Back Bay Boston Real Estate Glossary
Learn about different real estate terms with our helpful glossary...
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ABSTRACT
OF TITLE
The condensed history of a title to a particular parcel of real estate, consisting of a summary of the original grant and all subsequent conveyances and encumbrances affecting the property and a certification by the abstractor that the history is complete and accurate. ACCELERATION CLAUSE INSERT DEFINITION The clause in a mortgage or deed of trust that can be enforced to make the entire debt due immediately if the borrower defaults on an installment payment or other covenant. ACCESSION INSERT DEFINITION Acquiring title to additions or improvements to real property as a result of the annexation of fixtures or the accretion of alluvial deposits along the banks of streams. ACCRETION INSERT DEFINITION ACCRUED ITEMS On a closing statement, items of expense that are incurred but not yet payable, such as interest on a mortgage loan or taxes on real property. ACKNOWLEDGEMENT A formal declaration made before a duly authorized officer, usually a notary public, by a person who has signed a document. ACRE IA measure of land equal to 43,560 square feet, 4,840 square yards, 4,047 square meters, 160 square rods or 0.4047 hectares. ACTUAL EVICTION The legal process that results in the tenant's being physically removed from the leased premises. ACTUAL NOTICE Express information or fact; that which is known; direct knowledge. ADJUSTABLE-RATE MORTGAGE (ARM) A loan characterized by a fluctuating interest rate, usually one tied to a bank or savings and loan association cost-of-funds index. ADJUSTED BASIS See basis AD VALOREM TAX A tax levied according to value, generally used to refer to real estate tax. Also called the general tax. ADVERSE POSSESSION The actual, open, notorious, hostile and continuous possession of another's land under a claim of title. Possession for a statutory period may be a means of acquiring title. AFFIDAVIT OF TITLE A written statement, made under oath by a seller or grantor of real property and acknowledged by a notary public, in which the grantor AGENCY The relationship between a principal and an agent wherein the agent is authorized to represent the principal in certain transactions. AGENCY COUPLED WITH AN INTEREST An agency relationship in which the agent is given an estate or interest in the subject of the agency (the property). AGENT INSERT DEFINITION AIR LOT A designated airspace over a piece of land. An air lot, like surface property, may be transferred. AIR RIGHTS The right to use the open space above a property, usually allowing the surface to be used for another purpose. ALIENATION The act of transferring property to another. Alienation may be voluntary, such as by gift or sale, or involuntary, as through eminent domain or adverse possession. ALIENATION CLAUSE The clause in a mortgage or deed of trust that states that the balance of the secured debt becomes immediately due and payable at the lender's option if the property is sold by the borrower. In effect this clause prevents the borrower from assigning the debt without the lender's approval. ALLODIAL SYSTEM A system of land ownership in which land is held free and clear of any rent or service due to the government; commonly contrasted to the feudal system. Land is held under the allodial system in the United States. AMERICAN LAND TITLE ASSOCIATION (ALTA) POLICY A title insurance policy that protects the interest in a collateral property of a mortgage lender who originates a new real estate loan. AMORTIZED LOAN A loan in which the principal as well as the interest is payable in monthly or other periodic installments over the term of the loan. ANNUAL PERCENTAGE RATE (APR) The relationship of the total finance charges associated with a loan. This must be disclosed to borrowers by lenders under the Truth-in-Lending Act. ANTICIPATION The appraisal principle that holds that value can increase or decrease based on the expectation of some future benefit or detriment produced by the property. ANTITRUST LAWS Laws designed to preserve the free enterprise of the open marketplace by making illegal certain private conspiracies and combinations formed to minimize competition. Most violations of antitrust laws in the real estate business involve either price-fixing (brokers conspiring to set fixed compensation rates) or allocation of customers or markets (brokers agreeing to limit their areas of trade or dealing to certain areas or properties). APPRAISAL An estimate of the quantity, quality or value of something. The process through which conclusions of property value are obtained; also refers to the report that sets forth the process of estimation and conclusion of value. APPRECIATION An increase in the worth or value of a property due to economic or related causes, which may prove