A

1031 Exchange
The Internal Revenue Code Section that allows a taxpayer to sell an investment property and purchase another investment property in its place without paying capital gains on the proceeds from the sale. Also called Like-Kind Exchange or Tax-Deferred Exchange.

3D Tour
A photographic recording of an interior space using a proprietary camera that permits someone to tour a building through their internet browser.

Abandonment 
Failure to pay taxes.

Absolute Auction 
An auction where the property is sold to the highest qualified bidder; there is no minimum bid or reserve or right of confirmation. Also called Without Reserve.

Abstract of Title 
A brief, chronological summary of the recorded documents affecting title to a particular parcel of real property.

Acceleration Clause 
A contract clause that gives the lender the right to declare all outstanding payments immediately due upon a default by the borrower.

Acceptance 
When a party agrees to the terms of an offer to enter into a contract, thereby creating a binding contract.

Accession 
The acquisition of title to land by its addition to real estate already owned, through human actions or natural processes.

Accounting 
In an agency relationship, the agent’s fiduciary duty to the principal to strictly account for all monies received.

Accretion 
A gradual addition to dry land by the forces of nature, as when the tide deposits waterborne sediment onto shoreline property.

Accrued 
An accumulation.

Accrued Expense 
Item on a settlement statement for which the cost has been incurred, but the expense has not yet been paid. Such expenses are considered to be paid in arrears.

Acknowledgment 
Recognition of validity; a document signer’s declaration to an authorized official (usually a notary public) that he is signing voluntarily.

Acre 
A measure of land area that is equal to 43,560 square feet. One square mile contains 640 acres.

Actionable Fraud 
Fraud that meets certain criteria, so that a victim can successfully sue. The victim must prove the defendant concealed material facts or made false statements (intentionally or negligently) with the intent to induce the victim to enter a transaction, and the victim was harmed by relying on misrepresentations.

Actual Fraud 
An intentional misrepresentation or concealment of a material fact; when a person actively conceals material information or makes statements that he knows are false or misleading.

Actual Notice 
Actual knowledge of a fact, rather than knowledge imputed or inferred by law.

Ad Valorem 
Latin phrase meaning “according to value,” used to refer to taxes assessed on the value of property.

Adequate Consideration 

Consideration that is comparable in value to the consideration the other party to the contract is giving.

Adjustable Rate Mortgage (ARM) 
A type of loan structure that permits the lender to periodically change or vary the interest rate charged, based on a standard index.

Administrator 
A person appointed by the probate court to manage and distribute the estate of a deceased person when no executor is named in the will or there is no will.

Adverse Possession 
The open, notorious, hostile, adverse, exclusive, and continuous possession of another person’s property for a statutory number of years, after which time the adverse possessor may seek to obtain title to the property.

Advertisement 
A public notification in any type of media featuring property for sale or rent or marketing brokerage services; must follow guidelines of federal, state, and local fair housing laws.

Affidavit of Title 
A statement, sworn in front of a notary public or other authorized official, by the seller or grantor of property that identifies the grantor, identifies the grantor’s marital status, and certifies that the grantor has no new judgments, liens, divorces, unrecorded deeds, or other potential title defects since the title examination was completed. It also certifies that the grantor is indeed in possession of the property.

Affiliated Business Arrangement (AfBA) 
A situation where a person in a position to refer settlement services—or an associate of that person—has either an affiliate relationship with or a direct or beneficial ownership interest of more than 1% in a provider of settlement services and who then refers business to that provider or in some way influences the selection of that provider.

Agency 
A relationship of trust created when one person (the principal) gives another person (the agent) the right to represent the principal in dealings with third parties.

Agency Coupled with an Interest 
A situation in which the agent has a personal interest in the subject of the agency, as when one co-owner has been authorized by the others to sell their property.

Agent 
A licensed broker who represents another (the principal) in a real estate transaction; a person authorized to represent the principal in dealings with third parties (clients or customers).

Aggregate Rent 
The total rent for the full term of the lease.

Air Rights 
The right to undisturbed use and control of the airspace over a parcel of land (within reasonable limits for air travel); may be transferred separately from the land.

Alienation 
The transfer of ownership or an interest in property from one person to another, by any means.

Alienation Clause 
A mortgage clause allowing the lender to demand the full and immediate payment of the mortgage because the owner transferred or pledged to transfer ownership of the property. Also called Due on Sale Clause.

Allodial System 
The system of land ownership that allows anyone to own land.

Alluvion 
Solid material deposited along a shore by accretion. Also called Alluvium.

Amenity 
A tangible or intangible feature that enhances or adds value to real estate.

Amenity Purchaser 
A person who values a property based on its ability to fulfill his specific business needs or use, unlike investors who value a property based primarily on its investment return.

American Land Title Association (ALTA) 
A national association of title companies, abstractors, and attorneys. Members agree to promote uniformity, quality, and professional standards in title insurance policies. Policies issued by ALTA members follow specific guidelines.

Americans with Disabilities Act (ADA) 
A wide-ranging federal civil rights law, signed in 1990, that prohibits, under certain circumstances, discrimination based on disability.

Amortization 
Occurs when a loan balance decreases because of periodic installments paid on the principal and interest.

Amortized Loan 
A financial debt that is paid off over a period of time by a series of periodic payments. A loan can be fully amortized or partially amortized requiring a balloon payment to satisfy the debt at the end of the term.

Amperage 
Amount of electricity going through electric wires, measured in amperes (amps).

Anchor Tenant 
Major department or chain store strategically located at shopping centers to give maximum exposure to smaller satellite stores. A center may have several anchor tenants. Also called Magnet Store.

Annexation 
Attaching personal property to land so that it becomes a fixture and the law views it as part of the real property.

Annexation, Actual 
The process of physically attaching personal property to land, causing it to be a fixture.

Annexation, Constructive 
Personal property associated with real property in such a way that the law treats it as a fixture, even though it is not physically attached to the real property.

Annexer 
Person who owns an item as personal property and brings it onto real property, making it a part of the real property.

Annual Percentage Rate (APR) 
Relationship between the total cost of borrowing and the amount financed, represented as a percentage. Also called Effective Rate of Interest.

Annuity 
An amount paid yearly or at other regular intervals, often at a guaranteed minimum amount. Also, a type of insurance policy in which the policy holder makes payments for a fixed period or until a stated age, and then receives annuity payments from the insurance company.

Anticipation 
An economic principle that says value is created by the expectation of future benefits, such as profit on resale, pleasure, tax shelter, production, income, etc. Anticipation is the foundation of the income approach.

Anticipatory Repudiation
When one party to a contract informs the other before the set time of performance that he or she doesn’t intend to perform as agreed. The other party may immediately file a lawsuit for breach of contract without making a tender offer. Also called Anticipatory Breach.

Antitrust
An area of federal law concerned with maintaining competition in private markets by prohibiting unlawful restraint on trade.

Application Fee
The fee that a mortgage lender or broker charges to apply for a mortgage to cover processing costs.

Appraisal Foundation
Nonprofit organization recognized as the authority for professional appraisal standards.

Appraisal Management Company (AMC)
An entity that, for compensation, acts as a third party intermediary by contracting with independent real estate appraisers to perform appraisals for lenders.

Appraiser
A person who estimates the value of property, especially an expert qualified to do so by education and experience.

Appreciation
An increase in the market value of a home due to changing market conditions and/or home improvements.

Appropriative Rights
Water rights allocated by government permit, according to an appropriation system. It is not necessary to own property beside the body of water in order to apply for an appropriation permit.

Appurtenance
A right that goes along with ownership of real property; usually transferred with the property but may be sold separately.

Arbitration
A process where disputes are settled by referring them to a fair and neutral third party (arbitrator). The disputing parties agree in advance to agree with the decision of the arbitrator. There is a hearing where both parties have an opportunity to be heard, after which the arbitrator makes a decision.

Area Variance
Entitles landowners to use land in a way that is typically not allowed by the dimensional or physical requirements of the zoning law.

