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Learn About Real Estate And Other Financial Terms

1-2-3 Credit & Me: Learn how you can Stabilize, Improve & Maintain your credit throughout your lifetime (Part of the Real Estate & Finance 360 Degrees Series of Books Book 6) by THOMAS (TJ) UNDERWOOD  | Sold by: Services LLC | Oct 19, 2020, updated Summer 2023

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Absorption Rate: an estimate of the expected annual sales or new occupancy of a particular type of land use.

Abstract of Title: A summary of all of the recorded instruments and proceedings which affect the title to the property, arranged in the order in which they were recorded.

Accelerated Amortization: Paying PRINCIPAL amounts in excess of the minimum required by the mortgage contract so as to shorten the effective term of the loan.

Acceleration Clause: a loan provision giving the lender the right to declare the entire amount immediately due and payable upon the violation of a specific loan provision, such as failure to make payments.

Acceptance: The act of agreeing to accept an offer.

Access Right: The right of owners to get to and from their property.

Acknowledgment: A declaration by a person who has signed a document that such signature is a voluntary act, made before a duly authorized person.

Acquisition Cost: The price and all fees required to obtain a property.

Acquisition Loan: Money borrowed for the purpose of purchasing a property.

Accrued Interest: Interest that has been earned but not due and payable.

Acre: A measure of land equaling 43,560 square feet.

Adjustable Rate Mortgage (ARM): Mortgage in which rates/payments vary according to the current rate of interest. Many offer lower-than-market initial rates that rise only gradually for the first few years.

Addendum: Something added, as an attachment to the contract.

Ad Valorem Tax: A tax based on the value of the thing being taxed.

Adjusted Sales Price: In appraisal, the indicated price of a comparable property after adjustments have been made for accounting for differences between comparable and subject properties.

Adjustments: Money that both buyers and sellers credit to each other at closing.

Administrator: A person appointed by the court to administer the estate of a deceased person who left no will.

Affiant: One who makes an affidavit.

Affidavit: A statement or declaration reduced to writing, and sworn to or affirmed before some officer who is authorized to administer an oath or affirmation.

Agency: That relationship between principal and agent which arises out of a contract either expressed or implied, written or oral, wherein the agent is employed by a person to do certain acts on the persons behalf in dealing with a third party.

Agent: Licensed representative of the seller who assists both buyers and sellers with information, advice, and assessment of current market conditions.

Agreement of Sale: A written agreement between seller and purchaser in which the purchaser agrees to buy certain real estate and the seller agrees to sell upon certain terms and conditions set forth therein.

Alienation: A transferring of property to another.

Alienation Clause: Allows the lender to require the balance of the loan to be paid in full if the collateral is sold.

Alt A Loan: A loan that is less than an A paper loan.

Amortization: A gradual paying off of a debt by periodical installments.

Amortized Loan: Any loan with at least some payment of principal.

Annual Debt Service: Required annual principal and interest payments for a loan.

Annual Percentage Rate (APR): The effective rate of interest for a loan per year, disclosure of which is required by the Truth-In-Lending-Law.

Annuity: An amount of money or its equivalent which represents one of a series of payments.

Appeals Board: A body empowered with the ability to overturn decisions of the local government permitting agency and code enforcement agency based on an appeal by the aggrieved petitioner.

APOD: Annual Property Operating Data seen on a Real Estate Income & Expense Statement.

Apportionment: Adjustment of the income, expenses or carrying charges of real estate usually computed to the day of closing of the title so that the seller pays all expenses to that date. The buyer assumes all expenses from that day on.

Appraisal: Unbiased professional opinion of a property’s value based on its style and appearance, construction quality, usefulness, and the value of comparable properties.

Appreciation: An increase in the value of a property.

Appurtenance: Something that is outside the property itself but belongs to the land and adds to its greater enjoyment such as a right of way, barn or dwelling.

ARM: Adjustable Rate Mortgage

Arm’s Length Transaction: A transaction among parties, each of whom acts in his or her own best interest.

Arrears: The end of a term, used to signify default, overdue in payment.

Assessed Valuation: A valuation placed on the property by a public officer or board, as a basis for taxation.

Assessment: A charge against real estate made by a unit of government to cover a proportionate cost of an improvement such as a street or sewer.

Assessor: An official who has the responsibility of determining assessed values.

Assignee: The person to whom an agreement or contract is assigned.

Assignment: The method or manner by which a right or contract is transferred from one person to another.

Assignor: A party who assigns or transfers an agreement or contract to another.

Assumption of Mortgage: The taking of title to property by a grantee, wherein the grantee assumes liability for payment of an existing note or bond secured by a mortgage against a property and becomes personally liable for the payment of such mortgage debt.

Authority Site: Site seen by Search Engines as an authority on a certain topic. These sites are considered trusted sources and feature prominently in the search results.

Attest: To witness; by observation and signature.

Audit: Inspection of the books, records, and procedures used by business or individual.

Automated Mortgage Underwriting: Loan processing that is entirely or mostly handled via unattended computer connection.

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Backup Offer (Contract): A contract to buy real estate that becomes effective if a prior contract fails to be consummated.

Bad Title: a condition where complete real estate ownership is impaired by unsettled claims and liens and may prevent an owner from selling.

Balloon Mortgage Payment: A large payment during the term of a mortgage, often at the end.

Bargain & Sale Deed: One in which the GRANTOR implies to have or have had an interest in the property but offers no warranties of title to the grantee. This type of deed is typically used in many states to transfer title.

Bearer of the Note: Lender in whose hands the note remains until it is paid in full.

Beneficiary: The person that will receive the benefits resulting from certain acts.

Bequeath: To give or hand down by will.

Bequest: That which is given by terms of the will.

Berm: A raised earthen shoulder constructed as a barrier to water runoff or to screen from view an unsightly area.

Bid: The amount someone offers to pay.

Bi-lateral Contract: A contract under which each party promises performance.

Bi-weekly Mortgage: A mortgage that requires principal and interest at two week intervals. The payment is exactly half of what a monthly payment would be.

Binder: An agreement to cover the down payment for the purchase of real estate as evidence of a good faith on the part of the purchaser.

Blanket Mortgage: The underlying mortgage on a parcel of land in favor of an original mortgage which covers various tracts of a subdivision.

BMA: Broker Market Analysis, similar to a BPO

Board of Equalization: A government entity whose purpose is to assure uniform property tax assessments.

Boilerplate: Standard language found in contracts.

BOMA: Building Owners And Managers Association

Bona-Fide: In good faith, without fraud.

Book Value: The carrying amount of a asset, as shown on the books of a company. Generally the amount paid for an asset minus depreciation.

Bottomland: Low land near a river, lake, or stream, which is often flooded.

Bond: The evidence of a personal debt which is secured by a mortgage or other lien on real estate.

BPO: Broker Price Opinion or opinion by broker of what property will sell for based on market analysis and broker's opinion, often used by banks when pricing properties

Breach of Contract: A violation of the terms of a legal agreement.

Bridal Registry Mortgage: an innovation, sponsored by the FHA where a couple who plans to marry can establish a registry which friends and relatives can donate and the funds can be used as a down payment on a home.

Bridge Loan: Mortgage financing between the termination of one loan and the beginning of another loan.

A bridge loan, also known as a swing loan allows you to purchase a new home even though you have not yet sold your current home, or the closing date for the sale of your current home is set for after the closing date for the purchase of your new home.

Generally, you would use the current home as collateral for the bridge loan.


Broker: A state licensed agent, who for a fee, acts for property owners in real estate transactions, within the scope of state law.

Brokerage: The business of being a broker.

Broker Price Opinion: Same as BPO

Brownstone House: A nineteenth century style house, usually having four or five stories with a stoop leading up to the first floor.

Buffer Zone: A transitional area between two areas of different pre-dominant land use.

Builder Warranty: A guarantee on the quality of construction offered by the developer or building contractor.

Building Codes: Regulations established by local governments stating fully the structural requirements for building.

Building Inspection: Physical review of property as it proceeds under construction to ensure that each major component meets building codes, foundation, roofing, plumbing, electrical wiring, materials etc.

Also, periodic inspection of existing public buildings for health and safety considerations.

Building Line: A line fixed at a certain distance from the front and/or sides of a lot, beyond which no building can project.

Building Permit: Permission granted by a local government to build a specific structure or reconfigure an existing building at a particular site.

Building Restrictions: Provision in building codes that affect the orientation, size, and appearance of a building.

Build to Suit: An arrangement whereby a landowner offers to pay to construct on his or her land a building specified by a potential tenant, and then to lease land and building to the tenant.

Built-Ins: Appliances , machinery and other equipment that are constructed as part of a building rather than left freestanding and movable.

Bullet Loan: Typically a loan with a 5 to 10 year term and no amortization.

Bundle of Rights Theory: Theory that ownership of realty implies a group of rights such as occupancy, use and enjoyment, and the right to sell , bequeath, give, or lease all or part of these rights.

Bungalow: A small 20th century style, 1 story house that usually has an open or enclosed front porch.

Bureau of Land Management: An agency of the US Dept. of Interior that oversees the management of much of the land owned by the US government. Particularly forests and other undeveloped land.

Burned-Out Tax Shelter: A real estate investment that was originally intended to provide large income tax deductions but no longer does.

Buy Back Agreement: A provision in a contract under which the seller agrees to repurchase the property at a stated price upon the occurrence of a specified event within a certain period of time.

Buy Down: 1. The action to pay additional discount points to a lender in exchange for a reduced rate of interest on a loan.

2. A loan that has been bought down by the seller of the property for the benefit of the buyer.

Buyer’s Broker: An agent hired by a prospective purchaser to find an acceptable property for purchase.

The broker then represents the buyer and negotiates with the seller in the purchaser’s best interest.

Buyer’s Market: A situation where buyers have a wide choice of properties and may negotiate lower prices. Often caused by overbuilding, local population decreases, or economic slump.

Buyout: Arrangement by owner of a building to acquire the remaining lease term of a tenant in a different building.

This frees the tenant from the old lease obligations and permits him/her to negotiate a lease in the new building.

Bylaws: A set of regulations by which an organization conducts its activities.

Buying A Listing: When a real estate agent overprices a property in order to get the listing.

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Cancellation Clause: A provision in a lease or contract which confers on one or more or all parties to the lease or contract the right to terminate the party or parties obligations there under upon the occurrence of the condition or contingency set forth in the said clause.

Capital Appreciation: The appreciation accruing to the benefit of the capital improvement of real estate.

Capital Asset: Any asset of a permanent nature used for the production of income.

Capital Gain: Income that results from the sale of an asset not in the usual course of business.

Capital Loss: A loss from a sale of an asset not in the usual course of business.

Cash Out: Cash outs are often used to finance home improvements. When refinancing, it is the amount that is greater than your current mortgage.

Caveat Emptor: Let the buyer beware. The buyer must examine the goods or property and buy at the buyer’s own risk.

Chattel: Personal Property, such as household goods or fixtures.

Client: The one by whom a Broker is employed and by whom the broker will be compensated on completion of the purpose of the agency.

Closing Date: The date upon which the buyer takes over the property.

Cloud on Title: An outstanding claim or encumbrance which would affect or impair the owner’s title.

Collateral: Additional security pledged for the payment of an obligation.

Commission: A sum due a real estate broker for services in that capacity.

Commitment: A pledge or promise or affirmation agreement.

Conditional Sales Contract: A contract for the sale of property stating that, (public records) delivery is to be made to the buyer, title to remain vested in the seller until the conditions of the contract have been fulfilled.

Consideration: Anything given to induce entering into a contract such as money.

Constructive Notice: Information or knowledge of a fact imputed by law to a person because the person could have discovered the fact by proper diligence and inquiry

Contract: An agreement between competent parties to do or not to do certain things which are legally enforceable, whereby each party acquires a right.

Conveyance: The transfer of title of land from one person to another; The means or medium by which title of real estate is transferred.

Cul-De-Sac: A blind alley or street with only one outlet.


Debt-to-Income Ratio: The Debt-to-Income ratio is an important calculation that a lender uses when analyzing mortgage qualifications.

Your monthly expenses, including housing expenses, are compared to your monthly income.


Debt Service: Annual amount to be paid by a debtor on an obligation to repay money borrowed.

Deed: An instrument in writing duly executed and delivered, that conveys title to real property.

Deed Restriction: An imposed restriction in a deed for the purpose of limiting the use of land.

Defeasance Clause: The clause in a mortgage that permits the mortgagor to redeem his property upon the payment of the obligations to the mortgagee.

Depreciation: Loss in value in real property brought about by age, physical deterioration, or functional or economic obsolescence.

Discount Points: Amounts paid to the lender at the time of origination of a loan, to account for the difference between the market interest rate and the lower face rate of the note.

Domicile: A place where a person lives or has their home: in a legal sense.

Down Payment: Down payment is the difference between the cost of real estate, such as your new home, and the actual amount of the mortgage.

Duress: Unlawful constraint exercised upon a person whereby the person is forced to do some act against the person’s will.

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Earnest Money: Down Payment made by a purchaser of real estate as evidence of good faith.

Easement: A right that may be exercised by the public or individuals on, over, or through the lands of others.

Egress: A way out; an outlet.

Eminent domain: A right the government has to acquire property for necessary public use by condemnation; the owner must be fairly compensated.