to be either temporary or permanent; opposite of depreciation. APPURTENANCE A right, privilege or improvement belonging to, and passing with, the land. APPURTENANT EASEMENT An easement that is annexed to the ownership of one parcel and allows the owner the use of the neighbor's land. ASSEMBLAGE The combining of two or more adjoining lots into one larger tract to increase their total value. ASSESSMENT The imposition of a tax, charge or levy, usually according to established rates. ASSIGNMENT The transfer in writing of interest in a bond, mortgage, lease or other instrument. ASSUMPTION OF MORTGAGE INSERT DEFINITION ATTACHMENT INSERT DEFINITION ATTORNEY'S OPINION OF TITLE INSERT DEFINITION AUTOMATIC EXTENSION INSERT DEFINITION AVULSION INSERT DEFINITION INSERT DEFINITION BALLOON PAYMENT INSERT DEFINITION BARGAIN AND SALE DEED INSERT DEFINITION BASE LINE INSERT DEFINITION BASIS INSERT DEFINITION BENCH MARK INSERT DEFINITION BENEFICIARY INSERT DEFINITION BILATERAL CONTRACT INSERT DEFINITION BINDER INSERT DEFINITION BLANKET LOAN INSERT DEFINITION BLOCKBUSTING INSERT DEFINITION BLUE-SKY LAWS INSERT DEFINITION BOOT INSERT DEFINITION BRANCH OFFICE INSERT DEFINITION BREACH OF CONTRACT INSERT DEFINITION BROKER INSERT DEFINITION BROKERAGE INSERT DEFINITION BUFFER ZONE INSERT DEFINITION BUILDING CODE INSERT DEFINITION BUILDING PERMIT INSERT DEFINITION BULK TRANSFER INSERT DEFINITION BUNDLE OF LEGAL RIGHTS INSERT DEFINITION BUYDOWN INSERT DEFINITION BUYER-AGENCY AGREEMENT INSERT DEFINITION CAPITALIZATION INSERT DEFINITION CAPITALIZATION RATE INSERT DEFINITION CASH FLOW INSERT DEFINITION CASH RENT INSERT DEFINITION CAVEAT EMPTOR INSERT DEFINITION CERTIFICATE OF REASONABLE VALUE (CRV) INSERT DEFINITION CERTIFICATE OF SALE INSERT DEFINITION CERTIFICATE OF TITLE INSERT DEFINITION CHAIN OF TITLE INSERT DEFINITION CHANGE INSERT DEFINITION CHATTEL INSERT DEFINITION CIVIL RIGHTS ACT OF 1866 INSERT DEFINITION CLOSING STATEMENT INSERT DEFINITION CLOUD ON TITLE INSERT DEFINITION CLUSTERING INSERT DEFINITION CODE OF ETHICS INSERT DEFINITION CODICIL INSERT DEFINITION COINSURANCE CLAUSE INSERT DEFINITION COMMINGLING INSERT DEFINITION COMMISSION INSERT DEFINITION COMMON ELEMENTS INSERT DEFINITION COMMON LAW INSERT DEFINITION COMMUNITY PROPERTY INSERT DEFINITION COMPARABLES INSERT DEFINITION COMPETITION INSERT DEFINITION COMPETITIVE MARKET ANALYSIS (CMA) INSERT DEFINITION COMPREHENSIVE PLAN INSERT DEFINITION CONDEMNATION INSERT DEFINITION CONDITIONAL-USE PERMIT INSERT DEFINITION CONDOMINIUM INSERT DEFINITION CONFESSION OF JUDGEMENT CLAUSE INSERT DEFINITION CONFORMITY INSERT DEFINITION CONSIDERATION INSERT DEFINITION CONSTRUCTION LOAN INSERT DEFINITION CONSTRUCTIVE EVICTION INSERT DEFINITION CONSTRUCTIVE NOTICE INSERT DEFINITION CONTINGENCY INSERT DEFINITION CONTRACT INSERT DEFINITION CONTRIBUTION INSERT DEFINITION CONVENTIONAL LOAN INSERT DEFINITION CONVEYANCE INSERT DEFINITION COOPERATING BROKER INSERT DEFINITION COOPERATIVE INSERT DEFINITION CO-OWNERSHIP INSERT DEFINITION CORPORATION INSERT DEFINITION CORRECTION LINES INSERT DEFINITION COST APPROACH INSERT DEFINITION COST RECOVERY INSERT DEFINITION COUNTEROFFER INSERT DEFINITION COVENANT INSERT DEFINITION COVENANT OF QUIET ENJOYMENT INSERT DEFINITION CREDIT INSERT DEFINITION CURTEST INSERT DEFINITION INSERT DEFINITION DEBIT INSERT DEFINITION DECEDENT INSERT DEFINITION DEDICATION INSERT DEFINITION DEED INSERT DEFINITION DEED IN LIEU OF FORECLOSURE INSERT DEFINITION DEED IN TRUST INSERT DEFINITION DEED OF TRUST INSERT DEFINITION DEED OF TRUST LIEN INSERT DEFINITION DEED RESTRICTION INSERT DEFINITION DEFAULT INSERT DEFINITION DEFEASANCE CLAUSE INSERT DEFINITION DEFEASIBLE FEE ESTATE INSERT DEFINITION DEFICIENCY JUDGEMENT INSERT DEFINITION DEMAND INSERT DEFINITION DENSITY ZONING INSERT DEFINITION DEPRECIATION INSERT DEFINITION DESCENT INSERT DEFINITION DEVELOPER INSERT DEFINITION DEVISE INSERT DEFINITION DISCOUNT POINT INSERT DEFINITION DOMINANT TENEMENT INSERT DEFINITION DOWER INSERT DEFINITION DUAL AGENCY INSERT DEFINITION DUE-ON-SALE CLAUSE INSERT DEFINITION DURESS INSERT DEFINITION EASEMENT INSERT DEFINITION EASEMENT BY CONDEMNATION INSERT DEFINITION EASEMENT BY NECESSITY INSERT DEFINITION EASEMENT BY PRESCRIPTION INSERT DEFINITION EASEMENT IN GROSS INSERT DEFINITION ECONOMIC LIFE INSERT DEFINITION EMBLEMENTS INSERT DEFINITION EMINENT DOMAIN INSERT DEFINITION EMPLOYEE INSERT DEFINITION EMPLOYMENT CONTRACT INSERT DEFINITION ENABLING ACTS INSERT DEFINITION ENCROACHMENT INSERT DEFINITION ENCUMBRANCE INSERT DEFINITION EQUAL CREDIT OPPORTUNITY ACT (ECOA) INSERT DEFINITION EQUALIZATION INSERT DEFINITION EQUALIZATION FACTOR INSERT DEFINITION EQUITABLE LIEN INSERT DEFINITION EQUITABLE RIGHT OF REDEMPTION INSERT DEFINITION EQUITABLE TITLE INSERT DEFINITION EQUITY INSERT DEFINITION EROSION INSERT DEFINITION ESCHEAT INSERT DEFINITION ESCROW INSERT DEFINITION ESCROW ACCOUNT INSERT DEFINITION