Vocab Flashcards
(178 cards)
1
Q
Abutting
A
Abutting means an area of land or a building that has a common boundary with another.
2
Q
Acceleration clause
A
The acceleration clause is a contract provision that allows a lender to require a borrower to repay all of an outstanding loan if payments are not being made or there is a breach of contract.
3
Q
Acceptance
A
A point in a real estate transaction where the offer made has been accepted. When an offer is accepted, it becomes a binding contract.
4
Q
Accession
A
In property law, accession is the acquisition of land by its addition to already owned real estate through human or natural processes.
5
Q
Accretion
A
Accretion is the slow process of growth or acquisition of land, typically when soil is deposited by the natural action of water. Long term accretion can actually increase the size of a property.
6
Q
Active property
A
Active property is property that is still available for sale. The active status indicates that the seller is still accepting offers.
7
Q
Actual fraud
A
Actual fraud is an intentional misrepresentation of fact; or in plain terms lying.
8
Q
Addendum
A
An addendum is used to clarify and add new terms that were not initially part of the original contract or agreement.
9
Q
Ad valorem
A
The Latin phrase ad valorem means “according to value”
10
Q
Adjustable rate mortgage (ARM)
A
An ARM has a flexible interest rate. They have a fixed period during which the initial interest rate remains the same, after that the interest rate adjusts at a pre-arranged frequency.
11
Q
Adverse possession
A
Adverse possession is the legal principle in which a person who does not have the legal right to a property acquires legal ownership based on the continuous occupation of the land without the permission of its real owner.
12
Q
Agent
A
The party in an agency relationship who is hired by the principal to perform certain duties. In so doing, the agent must also uphold fiduciary duties owed to the principal.
13
Q
Agency
A
A fiduciary relationship between an agent and a principal where respective rights and duties prescribed by the laws of agency and by the agency agreement executed by the two parties.
14
Q
Absorption
A
The consumption of available vacant property in a building or market.
15
Q
Abstract of title
A
A written chronological record of the title records affecting rights and interests in a parcel of real property.
16
Q
actual notice
A
Knowledge given or received directly
through demonstrable evidence. Actual notice of
ownership: reading a bill of sale, inspecting a deed,
searching title records. See also constructive notice.
17
Q
adjusted basis
A
The beginning basis, or cost, of a property
plus the costs of capital improvements, minus all
depreciation expense.
18
Q
ad valorem tax
A
A real property’s annual tax levied by
taxing entities according to the property’s assessed value.
19
Q
air rights
A
Rights in real property as they apply to the
property’s airspace, or all space above the surface
within the parcel’s legal boundaries.
20
Q
air space
A
The air portion of real property. In a condominium
unit, the freehold space enclosed by the unit’s outer walls,
floor, and ceiling.
21
Q
alienation
A
A transfer of title to real property by
voluntary or involuntary means.
22
Q
allocation of markets
A
An act of collusion where two or more
competitors agree to limit competitive activity in portions
of the market in exchange for reciprocal restrictions from
the others.
23
Q
amortization
A
A partial or complete reduction of a loan’s
principal balance over the loan term, achieved by periodic
payments which include principal as well as interest.
24
Q
annual percentage rate (APR)
A
The total cost of credit to a
borrower inclusive of finance charges and the stated interest
rate, expressed as an annual rate of interest.
25
antitrust laws
Legislation aimed at preventing unfair trade
practices and monopoly, including collusion, price
fixing, and allocation of markets.
26
appraiser
A duly trained and licensed professional
authorized to perform appraisals for other parties.
27
appreciation
An increase in the value of a property
generally owing to economic forces beyond the control
of the owner.
28
appurtenance
A right, interest, or improvement that attaches to
and transfers with a parcel of real property, such as an easement
or a riparian right.
29
arrears
Payment that occurs at the end of a payment term rather
than at the beginning. Examples of items paid in arrears
include taxes and interest.
30
assemblage
A combining of contiguous parcels of real estate
into a single tract, performed with the expectation that
increased value will result.
31
assessed value
The value of a property as established by assessors
for the purpose of ad valorem taxation.
32
assessment
A periodic charge payable by condominium owners
for the maintenance of the property's common elements.
33
asset
A tangible or intangible item of value.
34
asset sale
A sale of a business involving the transfer of assets as opposed to the liabilities or stock.
35
assignment
A transfer of one's entire interest in an item of real or
personal property. The assignor transfers the interest to the
assignee.
36
assumption
In a sale of real property, the transfer of the seller's
mortgage loan obligations to the buyer. Requires, in most cases,
the approval of the lender.
