Vocabulary Flashcards
Learn the language of Real Estate terms
Abstract Judgement
Document stipulating the outcome of a legal action, which can be filed in any country where the judgment debtor has property.
Abandonment
Giving up possession or ownership of property by nonuse, usually accompanied by some affirmation act, such as removing ones belonging from an apartment.
Abstract of title
A summary or digest of all recorded transfers, conveyances, legal proceedings, and any other facts relied on as evidence of title to show continuity of ownership and indicate any possible impairment to title.
Acceleration clause
A provision in a real estate financing instrument that allows the lender to declare the remaining indebtedness due and payable on the happening of certain conditions, such as the sale of the property or the borrowers default in payment.
Acceptance
Indication by the person to whom an offer is made (the offer) of agreement to the terms of the offer. If the offer requires a writing, the acceptance must also be in writing.
Accession
The process of manufactured or natural improvement or addition to property.
Accretion
Accession by natural forces such as alluvion. (Alluvium; the increase of soil along the bank of a body of water by natural forces.)
Acknowledgment
A formal declaration made before an authorized person by person who has executed a written instrument stating that the execution of the instrument is the person’s own act.
Acquisition cost
For FHA- insured loans, the price to procure property, including purchase price and all nonrecurring closing costs, including discount points, FHA application fee, service charge and credit report, FHA appraisal, escrow, document preparation, title insurance, termite inspection and recording fees.
Acre
A measure of land equaling 160 square rods, 4,840 square yards, or 43,560 square feet, or a tract about 208.71 feet square.
Action for declaratory relief
Legal proceeding brought to determine the respective rights of the parties before a controversy arises
Action to quiet title
A court proceeding brought to establish title to real property.
Actual age
The number of years since completion of a building, also called historical or chronological age.
Actual authority
The authority an agent has because it is specified in the agency agreement, or that the agent believe he or she has because of an unintentional or a careless act of the principal.
Actual Fraud
A deliberate misrepresentation or representation made in reckless disregard of its truth or falsity; the suppression of truth; a promise made without the intention to perform it; or any other act intended to deceive.
Adjustable-rate mortgage (ARM)
Finance instrument whose interest rate will vary according to the change in an identified index or rate, such as the 11th District Cost of Funds.
Adjustable-rate note
Promissory note that serves as evidence of a debt that carries an interest rate that will vary according to the change in an identified index or rate, such as the 11th District Cost of Funds.
Adjusted cost basis
Purchase price of property plus cost of specified improvements, less any depreciation deductions taken on the property.
Adjusted gross income
Income from all sources less deductions for taxes, depreciation, and other allowable deductions.
Administrator
Personal representative of the estate of a decedent, appointed by the probate court.
See also executor; Personal representative of the estate of a decedent, named in the decedents will.
Ad Valorem
A latin phrase meaning “according to value” that is used to describe a tax charged in relation to the value of the property taxed.
Adverse possession
A method of acquiring title to real property by occupying the property against the interests of the true owner and fulfilling other statutory requirements.
After-acquired title
If title is acquired by a grantor only after a conveyance to a grantee the deed to the grantee becomes effective at the time the grantor actually receives title.
Agency
The relationship between a principal and the agent of the principal that arises out of a contract, whether express or implied, written or oral, by which the agent is employed by the principal to certain acts dealing with a third party.
Agency confirmation-form
Written statement required for a residential transaction involving property of one to four residential units, in the wording required by the California Civil Code, and signed by the property seller as well as the listing agent and selling agent (if different from the listing agent), that indicates the sellers understanding of the relationship of the seller to the listing and selling agent in the transaction.
Agent
One who acts for and with authority from another person, called the principal a special agent is appointed to carry out a particular act or transaction, and any other agent is a general agent.
Air rights
The real property right to the reasonable use of the airspace above the surface of the land.
Alienation
The transferring of property to another; an involuntary transfer of title.
Alienation Clause
An acceleration clause in a real estate financing instrument granting the lender the right to demand full payment of the remaining indebtedness on a sale of the property.
Alien Registration Receipt card
Identification card, referred to as the green card, that provides proof of the legal presence in the US of someone who is a citizen of another country.
All-inclusive trust deed (see wraparound mortgage or trust deed.)
Over riding or all-inclusive trust deed: a financing device in which a lender assumes payments on an existing debt and takes from the borrower a junior lien with a face value in an amount equal to the amount outstanding on the old instrument and the additional amount of money borrowed.
Amortized loan
The payment of a financial obligation in installments; recovery over a period of time of cost or value. A loan has negative amortization when the loan payments do not cover all of the interest due, which then is added to the remaining loan balance.
Apparent Authority
Authority to act as an agent that someone appears to have but does not actually have, which will place no obligation on the party the agent claims to represent if that party is in no way responsible for the representation.
Appraisal
An estimate of a property’s monetary value on the open market, an estimate of a property’s type and condition, its utility for a given purpose, or its highest and best use.
Appropriation, right of (see right of appropriation)
Right of government to take, impound, or divert water flowing on the public domain from its natural course for some beneficial purpose.
Appurtenance
Anything affixed (attached) to or used with land for its benefit that is transferred with the land.