Arm’s Length Transaction
A transaction that occurred under typical conditions in the marketplace, with each party acting in his or her own best interest.

Arrears 
Owing payment on things for which one has the use of but has not yet paid for, such as property taxes or mortgage interest that is paid in arrears. 2. Not on time; late in making payments or completing work.

As of Right Zoning
Refers to the landowner’s bundle of rights associated with a property; prohibits discrimination among landowners in a particular area.

Asbestos Asbestos
A toxic material that was once used in housing insulation and fireproofing. Because some forms of asbestos have been linked to certain lung diseases, it is no longer used in new homes. However, some older homes may still have asbestos in these materials.

As-Is Clause
A statement in a contract that indicates the property is being sold without warranty in its present condition at the time of the contract.

Ascending Bid
An auction method where the bidding starts low and the auctioneer asks for more, affording the opportunity for buyers to bid more, before the item is sold to the highest bidder.

Assemblage
The act of combining two or more parcels of land into one larger parcel.

Assessed Value

The value placed on a property by a taxing authority for the purpose of taxation. With real estate, this value is usually a fraction of true value.

Asset
An item of economic value owned by an individual, especially those that can be converted to cash.

Assignment
The transfer of rights or interests under a contract to another party. 2. A valuation service that is provided by an appraiser as a consequence of an agreement with a client. A document evidencing the transfer of ownership of a mortgage from one person to another.

Association Fees
Monthly fees paid by each condominium or cooperative owner for common area expenses such as utilities, management, building maintenance, hazard and liability insurance for the common areas of the property, and other amenities.

Assumable Mortgage
A mortgage loan that can be taken over (assumed) by the buyer when a home is sold. An assumption of a mortgage is a transaction in which the buyer of real property takes over the seller’s existing mortgage; the seller remains liable unless released by the lender from the obligation. If the mortgage contains a due-on-sale clause, the loan may not be assumed without the lender’s consent.

Assumption
A homebuyer’s agreement to take on the primary responsibility for paying an existing mortgage from a home seller.

Assumption Fee
A fee a lender charges a buyer who will assume the seller’s existing mortgage.

Attachment Lien
A lien intended to prevent property transfer pending the outcome of litigation.

Attestation
The act of witnessing a person’s signing of an instrument by a notary public.

Attorney-In-Fact
A person specifically designated in an instrument (e.g., power of attorney) to do something legally for another in his stead. An attorney-in-fact has a fiduciary relationship with the principal. An attorney-in-fact need not be an attorney-at-law.

Attorney’s Opinion of Title
A statement issued by an attorney after analyzing an abstract as to quality of title.

Auctioneer
A person licensed or authorized to conduct a public auction of item(s) belonging to someone else. In some states, an auctioneer selling real property must be licensed as a real estate broker, whereas in others he or she must be a licensed auctioneer.

Automated Underwriting
An auto- mated process performed by a technology application that streamlines the processing of loan applications and provides a recommendation to the lender to approve the loan or refer it for manual underwriting.

Avulsion
A natural process in which land is removed from one person’s property and deposited onto another’s. Avulsion happens very suddenly, as in a flash flood.

B

Bad Title
Title with defects making it unmarketable.

Bait and Switch
A deceptive sales technique that involves advertising to a consumer with a particular product, service, or rate to attract them, then persuading them to accept something more costly. Most states have consumer protection laws that make this tactic illegal.

Balance Sheet
A financial statement that shows assets, liabilities, and net worth as of a specific date.

Balloon Framing
A technique of framing where the long vertical pieces (studs) are installed in a continuous piece from foundation to roofline.

Balloon Mortgage
A mortgage with monthly payments often based on a 30-year amortization schedule, with the unpaid balance due in a lump sum payment at the end of a specific period of time (usually 5 or 7 years). The mort- gage may contain an option to “reset” the interest rate to the current market rate and to extend the due date if certain conditions are met.

Balloon Payment
A final lump-sum payment at the end of a loan term to pay off the entire remaining balance of principal and interest not covered by payments during the loan term.

Bankruptcy
A court process that cancels some debt and provides some relief for creditors. Chapter 7, sometimes called straight bankruptcy, is a liquidation proceeding; Chapter 13, sometimes called a reorganization proceeding, is filed by individuals who want to pay off their debts over a period of three to five years.

Bargain and Sale Deed
A type of deed that implies that the grantor owns the property and has the right to convey it, but there are no warranties that go with it.

Base Rent
The minimum amount of rent indicated in a lease.

Base Year
A period for determining a property’s actual operating expenses, typically over the first year of a lease term, that is used as the point of reference against which increases in subsequent years are compared and then passed on to the tenant.

Baseline
Main east-west line designated and named throughout the country for use with the rectangular survey system of legal land description.

Beam
A long piece of timber or metal that spans an opening or part of a building and provides support to a roof or floor above it. Beams are installed horizontally.

Before-tax Income
Income before taxes are deducted. Also known as “gross in- come.”

Benchmark
A bronze disk permanently placed and precisely identified by government survey teams.

Beneficiary
Person designated to receive benefits from a certain act, such as one who benefits from a trust.

Bilateral Contract
A contract in which both parties make a binding promise to the other.

Bill of Sale
A document used to transfer ownership of personal property from one person to another.

Binder
An agreement that may accompany an earnest money deposit for the purchase of real property as evidence of the purchaser’s good faith and intent to complete the transaction. It is important to note a binder is not a sales contract. It is used, however, by attorneys as the blueprint for creating a sales contract.

Biweekly Payment Plan
A fixed rate mortgage set up like a standard 30-year conventional loan, but payments are made every two weeks instead of every month.

Blanket Mortgage
A mortgage loan that covers more than one parcel of real estate, usually used to finance entire subdivision developments rather than an individual unit or lot.

Blind Advertisement
Generally, any real estate advertisement that is used by a licensee regarding the sale or lease of real estate or of licensed activities that does not include the broker’s name or business name. Prohibited in most states.

Blockbusting
The illegal practice of inducing owners to sell their homes (often at a deflated price) by suggesting the ethnic or racial composition of the neighborhood is changing, with the implication that property values will decline as a result. Also called Panic Selling or Panic Peddling.

Blueprint A detailed diagram, usually created by an architect, that is used to evaluate design, determine feasibility, and guide the construction of a structure.

Boilerplate
Standardized language used in contracts for the sake of efficiency and completeness.

Bona fide
In good faith, without fraud.

Boot
Extra, non-like-kind property that can be a part of a like-kind exchange to make up for pricing disparity between like-kind properties.

Bounds
Refers to boundaries; used with the word “metes” in the metes and bounds method of land description.

Boycott
A concerted refusal by two or more people to deal with a particular person or company.

Breach
Violation of a contractual obligation, duty, or law.

Breach of Contract
Failure, without legal excuse, to perform any promise which forms the whole or part of a contract.

Breach of Trust
The failure by someone entrusted with care or property of others to discharge the duties imposed on them under the terms of an agreement or other obligation; may be malicious or due to negligence or carelessness.

Bridge Loan
A short-term loan secured by the borrower’s current home (which is usually for sale) that allows the proceeds to be used for building or closing on a new house before the current home is sold. Also known as a “swing loan.”

Bridge Mortgage
A mortgage loan that occurs between the termination of one mortgage and the commencement of another. When the next mortgage is taken out, the bridge is repaid.

British Thermal Unit (BTU)
The amount of heat needed to raise the temperature of one pound of water by one degree Fahrenheit; used to measure the capacity of furnaces and air- conditioning units.

Broker An individual or firm that acts as an agent between providers and users of products or services, such as a mort- gage broker or real estate broker. See also “Mortgage Broker.”

Broker-Dealer
A person or organization that engages in the business of trading securities, such as stocks and bonds, for its own account or on behalf of its customers.

Broker Price Opinion (BPO)
The estimated value of a property as determined by a real estate licensee or other qualified individual. Often done at the request of a lender for non-federally related property transactions.