37
balloon payment
A lump sum payment on any loan which
retires the remaining loan balance in full.
38
base line
An imaginary latitude line within the rectangular survey
system that is designated in relation to a principal meridian for
purposes of identifying townships.
39
beginning basis
The original cost or market value of an acquired
asset.
40
benchmark
A registered marker denoting an official elevation
above sea level; used by surveyors to identify other elevations in
the area.
41
beneficiary
A party named to benefit from the yield or
disposition of an asset identified in a trust, insurance policy, or
will.
42
bilateral contract
A contract where both parties promise to
perform in exchange for performance by the other party.
43
binder
A temporary agreement to buy a property evidenced by a
valuable deposit. Receipt of the deposit binds a seller to a good-
faith agreement to sell a property, provided a complete sale
contract is executed within a certain period.
44
blind ad
An advertisement that does not contain the identity
of the advertiser.
45
blockbusting
Inducing property owners to sell or rent their
holdings due to an impending downturn in their property
values, often owing to a change in the area's ethnic or social
composition.
46
broker
A direct agent of the principal who is hired for
compensation to perform a stated service such as procuring a
customer.
47
broker's opinion of value
An estimate of a property's value
rendered by a party who is not necessarily licensed, objective, or
qualified. The estimate may not be a complete appraisal.
48
brokerage
The business of procuring customers on behalf of
clients for the purpose of completing a real estate transaction.
49
business brokerage
The brokerage of a business enterprise in
addition to any real property it may own or lease.
50
building code
A specific standard of construction or
maintenance of any aspect of an improved property
established by local government officials.
51
bundle of rights
A set of rights associated with ownership of
property, including the rights to possess, use, transfer, encumber
and exclude.
52
buydown
A loan arrangement where the borrower pays
extra interest in advance for the future benefit of a lower
interest rate over the loan term.
53
buyer representation agreement
A broker's listing with a
buyer to locate a suitable property for purchase or lease.
54
buyer's market
A market characterized by an excess of
sellers over buyers.
55
capital gain (or loss)
The difference between the net
sales proceeds of an asset and its adjusted basis.
56
capital improvement
An upgrading of improved property
having sufficient magnitude to constitute an addition to
the property's basis. Contrasts with repair and
maintenance.
57
capitalization rate
The rate of return on capital an
investor will demand from the investment property, or
the rate of return that the property will actually produce.
58
cash flow
The remaining positive or negative amount of
income an investment produces after subtracting all
operating expenses and debt service from gross income.
59
certificate of occupancy
A document confirming that a
newly constructed or renovated property has fully
complied with all building codes and is ready for
occupancy and use.
60
certificate of title
A document expressing the opinion of a
title officer or attorney that a property seller is in fact the
owner of good title based on a review of title records.
61
chain of title
Successive property owners of record dating
back to the original grant of title from the state to a
private party.
62
chattel
An item of personal property.
63
closing
A meeting of principal parties where a seller
transfers title and a buyer pays monies owed the seller
and lender.
64
closing statement
A financial summary and settlement of
a property transaction indicating sums due and payable
by the buyer and seller.
65
cloud
An encumbrance or claim on title to property
impeding or diminishing its marketability.
66
co-brokerage
A brokerage practice where agents and
brokers outside of the listing broker's agency assist as
subagents in procuring a customer in exchange for
portions of the commission.
67
collateral
Property liened by a lender as security for a
loan.
68
collusion
An unlawful agreement between competitors to
monopolize a market, disadvantage other competitors, or
otherwise undertake activities in violation of fair trade
laws.
69
color of title
A defective title transfer or the transfer of a
defective title where the new owner is originally
unaware of the defect. Color of title may be used as a
grounds for adverse possession, which, if successful,
would nullify the original defect.
70
commingling
An unlawful practice of mixing escrow
funds with the agency's operating funds.
71
common elements
1. Portions of a condominium property
that are owned by all unit owners, for example the
grounds, parking facilities, lobby, and elevators. 2.
Portions of a commercial property used by all occupants
as well as the public, for which the tenants may have to
share in the repair and maintenance costs.
72
common law
A body of law developed by court
judgments, decrees, and case decisions.
73
common law
A body of law developed by court
judgments, decrees, and case decisions.
74
community property
A system of property ownership
established by law which generally defines rights of
property ownership of spouses; community property is
co-owned by spouses, and separate property is owned by
a single spouse. Generally, property acquired during the
marriage with jointly held funds is community property.
75
comparable
A property having similar characteristics to a
subject property in an appraisal. The value or sale price of the comparable is used to estimate the value of the subject.