APR
Annual percentage Rate. The relative cost of credit as determined in accordance with regulations of the Board of Govenor of the Federal Reserve system for implementing the federal Truth-in-lending Act.
Area
Measure of the floor or ground space within the perimeter of a building or land parcel.
Arm’s-lenght transaction
A transaction in which neither party acts under duress and both have full knowledge of the property’s assets and defects, the property involved has been on the market a reasonable length of time, there are no unusual circumstances, and the price represents the normal consideration for the property sold, without unusual financing terms.
Asbestos
Naturally occurring fibrous silicate mineral linked with various forms of cancer if inhaled and which, until the mid-1970’s was used for its insulating properties in spray-on and batting applications in homes and commercial structures; remediation can be by containment or removable and requires following strict procedures.
Assessed Value
A valuation placed on a piece of property by a public authority as a basis for levying taxes on that property.
Assessor
The official responsible for determining assessed values.
Assignee
Party to whom an assignment of rights is made.
Assignment
Transfer of rights from one party to another, usually for compensation.
Assignor
Party making an assignment of rights to someone else.
Associate Licensee
A real estate salesperson who works as the the employee of a real estate broker.
Assumption
An undertaking or adoption of a debt or an obligation resting primarily on another person.
Attachment
The process by which real or personal property of a party to a lawsuit is seized and retained in the custody of the court.
Attorney-at-law
Someone licensed by the state to practice law.
Attorney-in-fact
An agent who has been granted a power of attorney by a principal.
Avulsion
The tearing or washing away of land along the bank of a body of water by natural forces.
Backfill
Dirt placed against the foundation of a structure after concrete used to create the foundation wall has cured and wood forms in which the concrete was poured have been removed.
Balance, principle of
The combination of land uses that results in the highest property values overall.
Balloon payment
An installment payment on a promissory note, usually the final payment, that is significant larger than the other installment payments.
Bankruptcy
A federal court proceeding in which the court takes possession of the assets of an insolvent debtor and sells the nonexempt assets to pay off creditors on a pro rata basis; title to the debtor’s assets is held by a trustee in bankruptcy.
Base Lines
Imaginary lines that run east-west and intersect meridians that run north-south to form the starting point for land measurement using the rectangular survey system of land description.
Base Value
For property tax assessment purposes, the full cash value of a parcel of real estate as of 2/28/75, or the date of subsequent sale or other reassessment event.
Basis
Cost basis is the dollar amount assigned to property at the time of acquisition under provisions of the Internal Revenue Code for the purpose of determining gains, loss and depreciation in calculating the income tax to be paid on the sale or exchange of the the property; adjusted cost basis is derived after the application of certain additions, such as for improvements, deductions and such as for depreciation.
Basis Point
For financing and investment purposes, 1/100 of 1 percent.
Beneficiary
One on whose behalf a trustee holds property conveyed by a truster; the lender under a deed of trust.
Beneficiary Statement
Document provided by the lender if the buyer of a property encumbered by an existing loan will take tittle to the property subject to that loan.
Benefit assessment
Amount owed by owners of property that is enhanced by the construction or renovation of improvements.
Anticipation, principle of
Expectation that property will offer future benefits, which tends to increase present value.
Bequest
Transfer of property, particularly personal property, called a legacy, by will. (see also device.)
Bilateral Contract
Agreement in which both parties make a promise to do something or to refrain from doing something and both are obligated to fulfill the promise.
Bill of Sale
Written instrument that conveys title to personal property.
Binding Contract
An agreement that can be enforced in a court of law if one of the parties to the agreement fails to fulfill to any of its terms.
Blind Ad
Ad in which the name of the person placing the ad is not mentioned.
Blockbusting
The practice on the part of unscrupulous speculators or real estate agents of inducing panic selling of homes at prices below market value, especially by exploring the prejudice of property owners in neighborhoods in which the racial make up is changing or appears to be on the verge of changing.
Bond
An obligation; a real estate bond is a written obligation issued on security of a mortgage or trust deeds.
Book Value
The current value for accounting purposes of an asset expressed as original cost plus capital additions minus accumulated depreciation.
Boot
Cash received in an exchange of property in addition to the property.
Bracing
Use of one or more construction methods, such as plywood wall sheathing, to enable a structure to withstand the pressures caused by high winds and earth movement. Information on bracing systems can be found at the web site of the engineered wood association. www.wallbracing.org
Breach of contract
The failure of a duty imposed by law or by contract, either by omission or commission.
Broker-Officer
A licensed broker who is an officer of a brokerage that is set up as a corporation and who is designated as the broker responsible for supervision of licensed employees of the brokerage.
Brokers price opinion (BPO)
An estimate of property value that is not an appraisal but is developed by a real estate broker based on comparable sales in the area.
Brownfield
A site identified by the Environmental Protection Agency as containing hazardous substances pollutants, or contaminants. Information on brown fields can be found at www.epa.gov/brownfields.
Building Code
Standards for building, planning, and construction established by state law and local ordinance.
Building Permit
Approval granted by the appropriate municipal, country, or other governing authority to begin construction of an improvement to real estate following review of the building plan submitted by the permit applicant and revision of the plan as required.