ESCROW INSTRUCTIONS INSERT DEFINITION ESTATE (TENANCY) AT SUFFERANCE INSERT DEFINITION ESTATE (TENANCY) AT WILL INSERT DEFINITION ESTATE (TENANCY) FOR YEARS INSERT DEFINITION ESTATE (TENANCY) FROM PERIOD TO PERIOD INSERT DEFINITION ESTATE IN LAND INSERT DEFINITION ESTATE TAXES INSERT DEFINITION ESTOPPEL INSERT DEFINITION ESTOPPEL CERTIFICATE INSERT DEFINITION ETHICS INSERT DEFINITION EVICTION INSERT DEFINITION EVIDENCE OF TITLE INSERT DEFINITION EXCHANGE INSERT DEFINITION EXCLUSIVE-AGENCY LISTING INSERT DEFINITION EXCLUSIVE RIGHT-TO-SELL LISTING INSERT DEFINITION EXECUTED CONTRACT INSERT DEFINITION EXECUTION INSERT DEFINITION EXECUTORY CONTRACT INSERT DEFINITION EXPRESS AGREEMENT INSERT DEFINITION EXPRESS CONTRACT INSERT DEFINITION EXTERNAL DEPRECIATION INSERT DEFINITION FANNIE MAE INSERT DEFINITION FARMER'S HOME ADMINISTRATION (FmHA) INSERT DEFINITION FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC) INSERT DEFINITION FEDERAL HOME LOAN MORTGAGE CORPORATION (FHLMC) INSERT DEFINITION FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA) INSERT DEFINITION FEDERAL RESERVE SYSTEM INSERT DEFINITION FEE SIMPLE ABSOLUTE INSERT DEFINITION FEE SIMPLE DEFEASIBLE INSERT DEFINITION FEUDAL SYSTEM INSERT DEFINITION UPON THE DEATH OF THE INDIVIDUAL INSERT DEFINITION FHA LOAN INSERT DEFINITION FIDUCIARY INSERT DEFINITION FIDUCIARY RELATIONSHIP INSERT DEFINITION FINANCIAL INSTITUTIONS REFORM, RECOVERY AND ENFORCEMENT ACT INSERT DEFINITION FINANCING STATEMENT INSERT DEFINITION FISCAL POLICY INSERT DEFINITION FIXTURE INSERT DEFINITION FORECLOSURE INSERT DEFINITION FRACTIONAL SECTION INSERT DEFINITION FRAUD INSERT DEFINITION FREDDIE MAC INSERT DEFINITION FREEHOLD ESTATE INSERT DEFINITION FRONT FOOTAGE INSERT DEFINITION FUNCTIONAL OBSOLESCENCE INSERT DEFINITION FUTURE INTEREST INSERT DEFINITION GENERAL AGENT INSERT DEFINITION GENERAL LIEN INSERT DEFINITION GENERAL PARTNERSHIP INSERT DEFINITION GENERAL WARRANTY DEED INSERT DEFINITION GINNIE MAE INSERT DEFINITION GOVERNMENT CHECK INSERT DEFINITION GOVERNMENT LOT INSERT DEFINITION GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GNMA) INSERT DEFINITION GOVERNMENT SURVEY SYSTEM INSERT DEFINITION GRADUATED-PAYMENT MORTGAGE (GPM) INSERT DEFINITION GRANTEE INSERT DEFINITION GRANTING CLAUSE INSERT DEFINITION GRANTOR INSERT DEFINITION GROSS INCOME MULTIPLIER INSERT DEFINITION GROSS LEASE INSERT DEFINITION GROSS RENT MULTIPLIER (GRM) INSERT DEFINITION GROUND LEASE INSERT DEFINITION GROWING-EQUITY MORTGAGE (GEM) INSERT DEFINITION HEIR INSERT DEFINITION HIGHEST AND BEST USE INSERT DEFINITION HOLDOVER TENANCY INSERT DEFINITION HOLOGRAPHIC WILL INSERT DEFINITION HOME EQUITY LOAN INSERT DEFINITION HOMEOWNER'S INSURANCE POLICY INSERT DEFINITION HOMESTEAD INSERT DEFINITION HYPOTHECATE INSERT DEFINITION IMPLIED CONTRACT INSERT DEFINITION IMPLIED WARRANTY OF HABITABILITY INSERT DEFINITION IMPROVEMENT INSERT DEFINITION INCOME APPROACH INSERT DEFINITION INCORPOREAL RIGHT INSERT DEFINITION INDEPENDENT CONTRACTOR INSERT DEFINITION INDEX METHOD INSERT DEFINITION INFLATION INSERT DEFINITION INHERITANCE TAXES INSERT DEFINITION INSTALLMENT CONTRACT INSERT DEFINITION INSTALLMENT SALE INSERT DEFINITION INTEREST INSERT DEFINITION INTERIM FINANCING INSERT DEFINITION INTERSTATE LAND SALES FULL DISCLOSURE ACT INSERT DEFINITION INTESTATE INSERT DEFINITION INTRINSIC VALUE INSERT DEFINITION INVESTMENT INSERT DEFINITION INVOLUNTARY ALIENATION INSERT DEFINITION INVOLUNTARY LIEN INSERT DEFINITION JOINT VENTURE INSERT DEFINITION JUDGEMENT INSERT DEFINITION JUDICIAL PRECEDENT INSERT DEFINITION JUNIOR LIEN INSERT DEFINITION LAND INSERT DEFINITION LAND CONTRACT INSERT DEFINITION LAW OF AGENCY INSERT DEFINITION LEASE INSERT DEFINITION LEASEHOLD ESTATE INSERT DEFINITION LEASE OPTION INSERT DEFINITION LEASE PURCHASE INSERT DEFINITION LEGACY INSERT DEFINITION LEGAL DESCRIPTION INSERT DEFINITION LEGALLY COMPETENT PARTIES INSERT DEFINITION LESSEE INSERT DEFINITION LESSOR INSERT DEFINITION LEVERAGE INSERT DEFINITION LEVY INSERT DEFINITION LICENSE INSERT DEFINITION LIEN INSERT DEFINITION LIEN THEORY INSERT DEFINITION LIFE INSERT DEFINITION LIFE ESTATE INSERT DEFINITION LIFE TENANT INSERT DEFINITION LIMITED PARTNERSHIP INSERT DEFINITION LIQUIDATED DAMAGES INSERT DEFINITION LIQUIDITY INSERT DEFINITION LIS PENDENS INSERT DEFINITION LISTING AGREEMENT INSERT DEFINITION LISTING BROKER INSERT DEFINITION LITTORAL RIGHTS INSERT DEFINITION LOAN ORIGINATION FEE INSERT DEFINITION LOAN-TO-VALUE RATIO INSERT DEFINITION LOT-AND-BLOCK (RECORDED PLAT) SYSTEM A contract between the owner of income property and a management firm or individual property manager that outlines the scope of the manager's authority. MARKET A place where goods can be bought and sold and a price established. MARKETABLE TITLE Good or clear title, reasonably free from the risk of litigation over possible defects. MARKET VALUE The most probable price property