76
comparative market analysis (CMA)
A method used by
brokers and salespeople for estimating the current value
of a property using sale price data from similar
properties. Not to be confused with a bona fide
appraisal performed by a licensed appraiser.
77
concurrency
A local, county, or regional planning
policy that requires developers to correct foreseen
negative impacts of a development during the
construction period of the project itself rather than
afterwards; for example, widening a road during
construction to accommodate a future increase in
traffic.
78
condemnation
1. A decree by a court or municipal
authority that a parcel of private property is to be taken
for public use under the power of eminent domain. 2. A
government order that a particular property is no longer
fit for use and must be demolished.
79
condominium estate
An estate distinguished by fee
simple ownership of the airspace of a unit plus an
undivided interest with the other unit owners in the
overall property's common elements.
80
condominium estate
An estate distinguished by fee
simple ownership of the airspace of a unit plus an
undivided interest with the other unit owners in the
overall property's common elements.
81
consideration
An item of tangible or intangible value, or
one's promise to do or not do some act which is used as an
inducement to another party to enter into a contract.
82
constructive notice
Knowledge one could or should
have, according to the presumption of law; a
demonstration to the public of property ownership
through title recordation, "for all to see."
83
contingency
A condition that must be satisfied for a
contract to be binding and enforceable.
84
contract
A potentially enforceable agreement between
two or more parties who agree to perform or not
perform some act. If valid, the contract is enforceable,
with limited exceptions.
85
contract for deed
A financial contract where a seller
retains legal title to a property and gives the buyer
equitable title and possession over a period of time.
During the contract period, the seller finances all or part
of the purchase price. If the buyer makes timely
payments and abides by all contract provisions, the
seller conveys legal title at the end of the contract
period.
86
contract for deed
A financial contract where a seller
retains legal title to a property and gives the buyer
equitable title and possession over a period of time.
During the contract period, the seller finances all or part
of the purchase price. If the buyer makes timely
payments and abides by all contract provisions, the
seller conveys legal title at the end of the contract
period.
87
contribution
The increment of market value added to a
property through the addition of a component or
improvement to the property. Not to be confused with
the cost of the component.
88
conventional loan
A permanent long-term loan that is
not FHA-insured or VA-guaranteed.
89
conversion
1. Changing real property to personal
property, and vice versa. 2. An illegal act of
appropriating escrow funds for payment of an agency's
operating expenses.
90
conveyance
A voluntary transfer of real property
interests.
91
cooperative estate
Ownership of shares in a cooperative
association which acquires a multi-unit dwelling as its
primary asset. Shareholders also receive a proprietary
lease on a unit for the duration of their share ownership.
92
cost approach
A method for determining value that takes
into account the cost of the land and the replacement or
reproduction cost of the improvements net of estimated
depreciation.
93
covenant
A written warrant or promise set forth in a
contract or other legal document by one or both of the
parties to the contract.
94
credit
1. An accounting entry on a closing statement
indicating an amount a party has paid or is to receive.
2. Loan funds advanced to a borrower.
95
credit evaluation
A lender's opinion of a borrower's
ability to repay a loan in view of financial capabilities
and past repayment patterns.
96
curtesy
A widower's life estate claim to portions of his
deceased spouse's real property.
97
customer
In agency law, a party outside of the fiduciary
relationship of client and agent. If an agent treats a
customer as a client, an implied agency may result.
98
datum
A standard elevation reference point used by
surveyors to measure elevations of property in an area.
99
debit
An accounting entry on a closing statement
indicating an amount a party must pay.
100
debt coverage ratio
An underwriting equation reflecting
how much debt service an investment property can
reasonably afford to pay out of its net operating income;
used to identify how large a loan the property can afford
given an interest rate and loan term.
101
debt ratio
An underwriting equation that is used to
determine how much debt an individual can reasonably
afford in view of the party's or household's income.
102
debt service
Periodic payments of interest and/or
principal on a mortgage loan.
103
deed in lieu of foreclosure
An instrument used to
convey mortgaged property back to the lender rather
than have the lender foreclose on the property.
104
deed in trust
An instrument used to convey real property to
the trustee of a land trust. The trustor is also the
beneficiary. See land trust.
105
deed of trust
An instrument used by a borrower to convey
title to mortgaged property to a trustee to be held as
security for the lender, who is the beneficiary of the trust.
106
deed restriction
A provision in a deed that limits or
places rules on how the deeded property may be used
or improved.