Broker Protection Clause
An optional clause that brokers may include in a listing agreement that obligates the seller to compensate the broker even if the property is sold after the listing agreement expires under certain circumstances. Also called Carryover Provision or Extender Clause.

Brokerage
A business that serves as an intermediary between buyers and sellers and/or lessees and lessors of real estate.

Brownfield
Any real property where redevelopment or reuse may be complicated by the presence or potential presence of hazardous waste, petroleum, pollutant, or contaminant.

Budget Mortgage
A mortgage agreement where payments include principal and interest on the loan, plus 1/12 of the year’s ad valorem property taxes and hazard insurance premiums.

Buffer Zone A means by which planners use space to separate two adjoining districts which have incompatible uses. A buffer zone consists of uses which are compatible with uses in each adjoining district.

Building Code
A means of setting construction standards, requiring builders to use particular methods and materials; regulations establishing minimum standards for construction and materials.

Building Department
A group of people responsible for issuing building permits and seeing that building codes are followed and construction and renovations are done by licensed professionals.

Building Code
Local regulations that set forth the standards and requirements for the construction, maintenance and occupancy of buildings. The codes are designed to provide for the safety, health and welfare of the public.

Building Efficiency
The ratio of usable square footage to rentable square footage.

Building Inspection
A process whereby local government officials ensure compliance with state and local building codes.

Building Permits
Official documents from a local government or other authority that allow the beginning of a construction or remodeling project.

Bundle of Rights
All real property rights that are conferred with ownership, including the right of possession, right of quiet enjoyment, right of disposition, right of exclusion, right of control. Also called Bundle of Sticks.

Buy-down
An arrangement whereby the property developer or another third party provides an interest subsidy to reduce the borrower’s monthly payments typically in the early years of the loan.

Buy-down Account
An account in which funds are held so that they can be applied as part of the monthly mortgage payment as each payment comes due during the period that an interest rate buy-down plan is in effect.

Buyer Agency Agreement
A contract between a buyer and a broker that grants the broker the right to represent the buyer in the purchase or lease of property and that makes the buyer responsible for paying commission to the broker. Also called Buyer Broker Agreement.

Buyer’s Agent
A licensed agent representing the interests of the buyer of a property.

Buyer’s Market
A situation in the housing market when there are many homes available for sale, but few buyers.

Bylaws
Rules and regulations that govern the activities of condominium and cooperative associations, including the purpose of the building, rules for elections and voting, and frequency of board of directors or shareholders meetings.

C

Cancellation
Termination of a contract without undoing acts that have been performed under it; can be done without going to court.

Cap
The maximum increase in the interest rate, or the maximum interest rate, that a lender can charge on an adjustable rate mortgage. For an adjustable-rate mortgage (ARM), a limitation on the amount the interest rate or mortgage payments may increase or decrease. See also “Lifetime Payment Cap,” “Lifetime Rate Cap,” “Periodic Payment Cap,” and “Periodic Rate Cap.”

Capacity
Your ability to make your mortgage payments on time. This de- pends on your income and income stability (job history and security), your assets and savings, and the amount of your income each month that is left over after you’ve paid for your housing costs, debts and other obligations.

Capital Expense
An expense incurred to improve property. Also called Reserves for Replacement.

Capital Gain
The taxable profit derived from the sale of a capital asset; the difference between the sales price and the adjusted basis of the property.

Capitalization
Used in the income approach to value. To capitalize income means to convert future income into present (current) value.

Capitalization Rate
The rate of return considered to be a reasonable return on investment given the risk.

Carbon Monoxide
Colorless, odorless gas that is a natural byproduct of fuel combustion; dangerous when inhaled.

Cash Flow
Measure of cash inflow and outflow from an investment. Positive cash flow means more money is coming into the business than is leaving it. Negative cash flow is the converse.

Cash-on-Cash Return
The ratio of income generated by the property to the cash investment (down payment and settlement costs) in the property.

Cash-out Refinance
A refinance trans- action in which the borrower receives additional funds over and above the amount needed to repay the existing mortgage, closing costs, points, and any subordinate liens.

Caveat Emptor
A Latin phrase meaning “Let the buyer beware.”

CC&Rs
A declaration of covenants, conditions, and restrictions; usually recorded by a developer to create a general plan of private restrictions for a subdivision. Also called Deed Restrictions.

Cease and Desist Order
Administrative agency directive to stop an offending activity.

Ceiling Height
The height in feet from the floor to the steel girders. Also called Feet Under Steel.

Ceiling
The maximum increase or decrease in the periodic payment allowable over the life of an adjustable rate mortgage. Also called Lifetime Cap.

Certificate of Eligibility (COE)
A certificate issued by the Department of Veteran’s Affairs to establish status and amount of a veteran’s eligibility to qualify for a loan guarantee.

Certificate of Purchase
A document that is given to the winning bidder of a real estate tax or foreclosure sale. Once the sale is confirmed, a deed will be issued to convey title.

Certificate of Reasonable Value (CRV)
A certificate establishing the current market value of a property based on an approved VA appraisal. Issued by the VA, this certificate places a limit on the amount of a VA-guaranteed loan.

Certificate of Title
A document prepared by an attorney stating the attorney’s opinion of the status of the title to a piece of property, after performing a title search and reviewing the public records. Also called Opinion of Title.

Certificate of Deposit
A document is- sued by a bank or other financial institution that is evidence of a deposit, with the issuer’s promise to return the deposit plus earnings at a specified interest rate within a specified time period.

Certificate of Eligibility
A document is- sued by the U.S. Department of Veterans Affairs (VA) certifying a veteran’s eligibility for a VA-guaranteed mortgage loan.

Certificate of Occupancy
Issued to builders after all inspections have been made and the property is deemed fit for occupancy by meeting the appropriate standards for health and safety.

Chain of Title The history of all of the documents that have transferred title to a parcel of real property, starting with the earliest existing document and ending with the most recent.

Change Orders
A change in the original construction plans ordered by the property owner or general contractor.

Chattel
A piece of personal property.

Chattel Mortgage
A loan that uses only personal property as security.

City Planning
The effort on the part of the city to coordinate, direct, and control the type of development taking place so as to ensure maximum benefits to the populace.

Civil Rights
Fundamental rights guaranteed to all persons by the law. The term primarily refers to constitutional and statutory protections against discrimination based on race, religion, sex, or national origin.

Clear Title
Ownership that is free of liens, defects, or other legal encumbrances.

Clearspan
Open distance between inside faces of support members.

Client A person being represented by a licensee. Also called Principal.

Closing
The process of completing a financial transaction. For mortgage loans, the process of signing mortgage documents, disbursing funds, and, if applicable, transferring ownership of the property. In some jurisdictions, closing is referred to as “escrow,” a process by which a buyer and seller deliver legal documents to a third party who completes the transaction in accordance with their instructions. See also “Settlement.

Closing Agent
The person or entity that coordinates the various closing activities, including the preparation and recordation of closing documents and the disbursement of funds. (May be referred to as an escrow agent or settlement agent in some jurisdictions.) Typically, the closing is con- ducted by title companies, escrow companies or attorneys.

Closing Costs
The upfront fees charged in connection with a mortgage loan trans- action. Money paid by a buyer (and/or seller or other third party, if applicable) to effect the closing of a mortgage loan, generally including, but not limited to a loan origination fee, title examination and insurance, survey, attorney’s fee, and prepaid items, such as escrow de- posits for taxes and insurance.

Closing Date
The date on which the sale of a property is to be finalized and a loan transaction completed. Often, a real estate sales professional coordinates the setting of this date with the buyer, the seller, the closing agent, and the lender.

Closing Disclosure
A standardized document that presents a final, detailed accounting for a real estate transaction, listing each party’s debits and credits and the amount each will receive or be required to pay at closing; required for all RESPA-related transactions. Also called Settlement Statement.

Closing Statement
See “HUD-1 Settlement Statement.”

Cloud on the Title
A claim, encumbrance, or defect that could make the title to real property unmarketable.