Encroachment: A building or part of a building or obstruction which intrudes upon or invades upon the property of another.

Encumbrance: Any right to or interest in the land interfering with its use or transfer.

Equity: The interest or value which the owner has in real estate over and above the liens against it.

Escheat: The reversion to the state of property in the event the owner thereof abandons it or dies, without leaving a will and has no distributes to whom the property may pass by lawful descent.

Escrow: A written agreement between two or more parties providing that certain instruments or property be placed with a third party to be delivered to a designated person upon the fulfillment or performance of some act or condition.

Escrow Deposit Account: An escrow deposit account is a trust account that is set up to hold the funds that are allocated for the payment of real estate taxes, hazard or mortgage insurance premiums and similar expenses.

Estate: The degree, quantity or nature and extent of interest which a person has in real estate.

Estoppel Certificate: An instrument executed by the mortgagee setting forth the present status and the balance due on the mortgage as of the date of execution of the certificate.

Exclusive Agency: An agreement of employment of a broker to the exclusion of all other brokers; if the sale is made by the owner or any other broker, the broker holding the exclusive right to sell is nevertheless entitled to compensation.

Executor/Executrix: A man/woman or corporate entity or any other type of organization named or designated in a will to carry out its provisions as to the disposition of the estate of a deceased person.

Extension Agreement: An agreement which extends the life of a mortgage or listing agreement to a later date.

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Fee Simple or Fee Absolute or Fee Simple Absolute or Fee Simple Estate: Absolute ownership of real property a person has.

This type of estate where the person is entitled to the entire property with unconditional power of disposition during the person’s life and descending to the person’s distributes and legal representatives upon the person’s death intestate.

Fee Simple Defeasible: A type of property ownership in which the GRANT of title or duration of ownership is dependent on a specified condition.

Fiduciary: A person who on behalf of or for the benefit of another transacts business or handles money or property not the person’s own.

Fixed Rate Mortgage: A fixed rate mortgage has a set interest rate for the term of the loan.

Hazard Insurance: Hazard insurance covers property damage caused by such things as fire, wind, storms, and other similar risks. Sometimes earthquakes and floods are also covered, while other times they are not

Fixtures: Personal Property so attached to the land or improvements as to become part of the real property.

Foreclosure: A procedure whereby property pledged as security for a debt is sold to pay the debt in the event of default in payment or terms.

Forfeiture: Loss of money or anything of value, by way of penalty due to the failure to perform.

Free And Clear Title: Title to property without EMCUMBRANCES. Generally used to refer to property free of MORTGAGE debt.

Freehold: An interest in real estate, not less than an estate for life.

Frontage: The linear distance of a piece of land along a lake, river, street, or highway.

FSBO: for sale by owner. a term referring to properties on the market that are not listed with a real estate broker.


General Lien: A lien that includes all of the property owned by the debtor, rather than a specific property.

General Warranty Deed: A DEED in which the GRANTOR agrees to protect the GRANTEE against any other claim to TITLE of the property and provides other promises.

Gentrification: The displacement of lower-income residents by higher income residents in a neighborhood. Generally occurs when an older neighborhood is rehabilitated or revitalized.

Gift Deed: A DEED for which CONSIDERATION is love and affection and no material consideration is involved.

Good And Marketable Title: Title to a piece of real estate that can be shown, usually by TITLE SEARCH or ABSTRACT OF TITLE to be vested in the OWNER OF RECORD, and free of claims and LIENS that would impair its marketability.

GOOD Faith: A concept of honesty.

Good Faith Estimate: Under the RESPA Act, an estimate of closing costs that must be given by a lender to mortgage applicants within three days after the loan application is made. The costs are based on the lender's best estimate.

Grade: 1. Ground level at the foundation. 2. To prepare a smooth surface on the site.

Graduated-Payment Mortgage: A mortgage requiring lower payments in the early years than in later years.

Grant: A technical name used in deeds of CONVEYANCE of property to indicate a transfer.

Grantee: The party to whom title of real property is conveyed; buyer.

Grantor: The party who conveys real estate by deed; seller.

Grantor/Grantee Index: An index kept with public records that cross-references prior owners of a property.

Greenbelt: An area of undeveloped land around a residential area, intended to preserve open space and a natural environment. Often enforced by covenant, deed, or city zoning.

Ground Fault Interupter (GFI): a safety device incorporated in some electrical outlets or circuits that immediately breaks the circuit if a short occurs. Generally required in areas exposed to water or weather.


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Habendum Clause: The “To have and to hold” clause which defines or limits the quality of the estate granted in the premises of the deed.

Hazard Insurance: A form of insurance that protects against certain risks, such as fires or storms.

Hearing: A formal procedure, with issues of fact or law to be tried, in which parties have a right to be heard. Similar to a trial and may result in a final order.

Heir: One who inherits property.

Heirs And Assigns: A term often found in DEEDS and WILLS to grant a FEE SIMPLE estate.

Hereditaments: The largest classification of property; including lands, tenements, and incorporeal property, such as right-of-way.

Hidden Defect: A TITLE defect that is not apparent from examination of the public record.

Highest And Best Use: An appraisal term meaning the legally, financially, and physically possible use that, at the time of appraisal, is most likely to produce the greatest net return to the land and/or building over a given period. May be applied to property as if vacant or as improved.

Home Equity Conversion: The process of liquidating all or a portion of the EQUITY in one's home.

Home Equity Loan: A loan secured by a second mortgage on one's principal residence, generally to be used for some non-housing expenditure. Generally two types are available.

A LINE OF CREDIT home equity loan establishes a credit line that can be drawn upon as needed.

A traditional SECOND MORTGAGE provides lump-sum proceeds at the time the loan is closed.

Home Improvement Loan: A loan, usually secured by a mortgage on the home, used to pay for major remodeling, reconstruction, or additions to the home.

Home Inspector: A professional who evaluates the structure and mechanical condition of a home prior to it being sold.

Homeowner's Insurance Policy: An insurance policy designed especially for homeowners. Usually protects the owner from losses caused by most disasters, theft and LIABILITY.

Homeowners' Warranty Program (HOW): A private insurance program that protects purchaser's of newly constructed homes, when the builder participates in the program, against structural and mechanical faults.

Homestead: Status provided by the homeowner's principle residence by some state statutes: protects home against JUDGMENTS up to specified amounts.

Homestead Estate: A property protected under homestead.

Homestead Exemption: In some jurisdictions, a reduction in the ASSESSED VALUE allowed for one's principle residence.

Housing Affordability Index: A statistical indicator of the ability of households in an area to purchase housing at prevailing prices with currently available financing.

Most commonly used indexes compare the amount of income of the typical household in an area to the required monthly payment of the typical house in the area.

HUD: A U.S. government agency established to implement certain federal housing and community development programs. This federal agency attempts to assure decent, safe, and sanitary housing for all Americans, and investigates complaints of discrimiation in housing.

Housing Permit: Authorization issued by a municipality allowing a builder to construct a house or apartment.

Housing Starts: An estimate of the number of dwelling units on which construction has begun during a stated period.

Housing Stock: The total number of DWELLING UNITS in an area.


HVAC: An acronym that refers to the climate control system in buildings(Heat, Ventilation, and Air Conditioning).

Hypothecate: To pledge a thing as security without having to give up possession of it.

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I - L

Illiquidity: Inadequate cash to meet obligations. Real Estate is considered an illiquid asset because of the time and effort required to convert to cash.

Impact Fee: An expense charged against private developers by the city as a condition for granting permission to develop a specific project.

The purpose of the fee is to defray the cost to the city of expanding and expending public services to the development.

Implied Agency: Occurs when the words and actions of the parties indicate that there is an agency relationship.

Implied Contract: Created by actions but not necessarily written or spoken.

Implied Warranty: One that is not written for but exists under the law. Contrasted with expressed.

Impound: To hold or take by court order.

Improved Land: Land that has some improvements. Land that has been partially or fully developed for use.

Improvement Ratio: The relative value of improvements to the value of UNIMPROVED PROPERTY.

Improvements: Those additions to RAW LAND, such as buildings, streets, sewers, etc., tending to increase value.

Imputed Interest: Implied Interest. In a MORTGAGE that states an insufficient intereset rate, the law will impute that the rate is higher, and the principle is less.

Indexed Loan: A long-term loan in which the term, payment, interest rate, or principal amount may be adjusted periodically according to a specific index.

Infrastructure: The basic public works of a city or subdivision, including roads, bridges, sewer and water systems, drainage systems and essential public utilities.

Index: An Adjustable Rate Mortgage’s (ARM) index is used to set the interest rate, subject to any rate caps, after the initial rate period ends.

Ingress and Egresss: The right to enter and exit through land owned by another.

Inspection: A physical scrutinizing review of property or of documents.

Installments: Parts of the same debt. payable at successive periods as agreed; payments made to reduce a mortgage.

Installment Sale: When a seller accepts a MORTGAGE for part of the sale, the tax on the gain is paid as mortgage PRINCIPAL is collected.

Instrument: A written legal document, created to establish the rights and and liabilities of the parties to it. Deeds, Mortgage, Land contract, Lease, and Assignment are all examples of instruments.

Insulation: Material used to slow the transfer of heat through walls so as to reduced energy costs and help maintain a uniform temperature.

Insurable Interest: An INTEREST in a person or property that would cause one a loss if that person or property were injured.

Insurable Title: A TITLE that can be insured by a TITLE INSURANCE company.

Insurable Value: The cost of total replacement of destructible improvement to a property.

Insurance Coverage: The total amount and type of insurance carried.

Insurance (Mortgage): A service, generally purchased by a borrower, that will INDEMNIFY the Lender in case of foreclosure of the loan.

Interest: Interest is the fee paid for the use of money, usually expressed as an annual percentage rate (APR).


Interest-Only Loan: A loan in which interest is payable at regular intervals until loan maturity, when the full loan balance is due.

Interest Rate: The percentage of a sum of money charged for its use. Also the rate of return on an investment.

Internal Revenue Code: The law, passed by CONGRESS, that specifies how and what income is to be taxed, and what may be deducted from taxable income.

IRS: An agency of the federal government that is responsible for the administration and collection of federal income taxes.

International Architecture: An early 20th century style house whose design is very simple with no ornamentation. The windows appear to be continuous rather than holes in the wall.

International Real Estate Federation: An organization with worldwide membership that is devoted to encouraging private rights to real estate.

International Real Estate Society: A federation of regional real estate societies. Each affiliated society maintains control over its own activities while participating in the federation to get the benefits of global cooperation.

Interpleader: Proceedings initiated by a neutral 3rd party to determine the rights of rival claimants to a property or a transaction.

Interstate Land Sales Act: A federal law, administered by HUD , which requires certain disclosures and advertising procedures when selling land to purchasers in other states.

Inter Vivos: During one's life.

Intestate: When a person dies without leaving a valid will.

Intrinsic Value: The inherent value of tangible property.

Inverse Comdemnation: A legal procedure to obtain compensation when a property interest has been taken or diminished in value by a government activity.

Involuntary Alienation: Loss of property for non-payment of debts such as taxes or mortgage foreclosure.

Involuntary Lien: A LIEN imposed against property without the consent of the property owner.

Irrevocable: Incapable of being recalled or revoked; unchangeable.

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Joint & Several Liability: A creditor can demand full repayment from any and all of those who have borrowed. Each borrower is responsible for the full debt, not just the PRORATED share.

Joint Ownership: Ownership by two or more people.

Joint Tenancy: Ownership of realty by two or more person’s, of each of whom has an undivided interest with the “right of survivorship.”

Joists: Support for a floor, generally horizontal bars, beams, or timbers.

Judgment Creditor: One who has received a court decree or Judgment for money due from the Judgment DEBTOR.

Judgment Debtor: One against whom a Judgment has been issued by a court for money owed, and that remains unsatisfied.

Judgment Lien: The claim upon the property of a debtor resulting from a JUDGMENT.

Judicial Foreclosure: Having a defaulted borrower's property sold where the court ratifies the price paid.

Jumbo Mortgage: Generally a mortgage loan that is very large. The interest rate is usually higher on this type of mortgage compared to a regular mortgage.

Junior Lien: Same as a junior mortgage.

Junior Mortgage: A MORTGAGE whose claim against the property will be satisfied only after prior mortgages have been repaid.

Jurisdiction: Geographical or topical area of authority for a specific government entity.

Just Compensation: The amount of money paid to a owner of a property when it is acquired under EMINENT DOMAIN.

Kicker: A payment required by a MORTGAGE in addition to normal PRINCIPAL and INTEREST.

Kick-Out Clause: A provision in a sales contract that allows the seller to void the agreement if a better offer is received before the sale is closed.

Laches: Delay or negligence in asserting one’s legal rights.

Land Contract: A real estate INSTALLMENT selling arrangement whereby the buyer may use, occupy, and enjoy land, but no deed is given by the seller (so no title passes) until all or a specified part of the sales price has been paid.

Same as Contract for Deed and Installment Land contract.

Landlocked: The condition of a lot that has no access to public thoroughfare except through an ADJACENT lot.

Landlord: One who rents property to another; A Lessor.

Landmark: A fixed object serving as a boundary mark for a tract of land. Same as MONUMENT.

Land Use Intensity: A measure of the extent to which a land parcel is developed in conformity with ZONING ordinances.