Bulk transfer of goods
Any transfer of a substantial part of the materials, supplies, merchandise, equipment, or other inventory of a business that is not in the ordinary course of the business’s activities.
Bundle of rights
The legal rights of ownership of real property, including the rights of possession, use, disposition, and exclusion of others from the property.
Business and Professions Code
California code that contains the Real Estate Law, which includes real estate licensing, transaction requirements, and the subdivided lands law.
Business Opportunity
The assets of an existing business enterprise, including its goodwill.
California Department of Insurance
California agency that regulates insurers; found at www.insurance.ca.gov
California Department of Public Health
California agency that regulates construction activities affecting the water supply and other public health issues; formerly part of the CA. Dept. of Health srvcs. www.dhs.ca.gov
Anchor Bolts
Bolts that fasten the sill plate of a wood-frame house to the house’s foundation, required in California since 1931 for all new construction as an earthquake safety measure.
Capital Assets
Assets of a permanent nature used in the production of income such as land, buildings, machinery and equipment; usually.
California Finance Lender
Licensee under the California finance lenders law who is in the business of making consumer loans or commercial loans in which personal property may be used as collateral. More info. www.corp.ca.gov/fsd/lender.asp
California Finance Lenders Law
see California Finance Lender
California Franchise Tax Board
California department that collects state personal income taxes and banks and corporation taxes.
California Residential Mortgage Lending Act
Part of the Calif. financial code that regulates mortgage bankers. Info. can be found at www.corp.ca.gov/fsd/mortgage.asp
California Solar Initiative
State law effective Jan 1, 2008 that requires municipal utilities to offer a solar incentive program to customers.
CalVet Loan
Home or farm loan procured through the Calif. Veterans Farm and Home purchase program.
Capital Assets
Assets of a permanent nature used in the production of income such as buildings machinery and equipment usually distinguishable under income tax law from inventory assets held for sale to customers in the ordinary course of the taxpayer’s trade or business.
Capital Gain
The amount by which the net resale proceeds of a capital item exceed the adjusted cost basis of the item.
Capitalization Rate
The rate of interest that is considered a reasonable return on investment used in the process of determining value based on net operating income; the yield necessary to attract investment.
Capitalization recapture
The return of an investment an amortization rate based on the right of the investor to get back the purchase price at the end of the term of ownership or over the productive life of the improvements.
Cash flow
The net income generated by a property before depreciation and other non-cash expenses.
Caveat emptor
Latin phrase meaning “Let the buyer beware.”
CC&Rs
Covenants, conditions, and restrictions; limitations on land use imposed by deed, usually when land is subdivided, as a means of regulating building construction, density, and use for the benefit of other property owners; may be referred to simply as restrictions.
Certificate of discharge
Document that is recorded by a mortgagee as evidence of the release of the mortgagee’s lien rights.
Certificate of eligibility
Issued by the Department of Veterans Affairs (VA) to a veteran who qualifies for a loan guaranteed by the the VA. Information on how to apply can be obtained at www.homeloans.va.gov.
Certificate of occupancy (CO)
Issued by the applicable building dept. of the municipal, county, or other jurisdiction in which the property is located when a structure has met all requirements and can be placed into service.
Certificate of Reasonable Value
Property appraisal required for a VA guaranteed loan.
Certificate of Redemption
Issued by the county tax collector when all past due amounts have been paid.
Certificate of Sale
Document received by the buyer at an execution or judicial foreclosure sale; replaced by a sheriff’s deed if the debtor fails to redeem the property during the statutory redemption period.
Certificate of Status
Document issued by California Secretary of State, showing a corporation’s place of domicile, date of incorporation, corporate number, name and address of agent for service of process, and other information.
Certificate of Title
Statement of a property’s owner of record, as well as any existing encumbrances.
Chain of Title
The history of the conveyances and encumbrances affecting the present owner’s title to property as far back as records are available.
Change, Principle of
Effect on property value of constantly varying physical, economic, social, and political forces.
Change in Ownership Statement
Document indicating former and present owner of real estate that must be filed by the County Recorder or Assessor within 45 days of the date that the transfer is recorded.
Chattel Mortgage
Use of personal property to secure or guarantee a promissory note.
Chattel Real
An estate related to real estate, such as a lease of real property.
Chattels
Personal property; any property that is not real property.
City Planning
Land use recommendations adopted by local jurisdiction, determined by use of demographic, geographic, economic, and other data.
Civil Law
Legal system based on laws and regulations without the influence of judicial influence as in the common-law system.
Civil Rights House Act of 2006
As of January 1, 2007 extends protected classifications of the Fair Employment and Housing Act (FEHA.) To all California laws prohibiting discrimination in housing and housing related areas, including real estate, licensure, and mortgage lending, and automatically includes any protected classes that are added to FEHA.
Closed of Escrow
Date on which all requirements of a real estate transaction have been fulfilled, documents are transmitted, and funds are transferred.
Closing
The completion of a real estate transaction, at which point required documents are transmitted and funds are transferred.
Cloud on the Title
Any claim, condition, or incumbrance that impairs title to real property.