107
defeasible fee
A fee estate where ownership is perpetual,
provided that usage restrictions or other conditions stated
in the deed are upheld. If not, the fee reverts to the
grantor either automatically (determinable fee) or by the
grantor's actions (condition subsequent).
108
deficiency judgment
A court order enabling a damaged
lender to attach a lien on the defaulted borrower's
property for an amount equal to the difference between
the debt and the proceeds of a foreclosure sale.
109
demand
A quantity of a product or service that is desired for
purchase, lease, or trade at any given time.
110
density
A measure of the degree of residential land use
within a given area for purposes of residential zoning
and land use control.
111
deposit
Valuable consideration accompanying an offer to
purchase real estate that signifies the offeror's good faith
intention to complete a sale or lease contract.
112
depreciable basis
The portion of a property's total basis
that may be depreciated, generally the basis of the
improvements, since land cannot be depreciated.
113
depreciation
1. A non-cash expense taken against the
income of investment property that allows the owner to
recover the cost of the investment through tax savings.
2. A loss of value to improved property.
114
descent and distribution, laws of
A body of state-level
laws that stipulates how an estate will be passed on to
heirs in the absence of a valid will.
115
determinable fee
A defeasible fee estate where title
automatically reverts to the grantor if usage conditions stated in the deed are violated.
116
devise
A transfer of real or personal property from the
devisor to the devisee(s) by means of a will.
117
discounting
A financial practice of reducing the value of
dollars received in the future by an amount that reflects the
interest that would have been earned if the dollars had
been received today. Performed to measure the present
value of an investment's future income.
118
discounted cash flow analysis
A financial analysis to
identify the discounted value of the cash flow of an
investment over a given number of years.
119
discrimination in housing
A failure to provide equal
opportunity for persons to acquire or finance housing
based on race, color, religion, national origin, sex,
handicapped status, marital status, or family status.
120
disintermediation
Direct investment without the
intermediation of a bank or other depository institution to
make loans and other investments.
121
documentary stamp
A tax stamp affixed to a property
document or record as evidence that the owner has paid
taxes related to the financing or transfer of real property.
122
dominant tenement
The property that benefits from the
existence of an easement appurtenant. The holder of the
easement is the dominant tenant.
123
dower
A widow's life estate interest in portions of her
deceased spouse's real property.
124
dual agency
Representing both principal parties to a
transaction.
125
due on sale
A loan provision defining the lender's right to
accelerate a note upon the transfer of collateralized
property.
126
earnest money escrow
An impound account used for the
safekeeping of a buyer's earnest money deposit;
accompanied by specific instructions to the escrow agent
for holding and disbursing the funds.
127
easement
An interest in real property giving the interest
holder the right to use defined portions of another's
property. May or may not attach to the estate.
128
economic life
The period during which an improvement is
expected to remain useful in its original use. Establishes
the improvement's annual depreciation amounts in
appraisal. Depreciation in tax accounting is determined by
a property's cost recovery class, which is related to
economic life.
129
economic obsolescence
A loss of value in a property
because of external factors generally beyond the control of
the owner, for example, a municipality's lack of funds to
improve deteriorated roadways. Also called external
obsolescence.
130
effective gross income
The actual income of an
investment property before expenses, expressed as total
potential income minus vacancy and collection losses.
131
emblements
Plants and crops considered personal
property, since human labor is required for planting,
growing and harvesting.
132
eminent domain
A power of a government entity to force
the sale of private property for subsequent public use.
133
encroachment
An unauthorized physical intrusion of
one's real property into the real property of another.
134
encumbrance
An interest, right or intrusion that limits
the freehold interest of an owner of real property or
otherwise adversely effects the marketability of title.
135
enforceability
Legal status of a valid contract or other
document that a court of law will force to be performed.
136
equalization
An averaging of assessed valuations in an
area to compensate for ad valorem tax inequities.
137
equilibrium
A theoretical market state in which the
forces of supply and demand are in balance.
138
equity
That portion of a property's value owned by the
legal owner, expressed as the difference between the
property's market value and all loan balances
outstanding on the property.
139
equity of redemption
A mortgagor's right to pay off a
defaulted mortgage and reclaim the property, provided
the redemption occurs before the completion of the
foreclosure sale.
140
escalator clause
A lease clause providing for an increase in
rent.
141
escheat
A reversionary transfer of real property to the state
or county when the legal owner dies without a will and
without heirs.
142
escrow
1. A trust or impound account used for the proper
handling of funds and documents in the closing of a real
property transaction. 2. An account that a lender requires a
borrower to establish to ensure that adequate funds will be
available for payment of taxes and insurance on a
mortgaged property.