Cluster Zoning
Allows developers to provide a varied selection of lot sizes and housing choices within a single area.

Co-borrower
Any borrower other than the first borrower whose name appears on the application and mortgage note, even when that person owns the property jointly with the first borrower and shares liability for the note.

Collateral
An asset that is pledged as security for a loan. The borrower risks losing the asset if the loan is not repaid according to the terms of the loan agreement. In the case of a mortgage, the collateral would be the house and real property.

Co–Insurance
A common clause or provision in building insurance policies under which the insured agrees to maintain insurance on his or her property in an amount equal to at least 80% of the replacement cost. If the property is not insured to that amount and a loss is incurred, the insurance company will make the insured share in the loss on a pro–rata basis.

Code of Ethics
A set of principles and standards based on core values by which a group of professionals are expected to conduct themselves.

Collateral
Property pledged as security for a debt.

Collusion
Secret agreement or cooperation among people, especially for deceitful or fraudulent purposes.

Combined Loan-to-Value (CLTV)
The relationship between the unpaid principal balances of ALL mortgage loans and the appraised value (or sales price if it is lower) of the property.

Commercial Banks
The largest financial intermediary directly involved in the financing of real estate. Their primary real estate activity involves short–term loans.

Commercial Property
Property zoned and used for business purposes, such as warehouses, restaurants, and office buildings (as distinguished from residential, industrial, or agricultural property).

Commingling
Illegally mixing personal or business funds with money held in trust on behalf of a client.

Commission
The fee charged for services performed, usually based on a percentage of the price of the items sold (such as the fee a real estate agent earns on the sale of a house).

Commitment Letter
A binding offer from your lender that includes the amount of the mortgage, the interest rate, and repayment terms.

Common Area Maintenance (CAM)
All costs incurred in maintaining the common areas of a commercial property, including parking lot sweeping and repair, snow removal, common utilities, landscaping, and other maintenance tasks. CAM costs are usually prorated among all tenants.

Common Areas
Those portions of a building, land, or improvements and amenities owned by a planned unit development (PUD) or condominium project’s homeowners’ association (or a cooperative project’s cooperative corporation) that are used by all of the unit owners, who share in the common expenses of their operation and maintenance. Common areas include swim- ming pools, tennis courts, and other recreational facilities, as well as common corridors of buildings, parking areas, means of ingress and egress, etc.

Common Law
Law that has developed over many years through court decisions and other precedents.

Community Property
In some states, property acquired during marriage that is owned jointly by the married couple.

Comparables
Recently sold properties with similar characteristics (size, room count, design, utility, etc.) that are in close proximity to the property being appraised. Also called Comps. An abbreviation for “comparable properties,” which are used as a comparison in determining the current value of a property that is being appraised.

Comparative Market Analysis (CMA)
A method of determining the approximate market value of a home by comparing the subject property to similar homes that have sold, are presently for sale, or did not sell in a given area. Also called Competitive Market Analysis.

Compensation
The valuable consideration one person or entity gives to another person or entity in exchange for the performance of some activity or service.

Compensatory Damages
Damages award intended to compensate a plaintiff for harm caused by the defendant’s act or failure to act, including personal injuries, property damage, and financial loss.

Competency
The ability to do something successfully or efficiently.

Competent Parties
Those who are legally capable of entering into contracts.

Complaint
A formal allegation, generally in writing, accusing someone of misdeeds, usually to formally begin a legal or administrative action.

Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA)
A federal law enacted by Congress whose primary emphasis is the cleanup of inactive hazardous waste sites and the liability for cleanup costs on arrangers and transporters of hazardous substances and on current and former owners of facilities where hazardous substances were disposed. Also called Superfund.

Comprehensive Loss Underwriting Exchange (C.L.U.E.)® Report
A report available from Lexis/Nexis® that tracks insurance claim history on real property and automobiles.

Comprehensive Plan
A written document prepared by a local planning board that identifies the goals, objectives, principles, guidelines, policies, standards, and strategies for the growth and development of a community, including its housing needs. Also called Master Plan.

Concealment
Occurs when a licensee fails to disclose information that is material to a decision to a party to whom the licensee has such a duty.

Concession: Something given up or agreed to in negotiating the sale of a house. For example, the sellers may agree to help pay for closing costs.

Condemnation
Taking private property for public use, through the government’s power of eminent domain. Also called Appropriation. (Condemnation is the action; eminent domain is the right.) 2. A declaration that a structure is unfit for occupancy and must be closed or demolished.

Condition
Provision in a deed or other document that makes the parties’ rights and obligations dependent on the occurrence or non-occurrence of some event.

Conditional Approval
A situation where a lender approves a loan under certain stated conditions.

Conditional Use
A land use that does not comply with the general zoning rules for the zone in which it is located, but is permitted because it benefits the public, for example, a hospital in a residential neighborhood. Also called Special Exception or Special Use.

Condominium
A unit in a multiunit building. The owner of a condominium unit owns the unit itself and has the right, along with other owners, to use the common areas but does not own the common elements such as the exterior walls, floors and ceilings or the structural systems outside of the unit; these are owned by the condominium association. There are usually condominium association fees for building maintenance, property upkeep, taxes and insurance on the common areas and reserves for improvements.

Confidentiality
The protection of the client’s confidential information. This duty lasts even after the agency relationship has terminated.

Conforming Loan
A loan that meets the qualifying standards of Fannie Mae or Freddie Mac, and thus can be sold on the secondary market.

Conformity
The principle that says a particular property achieves its maximum value when surrounded by properties similar in style, function, and utility. Also called Homogeneity.

Consent Decree
A binding agreement reached before judgment in a court case by which the accused party consents to change its behavior without admitting wrongdoing.

Consideration
Anything of value—such as money, goods, services, or promises—that is given to induce another person to enter into a contract. Also called Valuable Consideration.

Construction Loan
A temporary loan used to finance the construction of improvements and buildings on land.

Constructive Eviction
Occurs when the tenant’s use of the premises is substantially disturbed or interfered with by the landlord’s actions or failure to act where there is a duty to act. The tenant is effectively forced to move out and terminate the lease without further liability for further rent.

Constructive Fraud
A negligent misrepresentation or concealment of a material fact; when a person carelessly fails to disclose material information or makes statements that she should realize are false or misleading. Also called Negligent Misrepresentation.

Constructive Notice
Knowledge of a fact imputed to a person by law. A person is held to have constructive notice of something when he or she should have known it, even if he or she did not know it. Everyone is considered to have constructive notice of the contents of recorded documents since everyone is expected to protect their interests by searching the public record.

Consumer
A person or entity seeking or receiving licensed activities.

Consumer Financial Protection Bureau (CFPB)
An agency funded by the Federal Reserve with rulemaking and enforcement authority over many consumer financial laws. Established under provisions of the Dodd-Frank Act.

Consumer Price Index (CPI)
An index published monthly by the United States Bureau of Labor Standards (BLS) considered by many to be the basic indicator of inflation in the U.S.

Contingency Clause
A provision in a contract, deed, law, regulation, guideline, etc. that makes the parties’ rights and obligations depend on the occurrence (or nonoccurrence) of a specified event. Also called Condition, Escape Clause, Subject to Clause, or Kick-Out Clause.

Continuance
A title search performed just prior to settlement to bring a preliminary title report up to date and ensure that no intervening rights to the property have come up. Also called Bring-Down or Continuation.

Contract
An agreement between two or more parties to do, or not do, something. Contracts are legally enforceable promises, with the law providing remedies for breach.

Contract for Deed
An installment contract in which the seller passes possession but retains title to the property until the total or a substantial portion of the purchase price is paid. The two parties are the vendor (seller) and the vendee (buyer). Also called Land Contract, Agreement for Sale, or Installment Sales Contract.

Contract Rent
What tenants are actually paying in rent, as stated in the terms of the lease.

Contractual Capacity
The legal ability to enter into a contract.

Contribution
The principle that a specific item or feature of a property is worth only what it actually contributes in value to that parcel of real estate.