would bring in an arm's-length transaction under normal conditions on the open market. MASTER PLAN A comprehensive plan to guide the long-term physical development of a particular area. MECHANIC'S LIEN A statutory lien created in favor of contractors, laborers and materialmen who have performed work or furnished materials in the erection or repair of a building. MERIDIAN One of a set of imaginary lines running north and south and crossing a base line at a definite point, used in the rectangular (government) survey system of property description. METES-AND-BOUNDS DESCRIPTION A legal description of a parcel of land that begins at a well-marked point and follows the boundaries, using directions and distances around the tract, back to the place of beginning. MILL One-tenth of one cent. Some states use a mill rate to compute real estate taxes; for example, a rate of 52 mills would be $0.052 tax for each dollar of assessed valuation of a property. MINOR Someone who has not reached the age of majority and therefore does not have legal capacity to transfer title to real property. MONETARY POLICY Governmental regulation of the amount of money in circulation through such institutions as the Federal Reserve Board. MONTH-TO-MONTH TENANCY A periodic tenancy under which the tenant rents for one month at a time. In the absence of a rental agreement (oral or written) a tenancy is generally considered to be month to month. MONUMENT A fixed natural or artificial object used to establish real estate boundaries for a metes-and-bounds description. MORTGAGE A conditional transfer or pledge of real estate as security for the payment of a debt. Also, the document creating a mortgage lien. MORTGAGE BANKER Mortgage loan companies that originate, service and sell loans to investors. MORTGAGE BROKER An agent of a lender who brings the lender and borrower together. The broker receives a fee for this service. MORTGAGEE A lender in a mortgage loan transaction. MORTGAGE LIEN A lien or charge on the property of a mortgagor that secures the underlying debt obligations. MORTGAGOR A borrower in a mortgage loan transaction. MULTIPERIL POLICIES Insurance policies that offer protection from a range of potential perils, such as those of a fire, hazard, public liability and casualty. MULTIPLE-LISTING CLAUSE A provision in an exclusive listing for the authority and obligation on the part of the listing broker to distribute the listing to other brokers in the multiple-listing organization. MULTIPLE LISTING SERVICE (MLS) A marketing organization composed of member brokers who agree to share their listing agreements with one another in the hope of procuring ready, willing and able buyers for their properties more quickly than they could on their own. Most multiple-listing services accept exclusive-right-to-sell or exclusive agency listings from their member brokers.>
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A written promise or order to pay a specific sum of money that may be transferred by endorsement or delivery. The transferee then has the original payee's right to payment.
NET LEASE
A lease requiring the tenant to pay not only rent but also costs incurred in maintaining the property, including taxes, insurance, utilities and repairs.
NET LISTING
A listing based on the net price the seller will receive if the property is sold. Under a net listing the broker can offer the property for sale at the highest price obtainable to increase the commission. This type of listing is illegal in many states.
NET OPERATING INCOME (NOI)
The income projected for an income-producing property after deducting losses for vacancy and collection and operating expenses.
NONCONFORMING USE
A use of property that is permitted to continue after a zoning ordinance prohibiting it has been established for the area.
NON-HOMOGENEITY
A lack of uniformity; dissimilarity. Because no two parcels of land are exactly alike, real estate is said to be nonhomogeneous.
NOTE
See promissory note.
NOVATION
Substituting a new obligation for an old one or substituting new parties to an existing obligation.
NUNCUPATIVE WILL
An oral will declared by the testator in his or her final illness, made before witnesses and afterward reduced to writing.
The loss of value due to factors that are outmoded or less useful. Obsolescence may be functional or economic.
OCCUPANCY PERMIT
A permit issued by the appropriate local governing body to establish that the property is suitable for habitation by meeting certain safety and health standards.
OFFER AND ACCEPTANCE
Two essential components of a valid contract; a "meeting of the minds."
OFFICE OF THRIFT SUPERVISION (OTS)
Monitors and regulates the savings and loan industry. OTS was created by FIRREA.
OPEN-END LOAN
A mortgage loan that is expandable by increments up to a maximum dollar amount, the full loan being secured by the same original mortgage.