Land Use Planning: An activity, generally conducted by a LOCAL government, that provides public and private land use recommendations consistent with community policies. Generally used to guide decisions on zoning.

Land Use Regulation: Government ORDINANCES, codes and permit requirements intended to make the private use of land and natural resources conform to policy standards.

Land Use Succession: A change in the predominant use of a NEIGHBORHOOD or area over time.

Late Charge/Late Fee: A penalty for payments made after the due date plus a grace period. Often substantial---up to 5% of the regular payment.

Latent Defects: Flaws that are hidden but are likely to appear later.

Lead: a metal once common in plumbing pipes and paint but now considered hazardous.

Lead-Based Paint: Considered a hazardous material. It is potentially poisonous and its presence in property must be disclosed to potential buyers.

Lease: A CONTRACT in which, for a payment called rent, the one entitled to Possession of REAL PROPERTY (LESSOR) transfers those rights to another (LESSEE) for a specified period of time.

Leased Fee: The landlord's OWNERSHIP interest of a property that is under lease.

Leasehold: The interest or estate on which a lessee of real estate has a lease.

Lease with Option to Purchase: A lease that gives the lessee (tenant) the right to purchase the property at an agreed upon price under certain conditions.

Legal Description: Legally accepted identification of real estate by one of the following: the government rectangular survey system, metes and bounds, recorded plat (lot and block number).

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Legal Notice: Notification of others using the method required by law. See constructive notice, notice.

Legal Residence: Generally one's permanent home.

Legal Title: A collection of rights of ownership that are defined or recognized by law or could be successfully defended in a court of law.

Legatee: One who receives property by WILL.

Lessee: A person to whom property is rented under a lease. A Tenant.

Lessor: One who rents property to another under a lease. A Landlord.

Less Than Freehold Estate: An estate in land that has a pre-determined time span; most commonly a leasehold.

LET: To rent a property to a tenant.

Letter of Committment: Official notification to a borrower of the lender's intent to grant a loan. Generally specifies the terms of the loan and sets a date for the closing.

Letter of Credit: An arrangement with specified conditions, whereby a bank agrees to substitute its credit for a customer's.

Letter of Intent: The expression of a desire to enter into a CONTRACT without actually doing so.

Level-Payment Mortgage: Requires the same payment each month (or other period) for full amortization.

Leverage: Use of borrowed funds to increase purchasing power and ideally, to increase the profitability of an investment.

Levy: to legally impose or collect that which is due.

Liability: A debt or financial obligation. Contrast with ASSET. Also, a potential loss.

Liable: Responsible or obligated. Contrast with EXCULPATORY CLAUSE and NON RECOURSE.

LIBOR: London InterBank Offered Rate. The rate that international banks dealing in euros charge each other for large loans.

License: Permission. Also, a right granted by a state to an individual to operate as a real estate broker or salesperson.

Licensed Appraiser: Generally an APPRAISER who meets certain state requirements, but lacks the experience or expertise of a certified appraiser.

Licensee: One who holds a real estate LICENSE; A licensed salesperson or broker.

License Laws: Laws that govern the activities of real estate salespersons and brokers.

Licensing Examination: A written test given to a prospective real estate Broker or Salesperson to determine ability to represent the public in a real estate transaction.

Lien: A legal right or claim upon a specific property which attaches to the property until the debt is satisfied.

Lienholder: One who holds, or benefits from a LIEN.

Lien, Junior: A lien that will be paid after earlier liens have been paid.

Lien-Theory State: States whose laws give a lien on property to secure debt.

Life Estate: A freehold interest (in real estate) that expires upon the death of the owner or some other specified person (Pur Autrie Vie). Life Estate: The conveyance of title to property for the duration of the life of the grantee.

Life of Loan Cap: A contractual limitation on the maximum interest rate that can be applied to an adjustable rate mortgage during the term of the loan. Contrast with annual cap.

Life Tenant: One who is allowed to use property for life, or the lifetime of another designated person.

Limited Appraisal: An appraisal of real estate under and resulting from invoking the DEPARTURE PROVISION OF USPAP.

Limited Liability: The restriction of one's potential losses to the amount invested.

Line of Credit: An agreement whereby a financial institution promises to lend up to a certain amount without the need to file another application.

Link: A measure of distance used by surveyors.

Liquidated Damages: An amount agreed upon in a contract that one party will pay the other in the event of a BREACH OF THE CONTRACT.

Liquidation Value: The amount a property would bring under an immediate sale, minus transaction costs.

Liquidity: Ease of converting ASSETS to cash.

Lis Pendens: A legal document, filed in the office of the county clerk giving legal notice that an action or proceeding is pending in the courts affecting the property.

List: To obtain a listing.

Listing: An employment contract between principal and agent, authorizing the agent to perform services for the principal involving the latter’s property.

Listing Broker (Agent): The licensed real estate broker (agent) who secures a LISTING of the property. Contrast with SELLING BROKER.

Litigation: The act of carrying on a lawsuit.

Littoral: Part of the shore zone of a large body of water. Compare with riparian rights.

Loan Application: Documents required by a lender prior to issuing a Loan Committment.

Loan Application Fee: A charge required by a loan originator to be paid by the borrower to cover the credit report, property appraisal, and other incidental expenses associatied with underwriting the loan.

Loan Approval: Decision by a lender to extend credit in a specified amount. May also include a LOAN COMMITTMENT for specified loan terms.

Loan Committment: An agreement to lend money, generally of a specified amount, at specified terms at some time in the future.

Loan Origination: The process of making a new loan from marketing to closing.

Loan Package: The collection of documents associated with a specific loan application.

Loan Proceeds: The net amount of money that a lender disburses for a loan.

Loan Processing: The steps the lender takes in the loan approval process, from application of mortgage through closing.

Loan Terms: The major requirements of a loan, which determine how it is repaid.

Loan-To-Value Ratio (LTV): The portion of the amount borrowed compared to the cost or value of the property purchased.

One of the factors lenders consider before they approve a mortgage is the loan-to-value ratio (LTV).

The LTV is the loan amount expressed as a percent of either the purchase price or the appraised value of the property. So, if you make a 20 percent cash down payment on a property you’re buying, the LTV is 80 percent.

Points: Points are a percentage of the loan due at the closing. 1 point is equal to 1% of the loan amount. If you have a loan of $100,000, and are charged 1 point, then the 1 point will be $1,000.

"Location, Location, Location": The "three most important things about real estate"; a popular statement that emphasizes the importance of location with respect to the value of urban real estate.

Locked-In Interest Rate: The rate promised by the lender at the time of loan application.

Lock-In Period: The period during which a loan cannot be pre-paid. Also, the period of a loan committment.

Lot & Block: A method of locating a parcel of land. See Legal description.

Lot-Line: A line bounding a lot as described in a property SURVEY.

Low-Ball Offer: An offer from a prospective property buyer that is much lower than the listing price.  Such an offer may indicate the buyer's belief that the property will not attract many good offers and the asking price is unrealistic.

Also, it probably means the buyer is interested in the property only if it can be purchased at a bargain price.

Low-Income Housing (Qualified): Housing that is eligible for special tax credits. Strict rules must be followed concerning tenant qualification, certification, and project financing.

LTV: Loan-To-Value Ratio

L/V: Loan-To-Value Ratio

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M - N

Maintenance Fee: An assessment by a HOMEOWNER'S ASSOCIATION or CONDO OWNER'S ASSOCIATION, to pay costs of operating the COMMON ELEMENTS.

Manufactured Housing: A term used to describe a factory built home transported to a lot.

Margin: A constant amount added to the INDEX for the purpose of adjusting the interest rate on an adjustable rate mortgage.

Marginal Property: Property that is barely profitable to use.

Marginal Tax Bracket: The amount of income tax that an investor would pay on the next dollar of income.

Marital deduction: The tax-free amount one transfers by will to one's spouse.

Market: Place where buyers and sellers congregate; process by which things of value are exchanged for money. To publicize or promote a product or service.

Marketability: the speed or ease with which a property can be sold at or near its market value; its expected market appeal.

Marketability Study: An analysis, for a specific client, of the likely sales of a specific type of real estate product.

Marketable Title: A TITLE so free from defect that a court will enforce the title's acceptance by a purchaser. Contrast with cloud on title.

Market Analysis: A study of the supply and demand conditions in a specific area for a specific type of product or service. A market analysis report is generally prepared by someone with experience in real estate, economics, or marketing.

It helps to decide what type of project to develop and is also helpful in arranging permanent and construction financing for a proposed development.

Market Area: A geographic region from which one can expect the primary demand for a specific product or service provided at a fixed location.

Market Comparison Approach: One of 3 appraisal approaches. Value is estimated by analyzing sales prices of similar properties (comparables) recently sold.

Market Data Approach: Same as comparison approach.

Market Delineation: The process of defining the geographic extent of the demand for a specific property.

Market Indicators: Statistical data that indicate construction, sales, and leasing activity. These data are watched to consider economic trends.

Market Penetration: Same as Capture Rate.

Market Price: The actual price paid in a market transaction. Contrast with Market Value.

Market Rent: The RENT that a comparable unit would command if offered in the competitive market. Contrast with CONTRACT RENT.

Market Reasearch: Gathering, analyzing and interpreting data concerning market conditions; see also feasability study.

Market Segmentation: The process of defining the socio-economic characteristics of the demand for a specific property or properties.

Market Study: See Market Analysis.

Market Survey: Collection of primary information on other properties that sell or lease in the same market.

At a minimum, the characteristics or classification of each building, its rent levels, and tenant occupancy will be included.

See Market Analysis.

Market Value: The highest price which a buyer, ready and willing but not compelled to buy, would pay, and the lowest a seller, willing but not compelled to sell, would accept.

The theoretical highest price a buyer, willing, but not compelled to buy, would pay, and the lowest price a seller, willing but not compelled to sell, would accept.

Marshall & Swift: Publisher of material that provides information about construction costs for various types of buildings, quality levels and geographic areas. It incorporates the building cost data of FW Dodge.

Mass Appraising: Typically used by tax assessor, an effort to determine salient characteristics of properties in a given submarket, to allow an approximation of value for each. Sophisticated statistical techniques are often used in mass appraising.

Master Deed: Used by a condo developer or converter for recording a condo development. It divides a single property into individually owned units, includes restrictions on their use and provides for ownership of common areas.

Master Lease: A controlling lease. Contrast with SUBLEASE. Note that one cannot grant a greater interest in real estate than one has. So if a master lease is for a five year period, a sublease cannot legally exceed five years.

Master Mortgage Loan: The mortgage debt existing on a building used for cooperative housing. While each co-op tenant shareholder is obligated for a portion of the loan, this debt is separate from the loans that may have been used to purchase the individual co-op shares.

Mechanics Lien: A lien given by law upon a building or other improvement upon land, and upon the land itself, to secure the price of labor done upon, and materials furnished for the improvement.

Meeting of the Minds: Whenever all parties to a contract agree to the exact terms thereof.

Meridian: A longitudinal reference line that traverses the earth in a north-south direction; all meridians circle the earth through the equator and coverage at the north and south poles; used by surveyors in describing property under the rectangular survey system.

Metes & Bounds: A land description method that details all of the boundary lines of land, together with their terminal points and angles. A term used to describe boundary lines of land.

Metropolitan Statistical Area (MSA): One or more Counties having a population of at least 50,000. A consolidated statistical metropolitan (CMSA) area is an area with two or more primary metropolitan statistical areas (PMSA). A CMSA must also include at least 1 million people. The Atlanta Metropolitan Area consists of 28 Counties.

Mezzanine Financing: A loan that is below the first loan in priority and has other liens subordinate to it. Has the same priority as if it were called a second mortgage.

MGIC: Mortgage Insurance Guaranty Corporation

Mill: One tenth of a cent. Used in expressing tax rate on a per dollar basis.

Mineral Lease: An agreement that provides the lessee the right to excavate and sell minerals on the property of the lessor.

Mineral Rights: The priviledge of gaining income from the sale of oil, gas, and other valuable resources found on land.

Minimum Lot Area: The smallest building lot area allowed in a subdivision, generally specified by zoning ordinances.

Misrepresentation: An untrue statement, whether unintentional or deliberate. It may be a form of non-disclosure when there is a duty to disclose or the planned creation of a false appearance.

Where there is misrepresentation of Material Fact,the person injured may sue for damages or rescind the contract. See False Advertising.

Mistake: An unintentional error made in preparing a contract. It may be corrected by mutual consent of all parties without voiding the contract.

MLS: Multiple Listing Service.

Modernize: To alter property by installing up-to-date equipment, making contemporary cosmetic improvements and deleting obscolete facilities.

Moisture Barrier: A layer of foil, plastic, or paper used in the construction of exterior walls, ceilings, and foundations to prevent moisture penetration into wooden members or insulation.

Molding: Oramental strips of material, such as wood , used to cover joints between walls and ceilings and to trim door and window frames.

Monterey Architecture: A 19th century style, 2 story house with a balcony across the front at the second floor level.

Month-to Month Tenancy: Lease agreement extendable or cancellable each month.

Monument: A fixed object and point established by surveyors to establish land locations.

Moratorium: A time period during which a certain activity is not allowed.

Mortgage: An instrument in writing, duly executed and delivered that creates a lien upon real estate as security for the payment of a specified debt.

Mortgage-Backed Security: A bond or other financial obligation secured by a pool of mortgage loans.