Coastal Zone
An area of about 1800 square miles that runs the length of the state, from the sea inland from about 1000 yards with wider spots in coastal estuariane, habitat, and recreational areas; any development or improvement of land within the coastal zone must meet local requirements for coastal conservation and preservation of resources, as authorized by the California Coastal Act and subsequent legislation.
Codes
Bound volumes of laws and regulations
Codicil
Written amendment to a will, made with the same legal formalities.
Color of Title
A claim of possession to real property based on a document erroneously appearing to convey title to the claimant.
Commercial Acre
That portion of an acre of newly sub-divided land remaining after dedication for streets, sidewalks, parks, and so on.
Commercial Frustration
Excuse for failure to perform contract obligation because of changed circumstances that make a purchase uneconomic; also called “Impracticability of Performance.”
Commingling
Placing funds in an inappropriate financial account, such as depositing a deposit check in a broker’s business account instead of a trust account.
Commission
An agent’s compensation for performing the duties of the agency; in a real estate practice, typically a percentage of the selling price of property, rentals, or other property value.
Common interest subdivision
An area of land divided into separate parcels but with some of the land set aside for shared ownership by all of the owners of the separate parcels.
Common law
The body of law from England based on custom, usage, and court decisions.
Common law dedication
Transfer of private land to public use or ownership, such as a roadway through a subdivision, by permitting such use or referencing the use in deeds to adjoining parcels.
Community apartment project
A form of subdivision in which the owner has an individual interest in the land and exclusive right of occupancy of an apartment of the land.
Community property
All property acquired by husband and wife during marriage except that qualifying as separate property.
Community property with right of survivorship
Method of property ownership by a married couple that specifically provides for transfer of the interest of the first to die to the spouse, instead of the interest being willed or passed by interstate succession.
Community redevelopment agency (CRA)
An agency authorized by state law but formed by a local governing body to provide low and moderate income housing and employ low-income persons by rehabilitating existing structures and/or bringing new development.
Compensation
Money, goods, or other thing of value transferred in exchange for performance of a contract obligation.
Competition, principle of
Business profits encourage competition, which ultimately may reduce profits for any one business.
Competitive market analysis
Informal estimate of market value performed by a real estate agent for either seller or buyer, utilizing the sales history of nearby properties; usually expressed as a range of values that includes the probable market value of the subject property.
Compound interest
Interest paid on original principal and also on the accrued and unpaid interest that has accumulated as the debt matures.
Comps
Comparable properties that are used in an appraisal to determine the value of the property that is the subject of the appraisal.
Computerized loan origination (CLO) system
Use of computer technology to assist consumers in finding a lender, selecting a mortgage product, originating a mortgage, or choosing among other settlement service providers and products.
Concurrent ownership
Ownership of property by more than one person, not necessarily in equal shares.
Condemnation (see eminent domain.)
The right of the government to acquire title to property for public use by condemnation; the property owner receives compensation-generally fair market value. (See also inverse condemnation.)
Condition
A qualification of an estate granted that can be imposed only in a conveyance; it can be a condition precedent or a condition subsequent. See also CC&Rs.
Conditional delivery
Transfer of documents and funds to escrow agent or settlement officer to be held until the transaction is closed, at which time they are transferred to the designated party.
Conditional license
License that is issued to a salesperson who has not completed all of required education courses, contingent on all education requirements being met.
Conditional use permit
Authorization for a land use that would otherwise not be permitted by zoning ordinances.
Condition subsequent
A stipulation in a contract or transfer of property that already has taken effect that will extinguish the contract or defeat the property transfer.
Condominium
A subdivision providing an exclusive ownership (fee) interest in the airspace of a particular portion of real property, as well as an interest in common in a portion of that property.
Conflict of interest
Anything that benefits an agent’s self-interest or that of someone related to the agent, which would interfere with the objective fulfillment of an agent’s obligations to a principal.
Conforming loan
A loan that meets the requirements established for purchase by Fannie Mae.
Conformity, principle of
Holds that property values are maximized when buildings are similar in design, construction, and age, particularly in residential neighborhoods.
Consideration
Anything of value given or promised by a party to induce another to enter into a contract; may be a benefit conferred on one party or a detriment suffered by the other.
Construction loan
See interim loan./ A short-term temporary loan used until permanent financing is available, typically during building construction.
Constructive eviction
Interference by the landlord in a tenant’s legitimate use of leased property, such as by making unwarranted alteration to the property.
Constructive fraud
Any representation made without a deliberate intent to deceive.
Contract
A written or an oral agreement to do or not to do certain things. There may be an express agreement of the parties or a contract may be implied by their conduct. A unilateral contract imposes an obligation on only one of the parties, whereas both parties to a bilateral contract have an obligation to perform. A contract is executory when a contract obligation is to be performed in the future, and executed when all obligation have been performed and the contract transaction has been completed. A real estate contract must be a signed writing made by competent parties, for valuable consideration, with an offer by one party that is accepted by the other.
Contractor’s State License Board
State agency that licenses and regulated building contractors. Can be found at www.cslb.ca.gov
Contract rent
The rent agreed to by lessor and lessee.
Contractual obligation
The agreed-on performance by one of the parties to a contract.
Contribution, principle of
A component part of a property is valued in proportion to its contribution to the value of the entire property, regardless of its separate actual cost.
