when monthly loan payments are insufficient to pay the interest and/or principal payments necessary to pay off the loan. As a result, the loan balance increases.

NEGATIVE AMORTIZATION

287

under the Environmental Quality Act, a {BLANK} indicates that a subdivision does not harm the environment.

NEGATIVE DECLARATION

288

a written document which is freely transferrable, like money (such as personal checks, bank drafts and promissory notes) . Mortgages, trust deeds and land contracts are not {BLANK}s.

NEGOTIABLE INSTRUMENT

289

a lessee pays expenses such as taxes, insurance, and maintenance.

NET LEASE

290

any listing where an agent receives all money over a set selling price as his commission, rather than a percentage of the selling price.

NET LISTING

291

the interest rate named in the loan document.

NOMINAL RATE