Mortgage Banker: One who originates, sells, and services mortgage loans. Most loans are insured or guaranteed by a government agency or private morgage insurer.

Mortgage Bonds: Tax-exempt securities sold by municipal and state authorities for the purpose of providing low interest rate mortgage loans to qualified individuals. For most programs, mortgage borrower must be first-time home buyers with moderate income.

Mortgage Broker: One who, for a fee, places loan with investors, but does not service such loans.

Mortgage Commitment: A formal indication by a lending institution that it will grant a mortgage loan on a property, in a certain specified amount and on specified terms.

Mortgage Correspondent: One who services loans for a fee.

Mortgage Credit Certificate: Certificate allowing a borrower to claim a portion of mortgage interest as a credit against federal income tax.

Mortgage Constant: The percentage ratio between the annual debt service and the loan principal.

Mortgage Discount: Amount of principal that lenders deduct at the begining of the loan. See Discount Points.

Mortgagee: The party who lends the money and takes a mortgage to secure the payment thereof.

Mortgagee In Possession: Situation in which a lender takes possession and control of a mortgaged property upon foreclosure of the loan secured by the mortgage.

Mortgage Equity Technique: Same as Ellwood technique.

Mortgage Guaranty Insurance Co. (MGIC): A private company that insures—to lenders—loan repaymeny in the event of Default and/or foreclosure.

Mortgage Insurance: A policy that guarantees repayment of a mortgage in the event of death or possibly disability, of the MORTGAGOR. Also, protection for the lender in the case of default, usually covering the top 25% of the amount borrowed.

Mortgage Insurance Premium (MIP): The fee paid by a mortgagor to obtain mortgage insurance on a mortgage loan. The fee may be collected as a lump sum at loan closing or as a periodic amount included in the monthly payment, or both.

Mortgage Life Insurance: See Mortgage Insurance.

Mortgage (Loan) Pre-Approval: A process whereby a specific mortgage lender certifies that a prospective borrower is financially qualified and creditworthy for a specific type of loan with specified terms for an amount up to a specified maximum.

Actual advancement of the loan will depend on suitability and value of the collateral property, which is unspecified at the time of pre-approval.

Mortgage Lien: An ENCUMBRANCE on property used to secure a loan.

The holder of the lien has a claim to the property in case of default.

The priority of the claim depends on the order of recording and any subordination agreements.

Mortgage (Loan) Pre-Qualification: A simple excercise through which prospective borrowers an estimate of how large a loan they may be able to obtain based on their current financial situation.

The lender doing the analysis takes into the borrowers income and indebtedness but does not access the borrowers credit report or examine the collateral for the loan. Therefore, there is no promiseof a loan approval involved in the process.

Mortgage Pool: A collection of loans of similar nature that are sold as a unit in the secondary market or used to back a security that is then sold in the capital markets.

Mortgage Origination: See Loan Origination.

Mortgage Relief: Acquired freedom from mortgage debt, generally through assumption of mortgage by another party or debt retirement.

Mortgage Servicing: A mortgage banking activity that consists of collecting monthly principal, interest, taxes, and insurance payments from borrowers, as well as assuring that taxes and insurance are paid to the assessor and insurer and that interest earned and principal are paid to the investor.

Mortgagor: A person who borrows money and gives a mortgage on the person’s property as security for the payment of debt.

Most Probable Selling Price: The property's most likely selling price when not all the conditions required for a market value estimate are relevant.

Motivated Seller: One who urgently needs to dispose of property.

Multiple Listing: An arrangement among a group of real estate brokers; they agree in advance to provide information about some of all of their listings to the others and also agree that commissions on the sale will be split between listing and selling broker.

An arrangement among Real Estate Board of Exchange Members, whereby each broker presents the brokers listings to the attention of the other members so that if a sale results, the commission is divided between the broker bringing the listing and the broker making the sale.

Multiple Listing Service (MLS): An association of real estate brokers that agree to share listings with one another.

Municipality Unit District: A utility that serves a limited geographic area, formed as a municipality rather than a private corporation to take advantage of lower interest rates available to municipal bonds.

Allows development in an area that might otherwise not have utility services.

Muniments of Title: Documents, such as deeds or contracts, one uses to indicate ownership.

Negative Amortization: An increase in the OUTSTANDING BALANCE of a loan resulting from the failure of periodic debt service payments to cover required interest charged on the loan.

Generally occurs under INDEXED LOANS for which the applicable INTEREST RATE may be changed without affecting the monthly payments. Negative Amortization will occur if the interest rate is increased.

Negotiable Instrument: A promise to pay money, transferable from one person to another.

Negotiation: The process of bargaining that precedes an agreement. Successful negotiation normally results in a CONTRACT between the parties.

Neighborhood Life Cycle: A generalized pattern that describes the physical and social changes that residential areas experience over time.

Net Listing: A listing in which the broker's commission is the excess of the sale price over an agreed-upon (net) price to the seller, illegal in some states.

Net Worth: The excess of ASSETS over LIABILITIES. The amount of equity.

No Money Down: General term referring to a real estate acquisition strategies based on seller-provided financing and/or existing loan assumption and minimal use of cash down payments.

It is a method of achieving maximum profits from real estate investments.

Nonconforming Land Use: A use that violates ZONING regulations or codes but is allowed to continue because it was began before the zoning RESTRICTION was enacted.

Nonconforming Loan: Loan that does not meet the standard of, or is to large to be purchased by, FNMA or FMHLC. The interest rate is at least half a percentage point higher than for a conforming loan.

Nondisturbance Clause: An agreement in a mortgage clause on income-producing property that provides for the continuation of leases in the event of loan foreclosure.

Nonexclusive Listing: Same as OPEN LISTING.

Nonperforming Loan: A loan that is not earning income for its holder, on which full payment can no longer be expected, payments are more than 90 days delinquent, or the maturity date has passed and payment has not been made.

Nonrecourse: No personal liability.

Lenders will take the property pledged as collateral to satisfy a debt, but have no recourse to other assets of borrower.

Normal Wear & Tear: Physical DETERIORATION resulting from age and ordinary use of the property.

Notarize: To ATTEST in one's capacity as a NOTARY PUBLIC, to the genuiness of a signature.

Notary Public: An officer who is authorized to take acknowledgements to certain types of documents, such as, DEEDS, CONTRACTS, and MORTGAGES, AND BEFORE WHOM affidaits CAN BE SWORN.

Note: A WRITTEN INSTRUMENT that acknowledges a debt and promise to pay.

Notice: Official communication of a legal action or one's intent to take an action.

Notice of Completion: Legal notice filed after completion of construction.

An unpaid contractor has a set amount of time after completion to file a MECHANICS LIEN.

Notice of Default: A letter sent to a defaulting party as a reminder of the DEFAULT. May state a grace period and the penalties for failing to cure the default.

Notice to Quit: A notice to TENANT to vacate the property.

Notorious Possession: Generally acknowledges POSSESSION OF REAL ESTATE.

One of the requirements to gain ownership of real estate through ADVERSE POSSESSION.

Novation: A 3-party agreement whereby one party is released from a contract and another party is substituted.

NPV: Net Present Value

Nuisance: A land use whose associated activities are incompatible with surrounding land uses.

Null & Void: That which cannot be legally enforced, as with a CONTRACT provision that is not in conformance with the law.

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O - P

OAR: Overall rate of capitalization. same as overall rate of return.

Obligor: The person who binds himself or herself to another. One who has engaged to perform some obligation. One who makes a bond.

Obscolescence: A loss in value due to reduced desirability and usefulness of a structure because its design and construction and/or usefulness have become obscolete.

Offer: An expression of willingness to purchase a property at a specified price or of willingness to sell. In real estate an offer is made by either party to the other.

Offeree: One who receives an offer. Generally a buyer offers a purchase contract to an owner, which makes the owner the offeree. When the seller offers a contract to the buyer, the buyer is the offeree.

Offeror: One who extends an offer to another.

Off Site Costs: Expenditures related to construction that are spent away from the place of construction.

Off Site Improvements: The portion of a subdivision development that are not directly on the lots to be sold.

Open-End Mortgage: A mortgage under which the mortgagor (borrower) may secure additional funds from the mortgage lender usually stipulating a ceiling amount that can be borrowed.

Open House: A method of showing a home for sale whereby the home is left open for inspection by interested parties.

Open Listing: A listing given to any number of brokers without liability to compensate any except the one who first secures a buyer who is ready, willing, and able to meet the terms of the listing or secures the seller's ACCEPTANCE of another OFFER. The sale of the property automatically terminates all open listings.

Open Mortgage: a mortgage that has matured or is overdue and is therefore open to foreclosure at any time.

Open Space: Land within a developed are, that is left undeveloped and serves as an amenity to surrounding occupants.

Opinion of Title: A certificate, generally from an attorney, as to the validity of title to property being sold.

Opportunity Cost: a term in economics; when taking a particular action, the loss of the value of the next-best action.

Option: The right to purchase or lease the property upon specified terms within a specified period.

Optionor: One who gives or sells an option.

Option to Purchase: A contract that gives one the right (but not the obligation) to buy a property, within a certain time, for a specified amount, and subject to specified conditions.

Oral-Contract: An unwritten agreement; unenforceable in most states.

Ordinances: Municipal rules governing the use of land.

ORE, OREO: Other Real Estate. Other Real Estate Owned. Generally foreclosed property held by lending institutions.

Orientation: the position of real estate on a site relative to sunlight angles and prevailing winds.

Oriented Strand Board (OSB): Building material composed of rectangular-shaped wood strands arranged in layers at right angles to one another, laid up into mats that form a panel and bonded with waterproof adhesives.

Original Equity: the amount of cash initially invested by the underlying real estate owner, distinguished from Sweat Equity, Capital Calls.

Originate: Issue a loan.

Origination Fees: Charges to borrowers to cover the costs of issuing the loan, such as credit checks, appraisal and title expenses.

Origination Process: The process by which a loan is funded, including the due diligence process, financial structure and lender committee approval.

Other People's Money: Borrowed funds invested in a money-making venture.

Overbuilding: A situation in a given area where there has been more real estate construction than the market can absorb within a reasonable time.

Overimprovement: A land use considered to intense for the land.

Override: A fee paid to someone higher in the organization, or above a certain amount.

Owner Occupant: A tenant of a residence who also owns the property.

Owner of Record: The person(s) who according to the public records is/are the owner(s) of a particular property.

Ownership Form: Methods of owning real estate, which affect income tax, estate tax, continuity, liability, survivorship, transferability, disposition at death and bankruptcy.

Ownership forms Include:


Ownership Rights to Realty: Possession, Enjoyment, Control, and Disposition.

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Package Mortgage: A MORTGAGE arrangement whereby the principal amount loaned is increased because personalty as well as realty serve as collateral.

P&I: Principal and interest.

Paper: CREDIT given, evidenced by a written obligation that is backed by paper.

Parcel: A piece of property under one ownership, a lot in a subdivision.

Parole Evidence: Oral evidence, rather than that contained in documents. The parole evidence rule states that when parties put their agreement in writing, all previous oral AGREEMENTS merge into the written agreement.

The written agreement cannot be contradicted by oral testimony, unless there was a mistake or fraud.

Partial Interest: Ownership of part of the Ownership rights to a parcel of real estate. Also used to describe an undivided interest in property shared with several other owners.

Partially Amortized Loan: One that requires some payments toward principal but does not fully retire the Debt, thereby requiring a Balloon Loan.

Partial Release: A provision in a mortgage that allows some of the property pledged to be freed from serving as collateral.

Partial Taking: Acquisition by COMDEMNATION of only part of the property or some property rights.

Participating Mortgage (Loan): One that allows the lender to share in part of the income or resale proceeds.

Partition: The division of real property between those who own it with undivided interest.

Party Wall: A wall built along a line separating two properties, partly on each parcel.

Either owner has the right to use the wall and has an easement over that part of the adjoining owner's land covered by the wall.

Passive Solar Heating: A system of features incorporated into a building's design to use and maximize the effects of the sun's natural heating capability.

Patent: Conveyance of title to government land.

Payment Cap: A contractual limit on the percentage amount of adjustment allowed on an adjustable rate mortgage at any one adjustment period.

Penalty: What one will pay for breaking a law or violating part of or all of the terms of a contract (agreement).

Percolation Test: A procedure to measure the DRAINAGE characteristics of the soil on a lot. Required in the proper design of septic tank fields.

Perfecting Title: Removing a cloud or claim against a title to real estate.

Performance: In contract law, the completion of duties and obligations specified in a contract.

Performance Bond: One that is held by an insurance company, posted by a party who is to perform certain work.

If the work is not performed, the insurer promises to complete the work or pay damage up to the amount of the bond.

Performing Loan: Generally, one of which payments are less than 90 days past due.

Permanent Lender: One who makes permanent loans.

Permanent Mortgage: a mortgage for a long period of time; over 10 years.

Permit: A document issued by a government REGULATORY AUTHORITY, that allows the bearer to take some specific action.

Personal Liability: An individuals responsibility for a debt. Most morgage loans on real estate are recourse (the lender can look to the property and borrower for repayment).

Personal Property: Any property which is not real property.

Per Stirpes: A legal method of distributing an estate to include the descendents of a legatee, whose share is apportioned among linear descendents.