Conventional loan
A loan secured by a mortgage or trust deed that is made without governmental underwriting (FHA-insured or VA-guaranteed.)
Cooperating broker
The broker who finds a buyer for property listed for sale by another broker.
Cooperating split
Sharing of the compensation (usually a commission) received by the listing brother with the broker who brings the buyer to the transaction.
Cooperative apartment (See stock cooperative)
A form of subdivision, typically of an apartment building, in which each owner in the stock cooperative is a shareholder in a cooperation that holds title to the property, each shareholder being entitled to use, rent, or sell a specific apartment unit. See also limited equity housing cooperative .
Corporation
A legal entity that acts through its board of directors and officers, generally without liability on the part of the person or persons owning it. A domestic corporation is one chartered in California-any other corporation is foreign corporation in California.
Correction lines
Guide meridians running every 24 miles east and west of a meridian and standard parallels running every 24 miles north and south of a base line, used to correct inaccuracies in the rectangular survey system of land description caused by the earth’s curvature.
Correlative use
Doctrine that states that property owners may use a reasonable amount of water from an underground source, but not to the detriment of adjoining property owners. Information about California water rights can be found at the Web site of the Bureau of Land Management, www.blm.gov/nstc/Water Laws/california.html.
Costa-Hawkins Rental Housing Act
California law that preempts rent control for new construction, single-family residences, and multiunit buildings in jurisdictions with vacant control ordinances.
Cost approach
Appraisal method in which site value is added to the present reproduction or replacement cost of all property improvement, less depreciation, to determine market value.
Counteroff
Any change to the terms of an offer, made in response to it.
County assessor
Official responsible for determining property values for and valorem taxation purpose.
Covenant
An agreement or a promise to do or not to do a particular act, usually imposed by deed. See also CC&Rs.
Covenant of quiet enjoyment
Promise of a landlord, implied by law, not to interfere in the possession or use of leased property by the tenant.
Covenant to repair
Express or legally implied obligation of the landlord to make necessary repairs to leased premises.
Crawl space
Area beneath lowest level of structure, usually unpaved, that is less than the height requirement to qualify as a basement.
Creative financing
Alternative (non-institutional) financing that makes use of a seller carry back or other loan; useful when interest rates on institutional loans are relatively high or when borrower cannot qualify for a loan from a depository institution based on income or credit rating.
Credit bid
Bid by lender at a foreclosure sale represented by the amount of the outstanding indebtedness owed to the lender by the defaulting borrower.
Decedent
Person who has died.
Declaration of default
Notice, accompanied by original note and trust deed, provided by lender (beneficiary) to trustee on default of truster (borrower), stating the reason for the default.
Declaration of homestead (See homestead)
**Homestead exemption: A statutory exemption or real property used as a home from the claims of certain creditors and judgments up to a specified amount.
Decline
Period in which property loses value due to lacy of maintenance.
Dedication
The giving of land by its owner for a public use, and the acceptance of the land for such use by the appropriate government officials.
Deductions
Amounts on which income tax need not be paid; the home mortgage interest deduction from taxable income benefits homeowners.
Deed
Written instrument that, when properly executed and delivered, conveys title to real property from a grantor to grantee.
Deed in lieu of foreclosure
A deed to real property accepted by a lender from a defaulting borrower to avoid the necessity of foreclosure proceedings by the lender.
Deed of reconveyance
Deed from trustee to truster, at the request of beneficiary of trust (lender) , that returns title to the truster on payment of the indebtedness secured by the deed of trust.
Deed of trust
See trust deed.
Deed restriction
Provision placed in a deed by the grantor that limits the property’s use or requires the grantee to fulfill requirements of subdivision covenants, conditions, and restrictions (CC&Rs).
Default
Failure by one of the parties to a contract to fulfill one or more of the obligations imposed by the contract.
Defendant
A person against whom legal action is initiated for the purpose of obtaining criminal sanctions (in a case involving violation of a penal statute) or damages or other appropriate judicial relief ( in a civil case)
Deficiency judgment
A judgment given by a court when the value of security pledged for a loan is insufficient to pay off the debt of the defaulting borrower.
Demand for payoff
Lender’s statement of remaining indebtedness that will be paid at closing on transfer of the property securing the debt.
Department of Fair Employment and Housing
California agency that enforces anti discrimination laws; found www.dfeh.ca.gov
Department of Housing and Community Development
State agency that carries out CA State Housing Law by adopting building standards and administrative regulations that ensure safe and durable housing while safeguarding affordability; found at www.hed.ca.gov
Department of Housing and Urban Development (HUD)
Federal agency that carries out the purposes of the National Housing Act by, among other things, enforcing fair housing laws and supervising the activities of the Federal Housing Administration (FHA), which insure home mortgage loans; found at www.hud.gov
Department of Real Estate (DRE)
CA agency that administers the Real Estate Law, including the licensing of real estate brokers and salesperson.
Depreciation
Decrease in value of an asset that is allowed in computing property value for tax purposes; in appraising, a loss in the value of a property improvement from any cause; depreciation is curable when it can be remedied by a repair or an addition to the property, and it is curable when it can be remedied by a repair or an addition to the property, and it is incurable when there is no easy economic way to cure the loss. See also physical deterioration, functional obsolescence, and external obsolescence.