Conventional Mortgage Loan
A mortgage loan that is not insured or guaranteed by the federal government or one of its agencies, such as the Federal Housing Administration (FHA), the U.S. Department of Veterans Affairs (VA), or the Rural Housing Service (RHS). Contrast with “Government Mortgage.”

Conversion Option
A provision of some adjustable-rate mortgage (ARM) loans that allows the borrower to change the ARM to a fixed-rate mortgage at specified times after loan origination.

Conveyance
The act of transferring interest in property from one person to another.

Cooperating Agent
An agent who works with a listing agent to sell property in a real estate transaction; the selling agent who finds a buyer for the listed property. Also called Cooperating Broker.

Cooperative (Co-op) Project
A project in which a corporation holds title to a residential property and sells shares to individual buyers, who then receive a proprietary lease as their title.

Co-Ownership
Any form of ownership in which two or more people share title to a piece of property, holding undivided interests. Also called Co-Tenancy or Concurrent Ownership.

Corporation
An association organized according to strict regulations, in which individuals purchase ownership shares; regarded by the law as an artificial person, separate from the individual shareholders.

Correction Deed
A deed used to correct minor mistakes in an earlier deed, such as misspelled names or errors in the legal description of the property. Also called Deed of Correction or Deed of Confirmation.

Correction Line
In the government survey system, lines that are established at 24-mile intervals (or at every four township lines) north and south of a baseline, re-establishing the six- mile width between the range lines to account for the curvature of the earth.

Corrective Maintenance
Repairing or restoring broken or failed equipment to a specified condition.

Cosmetic Maintenance
Maintenance that increases a property’s appeal. Cost The amount needed to develop, produce, or build something.

Cost Approach
An appraisal method that estimates the value of real estate by establishing the cost new of replacing or reproducing the improvements, minus depreciation, plus the value of the site.

Cost of Funds Index (COFI)
An index that is used to determine interest rate changes for certain adjustable-rate mortgage (ARM) loans. It is based on the weighted monthly average cost of de- posits, advances, and other borrowings of members of the Federal Home Loan Bank of San Francisco.

Cost Manuals
Books, electronic media, and online sources that give estimated construction costs for various types of buildings in different areas of the country.

Cost of Money
The interest rate that people or businesses must pay to use another’s money for their own purposes.

Counteroffer
A response to an offer to enter into a contract, changing some of the terms of the original offer. A counteroffer is a rejection of the original offer (not a form of acceptance) and does not create a binding contract unless the new counteroffer is accepted by the original offeror.

Counterofferee
A person who receives a counteroffer or to whom a counteroffer is made. Counterofferor A person who makes a counteroffer.

Covenant
A contract, promise, or a guarantee (express or implied) in a document such as a deed or lease.

Covenant Against Encumbrances
The assurance that no encumbrances other than those specified in the deed exist.

Covenant of Further Assurance
A promise that the grantor will perform further acts reasonably necessary to correct any defects in the title or in the deed instrument.

Covenant of Quiet Enjoyment
A guarantee that a buyer has the right to exclusive, undisturbed possession of an estate, and the right to be undisturbed by the previous owner or anyone else claiming an interest in the property.

Covenant of Seisin
An assurance that the grantor has the exact estate in the quantity and quality which is being conveyed, i.e., “I own and I have the right to sell it.”

Crawl Space
Unfinished space below the first floor of a house, less than a full story in height, usually containing plumbing and other functional elements.

Credit
The ability of a person to borrow money, or buy goods by paying

over time. Credit is extended based on a lender’s opinion of the person’s financial situation and reliability, among other factors.

Credit Bureau 
A company that gathers information on consumers who use credit. These companies sell that information to lenders and other businesses in the form of a credit report.

Credit History
Information in the files of a credit bureau, primarily comprised of a list of individual consumer debts and a record of whether or not these debts were paid back on time or “as agreed.” Your credit history is called a credit report when provided by a credit bureau to a lender or other business.

Credit Life Insurance: A type of insurance that pays off a specific amount of debt or a specified credit account if the borrower dies while the policy is in force.

Credit Report A listing of a borrower’s credit history, including the amount of debt, record of repayment, job info, address info, etc.

Credit Score
A numerical value that ranks a borrower’s credit risk at a given point in time based on a statistical evaluation of information in the individual’s credit history that has been proven to be predictive of loan performance.

Creditworthy
Your ability to qualify for credit and repay debts.

Creditor
A person who extends credit to whom you owe money.

Cubic Feet
Length x Width x Depth = Cubic Feet. Divide cubic feet by 27 to find cubic yards. Culpable Negligence Occurs if a licensee operates in a reckless, careless, and excessively negligent manner. Culpable negligence is for which one can be held legally accountable.

Curable Depreciation Depreciation is considered curable if the cost of the repair is less than what the repair adds to the value of property.

Curtesy An interest held by a married person in the real property owned by a spouse; refers to a husband’s interest in his wife’s property. Not recognized in all states.

Customer A party to a transaction with whom a real estate licensee does not have a fiduciary duty or relationship, but with whom a licensee must be honest and fair.

D

Dangling Commission
Compensation that licensees may accept from a broker with whom they are no longer associated, assuming they were licensed with that broker at the time the commission was earned and the right to any commission under such circumstances is spelled out in the licensee’s agreement with the broker.

Days on Market (DOM)
The time period between listing a property and either selling or removing it from the market.

DD-214
A Certificate of Release or Discharge from Active Duty issued by the Department of Defense. The DD-214 identifies the character of service and reason for discharge (honorable, dishonorable, etc.).

Debit
A sum of money that is owed.

Debt
The amount of money owed on a note or other promise to pay.

Debt Service
The amount of money paid at regular intervals toward reducing the principal and interest owed on a debt.

Debt-to-Income Ratio
The relationship of a borrower’s total monthly debt to gross monthly income, expressed as a percentage (Total Debt ÷ Income = Ratio %). Debt obligations include housing and long-term debts with more than 10 payments remaining. Also called Total Debt Service Ratio or Back-End Ratio.

Decree
Court order.

Dedication
The donation of real property by a private owner to the public.

Deed
The legal document transferring ownership or title to a property. A written instrument transferring the grantor’s ownership of, or interest in, real property.

Deed in Lieu of Foreclosure
Process by which the deed to a property is given by a borrower to the lender to avoid foreclosure.

Deed of Trust
A security instrument placing into the hands of a disinterested third party (a trustee) a specific financial interest in the title to real property as security for the payment of a note, making the lender the beneficiary. Also called Trust Deed.

Deed of Release
A deed given by lien holders, remaindermen, or mortgagees to relinquish their claims on the property.

Deed Restriction
Limitations placed in a deed by a grantor that restrict the way in which the land may be used, improved, or maintained.

Default
Failure to fulfill an obligation, duty, or promise, as when a borrower fails to make payments, a tenant fails to pay rent, or a party fails to perform a contract. A mortgage, note, or other document will define what constitutes default.

Defeasance Clause
A clause used to defeat or cancel a certain right upon the occurrence of a specific event.

Defeasible Fee
A type of freehold estate conveying ownership interest that comes with a condition. Also called Qualified Fee.

Defect in Title
Any lien, claim or encumbrance, on a particular piece of real estate, that has been properly recorded in the public records. Recorded defects impair clear title and may result in the title being unmarketable.

Deficiency Judgment
A personal judgment against a borrower if the lender/creditor does not receive the amount of the lien plus the costs associated with foreclosure at a foreclosure sale.

Delinquency
Failure to make a payment when it is due. The condition of a loan when a scheduled payment has not been received by the due date, but generally used to refer to a loan for which payment is 30 or more days past due.

Delivery and Acceptance
A requirement for the legal transfer of property through a deed. Delivery refers to the grantor’s intention to transfer the property’s title and signing a deed; acceptance refers to the grantee’s receiving the deed while the grantor is alive.

Deposit
A sum of money placed or kept in a bank account.