OPEN LISTING
A listing contract under which the broker's commission is contingent on the broker's producing a ready, willing and able buyer before the property is sold by the seller or another broker.
OPTION
An agreement to keep open for a set period an offer to sell or purchase property.
OPTION LISTING
Listing with a provision that gives the listing broker the right to purchase the listed property.
OSTENSIBLE AGENCY/strong>
A form of implied agency relationship created by the actions of the parties involved rather than by written agreement or document.
A real estate loan used to finance the purchase of both real property and personal property, such as in the purchase of a new home that includes carpeting, window coverings and major appliances.
PAROL EVIDENCE RULE
A rule of evidence providing that a written agreement is the final expression of the agreement of the parties, not to be varied or contradicted by prior or contemporaneous oral or written negotiations.
PARTICIPATION MORTGAGE
A mortgage loan wherein the lender has a partial equity interest in the property or receives a portion of the income from the property.
PARTITION
The division of covenants' interests in real property when the parties do not all voluntarily agree to terminate the co-ownership; takes place through court procedures.
PARTNERSHIP
An association of two or more individuals who carry on a continuing business for profit as co-owners. Under the law a partnership is regarded as a group of individuals rather than as a single entity. A genera/ partnership is a typical form of joint venture in which each general partner shares in the administration, profits and losses of the operation. A limited partnership is a business arrangement whereby the operation is administered by one or more general partners and funded, by and large, by limited or silent partners, who are by law responsible for losses only to the extent of their investments.
PARTY WALL
A wall that is located on or at a boundary line between two adjoining parcels of land and is used or is intended to be used by the owners of both properties.
PATENT
A grant or franchise of land from the United States government.
PAYMENT CAP
The limit on the amount the monthly payment can be increased on an adjustable-rate mortgage when the interest rate is adjusted.
PAYOFF STATEMENT
See reduction certificate.
PERCENTAGE LEASE
A lease, commonly used for commercial property, whose rental is based on the tenant's gross sales at the premises; it usually stipulates a base monthly rental plus a percentage of any gross sales above a certain amount.
PERCOLATION TEST
A test of the soil to determine if it will absorb and drain water adequately to use aseptic system for sewage disposal.
PERIODIC ESTATE (TENANCY)
See estate from period to period.
PERSONAL PROPERTY
Items, called chattels, that do not fit into the definition of real property; movable objects.
PHYSICAL DETERIORATION
A reduction in a property's value resulting from a decline in physical condition; can be caused by action of the elements or by ordinary wear and tear.
PLANNED UNIT DEVELOPMENT (PUD)
A planned combination of diverse land uses, such as housing, recreation and shopping, in one contained development or subdivision.
PLAT MAP
A map of a town, section or subdivision indicating the location and boundaries of individual properties.
PLOTTAGE
The increase in value or utility resulting from the consolidation (assemblage) of two or more adjacent lots into one larger lot.
POINT OF BEGINNING (POB)
In a metes-and-bounds legal description, the starting point of the survey, situated in one corner of the parcel; all metes-and- bounds descriptions must follow the boundaries of the parcel back to the point of beginning.
POLICE POWER
The government's right to impose laws, statutes and ordinances, including zoning ordinances and building codes, to protect the public health, safety and welfare.
POWER OF ATTORNEY
A written instrument authorizing a person, the attorney-in-fact, to act as agent for another person to the extent indicated in the instrument.
PREPAID ITEMS
On a closing statement, items that have been paid in advance by the seller, such as insurance premiums and some real estate taxes, for which he or she must be reimbursed by the buyer.
PREPAYMENT PENALTY
A charge imposed on a borrower who pays off the loan principal early. This penalty compensates the lender for interest and other charges that would otherwise be lost.
PRICE-FIXING
See antitrust laws.
PRIMARY MORTGAGE MARKET
The mortgage market in which loans are originated and consisting of lenders such as commercial banks, savings and loan associations and mutual savings banks.
PRINCIPAL
(I) A sum loaned or employed as a fund or an investment, as distinguished from its income or profits. (2) The original amount (as in a loan) of the total due and payable at a certain date. (3) A main party to a transaction--the person for whom the agent works.
PRINCIPAL MERIDIAN
The main imaginary line running north and south and crossing a base line at a definite point, used by surveyors for reference in locating and describing land under the rectangular (government) survey system of legal description.
PRIOR APPROPRIATION
A concept of water ownership in which the landowner's right to use available water is based on a government-administered permit system.
PRIORITY
The order of position or time. The priority of liens is generally determined by the chronological order in which the lien documents are recorded; tax liens, however, have priority even over previously recorded liens.
PRIVATE MORTGAGE INSURANCE (PMI)
Insurance provided by private carrier that protects a lender against a loss in the event of a foreclosure and deficiency.
PROBATE
A legal process by which a court determines who will inherit a decedent's property and what the estate's assets are.
PROCURING CAUSE
The effort that brings about the desired result. Under an open listing the broker who is the procuring cause of the sale receives the commission.
PROGRESSION
An appraisal principle that states that, between dissimilar properties. the value of the lesser-quality property is favorably affected by the presence of the better-quality property.
PROMISSORY NOTE
A financing instrument that states the terms of the underlying obligation, is signed by its maker and is negotiable (transferable to a third party).
PROPERTY MANAGER
Someone who manages real estate for another person for compensation. Duties include collecting rents, maintaining the property and keeping up all accounting.
PROPERTY REPORTS
The mandatory federal and state documents compiled by subdividers and developers to provide potential purchasers with facts about a property prior to their purchase.