Devise
Transfer of title to property by will. See also bequest.
Devisee
Person receiving title to property by will. See also legatee.
Devisor
One who wills property to another.
Direct Endorsement Plan
Program that allows lenders to qualify to make FHA-insured loans without prior HUD review, except for construction projects.
Discharged contract
An agreement that has been terminated, whether by performance of its terms; recession of the parties; release by one party at the request of the other party; formation of a new contract to a new party; or breach by one of the parties by failure to fulfill the terms of the agreement.
Discount points.
See points.
Discount rate
Interest rate charged member banks by Federal Reserve bank.
Documentary transfer tax
A tax applied on all transfers of real property located in a country that the county is authorized by the state to collect; notice of payment is entered on the face of the deed or on a separate paper filed with the deed.
Dominant tenement
See easement.
Donee
One who receives a gift.
Donor
One who makes a gift.
Downspout
Part of the rainwater drainage system that conducts water from a gutter that runs along a roof eave to ground level.
Drywall
Plasterboard, also called wallboard, used for interior finishing.
Dual Agency
An agency relationship in which the agent represents two principals in their dealings with each other.
Due Diligence
Acting with the appropriate degree of skill and care in fulfilling one’s responsibilities under an agency or other contractual relationship.
Due-on-sale Clause
An acceleration clause in a real estate financing instrument granting the lender the right to demand full payment off the remaining indebtedness on a sale of the property.
Duty of care
The obligation of principal to agent that the principal will not interfere with the agent’s prospective economic advantage - the agent’s business activities.
Earthquake fault zone
As defined by the state geologist, the area in such close proximity to an earthquake fault that movement of the fault presents a property hazard; location within an earthquake fault zone must be disclosed to a prospective purchaser by the seller (or seller’s agent, if there is one.)
Easement
The right to a specific use of or the right to travel over the land of another. The land being used or traveled over is the the servient tenement; the land that is benefited by the use is the dominant tenement. An easement appurtenant is a property interest that belongs to the owner of the dominant tenement and is transferred with the land; an easement in gross is a personal right that usually is not transferable by its owner.
Easement Appurtenant
An easement right that is transferred along with the title to the land that benefits from the easement.
Easement by condemnation
Taking of an easement right by a public entity.
Easement by implication of law
An easement that will be created by law to provide access to a parcel of land that is otherwise landlocked.
Easement by necessity
An easement right over the land of the grantor of adjacent property that would otherwise be landlocked.
Easement by prescription
Acquiring a specific use of or the right to travel over the land of another by statutory requirements similar to those for adverse possession.
Easement in gross
An easement right with no accompanying property ownership right.
Eave
Portion of the roof that extends over the exterior wall.
Economic life
The period of time over which an improved property will yield a return on investment over and above the return attributable solely to the land.
Economic obsolescence
See External Obsolescence.
Economic Stimulus Act of 2008
Legislation passed by Congress to bolster the economy by making payments of up to $1200 to over 130 million households. More information is available at (see book.)
Effective Gross Income
Property income from all sources, less allowance for vacancy and collection losses.
Electronic Signatures in Global and National Commerce Act
Enacted by Congress in 1000 to facilitate the use of electronic records and signatures in interstate and foreign commerce by ensuring the validity and legal effect of contracts entered into electronically.
Emancipated minor
A person under the age of 18 who is married, in the military service, or determined by a court to be legally able to enter into a contract as an adult.
Emblements
Crops produced annually by labor and industry as distinguished from crops that grow naturally on the land.
Eminent domain
The right of the government to acquire title to property for public use by condemnation; the proper owner receives compensation - generally fair market value. (see also inverse condemnation.)
Employee
Person who is hired by someone else to perform work; for purposes of the Real Estate Law, a real estate salesperson is always considered an employee under the supervision of the employing broker; for tax purposes, a real estate salesperson working for a real estate broker can be hired as an employee or as an independent contractor.
Employer
Person who hires someone else to perform work.
Encroachment
The unlawful intrusion of a property improvement onto adjacent property.
Encumbrance
Anything that affects or limits the fee simple title to or affects the condition or use of real estate.
Energy-efficient ratio (EER)
Measure of an electrical appliance’s energy consumption found by dividing its capacity measured in British Thermal Units (BTUs)
Environmental impact report (EIR)
Evaluation of effects on the environment of a proposed development; may be required by local government.
Environmental obsolescence
See external obsolescence.
Equal Credit Opportunity Act
Federal law intended to ensure that all consumers are given an equal chance to obtain credit. Information is available at www.ftc.gov/bcp/edu/pubs/consumer/credit/cre15.shtm.
Equal dignities rule
Requires a writing if an (such as a listing agreement_ involves a transaction (such as the sale of real estate) that requires writing.
Equilibrium
Period of stability in the life cycle of a building or neighborhood in which little change is evident.
Equitable estoppel
Common law doctrine that require transfer of title to property if seller acquires title only after a purported sale of the property to someone else; intended to prevent unjust enrichment.
Equity
Difference between current market value and the remaining indebtedness on a property; free-and-clear property value.