Depreciation
The decrease in value to real property improvements caused by deterioration or obsolescence. 2. A loss in value as an accounting procedure for use as a tax deduction for income tax purposes. Also called Cost Recovery.

Derogatory Credit
Credit history showing previous problems in meeting financial obligations.

Descent
An operation of law when real property is transferred to an heir after the death of the owner who leaves no will (intestate).

Designated Agency
A contractual relationship between a broker and a client available in some states in which one or more licensees associated with the broker are appointed to represent the client in an in-house transaction. Also called Split Agency.

Designated Agent
A licensee appointed by a broker as the legal agent of a client. Also called Split Agent.

Devise
To transfer real property by will; real property transferred in a will.

Direct Capitalization Rate
A rate of return, stated as a percent, used to derive a value opinion from the anticipated net operating income a property could generate. It is used for direct capitalization in the income approach. Also called Cap Rate or Rate.

Disability
A physical or mental impairment that substantially limits or curtails one or more major life activities.

Discharge of Mortgage
Required once a borrower’s loan is paid off. The lender issues the discharge of contract, and the borrower should record this document. Also called Release of Lien or Satisfaction of Mortgage.

Disclosure
A real estate licensee’s fiduciary obligation to reveal material facts or defects.

Discount Point
A form of pre-paid interest that a lender charges to increase the yield on a lower-than-market interest rate loan. One point equals 1% of the loan amount; one discount point equals approximately 1/8 of a percent.

Discount Rate
The interest rate charged by Federal Reserve Banks on loans to member commercial banks.

Discrimination
Treating people unequally because of their race, religion, sex, national origin, age, or some other characteristic of a protected class, in violation of civil rights laws.

Disintermediation
The movement of money out of savings accounts and into higher yield investments, such as corporate securities or government instruments.

Disparate Impact
When a law that isn’t discriminatory on the face of it has a greater impact on a minority group than it has on other groups. Also called Disparate Effect.

Disparate Intent
An intentional decision to treat some people differently than others in a similar situation. Also called Disparate Treatment.

Doctrine of Emblements
A rule that allows a tenant farmer to re-enter the land to harvest crops that were planted by the tenant farmer even after the land has been sold to a new owner.

Doctrine of Part Performance
A legal doctrine that allows a court to enforce an oral agreement that should have been in writing, when one party has taken irrevocable steps to perform his or her side of the bargain, and failure to enforce the contract would result in an unjust benefit for the other party.

Dominant Tenant
A person with easement rights on another’s property; either the owner of a dominant tenement or someone who has an easement in gross.

Dominant Tenement
Property that receives the benefit of an appurtenant easement. Also called Dominant Estate.

Double Net Lease
A lease in which the tenant pays two of the expenses associated with property ownership, in addition to paying the rent. Also called Net-Net.

Dower
The interest held by a married person in the real property owned by a spouse; generally refers to a wife’s interest in her husband’s property. Not recognized in all states.

Down Payment
The amount of money a buyer pays to obtain a property, in addition to the money that the buyer borrows.

Dual Agency
An agency relationship in which a licensee represents both buyer and seller (or both landlord and tenant) in the same transaction. Usually requires informed written consent from both parties.

Dual Agent
A licensee who represents both the buyer and the seller (or both landlord and tenant) in a single real estate transaction.

Due Diligence
Investigation to discover facts or liabilities about a property prior to its purchase.

Due on Sale Clause
A clause, included in many mortgages, permitting the lender to require the borrower to repay the outstanding balance when the property is sold. Prevents loan assumption.

Duress
The use of force or improper actions, against a person or property, in order to induce a party to enter into a contract.

E

Earnest Money
Money offered as an indication of good faith regarding the future performance of a purchase agreement.

Easement
A nonpossessory interest and an encumbrance on property that grants the right to use another person’s real property for a particular purpose.

Easement Appurtenant
The right acquired by the owner of one parcel of land to use another’s adjacent land for a specific purpose. There must be two tracts of land; one becomes the dominant tenement (it benefits from the easement), and the other becomes the servient tenement.

Easement by Implication
An easement that occurs because of necessity, such as the conveyance of a land–locked property.

Easement by Prescription
An easement created by open and notorious, hostile, and adverse use of another person’s land for a specific period of time determined by state law. Prescriptive use does not have to be exclusive (the owner may be using the property, too), and the user does not acquire title to the property. Also called Prescriptive Easement.

Easement in Gross
An easement that benefits a person or company, rather than benefiting another parcel of land.

Economic Base
The main business or industry in an area that supports and sustains the community.

Economic Life
The time during which a building can be used for its intended purpose and generate more income than is paid out for operating expenses. Also called Useful Life.

Economic Obsolescence
A loss in value due to factors outside the subject property, such as changes in competition or surrounding land use. Also called External Obsolescence. Economic Rent The amount of rental which a building would receive, if set by the market, as opposed to contract rent set by the lease.

Effective Age
The age of a structure based on the actual wear and tear that the building shows from physical, functional or external obsolescence; not necessarily the structure’s actual age.

Effective Date
The date for which value was established when doing an appraisal.

Effective Gross Income
The anticipated income resulting from the estimated potential gross income from a rental property less an allowance for vacancy and collection losses.

Elevation
Vertical measurement above or below a fixed reference point, most commonly sea level.

Emblement
A crop that is planted and cultivated through someone’s labor and industry. Emblements are considered to be personal property. Also called Fructus Industriales.

Eminent Domain
The government’s constitutional power to take private property for public use, as long as the owner is paid just compensation. (Condemnation is the action; eminent domain is the right.)

Encapsulation
The process of applying a sealant to asbestos-containing material, which penetrates the material’s surface, preventing the release of the dangerous fibers into the air.

Encroachment
A physical object intruding onto neighboring property, often due to a mistake regarding the boundary.

Encumbrance
Any claim, lien, charge, or liability that affects or limits the fee simple title to real property.

ENERGY STAR
A program, managed by the U.S. Environmental Protection Agency, that sets standards for energy-efficient consumer products and homes.

Enforceable Contract
A contract that would be upheld by the courts. The requirements for an enforceable contract are capacity, mutual consent (offer and acceptance), lawful objective, and consideration. In addition, certain contracts must be in writing to be enforceable.

Entitlement
The maximum dollar amount of a loan guarantee to which an eligible veteran is entitled.

Environmental Impact Statement (EIS)
A report required for certain development projects that identifies the positive and negative effects that the proposed action would have on the environment and its inhabitants.

Environmental Protection Agency (EPA)
The federal agency tasked with creating and enforcing environmental protection standards, helping others with environmental pollution problems, and providing research on environmental issues.

Environmental Site Assessment (ESA)
A due diligence analysis of real property to determine the possibility of environmental contamination. An ESA can have up to four phases: I- Investigation; II-Testing; III-Remediation; IV-Management.

Equal Credit Opportunity Act (ECOA)
A federal law that requires lenders to make credit equally available without regard to the applicant’s race, color, religion, national origin, age, sex, or marital status; the fact that all or part of the applicant’s income is derived from a public assistance program; or the fact that the applicant has in good faith exercised any right under the Consumer Credit Protection Act. It also requires various notices to consumers.

Equitable Right of Redemption
The right of a debtor to redeem the property from foreclosure proceedings prior to confirmation of sale.

Equitable Lien
A lien created when justice and fairness would require a court of equity to declare such a lien exists or when conduct of parties would imply that a lien was intended.

Equitable Title
Any present right to acquire legal title to property.

Equity
An owner’s unencumbered interest in property; the difference between the value of the property and the liens, such as a mortgage, against it.

Erosion
A gradual loss of soil due to the action of wind, water, or other forces.

Errors and Omissions Insurance (E&O)
Insurance that protects real estate licensees from liability due to mistakes or negligence. It does not cover claims related to fraud or discrimination.

Escalation Clause
A lease clause that provides for an increase in rent to reflect increases in expenses paid by the landlord, such as real estate taxes, operating costs, and cost of living expenses. Also called Escalator.