PROPRIETARY LEASE
A lease given by the corporation that owns a cooperative apartment building to the shareholder for the shareholder's right as a tenant to an individual apartment.
Expenses, either prepaid or paid in arrears, that are divided or distributed between buyer and seller at the closing.
PROTECTED CLASS
Any group of people designated as such by the Department of Housing and Urban Development (HUD) in consideration of federal and state civil rights legislation. Currently includes ethnic minorities, women, religious groups, the handicapped and others.
PUFFING
Exaggerated or superlative comments or opinions.
PUR AUTRE VIE "FOR THE LIFE OF ANOTHER."
A life estate pur autre vie is a life estate that is measured by the life of a person other than the grantee.
PURCHASE-MONEY MORTGAGE (PMM)
A note secured by a mortgage or deed of trust given by a buyer, as borrower, to a seller, as lender, as part of the purchase price of the real estate.
PYRAMIDING
The process of acquiring additional properties by refinancing properties already owned and investing the loan proceeds in additional properties.
The appraisal method of estimating building costs by calculating the cost of all of the physical components in the improvements, adding the cost to assemble them and then including the indirect costs associated with such construction.
QUIET TITLE
Court action to remove a cloud on the title.
QUITCLAIM DEED
A conveyance by which the grantor transfers whatever interest he or she has in the real estate, without warranties or obligations.
A strip of land six miles wide, extending north and south and numbered east and west according to its distance from the principal meridian in the rectangular (government) survey system of legal description.
RATE CAP
The limit on the amount the interest rate can be increased at each adjustment period in an adjustable-rate loan. The cap may also set the maximum interest rate that can be charged during the life of the loan.
RATIFICATION
Method of creating an agency relationship in which the principal accepts the conduct of someone who acted without prior authorization as the principal's agent.
READY, WILLING AND ABLE BUYER
One who is prepared to buy property on the seller's terms and is ready to take positive steps to consummate the transaction.
REAL ESTATE LAND
A portion of the earth's surface extending downward to the center of the earth and upward infinitely into space, including all things permanently attached to it, whether naturally or artificially.
REAL ESTATE INVESTMENT SYNDICATE
See syndicate.
REAL ESTATE INVESTMENT TRUST (REIT)
Trust ownership of real estate by a group of individuals who purchase certificates of ownership in the trust, which in turn invests the money in real property and distributes the profits back to the investors free of corporate income tax.
REAL ESTATE LICENSE LAW
State law enacted to protect the public from fraud, dishonesty and incompetence in the purchase and sale of real estate.
REAL ESTATE MORTGAGE INVESTMENT CONDUIT (REMIC)
A tax entity that issues multiple classes of investor interests (securities) backed by a pool of mortgages.
REAL ESTATE RECOVERY FUND
A fund established in some states from real estate license revenues to cover claims of aggrieved parties who have suffered monetary damage through the actions of a real estate licensee.
REAL ESTATE SETTLEMENT PROCEDURES ACT (RESPA)
The federal law that requires certain disclosures to consumers about mortgage loan settlements. The law also prohibits the payment or receipt of kickbacks and certain kinds of referral fees.
REAL PROPERTY
The interests, benefits and rights inherent in real estate ownership.
REALTOR®
A registered trademark term reserved for the sole use of active members of local REALTOR(r) boards affiliated with the National Association of REALTORS(r).
RECONCILIATION
The final step in the appraisal process, in which the appraiser combines the estimates of value received from the sales comparison, cost and income approaches to arrive at a final estimate of market value for the subject property.
RECONVEYANCE DEED
A deed used by a trustee under a deed of trust to return title to the trustor.
RECORDING
The act of entering or recording documents affecting or conveying interests in real estate in the recorder's office established in each county. Until it is recorded, a deed or mortgage ordinarily is not effective against subsequent purchasers or mortgagees.
RECTANGULAR (GOVERNMENT) SURVEY SYSTEM
A system established in 1785 by the federal government, providing for surveying and describing land by reference to principal meridians and base lines.
REDEMPTION
The right of a defaulted property owner to recover his or her property by curing the default.
REDEMPTION PERIOD
A period of time established by state law during which a property owner has the right to redeem his or her real estate from a foreclosure or tax sale by paying the sales price, interest and costs. Many states do not have mortgage redemption laws.
REDLINING
The illegal practice of a lending institution denying loans or restricting their number for certain areas of a community.
REDUCTION CERTIFICATE (PAYOFF STATEMENT)
The document signed by a lender indicating the amount required to pay a loan balance in full and satisfy the debt; used in the settlement process to protect both the seller's and the buyer's interests.
REGRESSION
An appraisal principle that states that, between dissimilar properties, the value of the better quality property is affected adversely by the presence of the lesser-quality property.
REGULATION Z
Implements the Truth-in-Lending Act requiring credit institutions to inform borrowers of the true cost of obtaining credit.
RELEASE DEED
A document, also known as a deed of reconveyance, that transfers all rights given a trustee under a deed of trust loan back to the grantor after the loan has been fully repaid.
REMAINDER INTEREST
The remnant of an estate that has been conveyed to take effect and be enjoyed after the termination of a prior estate, such as when an owner conveys a life estate to one party and the remainder to another.
RENT
A fixed, periodic payment made by a tenant of a property to the owner for possession and use, usually by prior agreement of the parties.
RENT SCHEDULE
A statement of proposed rental rates, determined by the owner or the property manager or both, based on a building's estimated expenses, market supply and demand and the owner's long-range goals for the property.
REPLACEMENT COST
The construction cost at current prices of a property that is not necessarily an exact duplicate of the subject property but serves the same purpose or function as the original.