Photovoltaic: The process of converting light directly into electricity using especially designed silicone cells.

Physical Depreciation or Deterioration: The loss of value from all causes of age and action of the elements.

Piggyback Loan: Combination of the construction loan with the permanent loan committment.

Pipeline: A conduit or networks of pipe used to carry liquids. also, used metaphorically in describing the production process, the course of completion of work in progress.

PITI: Principal, Interest, Taxes and Insurance.

Plaintiff: A person who brings a lawsuit.

Planned Unit Development (PUD): A zoning classification that allows flexibility in the design of a subdivision.

Planning Commission: A group of citizens appointed by local government authorities to conduct hearings and recommend amendments to the zoning ordinances.

Plat: a plan or map of a specific land area.

Plat Book: A public record containing maps of land showing the division of such land into streets, blocks and lots and indicating the measurements.

Pledged Account Mortgage (PAM): A type of home loan purchase under which a sum of cash contributed by the owner is set aside in an accout pledged to the lender.

The account is drawn down during the original years of the loan to supplement periodic mortgage payments. The effect is to reduce the payment amount in the early years.

Pledged Asset Mortgage: A mortgage loan, often requiring no CASH down payment, secured by a portfolio of market securities in addition to the mortgage financed on the loan.

Such loans are often offered by major brokerage houses and require the borrower to retain an account with the firm.

The lender can access the portfolio in the event of DEFAULT on the mortgage loan.

PMI: Private Mortgage Insurance.

Pocket Card: Required for SALESPERSONS and BROKERS in most states. Issued by the state licensing agency, it identifies its holder as a licensee and must be carried at all times.

Power of Attorney: A written instrument duly signed and executed by an owner of property, which authorizes an agent to act on behalf of the owner to the extent indicated in the instrument.

Prepayment Clause: A clause in a mortgage which gives mortgagor the privilege of paying the mortgage indebtedness before it becomes due.

Prepayment Privilege: Prepayment privilege allows you to pay all or part of your loan off prior to its maturity

Principal: The employer of an agent or broker, the broker’s or agent’s client. Also, the one who owns or will use property.

Principal Broker: The licensed broker resposible for the operations conducted by the brokerage firm.

Private Mortgage Insurance (PMI): PMI is insurance that a lender may require from homebuyers who obtain loans that are more than 80 percent of their new home’s value. This insurance can protect the lender from loss in the case of mortgage default.

Probate: To establish the will of a deceased person.

Proportion: Allocation of closing costs and credits to buyers and sellers.

Purchase Money Mortgage: A mortgage given by a grantee in part payment of the purchase price of real estate.

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Q -R

Quit-Claim Deed: A deed which conveys simply the grantors rights or interest in real estate, without any agreement or covenants as to the nature or extent of that interest, or any other covenants; usually used to remove a cloud from the title.

Radon: A naturally appearing (not man made) gas that may contaminate water or air in buildings.

Studies from mines have indicated a correlation between radon and lung cancer in humans.

Rafter: The structural member (timber or beam) that supports a roof.

RAM: Reverse Annuity Mortgage

Range Lines: Lines parallel to a principal meridian, marking off the land into 6-mile strips known as ranges; they are numbered east or west of a principal meridian in the government rectangular survey.

Rate Improvement Mortgage: A mortgage loan with a provision that allows the borrower to reduce the interest rate when market rates decline.

The provision may be invoked only one time over the life of the loan.

Raw Land: Acreage with no added improvements, such as landscaping drainage, streets and utilities and structures.

Ready, Willing and Able: Capable of an action and disposed to act.

Real Estate: In law, land and everything more or less attached to it. Ownership below to the center of the earth and above to the heavens.

In business, the activities concerned with ownership and use transfers of the physical property.

Real Estate Commission: State agency that enforces real estate license laws.

Real Estate Information System (REIS): A large data bank that includes historical rental rates on a large number of properties. For more info go to:

Real Estate Investment Trust (REIT): A real estate mutual fund, allowed by income tax laws to avoid the corporate income tax.

It sells shares of ownership and must invest in real estate or mortgages.

Real Estate Market: The potential buyers and sellers of real property at the current time, and the current transaction activity for real property.

Real Estate Owned (REO): Property acquired by a lender through foreclosure and held in inventory. Commonly referred to as REO.

Real Estate Settlement Procedures Act (RESPA): A law that states how mortgage lenders must treat those who apply for federally related real estate loans on properties of 1-4 dwelling units, intended to provide borrowers with more knowledge when they comparison shop for mortgage products.

Real Property: Land and generally whatever is erected upon or affixed to it.

The rights to use real estate.

Sometimes also defined as real estate.

Realtor: A professional in real estate who subscribes to a strict code of ethics as a member of the local and state boards and of the NAR.

Realty: Same as real estate.

Reappraisal Lease: A lease where the rental level is periodically reviewed by independent appraisers.

Often, the lessor and lessee will each select an appraiser; if they do not agree on a value, they will choose a third appraiser.

Reassessment: The process of revising or updating the value estimate of property for AD VALOREM tax purposes.

Rebate: A refund resulting from a purchase or tax.

Recapture Clause: In a contract, a clause permitting the party who grants an interest or right to take it back under certain conditions.

Recasting: The process of adjusting a loan arrangement, especially under the threat of default. See workout.

Recession: General Economic slowdown, officially declared after two consecutive quarters of reduced GDP.

Often there is a shrinkage in the real estate industry without a reduction in the general business economy.

Reciprocity: Mutual agreement to accept, such as a state’s acceptance, as valid the real estate license one has earned in another state.

Reconciliation: In appraisal, the process of adjusting comparables to estimate the value of the subject being appraised.

Reconfiguration: Changing the physical shape of a property.

Reconveyance: Occurs when a mortgage debt is retired.

The lender conveys the property back to the equity owner, free of the debt.

Recording: The act of entering into a book of public records instruments affecting the title to real property.

Recording in this manner gives notice to the world of facts recorded.

Recourse: The ability of a lender to claim money from a borrower in default, in addition to the property pledged as collateral.

Recovery Fund: Generally administered by the Real Estate Commission.

Requires licensees to contribute, then reimburses aggrieved persons who are unable to collect from brokers for wrongdoing.

Rectangular Survey: Same as government survey.

Redeemable Rent: In a lease with a purchase option, the rent paid that can be applied toward the purchase price.

Redemption: The right of a mortgagor to redeem the property by paying a debt after the expiration date and before sale at foreclosure.

Redemption Period: The period during which a former owner can reclaim foreclosed property.

Rediscount Rate: The rate of interest charged to member banks when they borrow from the federal reserve system. Also called discount rate.

Redlining: An illegal practice of lender refusing to make home loans in certain areas.

Reduction Certificate: A document in which the mortgagee (lender) acknowledges the sum due on the mortgage loan.

Used when mortgaged property is sold and the buyer assumes the debt.

Reentry: The legal right of a landlord to possess the property when the term for possession by a tenant has expired.

Reevaluation Lease: Same as reappraisal lease.

Referral: The act of suggesting the use of a certain broker.

REFI: Slang for Refinance.

Refinance: To replace an old loan(s) with a new loan(s).

Registrar: The person who is to maintain accurate official records, such as for deeds, mortgages, and other recorded documents.

Regression: A statistical technique used to estimate mathematical models of economic and other processes.

It is used to find a mathematical expression that best fits the relationship between a group of random variables as indicated by a sample of data.

Regulation D: A regulation of the SEC that sets forth conditions necessary for a private offering exemption.

Regulation Z: a federal regulation requiring creditors to provide full disclosure of the terms of the loan.

Compliance is compulsory for anyone who arranges credit for more than 5 sales of residential real estate in a year.

Terms of the loan must be disclosed. The interest rate must be stated as an Annual Percentage Rate.

Regulatory Taking: effects of government regulation deemed so severe as to destroy most of the value of a property.

In effect the government has “taken” the property without just compensation.

Rehab: See rehabilitate.

Rehabilitate: To restore a structure to a condition of good repair.

REIT: (Real Estate Investment Trust) A real estate mutual fund, allowed by income tax laws to avoid the corporate income tax.

It sells shares of ownership and must invest in real estate or mortgages.

Release Clause: In a mortgage, a clause that gives the owner the privilege of paying a portion of the mortgage indebtedness, thus freeing a portion of the property from the mortgage.

Release of Lien: To free real estate from a mortgage. See partial release.

Reliction: Gradual subsidence of water, leaving dry land.

Relocation Clause: A lease stipulation that allows the landlord to move the tenant within the building.

Relocation Network: A geographically diverse group of independent real estate brokerages, generally not members of a franchise, that share information with one another concerning potential customers.

Relocation Service: A company that contracts with other firms to arrange the relocation of employees from one city to another.

The service generally handles the sale of the employee’s home. Furniture-moving services may also be included.

Remainder: An estate that takes place after the termination of a prior estate, such as a life estate.

Remainderman: The person who is to receive possession of the property after the death of a life tenant.

Remediation: Corrective action to clean up an environmentally contaminated site to reduce contamination or reduce the amount to an acceptable level.

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REMIC: Real Estate Mortgage Investment Conduit.

Remodel: To change the appearance and functional utility of a building. This may include painting, repairing, and replacing of fixtures and equipment.

Rendering: A drawing or (usually) watercolor or oil painting giving a perspective view of a proposed building or development to show how it will look when completed, including landscaping, a more artistic representation than the more technical elevation.

Renegotiate: To legally revise the terms of a contract.

Renegotiated Rate Mortgage (RRM): A loan whose interest rate is revised at pegged intervals but is not tied to an index.

Renewal Option: The right, but not the obligation, of a tenant to continue a lease at a specified term and rent.

Renovate: General term use to describe the process of upgrading an existing improvement.

Usually there is an attempt to keep the same general appearance of the building with new materials or to return the building to its original appearance.

Rent: A charge for the use of space.

Rental Rate: The periodic charge per unit for the use of property.

Rent Controls: Laws that govern the rates that may be charged for space.

Rent Free Period: A portion of a term of a lease when no rent is required.

REO (Real Estate Owned): Property acquired by a lender through foreclosure and held in inventory. Commonly referred to as REO.

Reorientation: Changing the market appeal of a property.

Replacement Cost: The cost of erecting a building to replace an existing structure.

Repo: Slang for repossession, also relates to repurchase of a note.

Reproduction Cost: The cost of exact reproduction of a property as of a certain date.

Reproduction differs from replacement in that replacement requires the same functional utility for a property, whereas, reproduction is an exact duplication.

Resale Price: The assumed projected selling price a property could fetch at the end of the projected period.

Resale Proceeds: The amount a former owner receives upon a sale after paying transaction costs, remaining debt, and, sometimes, income taxes.

Rescind: To withdraw an offer or contract, regulation Z allows a three day period in which to rescind certain credit transactions.

Rescission: The act of canceling or terminating a Contract. Rescission is allowed when: FRAUD, DURESS, MISREPRESENTATION, OR MISTAKE WAS INVOLVED.

Regulation Z allows one to rescind certain credit transactions within 3 business days.

Reserve Fund: An amount maintained to provide funds for anticipated expenditures required to maintain a building.

A reserve may be required by a lender in the form of an escrow to pay upcoming taxes and insurance costs.

A replacement reserve may be maintained to provide for replacement of short-lived components such as carpet, HVAC systems, and roofing etcetera.

Reserve Price: In an auction or other bidding procedure it is an established amount below which the seller is not obligated to accept a winning bid.

Residence: The place where on lives, particularly in the dwelling in which one lives.

Residential Broker: One who lists and sells houses and condos. Contrast with Commercial Broker.

Residential Property: Owner occupied property.

Residential Service Contract: An insurance contract or home warranty, generally for one year, covering the plumbing, mechanical and electrical systems of a home.

It is available in most areas upon the purchase of an existing home. The buyer or seller can pay for the contract.

Resource Conservation And Recovery Act (RCRA): The U.S. law, passed in 1976, , that require ongoing operations involving the generation, transport, and treatment/storage/disposal of hazardous waste.

Amended in 1984 by the Hazardous and Solid Waste Amendments, which established restrictions requiring the treatment of hazardous waste before disposal in landfills.

Respondeat Superior: In agency law, the doctrine that a principal is liable for the actions of an agent.

Restore: To return a building to its original quality and appearance.

While modern materials are used, the emphasis is on faithful reproduction of the original style.

Restraint on Alienation: A limiting condition on the right to transfer property.

If the condition is against public policy or is unreasonable, the courts will void the condition.

Restricted Appraisal Report: An appraisal report that contains minimal detail and is intended to be received or relied upon by the client only, not any other party.

Restriction: A limitation placed on the use of property, contained in the deed or other written agreement in the chain of title or in local ordinances pertaining to land use.

Restrictive Covenant: A covenant or deed restriction that limits the property rights of the owner.

Retainage: An agreement in a construction contract where money is earned by a contractor but contractor is not paid until the completion of construction or some other agreed-upon date.

Retaining Wall: A vertical partition used to restrict the movement of soil or water.

Retire (A Debt): To pay off the principal on a loan, thereby fulfilling the obligation under the loan contract. See also amortization.

Revaluation Clause: See Reappraisal lease.

Revenue Stamps: Stamps that are affixed to deeds and that indicate the payment of the states deed transfer tax.

Federal revenue stamps have not been used since 1968, but many states have substituted their own.