Equity of redemption
The right to redeem property during the foreclosure period, or during a statutorily prescribed time following a foreclosure sale.
Erosion
Process of wearing away of the surface of the land by the action of the elements, most conspicuously at a time of heavy rainfall.
Escalator clause
Provision in a lease agreement for an increase in payments based on an increase in an index such as the consumer price index.
Escheat
The reverting of property to the state when there are no heirs capable of inheriting.
Escrow
The deposit of instruments and/or funds (with instructions) with a neutral third party to carry out the provisions of an agreement or a contract.
Escrow agent
See escrow holder.
Escrow holder
Escrow agent or escrow officer; neutral third party who holds in trust the funds and documents necessary to complete a transaction until all of the terms of the underlying agreement agreement have been fulfilled, at which time the funds are disbursed and documents transferred as required.
Escrow instructions
Written instructions to the escrow holder specifying the terms under which the escrow is to be conducted, including the contract or other requirements that are to be fulfilled as part of the escrow proceeding; change in the escrow instructions requires agreement of both parties to the underlying contract.
Escrow officer
See escrow holder.
Estate
The interest held by the owner of property.
Estate at sufferance
The occupancy of a tenant after the lease term expires.
Estate at Will
A tenancy in which the tenants time of possession is indefinite.
Estate for years
A tenancy in which the tenants time of possession is indefinite.
Estate from period to period
Periodic tenancy; a tenancy for a fixed term, automatically renewed for the same term unless owner or tenant gives the other written notice of intention to terminate the tenancy.
Estates of tenancy
See leasehold estate.
Estate tax
Federal or state tax on the value of property owned by a decedent at the time of death.
Estoppel
A bar against future conduct. By acting as if an agency relationship exists, a principal is prevented by estoppel denying it in future.
Eviction
Dispossession by process of law.
Exchange
A means of trading equities in two or more real properties, treated as a single transaction through a single escrow.
Exclusive agency listing
A listing agreement employing a broker as sole agent for a seller of real property under the terms of which the broker is entitled to compensation if the property is sold through any other broker, but not if a sale is negotiated by the owner without the services of an agent.
Exclusive authorization and right-to-sell listing
A listing agreement employing a broker as agent for a seller of real property under the terms of which the broker is entitled to compensation if the listed property is sold during the duration of the listing, whether by the listing agent, another agent, or the owner acting without the services of an agent.
Executed contract
Written agreement that has been signed by all parties; agreement that has been completed according to its terms.
Executor
Personal representative of the estate of a decedent, named in the decedent’s will. See also administrator.
Executory contract
Agreement with terms that have not yet been completed.
Express agent
Agent identified in written or oral agency agreement.
Express agreement
An agreement established by written or oral communication of the parties that both parties acknowledge as their intention.
Express Contract
See express agreement.
Express reservation
Property interest identified in deed as retained by grantor.
Extended-coverage policy
Policy of title insurance, primarily intended for the benefit of lenders, that includes coverage of times that would ordinarily be discovered by a property inspection, such as rights of parties in possession of the property.
External obsolescence
Economic or environmental obsolescence; loss in value due to outside causes, such as changes in nearby land use.
Fair and Accurate Credit Transactions Act of 2003 (FACTA)
Federal law that amended the Fair Credit Reporting Act (FCRA) to create procedures to assist consumers who are victims of identity theft; found at www.ftc.gov/os/statutes/fcrajump.shtm.
Fair Credit Reporting Act (FCRA)
Federal law detailing consumer rights in loan transactions involving credit reports; found at www.ftc.gov/os/statues/fcrajump.shtm.
Fair Employment and Housing Act (FEHA)
California law that provides protection from harassment or discrimination in employment or housing on the basis of age (40 and over), ancestry, color, religious creed, denial of family and medical care leave, disability (mental and physical) including HIV and AIDS, marital status, medical condition (cancer and genetic characteristics), national origin, race, religion, sex, and sexual orientation. The text of the law and enforcement procedures can be seen at www.dgeh.ca.gov/about/fehaDescription.aspx
Fair Housing Act
Federal law that prohibits discrimination in provision of housing on the basis of race, color, religion, sex, national origin, ancestry, disability, or familial states; Title V111 of the Civil Rights Act of 1968. Full text of the Fair Housing Act can be found at www.usdoj.gov/crt/housing/title8.htm.
Fair Housing Amendments Act of 1988
Expanded federal protections against discrimination in provision of housing to include families with children and persons with disabilities.
Fannie Mae
Formerly the Federal National Mortgage Association; created in 1938 to provide a secondary mortgage market for federally related mortgage loans; now also purchases conventional mortgage loans. Information can be found at www.fanniemae.com and www.efanniemae.com.
Farmer Mac
Farmers Home Administration; provides financing of agricultural real estate and rural housing loans and liquidity to agricultural and rural housing lenders; found at www.farmermac.com.
Federal Depository Insurance Corporation (FDIC)
Insures savings, checking, and other deposit accounts in insured institutions, up to $100,000 per depositor; retirement accounts can be insured up to $250,000 per depositor; found at www.fdic.gov.