REPRODUCTION COST
The construction cost at current prices of an exact duplicate of the subject property.
RESOLUTION TRUST CORPORATION
The organization created by FIRREA to liquidate the assets of failed savings and loan associations.
RESTRICTIVE COVENANTS
A clause in a deed that limits the way the real estate ownership may be used.
REVERSE-ANNUITY MORTGAGE (RAM)
A loan under which the homeowner receives monthly payments based on his or her accumulated equity rather than a lump sum. The loan must be repaid at a prearranged date or upon the death of the owner or the sale of the property.
REVERSIONARY INTEREST
The remnant of an estate that the grantor holds after granting a life estate to another person.
REVERSIONARY RIGHT
The return of the rights of possession and quiet enjoyment to the lessor at the expiration of a lease.
RIGHT OF FIRST REFUSAL o RIGHT OF SURVIVORSHIP
Clause in a lease which gives the lesee (tenant) the right to purchase the rented property if during the term of the lease the lessor (landlord) receives an offer to purchase from a buyer. Usually the lessee must purchase on the terms and conditions of the buyer's offer.
RIGHT-OF-WAY
The right given by one landowner to another to pass over the land, construct a roadway or use as a pathway, without actually transferring ownership.
RIPARIAN RIGHTS
An owner's rights in land that borders on or includes a stream, river or lake. These rights include access to and use of the water.
RISK MANAGEMENT
Evaluation and selection of appropriate property and other insurance.
RULES AND REGULATIONS /strong>
Real estate licensing authority orders that govern licensees' activities; they usually have the same force and effect as statutory law.
The process of estimating the value of a property by examining and comparing actual sales of comparable properties.
SALESPERSON
A person who performs real estate activities while employed by or associated with a licensed real estate broker.
SATISFACTION OF MORTGAGE
A document acknowledging the payment of a mortgage debt.
SECONDARY MORTGAGE MARKET
A market for the purchase and sale of existing mortgages, designed to provide greater liquidity for mortgages; also called the secondary money market. Mortgages are first originated in the primary mortgage market.
SECTION
A portion of township under the rectangular (government) survey system. A township is divided into 36 sections, numbered one through 36. A section is a square with mile-long sides and an area of one square mile, or 640 acres.
SECURITY AGREEMENT
See Uniform Commercial Code.
SECURITY DEPOSIT
A payment by a tenant, held by the landlord during the lease term and kept (wholly or partially) on default or destruction of the premises by the tenant.
SEPARATE PROPERTY
Under community property law, property owned solely by either spouse before the marriage, acquired by gift or inheritance after the marriage or purchased with separate funds after the marriage.
SERVIENT TENEMENT
Land on which an easement exists in favor of an adjacent property (called a dominant estate); also called a servient estate.
SETBACK
The amount of space local zoning regulations require between a lot line and a building line.
SEVERALTY
Ownership of real property by one person only, also called sole ownership.
SEVERANCE
Changing an item of real estate to personal property by detaching it from the land; for example, cutting down a tree.
SHARECROPPING
In an agricultural lease, the agreement between the landowner and the tenant farmer to split the crop or the profit from its sale, actually sharing the crop.
SHARED-APPRECIATION MORTGAGE (SAM)
A mortgage loan in which the lender, in exchange for a loan with a favorable interest rate, participates in the profits (if any) the borrower receives when the property is eventually sold.
SITUS
The personal preference of people for one area over another, not necessarily based on objective facts and knowledge.
SPECIAL AGENT
One who is authorized by a principal to perform a single act or transaction; a real estate broker is usually a special agent authorized to find a ready, willing and able buyer for a particular property.
SPECIAL ASSESSMENT
A tax or levy customarily imposed against only those specific parcels of real estate that will benefit from a proposed public improvement like a street or sewer.
SPECIAL WARRANTY DEED
A deed in which the grantor warrants, or guarantees, the title only against defects arising during the period of his or her tenure and ownership of the property and not against defects existing before that time, generally using the language, "by, through or under the grantor but not otherwise."
SPECIFIC LIEN
A lien affecting or attaching only to a certain, specific parcel of land or piece of property.
SPECIFIC PERFORMANCE
A legal action to compel a party to carry out the terms of a contract.
SQUARE-FOOT METHOD
The appraisal method of estimating building costs by multiplying the number of square feet in the improvements being appraised by the cost per square foot for recently constructed similar improvements.
STATUTE OF FRAUDS
That part of a state law that requires certain instruments, such as deeds, real estate sales contracts and certain leases, to be in writing to be legally enforceable.
STATUTE OF LIMITATIONS
That law pertaining to the period of time within which certain actions must be brought to court.
STATUTORY LIEN
A lien imposed on property by statute, a tax lien, for example--in contrast to an equitable lien, which arises out of common law.
STATUTORY REDEMPTION
The right of a defaulted property owner to recover the property after its sale by paying the appropriate fees and charges.
STEERING
The illegal practice of channeling home seekers to particular areas, either to maintain the homogeneity of an area or to change the character of an area, which limits their choices of where they can live.
STRAIGHT-LINE METHOD
A method of calculating depreciation for tax purposes, computed by dividing the adjusted basis of a property by the estimated number of years of remaining useful life.
STRAIGHT (TERM) LOAN
A loan in which only interest is paid during the term of the loan, with the entire principal amount due with the final interest payment.
SUBAGENT
One who is employed by a person already acting as an agent. Typically a reference to a salesperson licensed under a broker (agent) who is employed under the terms of a listing agreement.
SUBDIVIDER
One who buys undeveloped land, divides it into smaller, usable lots and sells the lots to potential users.