Reverse Annuity Mortgage (RAM): A type of mortgage designed for elderly homeowners with substantial equity, by which a lender periodically pays an amount to the borrower.

The loan balance increase with periodic payments, causing negative amortization.

Reversion: The right of a lessor to possess leased property upon the termination of a lease.

Reversionary Interest: The interest the person has in property upon termination of the preceding estate.

Reversionary Value: The value of property at the expiration of a certain time period.

Review Appraiser: One who specializes in appraisal reviews.

Revocation: An act of recalling a power or authority conferred, as a revocation of a power of attorney, a license, and agency etcetera.

Rezoning: An action to change the designation of a subject parcel, or group of parcels on the zoning map.

The effect of rezoning is to change the permitted uses for the affected parcels.

Rider: An amendment or attachment to a contract. Same as addendum.

Right of Redemption: Same as Equity of Redemption.

Right of Survivorship: The rights of a surviving joint tenant to acquire the interest of a deceased joint owner; the distinguishing feature of both Joint tenancy and Tenancy by the Entireties.

Right-of-Way: A right to use a particular path for access or passage; a type of Easement.

Riparian Owner: One who owns land bounding upon a lake, river or other body of water.

Riparian Rights: Rights pertaining to the use of water on, under, or adjacent to one’s land. May be qualified to avoid nuisance and pollution.

Riparian rights are recognized in most eastern states but rarely in western states of the U.S., where they recognize USUFRUCTUARY rights.

Risk: Uncertainty or variability.

ROD: A linear unit of measurement equal to 16 1/2 feet.

Rollback: A retroactive claim by a taxing authority of a higher tax rate when property is sold after being taxed at a special use rate or the land is put to a more valuable use.

Rollover Loan: A type of mortgage loan; commonly used in Canada, in which the amortization of principal is based on a long term but the interest rate is established for a much shorter term.

The loan may be extended, or ROLLED OVER, at the end of a shorter term at the current market rate.

Royalty: Money paid to a property owner for extraction of some valuable resource from the land.

RRM: Renegotiated Rate Mortgage.

Rule of 72’s: An approximation of the time it takes money to double when earning compound interest.

Rule of 78’s: A method for computing unearned interest used on installment loans with ADD-ON INTEREST.

The number 78 is base on the sum of the digits from 1 to 12.

Run With The Land: An expression indicating a right or restriction that affects all current and future owners of a property.

Contrasted with an agreement between a current owner and other parties, that is not passed on to future owners in a deed.

Rural: The area outside a large metro area often characterized by farmland, ranches, small towns and sparsely populated regions.

Rurban Areas: On the fringe of urban areas, that are in the process of being developed for urban uses.

R-Value: A measure of the heat conductivity of material.

The higher the R Value the better the material serves as insulation from heat transfer.

R value generally applies to insulation materials, roofs, exterior walls, and windows and doors.

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Sale-Leaseback: The simultaneous sale of a property and lease back to the seller. The lease portion of the transaction is generally long-term.

The seller-lessee in the transaction is converted from an owner to a tenant.

Sale Pending: A real estate transaction for which a contract has been signed but not closed.

Sales Comparison Approach: See Market Comparison Approach.

Sales Contract: A contract by which the buyer and the seller agree to the terms of sale.

Same as Agreement Of Sale, Earnest Money Contract.

Salesperson: One who is licensed to deal in real estate or perform any other act enumerated by state real estate license laws, while under the supervision of the broker licensed by the state.

Sales Price: The amount of money required to be paid for real estate according to a contract, or previously paid.

SAM: Shared Appreciation Mortgage

Sandwich Lease: Lease held by lessee who becomes a lessor by subletting.

Typically the sandwich leaseholder is neither the owner or the user of the property.

See sublease.

SARA: Superfund Amendments and Reauthorization Act.

Satisfaction of Mortgage: Same as satisfaction piece.

Satisfaction Piece: An instrument for recording and acknowledging final payment of a mortgage loan.

Scale: The proportional dimensions between the dimensions of a drawing, plan or model to the dimensions of the physical object it represents.

Scenic Easement: An encumbrance on the title to a property to preserve it in a more-or-less natural or undeveloped state. See easement.

Seasoned Loan: A loan on which several payments have been collected.

Secondary Financing: See junior mortgage, second mortgage.

Secondary Mortgage Market: the mechanisms available to buy and sell mortgages, mainly residential first mortgages.

Existing mortgages and mortgage-backed securities are traded in the secondary mortgage market.

The ability to sell your mortgage to another financial institution may enable your lender to offer you a lower interest rate on your mortgage.

Second Home: A residence that is not one’s principal residence.

Second Mortgage: A subordinated lien, created by a mortgage loan, over the amount of a first mortgage.

Second mortgages are used at purchase to reduce the amount of a cash down payment or in refinancing to raise cash for any purchase.

Section (of land): One square mile in the government rectangular survey. There are 36 sections in a six mile square township.

Section 8 Housing: Privately owned rental dwelling units participating in the low income rental assistance program created by 1974 amendments to section 8 of the 1937 housing act.

Section 121: The section of the IRS code that deals with exclusion of gain from the sale of a principal residence.

Securitization: The process of creating a security marketable in the capital markets and backed by a package of assets such as mortgage loans.

Security: Property that serves as collateral for a debt.

Security Deposit: A cash payment required by a landlord, to be held during the term of the lease to offset damages incurred due to actions of the tenant.

Security Instrument: an interest in real estate that allows the property to be sold upon a default on the obligation for which the security interest was created.

The security instrument is more specifically described as a security DEED, a MORTGAGE or a TRUST DEED.

Security Interest: An interest in real estate in which the real estate serves as collateral.

See Through Building: A vacant building.

Seisin: The possession of realty by one who claims to own a fee simple estate or a life estate or other salable interest.

Self-Amortizing Loan: One that will retire itself through regular principal and interest payments. Contrast with balloon, interest only loan.

Self-Contained Appraisal Report: A written appraisal report that contains all the information required by USPAP, with extensive detail.

Contrast with Restricted Appraisal, Summary Appraisal.

Seller Financing: A debt instrument taken back by the seller as part of the purchase price for the property.

Such financing is used as an inducement to a sale when a normal 3rd party financing is expensive or unavailable and in situations where the existing, first lien loan may be assumed by the buyer but the difference between the existing debt and sales price exceeds the cash resources of the buyer.

Seller’s Market: Economic conditions that favor sellers, reflecting rising prices and market activity. Contrast with buyers market.

Selling Broker (Agent): The licensed real estate broker (agent) that brings forth the buyer. Contrast with listing broker (agent).

Senior Mortgage: Same as first mortgage.

Senior Residential Appraisal: See SRA

Separate Property: Property acquired by either spouse prior to marriage, or by gift or devise after marriage, as distinct from community property.

Service Released: When a loan is sold on the secondary market, it is service released if the new financial institution takes over the servicing of the loan (taking payments, answering questions, handling issues, etc.).

Service Retained: When a loan is sold on the secondary market, it is service retained if the bank you selected for your loan sells the loan, but continues to service the loan (taking payments, answering questions, handling issues, etc.).

Servicing: The act of billing, collecting payment and filing reports for a mortgage loan, may also include loan analysis, default follow up and manage of tax and insurance escrow accounts.

Often performed for a fee by mortgage bankers after loans are sold to investors.

Settlement: Same as closing.

Settlement Statement: Same as closing statement.

Settling: The movement, generally a sinking or shifting, of a building because of its weight and/or soil shrinkage.

Some settling is normal and expected.

The amount may vary depending construction and soil characteristics.

Severalty: The ownership of real property by an individual as an individual as an individual.

See Tenancy in Severalty.

Severance Damages: An element of value arising out of a condemnation to which a tract was a part.

Shadow Inventory: Inventory that banks, mortgage lenders and potential sellers have in their possession but that are not currently for sale due to varying reasons—such as property not in selling condition, waiting for a better price and other factors.

Shared Appreciation Mortgage (SAM): A residential loan with a fixed interest rate and set below market rates, with the lender entitled to a specified share of appreciation in property value over a specified time interval.

The amount of appreciation is established by the sale of the home or appraisal if no sale is made.

Shared Equity Mortgage: A home loan in which the lender is granted a share of the equity, thereby allowing the lender to participate in the proceeds from reasale.

Sheriff’s Deed: Evidence of ownership given by a court in the sale of a property for unpaid taxes.

Siding: Materials used to weatherproof outside walls.

Simple Interest: A method of calculating the future value of a sum assuming that interest paid is not compounded.

Interest is paid only on the principal.

Single Family Housing: A type of residential structure designed to include one dwelling.

Sinking Fund: An account that, when compounded, will equal a specified sum after a specified time period. See compound interest.

Site: A plot of land prepared for or underlying a structure or development. The location of a property.

Site Built Home: A home that is constructed primarily on its site.

Site Plan: A document that describes how a parcel of land is to be improved.

It includes the outlines of all structures and site improvements, such as driveways, parking lots, landscaping, and utility connection.

Situs: The economic attributes of location, including the relationship between the property and surrounding properties, as well as distant points of interest and the linkages to those points.

Situs is considered to be the aspects of location that contributes to the market value of real property.

Slab: A poured concrete building foundation.

Most houses that are built on slabs lack basements.

Smart Building: See Intelligent Building.

Soffit: the underside of a roof that extends beyond the exterior walls.

Soft Market: A market in which demand has shrunk or supply has grown faster than demand and which sales at reasonable prices have become more difficult. A buyer’s market.

Soil Bank: Land held out of agricultural production in an effort to stabilize commodity prices and promote soil conservation.

Subsidies are provided by the U.S. Department of Agriculture.

Solid Waste: All types of waste material, whether or not hazardous.

Sales Contract: A written agreement by which the buyer and seller have a “meeting of the minds” and agree to terms of sale.

Second Mortgage: A mortgage in addition to an existing first mortgage.

Setback: The distance from a curb or other such line within which no buildings may be constructed.

Space Planning: Deciding on the use and allocation of space for a proposed user.

Special Assessment: An assessment against a property to pay for public improvements by which the assessed property will benefit.

Special (Limited) Warranty Deed: A deed in which the grantor limits the title warranty given to the grantee to anyone claiming by, from, through, or under him, the grantor.

The grantor does not warrant against title defects arising from conditions that existed before he/she owned the property.

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SPEC: Speculative, built without tenant or buyer/user.

SPEC HOUSE: Single family house built in anticipation of finding a buyer.

Special Agent: One who is authorized to act on behalf of another, with limited authority.

Special Assessment: An assessment made against a property to pay for a government improvement by which the assessed property is suppose to be especially benefited.

Special Assessment District: An area where a special assessment is imposed because of a public project that benefits the owners in the defined area.

Special-Purpose Property: A building with limited uses and marketability, such as a church, school, theater, or public utility.

Special Use Permit: A right granted by a local zoning authority to conduct certain activities within a zoning district.

Such activities are considered conditional uses, which are permitted within the zones only upon special approval of the zoning authority.

Also considered conditional use permit.

Special Use Valuation: Valuing land or property at a lower value than it should be if properly valued in its true category of zoning and use.

Special Warranty Deed: A deed in which the grantor limits the title warranty given to the grantee to anyone claiming by, from, through, or under him, the grantor.

The grantor does not warrant against title defects arising from conditions that existed before he owned the property.

Specifications: Detailed instructions provided in conjunction with plans and blueprints for construction.

May stipulate the type of materials to be used, special construction techniques, dimensions, and colors.

Specific Performance: A legal action in which the court requires a party to a contract to perform the terms of the contract when he has refused to fulfill his obligations.

Used in real estate, since each parcel of land is unique.

Speculation: Investment or other decision whose success depends on an event or change that is not certain to occur.

Speculator: One who invests with the anticipation that an event or series of events will occur to increase the value of the investment.

Split-Level: Also called a tri-level; a popular style of home, best suited for side to side slopes, in which a one story wing is attached between the levels of a two story wing.

Spot Zoning: The act of rezoning a parcel of land where all surrounding parcels are zoned for a different use, in particular where the rezoning creates a use that is incompatible with surrounding land uses.

Spot zoning is generally disallowed in the courts.

Spread: The difference between a bid price and asking price.

Square Footage: The area, measured in square feet of a parcel of real estate.

Generally measured from outside the exterior walls in the case of structures.

Squatter’s Rights: The legal allowance to use the property of another in absence of an attempt by the owner to force eviction, this right may eventually be converted to title by the property over time by adverse possession, if recognized by state law.

SRA: Senior Residential Appraiser, a designation granted by the Appraisal Institute.

Stable Mortgage: A mortgage loan instrument that combines fixed and adjustable rate in the same loan.

The rate applied to the loan is a blend of fixed rate and a rate that varies according to an index.

Stagflation: Describes an economic situation of stagnant economic conditions combined with inflation.

Standard Metropolitan Statistical Area: See SMSA.

Standby Commitment: A commitment by a lender to make available a sum of money at specified terms for a specified period.

Standby Fee: The sum required by a lender to provide a standby commitment.

The fee is forfeited should the loan not be closed within a specified time.

State-Certified Appraiser: Certified General Appraiser, Certified Residential Appraiser.

State Rule: A method for determining just compensation in many (but not all) states. Contrast Federal Rule.

Statute: A law enacted by an act of legislature.