Escape Clause
A clause, term, or condition in a contract that allows a party to that contract to avoid having to perform the contract.

Escheat
The reversion of property to the state (or, in some states, the county) after a person dies without leaving a valid will or having any heirs.

Escrow
An item of value, money, or documents deposited with a third party to be delivered upon the fulfillment of a condition. For example, the deposit by a borrower with the lender of funds to pay taxes and insurance premiums when they become due, or the deposit of funds or documents with an attorney or escrow agent to be disbursed upon the closing of a sale of real estate.

Escrow Account
A separate account maintained by a broker for the deposit of clients’ money (i.e., good faith deposits). Also called Trust Account. 2. The account a lender maintains to hold a borrower’s monthly payments for property insurance and property tax until those bills are due. Also called Reserve Account or Impound Account.

Escrow Closing
A settlement procedure conducted by a disinterested third party, often an escrow agent, where the buyer and seller are not present.

Escrow Reserves
An account maintained by a lender for the deposit of borrowers’ extra 1/12 monthly deposits to cover next year’s insurance and tax payments.

Established Business Relationship (EBR)
A relationship that may allow a telemarketer or seller to call a consumer for up to 18 months after the consumer’s last purchase, delivery, or payment (even if the consumer’s number is on the National Do Not Call Registry).

Estate
A possessory interest in real property; either a freehold estate or a leasehold estate. Also called Tenement or Hereditament.

Estate at Sufferance
Retention of possession without the consent of the landlord after the lease has expired. Also called Tenancy at Sufferance.

Estate at Will
An occupation of space, for an indefinite period, which can be terminated by either the lessor or lessee at any time. Also called Tenancy at Will.

Estate for Years
A leasehold estate set to last for a definite period (e.g., one week, three years), after which it automatically terminates. Also called Term Tenancy.

Estate from Period to Period
A leasehold, which is automatically renewed for the same term as in the original lease; notice needed to terminate. Also called Periodic Tenancy, or Estate from Period to Period or Month-to-Month Rental.

Estate in Fee
The maximum possible estate one can possess in real property. Also called Fee Simple or Fee Simple Absolute.

Estoppel
A legal doctrine that prevents a person from asserting rights or facts that are inconsistent with his earlier actions or statements when he failed to object (or attempt to “stop”) another person’s actions.

Ethics
The fundamental principles of honesty and integrity that guide a person’s behavior. Eviction, Actual The legal process of forcing someone off property or preventing someone from re-entering property.

Eviction, Constructive
When a landlord’s act (or failure to act) interferes with the tenant’s quiet enjoyment of the property, or makes the property unfit for its intended use, to such an extent that the tenant is forced to move out.

Eviction, Retaliatory
When a landlord evicts a tenant in retaliation for complaining about code violations or for participating in a tenants’ rights group.

Eviction, Self-help
When a landlord uses physical force, a lockout, or a utility shutoff to remove a tenant, instead of going through the legal process.

Evidence of Title
Evidence of title to real estate is provided through a title report or issuance of title insurance.

Exclusive Agency Buyer Agency Agreement
A contract between a buyer and broker in which the broker earns commission only if he is the broker who finds the property the buyer eventually purchases.

Exclusive Agency Listing
A listing agreement under which a real estate broker (known as the listing broker) acts as an exclusive agent to sell the property for the property owner, but may be paid a reduced or no commission when the property is sold if, for example, the property owner rather than the listing broker finds the buyer. This kind of list- ing agreement can be used to provide the owner a limited range of real estate brokerage services rather than the traditional full range. As with other kinds of listing agreements, if a second real estate broker (known as a selling broker) finds the buyer for the property, then some commission will be paid to the selling broker..

Exclusive Buyer Agency Agreement
A contract between a buyer and broker in which the broker earns the negotiated fee even if the buyer purchases property through another broker or finds it on his own.

Exclusive Right to Sell Listing
The traditional kind of listing agreement un- der which the property owner appoints a real estate broker (known as the list- ing broker) as exclusive agent to sell the property on the owner’s stated terms, and agrees to pay the listing broker a commission when the property is sold, regardless of whether the buyer is found by the broker, the owner or another broker. This is the kind of listing agreement that is commonly used by a list- ing broker to provide the traditional full range of real estate brokerage services. If a second real estate broker (known as a selling broker) finds the buyer for the property, then some commission will be paid to the selling broker.

Executed Contract
A contract in which both parties have fully performed their contractual obligations.

Executor
A person appointed in a will to carry out the provisions of the will. Sometimes called Executrix if female.

Executory Contract
A contract in which one or both parties have not yet completed performance of their contractual obligations.

Express Authority
Actual consent to represent intentionally given by agreement—either oral or written—by a principal to an agent.

Express Contract
An agreement that’s been expressed in words, either spoken or written. External Obsolescence When something outside of a property and outside of the control of a property owner makes it less desirable. Also called Economic Obsolescence.

F

Facilitator
A licensee who assists in the successful completion of a real estate transaction but has no agency relationship with and, therefore, no fiduciary obligation to either party.

Fair Housing Act
A consumer protection law that imposes obligations on (1) credit bureaus (and similar agencies) that maintain consumer credit histories, (2) lenders and other businesses that buy reports from credit bureaus, and (3) parties who furnish consumer information to credit bureaus. Among other provisions, the FCRA limits the sale of credit reports by credit bureaus by requiring the purchaser to have a legitimate business need for the data, allows consumers to learn the information on them in credit bureau files (including one annual free credit report), and specifies procedure for challenging errors in that data. Common name for Title VIII of the Civil Rights Act of 1968 and its amendments.

Fair Market Value
The price at which property would be transferred between a willing buyer and willing seller, each of whom has a reasonable knowledge of all pertinent facts and is not under any compulsion to buy or sell.

Familial Status
A protected group under the federal Fair Housing Act, making it illegal to discriminate against a person for being the parent or guardian of a child under 18 years of age.

Fannie Mae
A New York stock ex- change company. It is a public company that operates under a federal charter and is the nation’s largest source of financing for home mortgages. Fannie Mae does not lend money directly to consumers, but instead works to en- sure that mortgage funds are available and affordable, by purchasing mortgage loans from institutions that lend directly to consumers.

Fannie Mae-Seller/Servicer
A lender that Fannie Mae has approved to sell loans to it and to service loans on Fannie Mae’s behalf.

Fannie Mae/Freddie Mac Loan Limit
The current 2006 Fannie Mae/Freddie Mac loan limit for a single-family home is $417,000 and is higher in Alaska, Guam, Hawaii, and the U.S. Virgin Islands. The Fannie Mae loan limit is $533,850 for a two-unit home; $645,300 for a three-unit home; and $801,950 for a four-unit home. Also referred to as the “conventional loan limit.”

Federal Deposit Insurance Corporation (FDIC)
A federal agency established to insure the deposits in member commercial banks. It determines the maximum insurance amount per account.

Federal Fair Housing Act of 1968
An act prohibiting discrimination in the sale or rental of housing on the basis of race, color, religion or national origin sex, handicap, and familial status.

Federal Home Loan Bank System (FHLB)
A government-sponsored enterprise, created by Congress but privately funded, that supports mortgage lending and related community investment for its member banks and financial institutions.

Federal Housing Administration (FHA): An agency within the U.S. Department of Housing and Urban Development (HUD) that insures mortgages and loans made by private lenders.

Federal Home Loan Mortgage Corporation (FHLMC) “Freddie Mac,” as it is officially known, is a government sponsored entity regulated by the Federal Housing Finance Agency that operates in the secondary mortgage market to purchase mortgage loans from lenders.

Federal Housing Administration (FHA)
A federal agency established in 1943 to increase home ownership by providing an insurance program to safeguard the lender against the risk of non- payment. Currently part of HUD.

Federal National Mortgage Association (FNMA) Commonly known as “Fannie Mae,” this government sponsored entity regulated by the Federal Housing Finance Agency is the largest buyer of existing mortgages in the secondary mortgage market.