Federal Funds rate
The interest rate at which depository institutions lend balances at the Federal Reserve to other depository institutions overnight. Discussion and historical rates can be found at www.federalreserve.gov/monetarypolicy/fomc.htm.
Federal Housing Administration (FHA)
Created in 1934 to provide mortgage insurance on loans made by FHA-approved lenders throughout the US; part of the Dept. of Housing and Urban Development; found at www.fha.com and www.hud.gov/offices/hsg.
Federally related transaction
Transaction that involves a federally chartered or insured lender.
Federal Reserve System (the Fed)
Central banking system of the US; found at www.federalreserve.gov.
Fee simple absolute
A fee simple estate with no restrictions on its use.
Fee simple defeasible
An interest in land, such as a fee simple conditional or fee simple with special limitation, that may result in the estate of ownership being defeated.
Fee simple estate
The greatest interest in real property one can own, including the right to use the property at present and for an indeterminate period of time in the future.
Fee simple qualified
A fee simple estate with some restrictions on the right of possession.
FICO score
Consumer credit score developed by the Fair Isaac Corporation; found at www.myfico.com.
Fictitious business name statement
Document indicating the name under which a business is operating; filed with the county where the business is located. Information is available at www.sos.ca.gov/business/corp/corp_irc.htm.
Fiduciary
A person in a position of trust and confidence who owes a certain loyalty to another, such as an agent to a principal.
Final subdivision map
See tentative subdivision map.
Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA)
Federal legislation passed in response to the savings and loan crisis of the 1980s’ established requirement for state appraiser licensing. Bibliography can be found at www.fdic.gov/bank/historical/S&l/s/bib11.html.
Fire stops
Wood blocks placed at intervals between wall studs to slow spread of fire.
Fiscal year
A business or an accounting year as distinguished from a calendar year.
Fixed-rate mortgage
Loan secured by mortgage or deed of trust on real estate that carries an interest rate that does not change over the life of the loan.
Fixture
Anything permanently attached to land or improvements so as to become real property.
Flashing
Metal strips intended to prevent water entry at openings in a roof for chimneys, vents, dormers, and changes in roof line.
Foreclosure
Sale of real property by mortgagee, trustee, or other lien holder on default by the borrower. See also judicial foreclosure action.
Forfeiture
Breach of a condition subsequent in a deed; entitles grantor or grantor’s successor to reacquire title to the property.
Form appraisal report
A short report, typically two pages plus addenda, using a preprinted form to summarize the data contributing to an appraiser’s conclusion of value.
Form-based planning
Type of land use planning permitted in California that provides a mis of land uses while taking into account the relationship of buildings and public areas. Information can be found at www.lgc.org/freepub/doc/community_design/fact_sheets/form_based_codes.pdf.
Foundation
Base of building, typically of poured concrete consisting of walls or footings.
Frame
Support posts, beams, and roof members, typically wood in residential construction; steel-frame construction is common for commercial structures and is also used for homes.
Franchise
A contract or agreement between the franchisor (grantor) and the franchisee (grantee).
Franchise Tax Fraud
California tax on corporations. The intentional and successful use of any cunning, deception, collusion, or artifice to circumvent, cheat, or deceive another person, so that the other person acts on it to the loose of property and legal injury; actual fraud is a deliberate misrepresentation or a representation made in reckless disregard of truth, a promise made without the intention to perform it. or any other act intended to deceive; constructive fraud is any misrepresentation made without fraudulent intent (the deliberate intent to deceive.) Fraud is negative when it is a deliberate concealment of something that should be revealed.
Fraudulent misrepresentation
Deliberate intent to deceive; fraudulent misrepresentation of a material fact in a real estate transaction is grounds for a legal action that may result in damages or rescission.
Freddie Mac
Formerly the Federal Home Loan Mortgage Association; private corporation under federal supervision created by Congress in 1970 to provide a secondary market for conventional residential mortgage loans; found at www.freddiemac.com
Freehold estate
An estate in land in which ownership is for an indeterminate length of time as in a fee simple or life estate.
Front foot
Property measured by the front linear foot on its street line, each front foot extending the depth of the lot.
Fructus industriales
Plant growth that is the result of cultivation.
Fructus naturales
Plant growth that does not require cultivation, such as natural trees, grasses, and shrubbery.
Full disclosure of material facts
Obligation of real estate licensee to make known to the licensee’s client as well as prospective purchasers all facts concerning the property and likely to affect its value that are known to the licensee and the licensee is both otherwise prohibited by law from disclosing.
Functional obsolescence
Loss in value due to adverse factors within a structure that affect its marketability, such as its design, layout, or utility.
General agent
See agent.
General indexes
Lists of property owners and documents affecting property title maintained by titles companies.
General lien
Lien on all property of the debtor.
General partnership
An association of two or more persons, called the partners, to carry on a business as co-owners for profit.
General plan
An association of two or more persons, called the partners, to carry on a business as co-owners for profit.
General plan
Master plan’ includes a statement of policy of the development and land uses within a city or county and a program to implement that policy.
General power of attorney
Authority to act on behalf of someone else for financial purposes. See also power of attorney.
Gentrification
Renovation of run-down properties in neighborhoods that are in decline.
Gift
Voluntary transfer by an individual of any type of property for less than full consideration.