Statute of Frauds: A state law that provides that certain contracts must be in writing in order to be enforceable.

Applied to Deeds, Mortgages, and other real estate contracts, with the exception of leases for periods shorter than one Statute of Limitations: year.

Statute of Limitation: A specified statutory period after which a claimant is barred from enforcing his claim by suit.

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Statutory Dedication: The owners of a subdivision or other property file a plat that results in a grant of public property, such as streets in a development.

Statutory Foreclosure: A foreclosure proceeding not conducted under court supervision.

Contrast with Judicial Foreclosure.

Steering: The illegal practice of limiting the housing shown to certain ethnic groups.

Step-Loan: A type of adjustable-rate mortgage for which the interest rate is adjusted only once during the term of the loan.

Stepped Up Basis: An income tax term used to describe the change in the adjusted tax basis of property, allowed for certain transactions.

Stepped-Up Lease: Same as Graduated Lease.

Stigma: A negative image of a property.

Stipulations: The terms within a written contract.

Straw Man: One that purchases a property that is, in turn conveyed to another for the purpose of concealing the identity of the eventual purchaser.

Strict Foreclosure: A foreclosure procedure in which the mortgagee has the right to possess the mortgaged property directly upon default of the mortgage agreement.

Rarely used today.

Strict Liability: An owner’s responsibility for cleaning up a contaminated site, even though the owner was not negligent.

See Innocent Person, Lender Liability.

Structure: Any constructed improvement on a site.

Sales Contract: A written agreement by which the buyer and seller have a “meeting of the minds” and agree to terms of sale.

Second Mortgage: A mortgage in addition to an existing first mortgage.

Setback: The distance from a curb or other such line within which no buildings may be constructed.

Special Assessment: An assessment against a property to pay for public improvements by which the assessed property will benefit.

Special (Limited) Warranty Deed: A deed in which the grantor limits the title warranty given to the grantee to anyone claiming by, from, through, or under him, the grantor.

The grantor does not warrant against title defects arising from conditions that existed before he/she owned the property.

Specific Performance: A legal action in a court of equity compelling a defendant to carry out the terms of an agreement or contract.

Subdivision: A parcel of land divided into lots.

Subordination Clause: A clause which permits the placing of a mortgage at a later date which takes priority over an existing mortgage.

Subagency: The relationship under which a sales agent tries to sell a property listed with another agent.

Subcontractor: One who performs services under contract to a general contractor.

Subdivider: One who partitions a tract of land for the purpose of selling the individual plots.

Subdividing: Dividing a tract of land into smaller tracts.

Subdivision: A tract of land divided into lots suitable for homebuilding purposes. Usually requires that a subdivision plat be recorded.

Subject Property: In appraisal and real estate, the property being appraised or compared to similar properties.

Subject To: Acquiring a property with an existing mortgage, but not becoming personally liable for the debt.

Contrast with Assumption of Mortgage.

Subject To Mortgage: Acquiring a property with an existing mortgage, but not becoming personally liable for the debt.

Contrast with Assumption of Mortgage.

The buyer must make payments in order to keep the property; however with default only the buyer’s equity in that property is lost.

Sublease: A lease from a lessee to another lessee.

Sublet: Same as sublease.

Subordinate Mortgage: One having a lower priority than another; the subordinate has a claim in foreclosure only after satisfaction of mortgage(s) with priority.

Subordination: Moving to a lower priority, as a lien would if it changes from a first mortgage to a second mortgage.

Subordination Clause: A clause or document that permits a mortgage recorded at a later date to take priority over an existing mortgage.

Sub-Prime Loan: A loan offered to applicants with less than top quality credit ratings.

Subrogation: The substitution of one person for another. The substituted person acquires all rights.

Substitution: In appraisal, the principle that market value is indicated by the value of another property with similar utility.

A similar buyer is considered to be indifferent to substituting one property for another.

Subsurface Rights: Same as mineral rights.

Suburb: A town or incorporated development in close proximity to a city.

Usually characterized by a lower population density as compared to cities.

Summary Appraisal Report: A written appraisal report that contains a moderate amount of detail.

Contrast with self-contained appraisal report.

Summary Possession: Same as eviction, action.

Sump: As part of a drainage system, a pit in the basement to collect excess moisture and liquids.

To avoid flooding a sump pump may be installed to remove accumulated water in the sump pit.

Sunset Clause: A provision in the sales contract a date after which the agreement is no longer effective.

Sunspace: A room in a house generally designed to collect solar heat.

Superadequacy: A component of real estate that is beyond what is needed in the structure.

Superfund: A commonly used term for the federal clean up law.

Superfund Amendments and Reauthorization Act: SARA Updated version of the superfund federal law.

Surety: One who guarantees the performance of another.

Surface Rights: The rights to use and modify the surface area of real property.

Surrender: The cancellation of a lease by mutual consent of the lessor and lessee.

Survey: The process of blueprint creating or showing the measurements or boundaries of an area.

The process by which a parcel of land is measured and its area ascertained.

The plan showing the measurements, boundaries, area and contour.

Also, a detailed canvass of attitudes or market characteristics.

Surveyor: One who prepares surveys.

Survivorship: The right of a joint tenant or tenants to maintain ownership rights following the death of another joint tenant.

Prevents heirs of the deceased from making claims against the property.

Sweat Equity: Value added to a property due to improvements as a result of work performed personally by the owner.

Sweetener: Something included in a transaction to make it more acceptable.

Swing Loan: A short term loan that allows a homeowner to purchase a new home before selling the former residence.

Syndication: A method of selling property whereby a sponsor sells interests to investors.

May take the form of a Partnership, Limited Partnership, Tenancy in Common, LLC’s, Corporation or Sub chapter S corporation.

Syndicator: A person in business who sells an investment in shares or units.

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Table Funding: The practice of originating mortgage loans with internal capital, until enough loans have been packaged for sale in the secondary markets.

Tacking: Adding on a time period.

Takedown: The time when a borrower actually accepts money from a lender under a line of credit or loan commitment.

Taking: The acquisition of a parcel of land through condemnation.

Tangible Property: Real Estate and other property that can be seen and touched.

Tax: A charge levied upon persons or things by a government.

Taxable Value: See Assessed Value.

Tax Assessor: See Assessor.

Tax and Insurance Escrow: An account required by a mortgage lender to fund annual property tax assessments and hazard insurance premiums for the mortgaged property.

Funded through monthly contributions by the mortgagor. See PITI.

Tax Base: The collective value of property, income, or other taxable activity or assets subject to tax.

Tax revenues are computed as the tax base times the tax rate.

For property taxation, the base is the total assessed value of all taxable property less exemptions.

Tax Basis: Same as basis (TAX); see ADJUSTED TAX BASIS.

Tax Bracket: Marginal rate for income taxes; the percentage of each additional dollar in income required to be paid as income taxes.

Tax Credit: A reduction against income tax payment that would otherwise be due.

Contrast with TAX DEDUCTIONS that reduce taxable income.

Tax Deductible: A type of expense that can be used to reduce taxable income.


Tax Deduction: One that can be used to reduce taxable income. See TAX DEDUCTIBLE; contrast with TAX CREDIT.

Tax Deed: The tax of instrument given to a grantee by the government that had claimed the property for unpaid taxes.

Tax Exempt Property: Real property that is not subject, in whole or in part, to AD VALOREM property taxes.

Tax Foreclosure: The process of enforcing a lien against property for non-payment of delinquent property taxes.

Taxing authorities hold a superior lien against all taxable property to enforce the payment of their taxes.

Tax Lien: A debt attached against property for failing to pay taxes.

Tax Map: A document showing the location, dimensions and other data pertaining to a parcel of land subject to property taxes.

Maps are generally bound into books and kept as public records at the local tax office.

Tax on Home Sale: See Section 121

Tax Rate: The ratio of tax assessment to the amount being taxed.

Tax Roll: The list of all properties subject to a tax in a county or other property taxing jurisdiction. It identifies all properties and indicates their assessed values.

Tax Sale: The sale of property after a period of non-payment of taxes.

The grantee receives a tax deed.

In most states the defaulting party has a redemption period during which he may pay the unpaid taxes, interest, court costs, and the purchase price to redeem the property.

Tax Shelter: An investment that produces after tax income that is greater than before-tax income.

The investment may produce BEFORE-TAX CASH FLOW while generating losses to shield, from taxation, income from sources outside the investment.

Tax-Sheltered Income: Cash flow received from rental property that is not taxable. See Tax Shelter.

Teaser Rate: A contract interest rate charged on an adjustable-rate mortgage for the initial adjustment interval that is significantly lower than the fully indexed rate at the time.

It is an incentive to encourage borrower’s to accept adjustable rate mortgage loans.

In general, the interest rate reverts to the fully indexed rate at the first adjustment date. See Fully Indexed Rate.

Tenancy in Common: An ownership of property by two or more persons, with each having an undivided interest, without the right of survivorship.

Tenancy at Will: An estate which gives one the right to use or occupy land or property at the will of the owner.

Tenant at Sufferance: One who gains possession of land or property by lawful title and keeps it without any title.

Tenancy: The right of possession of real property.

May refer to ownership or occupancy. See tenancy in common, joint tenancy.

Tenancy at Sufferance: Tenancy established when a person who had been a lawful tenant wrongfully remains in possession of property after expiration of a lease.

Tenancy at Will: A license to utilize or occupy lands and buildings at the will of the owner.

The tenant may decide to leave the property at any time or must leave at the landlord’s will. Agreement may be oral or written. See emblements.

Tenancy by the Entirety: An estate that exists only between husband and wife with equal right of possession and enjoyment during their joint lives and with the right of survivorship—i.e., when one dies, the property goes to the surviving tenant.

Recognized in some states.

Tenancy for Life: Same as life estate.

Tenancy for Years: Created by a lease for a for a fixed term, such as 2 months, 3 years, 10 years and so on.

Tenancy from Year to Year: Same as leasehold.

Tenancy in Common: An ownership in realty by two or more persons, each of whom has an undivided interest, without the right of survivorship.

Upon the death of one of the owners, the ownership share of the decedent is inherited by the party or parties designated in the decedent’s will.

Compare with partition, see Syndication.

Tenancy in Severalty: Ownership of property by one person or one legal entity (corporation).

Tenant: One who is given possession of real estate for a fixed period or at will. See lessee, tenancy at will.

Tender: An offer to perform an obligation, together with actual performance or evidence of present ability to perform.

To perform under a contract. To pay or deliver.

Tenements: Possessions that are permanent and fixed; structures attached to land.

Also, older apartment units.

Tenure: The nature of an occupants ownership rights; an indication of whether one is an owner or tenant.

Tenure in Land: The mode in which a person holds an estate in land.

Term: The period of time in which something is in effect.

Term Amortization: For a loan; the period of time during which principle and interest payments must be made; generally the time needed to amortize the loan fully.

See Amortization Term.

Termite Clause: A provision in a termite clause that allows the buyer to have the property inspected for termite infestation.

Termite Inspection: An examination of a structure by qualified personnel to determine the existence of infestation by termites.

Often required in the terms of sale contract. See Wood Destroying Insect.

Termites: Insects that bore into wood and destroy it.

Term Loan: One with a set maturity date, typically without amortization.

Term Mortgage: See Term Loan.

Terms: Conditions and arrangements specified in a contract.

Testament: A will, generally to dispose of personal property. Common usage employs the word will, testament and last will and testaments as synonyms.

Testamentary Trust: trust created by a will, which comes into effect only after the testator’s death.

Testate: Having made a valid will. Contrast with intestate.

Testator: A person who makes a will.

Testatrix: a woman who makes a will.

Testimonium: A clause that cites the act and date in a deed or other conveyance.

Before signing a deed the grantor should make sure that everything is in order, such as the spelling of names, and legal descriptions.

This is the testimonium clause.

Third Party: One who is not directly involved in a transaction or contract but may be involved or affected by it.

Time is of the Essence: A phrase that, when inserted in a contract, requires that all references to specific dates and time of day noted in the contract be interpreted exactly.

In its absence extreme delays might be acceptable.

Time-Sharing: A form of ownership under which a property is held by a number of people, Each with the right of possession for a specified time interval.

Time sharing is most often applied to resort and vacation properties.

Time Value of Money: A concept that money available now is worth more than the same amount of money in the future because of its potential earning capacity.

Title: Evidence that the owner of land is in lawful possession thereof; evidence of ownership.

See also adverse possession, certificate of title, clear title, color of title, cloud on the title, marketable title.

The title is a legal document that shows the ownership of a specific property.

Title abstract: See abstract of title

Title Insurance Policy: Title insurance is meant to protect an owner’s or lender’s financial interest in real property against loss due to title defects, liens or other matters.

It will defend against a lawsuit attacking the title as it is insured, or reimburse the insured for the actual monetary loss incurred, up to the dollar amount of insurance provided by the policy.


Title Search: A title search is an examination of the public records, laws and court decisions to disclose past and current facts regarding the ownership of a particular piece of real estate.

Title Binder: Temporary title insurance expected to be replaced by a title insurance policy.

Title Company: One in the business of examining title to real estate and/or issuing Title insurance.

Title Defect: An unresolved claim against the ownership of property that prevents presentation of a marketable title.

Such claims may arise from failure of the owner’s spouse, or former part owner, to sign a deed, current liens against the property, or an interpretation in the title of records to a property, or the interruption in the title records to a property.