143
estate
1. A set of rights to real property that includes the
right of possession. 2. The totality of one's personal and
real property ownership.
144
estate in land
An estate.
145
estoppel
A legal restraint to prevent a person from
claiming a right or interest that is inconsistent with the
person's previous statements or acts. An estoppel
certificate documents the party's initial position or act,
which cannot be contradicted later.
146
eviction
Removal of a tenant from a property because of a
lease default.
147
evidence of title
Actual or constructive notice of real
property ownership, including opinion of title,
certificate of title, and title insurance.
148
exclusion
One of the bundle of legal rights to real
property enabling the owner to prevent others from
entry or use.
149
exclusive agency
A listing agreement which pays the
listing broker a commission if anyone other than the
property owner procures a customer.
150
exclusive right to sell
A listing agreement which pays the
listing broker a commission if anyone at all procures a
customer.
151
executory contract
A completed agreement which enjoins
one or both principal parties to perform certain actions
in order for the contract to become fully executed.
152
facilitator
A transaction broker who assists principal
parties in completing a transaction without acting as a
fiduciary agent of either party.
153
fair financing laws
Anti-discrimination legislation
designed to ensure that all parties have equal access to
mortgage financing.
154
fair housing laws
Anti-discrimination legislation designed
to ensure equal opportunity in housing to all home
buyers.
155
Federal Deposit Insurance Corporation
A quasi-
governmental agency that insures deposits of
depository institutions and otherwise develops
regulations for the banking industry.
156
Federal Home Loan Mortgage Corporation (Freddie
Mac)
A major secondary mortgage market
organization which buys conventional, FHA, and VA loans and sells mortgage-backed securities.
157
Federal Housing Administration
An agency of the
Department of Housing and Urban Development which insures permanent long-term loans that meet certain qualifications.
158
Federal National Mortgage Association (Fannie Mae)
A government-sponsored agency in the secondary mortgage market which buys conventional, FHA, and VA loans, sells mortgage-backed securities, and guarantees payment of principal and interest on the securities.
159
Federal Reserve System
The principal regulator of the
money supply as well as of the American banking system.
160
fee simple
An estate representing the highest form of
legal ownership of real property, particularly the fee simple absolute estate.
161
fiduciary
The agent in an agency relationship; receives
the trust and confidence of the principal and owes fiduciary duties to the principal.
162
fiduciary duties
Duties of an agent to the principal in an
agency relationship, including skill, care, diligence, loyalty, obedience, confidentiality, disclosure, and accounting.
163
fixture
An item permanently attached to land so as to be
defined as real property.
164
foreclosure
A procedure for forcing sale of a secured
property to satisfy a lienholder's claim.
165
freehold estate
An ownership estate of indeterminable
duration; contrasts with a leasehold estate.
166
full-service lease
A lease requiring the landlord to pay all
of a property's operating expenses, including those that
pertain to an individual tenant.
167
functional obsolescence
A loss of value in an improved
property because of design flaws or failure of the
property to meet current standards. May be curable or
incurable.
168
general agency
A fiduciary relationship which authorizes
the agent to conduct a broad range of activities for the
principal in a particular business enterprise. May or
may not include authority to enter into contracts.
169
general lien
A lien against any and all property owned by
a lienee.
170
general partnership
A for-profit business where two or
more co-owners agree to share management
responsibilities and profits. Does not involve silent
partners, as in a limited partnership.
171
general warranty deed
A bargain and sale deed
containing the assurance that the grantor will defend
against any and all claims to the title.
172
goodwill
An intangible business asset valued at the
difference between the sale price and the value of all
other assets of the business.
173
Government National Mortgage Association (Ginnie
Mae)
A division of HUD which guarantees FNMA
mortgages and securities backed by pools of VA-
guaranteed and FHA-insured mortgages.
174
grantee
A party who receives a right, interest, or title to
real property from another.
175
grantor
A party who transfers a right, interest, or title to
real property to another.
176
gross easement
A personal right to use another's property,
granted by the owner; does not attach to the estate, and
there are no dominant or servient tenements.
177
gross income multiplier
A shortcut method for
estimating the value of an income property. The
procedure involves multiplying the property's gross
annual income times a multiplier that reflects the ratio
between gross annual income and sale price that is
typical for similar properties in the area.
178
gross rent multiplier
A shortcut method for estimating
the value of an income property. The procedure involves multiplying the property's gross monthly rent times a multiplier that reflects the ratio between gross monthly rent and sale price that is typical for similar properties in the area.