SUBDIVISION
A tract of land divided by the owner, known as the subdivider, into blocks, building lots and streets according to a recorded subdivision plat, which must comply with local ordinances and regulations.
SUBDIVISION AND DEVELOPMENT ORDINANCES
Municipal ordinances that establish requirements for sub- divisions and development.
SUBDIVISION PLAT
See plat map.
SUBLEASE
See subletting.
SUBLETTING
The leasing of premises by a lessee to a third party for part of the lessee's remaining term.See also assignment.
SUBORDINATION
Relegation to a lesser position, usually in respect to a right or security.
SUBORDINATION AGREEMENT
A written agreement between holders of liens on a property that changes the priority of mortgage, judgment and other liens under certain circumstances.
SUBROGATION
The substitution of one creditor for another, with the substituted person succeeding to the legal rights and claims of the original claimant. Subrogation is used by title insurers to acquire from the injured party rights to sue in order to re- cover any claims they have paid.
SUBSTITUTION
An appraisal principle that states that the maximum value of a property tends to be set by the cost of purchasing an equally desirable and valuable substitute property, assuming that no costly delay is encountered in making the substitution.
SUBSURFACE RIGHTS
Ownership rights in a parcel of real estate to the water, minerals, gas, oil and so forth that lie beneath the surface of the property.
SUIT FOR POSSESSION
A court suit initiated by a landlord to evict a tenant from leased premises after the tenant has breached one of the terms of the lease or has held possession of the property after the lease's expiration.
SUIT TO QUIET TITLE
A court action intended to establish or settle the title to a particular property, especially when there is a cloud on the title.
SURETY BOND
A legal document issued to assure the completion of an act by another person.
SURFACE RIGHTS
A legal interest in the use or occupation of the top of land as opposed to subsurface or mineral rights.
SURVEY
A pictorial depiction of land and the improvements on it and shows boundary lines with measurements and bearings, buildings, easements, etc.
Adding an extra period of time to the term of a contract.
TAXATION
To levy an assessment against, usually by government powers. Unpaid taxes usually form a special lien on property owned by the taxpayer, ahead of registered mortgages.
TAX DEED
The instrument of conveyance when a property is sold by a government body to pay for arrears of taxes.
TAX LIEN
A claim registered against a property by a government authority for non-payment of assessed taxes.
TAX SALE
Sale of property by a government body for non-payment of taxes, either by tender or auction.
TENANCY IN COMMON
Ownership of property in which several owners each own a stated portion of the property (a percentage). Each owner may deal with her portion of the property as she wishes (giving it away, mortgaging it, bequeathing it, etc.) and, upon her death, her share becomes part of her estate.
TESTATE
To die leaving a valid will: opposite meaning is to die intestate.
TESTATOR
The person who makes a will.
TIME IS OF THE ESSENCE
A standard statement in a contract which ensures that all dates and times of day noted in the contract are important and cannot be ignored by any of the parties without the consent of the others except in breach of the contract.
TIME-SHARE
A form of joint ownership of property where numerous owners share title and enjoy use or occupation of the property according to a specific schedule.
TITLE
The legal term for one's ownership interest in land.
TITLE INSURANCE
A form of insurance contract which guarantees to indemnify an owner or mortgagee of property for damages suffered as a result of undiscovered title defects which arise later.
TITLE SEARCH
The act of examining in detail the public records relating to ownership of a parcel of land to ensure that the current owner has clear title, free of any liens, claims, mortgage or competing and adverse interests. Usually performed by a lawyer, qualified title searcher, or title isurance company on behalf of a proposed purchaser or mortgagee.
TITLE THEORY
Jurisdictions in which ownership of land is divided into two interests--legal title and equitable title When an owner registers a mortgage in favor of a lender, legal title is transferred to the lender while the owner retains equitable (or beneficial ) title. Once the mortgage is paid out, legal title is transferred back to the owner.
TORRENS SYSTEM
Developed in Australia, a system of the registration of interests in land in which documents are closely regulated, monitored, and examined by the recording authority to ensure that they are correct and that title is transferred without flaw. Property may not be transferred if uncorrected title defects exist.
TRUST DEED
An instrument of conveyance of title to property wherein the transferre will be holding the title to the property on behalf on another person.
TRUSTEE
A person who holds title to property on behalf of another.
An agreement to exchange payment for services, where payment becomes due only once the service has been successfully performed. A listing agreement for the sale of real property may be a unilateral contract.
USURY
The illegal act of charging extremely high interest rates on a loan.
Legally binding; authorized.
VARIANCE
An indulgence granted by a local zoning commission or authority to allow a non-conforming use of a property to continue.
VOIDABLE CONTRACT
A contract that may be treated as legally unenforceable at the option of a party (usually the injured party) but remains enforceable until that party exercises her option.
VOLUNTARY ALIENATION
Transfer of title to an asset with the consent of the owner.
VOLUNTARY LIEN
A cliam that is recorded/registered with the consent of the owner.
Allowing or causing a property to suffer damage or undue wear and tear to the detriment of another person who has an interest in or claim to the property.
WILL
A written statement of a person's wishes for the disposition of that person's estate after their death.
WRAPAROUND LOAN
A secondary financing option in which new money borrowed is blended with money already owed and registered on title to the property. A second mortgage is registered as security for the new money but the old mortgage remains in existence and the rate of interest is a blend of the rate chargeable on the old mortgage and the rate chargeable on the newly borrowed money.
A set of rules passed by local government which regulates the use of property according to its location within the municipality, placement of structures on the property, maximum floor area, mnimum lot area, minimim floor-to-lot area ratios, etc.