See cloud on title.

Title Insurance: An insurance policy that protects the holder from loss sustained by defects in the title.

Title Report: A document indicating the current state of the title, such as easements, covenants, liens, and any defects.

The title report does not describe the chain of title. See Abstract of Title.

Title Search: An examination of the public records to determine the ownership and encumbrances affecting real property.

A title search is an examination of the public records, laws and court decisions to disclose past and current facts regarding the ownership of a particular piece of real estate.

Title Theory States: states in which the law splits the title of mortgaged property into legal title, held by the lender, and equitable title, held by the borrower.

The borrower gains full title to the property upon retiring the mortgage debt.

The lender is granted more immediate cure to a default than in lien theory states. Contrast with lien theory states.

To Have and To Hold Clause: See Habendum Clause.

Topography: The state of the surface of the land; may be rolling, rough, flat etcetera.

Torrens System: A title registration system used in some states; the condition of the title can easily be discovered without resorting to a title search.

Tort: a wrongful action that is neither a crime nor a breach of contract.

Town House: A dwelling unit, usually having 2 or more floors and attached to other similar units via party walls.

Town Houses are often used in planned unit developments and condominium developments, which provide for clustered or attached housing and common open space.

See cluster houses, row houses, brownstone.

Township: A six mile square tract delineated by government rectangular system.

Track Record: A developer’s or builder’s reputation for producing on a timely and economical basis.

A good track record can be helpful in arranging financing or attracting investors for a new project.

Tract: A tract of land, generally held for subdividing; a subdivision.

Tract House: A dwelling that has a similar style and floor plan to those of all other houses in a development. Contrast with custom builder.

Trade Area: Same as market area.

Trading Up: Buying a larger more expensive property.

Tranche: A second of a MORTGAGE BACKED SECURITY, differentiated by maturity or by risk.

Transaction Costs: The costs associated with buying and selling real estate.

Transferable Development Rights: A type of zoning ordinance that allows owners of property zoned for low density development or conservation use to sell development rights to other property owners.

The development rights purchased permit the landowner to develop their parcels at higher density than otherwise.

The system is designed to provide for low density uses, such as historic preservation, without unduly penalizing some landowners.

Transfer Tax: One paid upon the passing of title to property or to a valuable interest.

Trespass: Unlawful entry or possession of a property.

Tri-Level: Same as split-level.

Trust: An arrangement whereby property is transferred to a trusted third party by a grantor.

The trustee holds the property for the benefit of another (beneficiary).

Trust Account: A separate bank account segregated from a broker’s own funds, in which the broker is required by state law to deposit all monies collected for clients.

In some states called an escrow account.

Trust Deed: A conveyance of real estate to a third party to be held for the benefit of another.

Commonly used in some states in place of mortgages that conditionally convey title to the lender.

Trustee: One who holds property in trust for another to secure performance of an obligation; the neutral party in the trust deed transaction.

Trustee’s Deed: Same as Deed of Trust.

Trustee’s Sale: A foreclosure sale conducted by a trustee under the stipulations of a deed of trust.

Truth-in-Lending: See regulation Z.

Tudor: An English style imposing looking house with fortress lines. Siding is chiefly stone and brick with some stucco and half timbers. Windows and doors have moulded cement or stone trim around them.

Turnkey Project: A development in which a developer completes the entire project on behalf of a buyer, the developer turns over the keys to the buyer at completion.

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U - Z

Underlying Mortgage: Refers to the first mortgage when there is a wraparound mortgage

Underimprovement: A structure or development of lower cost than the highest and best use of the site.

Underwater: Slang term used to refer to a property whose debt exceeds its value.

Underwriter: One who insures another or takes certain risks.

Underwriting: Underwriting is the process of analyzing risk and matching it to appropriate financing terms.

Four major factors often considered when a lender considers your loan are your credit history, your income vs. debt ratio, down payment or equity, and compensating factors.

Undivided Interest: An ownership right to use and possession of a property that is shared among co-owners.

Unearned Increment: An increase in the value of real estate unrelated to effort on part of the owner; often due to an increase in population.

Unencumbered Property: Real property with free and clear title.

Uniform Residential Appraisal Report (URAR): A standard form for reporting the appraisal of a dwelling.

Uniform Settlement Statement: The form prescribed by RESPA for federally reported mortgages, which must be prepared by whoever handles a closing, must contain certain relevant closing information, and must be given to buyer and seller.

Uniform Standards of Professional Appraisers Practices (USPAP): A set of requirements covering ethics, record keeping, research and reporting promulgated by the appraisal foundation, and adhered to by its members.

Unilateral Contract: An obligation given by one party contingent upon the performance of another party, but without obligating the second party to perform.

Unimproved Property: Land that has receive no development, construction, or site preparation.

Unit-In-Place Method: A technique used by appraisers to estimate the reproduction cost of a structure.

The method involves estimating the cost of producing and installing individual components such as the foundation, exterior walls, and plumbing.

Similar methods include the trade-breakdown method and segregated-cost method.

Unities: Four characteristics required to create joint tenancy: unity of possession, interest, time, and title.

Unrealized Gain: The excess of current market value over cost for an asset that is unsold.

Unrecorded Deed: An instrument that transfers title from one party (grantor) to another party (grantee) without providing public notice of change in ownership.

Recording is essential to protect ones right in real estate.

Urea Formaldehyde Foam Insulation: An effective insulation material that can be injected in a wall through a small opening . May release gases that can be hazardous.

Useful Life: In appraisal, the economic period during which a positive cash flow is expected. In taxes and accounting, the period to depreciate a building.

Usufructuary Rights: Interest that provides for use of a property that belongs to another.

Compare with emblement.

Utilities: Services such as water, sewer, gas, electricity and telephones that are generally required to operate a building.

Utility Easement: Use of another’s property for the purpose of laying gas, electric, water, and sewer lines.

Unilateral Contract: An obligation given by one party contingent upon the performance of another party, but without obligating the second party to conform.

Compare with Bilateral Contract.

Unimproved Property: Land that has received no construction, or site preparation.

Unit: A multifamily residential property, a suite of rooms making up a residence for one tenant. I

t is generally characterized by a private entrance and some method of individuality from other units in the building or complex.

Usury: Charging interest at a higher rate than the maximum rate established by law.

Valuation: Estimated Worth or price.

Variance: Authorization to make changes to a particular property in a manner not permitted by current zoning.

Vendee’s Lien: A lien against a piece of property under contract of sale to secure deposit paid by purchaser.

Violations: Conditions contrary to law or permissable use of property.

Vacant land: Land not currently being used. May have utilities and off site improvements. Contrast with RAW LAND.

Vacate: To move out.

Vacation Home: A dwelling used by the owner occasionally for recreational or resort purposes.

Valid: Having legally binding force; legally sufficient and authorized by law.

VA Loan: Home loan guaranteed by the U.S. Veterans Administration under the servicemen’s readjustment act of 1944 and later.

The VA guarantees restitution to the lender in case of default.

The guarantee is 60% of the loan but not more than thirty six thousand.

Home must be a principal residence.

Valuable Consideration: A type of promised payment upon which a promise can enforce a claim against an unwilling promisor.

Includes money, extension of time, and other equivalents for the grant.

Distinguished from GOOD CONSIDERATION which may be love and affection toward a relative, generosity and the like.

Valuation: Estimated worth or price.

Value: The worth of all rights arising from ownership; the quantity of one thing that will be given in exchange for another.

Value in Use: The worth of a property in a certain use, typically as it is currently being used.

This amount may be greater or less than its value use. Contrast with Highest and Best Use.

Vara: a measurement or unit of length.

Variance: Authorization to make changes to a particular property in a manner not permitted by current zoning.

Variable Interest Rate: An amount of compensation to a lender that is allowed to vary over the maturity of a loan.

Variable-Maturity Loan: A long-term mortgage interest loan, in which the interest rate may be adjusted periodically.

Payment levels remain the same, but the loan maturity is lengthened or shortened to achieve the adjustment.

Variable-Payment Plan: Any mortgage repayment plan that provides for periodic change in the amount of monthly payments.

Changes may appear as a result of the expiration of an interest-only period, a planned step up in payments, or a change in the interest rate due to fluctuation in an index.

Variable rate mortgage (VRM): A long-term mortgage loan applied to residences, under which the interest rate may be adjusted on a 6 month basis over the term of the loan.

Variance: Permission granted by a zoning authority to a property owner to allow for a specified violation of the zoning requirements.

Variances are generally given when compliance is impossible without rendering the property virtually useless.

Vendee: A buyer, generally used for real estate; one who purchases personal property is usually called the buyer.

Vendee’s Lien: a lien against a property under a contract of sale, to secure the deposit paid by a purchaser.

Vendor: A seller, usually of real estate. The term seller is commonly used for personal property.

Vendor’s Lien: See purchase money mortgage.

Veneer: Wood or brick exterior that covers a less attractive and less expensive surface.

Verification: Sworn statements before a duly qualified officer that the contents of an instrument are correct.

Vest: To create an entitlement to a privilege or right.

Veterans Administration (VA): An agency of the federal government that provides services for eligible veterans.

Vicarious Liability: The responsibility of one party for the acts of another.

Violation: An act or condition contrary to law or to permissible use of real property.

Void: Having no legal force or effect; unenforceable. See null and void.

Voidable: Capable of being voided, but not voided unless action is taken to void it. A contract to real estate entered into by a minor is only VOIDABLE by the minor.

Voluntary Alienation: Legal term that describes a sale or gift made by the free will of the seller or donor.

Voluntary Lien: A debt that the property owner agrees to have recorded. Typically a mortgage. Contrast with involuntary lien.

VRM: Variable Rate Mortgage.

Waiver: The involuntary renunciation, abandonment or surrender of some claim, right or privilege.

Waiver of Tax Lien: A form to be signed by a taxing jurisdiction stating that it will not file a lien. The form is typically needed when real estate is sold by an estate.

Walk-Through Inspection: Inspection of premises by a buyer or tenant prior to closing or taking possession.

Warehousing (Loan): The packaging of a number of mortgage loans for sale in the secondary mortgage market by a financial institution or mortgage banker who has originated the loan.

Warranty: A promise contained in a contract.

Warranty Deed: One that contains a covenant that the grantor will protect the grantee against any and all claims. Usually contains covenants assuring good title.

A conveyance of land or property in which the grantor warrants the title to the grantee.

Warranty of Habitability: An implied Assurance given by a landlord that an appartmet offered for rent is free from safety and health hazards.

Waste: Often found in a mortgage or lease contract, or in a life estate, this term refers to property abuse, destruction or damage.

Wasting Asset: Something of value that deteriorates over time.

Water Table: The upper level at which ground water is normally encountered in a particular area.

Wear and Tear: Physical deterioration of property as a result of use, weathering and age.

Wetlands: Land, such as marsh or swamp, normally saturated with water.

White Elephant: A property that is too expensive to maintain or generates too little income to pay for itself.

Will: The disposition of one’s property, to take effect after one’s death.

Without Recourse: Words used in endorsing a note or bill to denote that the holder is not to look to the debtor personally in the event of non-payment. The creditor has recourse only to the property.

Wood Destroying Insect: A term used in certain home inspection forms; as a condition for purchase, the property must be free of these insects.

Working Mortgage: A mortgage loan in which payments are made more frequently than once a month and are timed to coincide with the borrower’s pay period. Typically the payments are deducted directly from the borrower’s paycheck.

Workout Agreement: A mutual effort by a property owner and lender to avoid foreclosure or bankruptcy following a default, generally involves substantial reduction in the debt service burden during an economic depression.

Work Triangle: The total distance of the sides of a “triangle” connecting the refrigerator, range, and sink in a home kitchen; experts say that this distance should be between 15 and 21 feet for maximum efficiency.

Wraparound Mortgage: A mortgage that includes in its balance an underlying mortgage.

Rather than having distinct 1st and 2nd mortgages, a wraparound mortgage includes both.

Write-Down: To diminish in amount on the records, generally to reflect a market value loss.

Write-Off: An accounting procedure where an asset whose value has declined is reserved or taken off the books.

Yard: The open grounds of a property.

Zero Lot Line: A form of Cluster Housing developed in which individual dwelling units are placed on separately platted lots. They may be attached to one another, but not necessarily.

Zone: An area set off by local ordinance for specific use, subject to certain restrictions or conditions.

Zoning: A legal mechanism for local governments to regulate the use of privately owned real estate by specific application of police power to prevent conflicting land uses and promote orderly development.

All privately owned land within the jurisdiction is placed within designated zones that limit the type and intensity of development permitted.

Zoning Ordinance: Act of city or county or other authorities specifying the type of use to which property may be put in specific areas.

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Thomas (TJ) Underwood has been providing financial advice as a tax practitioner since the mid 1980’s and began his financial planning career (while earning a Bachelor of Science Degree in Business Administration/Finance/Marketing), in Detroit at Wayne State University.  From 2010 up to the present he continues to provide visitors timely personal finance and wealth building advice and articles—including real estate advice—on 3 sites that he has created since 2010. 

Even though he is an active real estate Broker in the Atlanta Metropolitan area, he continues to blog consistently to help visitors and those who desire lasting financial and life changing success the opportunity to change their life for the better in a more efficient way. 

You can learn more about him and gain access to all three sites that he has created by going to Who is the creator of page.

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