Federal Reserve System (FRS)
A federal agency which oversees and regulates monetary policy, which in turn affects interest rates and the availability of credit. All federally chartered commercial banks must be members.

Fee Simple Absolute
The greatest estate (ownership) one can have in real property because it is freely transferable and inheritable, and of indefinite duration, with no conditions on the title. Also called Fee, Fee Simple, or Fee Title.

Fee Simple Determinable
A defeasible fee that terminates automatically if certain conditions occur. The grantor (or his or her heirs) has a possibility of reverter. Also called Determinable Fee.

Fee Simple Subject to a Condition Precedent
A condition in which the grantor retains title to the estate until a specific condition occurs.

Fee Simple Subject to a Condition Subsequent
A defeasible fee that the grantor may terminate if conditions stated in the deed are not met. The grantor (or his or her heirs) has a right of re-entry.

FHA-Insured Loan
A mortgage loan insured by the Federal Housing Administration that protects the lender against losses from default.

Fiduciary
Person in a position of trust, held by law to high standards of good faith and loyalty. Fiduciary Deed A deed executed by a person in a position of trust, held by law to high standards of good faith and loyalty.

First Lien
Claim with highest priority against property; also known as a superior to the rights of subsequent lenders. (Recorded first)

First Mortgage
A mortgage on real estate in which the lender’s rights are superior to the rights of subsequent lenders. (Recorded first)

First Substantive Contact
An event triggering agency disclosure (e.g., prior to entering into a listing agreement, prior to showing a property, at an open house when a buyer displays serious interest, etc.).

First-Time Home Buyer
A person with no ownership interest in a principal residence during the three-year period preceding the purchase of the security property.

Fixed Expenses
Ongoing operating expenses that do not vary based on occupancy levels of the property (e.g., taxes, insurance).

Fixed Fee
Commission agreement by which a fixed dollar amount is paid for the performance of specific real estate services; payment usually requires the successful completion of the transaction.

Fixed-Period Adjustable-Rate Mortgage
An adjustable-rate mortgage (ARM) that offers a fixed rate for an initial period, typically three to ten years, and then adjusts every six months, annually, or at another specified period, for the remainder of the term. Also known as a “hybrid loan.”

Fixed Rate Loan
A mortgage with an interest rate that does not change during the entire term of the loan.

Fixture
A man-made attachment; an item of personal property that has been attached to or closely associated with real property in such a way that it has legally become part of the real property.

Flipping
Purchasing a property and quickly reselling it for a profit.

Flood Certification Fee
A fee charged by independent mapping firms to identify properties located in areas designated as flood zones.

Flood Insurance
Insurance that compensates for physical property damage resulting from flooding. It is required for properties located in federally designated flood hazard zones.

Floodplain
Land that is or has been covered by the 100-year flood, which is one that has a 1% chance of occurring in any given year.

Floor Area Ratio
The maximum size of a building permitted on a development site according to zoning requirements. The floor area ratio (FAR) is typically stated as a percentage, such as 25%, 30%, etc.

Floor Load Capacity
The weight (pounds per square foot) or load that the floor of a structure can handle.

Footer
The support for the foundation of a building. Footers are installed below the frost line and are wider than the foundations that they support.

Forbearance Agreement
When the lender agrees to temporarily reduce, postpone, or suspend the mortgage payment and not proceed with foreclosure as long as the borrower brings the loan current within the specified time.

Forcible Entry and Detainer Action
A summary legal action to regain possession of real property; especially, a lawsuit filed by a landlord to evict a defaulting tenant and regain possession of property. Also called Unlawful Detainer Action.

Foreclosure
The remedy a lienholder uses to force the sale of property, applying the proceeds of the sale toward debt satisfaction.

Foreclosure Action
A lawsuit filed by a creditor to begin foreclosure proceedings.

Foreign Investment in Real Property Tax Act of 1980 (FIRPTA)
A federal law that imposes income tax on foreign persons selling or otherwise disposing of their interest in real property.

Forfeiture
The loss of money, property, rights, or privileges due to a breach of a legal obligation.

Foundation
The basic structure on which the rest of the building will sit. A foundation can be concrete slab, pier and beams, crawl space, or basement.

Framing
The basic load-bearing skeleton of the house to which interior walls, exterior walls, and roof are attached.

Fraud
A material misrepresentation that is known to be false or made recklessly, is made to induce an act, induces an act in reliance on the misrepresentation, and causes injury. Also called Fraudulent Dealing.

Freehold Estate
A possessory interest in real property of uncertain (and often unlimited) duration; an ownership estate in real property; either a fee simple or life estate. The holder of a freehold estate has title.

Friable
A characteristic of asbestos in which it can crumble easily or become powdery when manipulated by hand, releasing particles into the air.

Frontage
The dimension across the access side of a parcel of land. The access could be a road, railroad tracks, or water. When referring to lot size, frontage is the first number. Also called Front Foot.

Fructus Naturales
Naturally occurring plants (“fruits of nature”) generally considered part of real property. Also called Natural Attachments.

Fully Amortized Mortgage
A method of loan repayment in which the dollar amount of each payment is the same. A portion of each payment is applied to interest, and the remainder reduces the principal. Over the life of the mortgage, the outstanding balance is reduced to zero. Functional Obsolescence When an improvement is less desirable because of something inherent or lacking in the design.

G

General Agent
A person authorized to handle a principal’s affairs in one area or in specified areas.

General Contractor
A person who oversees a home improvement or construction project and handles various aspects such as scheduling workers and ordering supplies.

General Lien
A lien against all property of a debtor, instead of a particular piece of property. General Partnership A partnership in which each member has an equal right to manage the business, share in the profits, and carry equal responsibility for the partnership’s debts.

General Warranty Deed
A deed in which the grantor warrants the title against any and all defects that might have arisen before or during his or her period of ownership. Also called Standard Warranty Deed or Simple Warranty Deed.

Genuine Assent
Consent given freely to create a binding contract. If offer or acceptance is given as a result of fraud, undue influence, duress, or mistake, then the contract is voidable by the victimized party.

Gift Letter
A letter that a family member writes verifying that s/he has given you a certain amount of money as a gift and that you don’t have to repay it. You can use this money towards a portion of your down payment with some mort- gages.

Good Consideration
Love and affection.

Good Faith
The general presumption that the parties in a contract or other business transaction will deal with each other honestly and fairly, adhering to the terms of any contract and acting without any intent to defraud, deceive, or otherwise take advantage of the other party.

Good-Faith Estimate
A form required by the Real Estate Settlement Procedures Act (RESPA) that discloses an estimate of the amount or range of charges, for specific settlement services the borrower is likely to incur in connection with the mortgage transaction.

Good Title
One which is free from encumbrances such as liens, pending litigation and other such defects.

Government Mortgage
A mortgage loan that is insured or guaranteed by a federal government entity such as the Federal Housing Administration (FHA), the U.S. Department of Veterans Affairs (VA), or the Rural Housing Service (RHS).

Government National Mortgage Association (GNMA)
A government-owned corporation within the U.S. Department of Housing and Urban Development (HUD) that guarantees securities backed by mortgages that are insured or guaranteed by other government agencies. Popularly known as “Ginnie Mae.”

Government Survey System
Legal description for land referencing principal meridians and baselines designated throughout the country. Also called Rectangular Survey System.

Government-Sponsored Enterprise (GSE)
A privately held corporation with public purposes created by the U.S. Congress to reduce the cost of capital for certain borrowing sectors of the economy.

Graduated Lease
A lease under which rental increases are made at scheduled intervals for specific amounts.

Graduated Payment Buydown
A temporary buydown plan where payment subsidies, usually from a seller or developer, in the early years of the loan keep payments low, but payments increase each year until they’re sufficient to fully amortize the loan.

Graduated Payment Mortgage (GPM)
A financing technique for residential real estate in which monthly payments start at a lower rate and increase periodically over the life of the mortgage; an example is the FHA 245 loan.

Grandfather Clause Creating an exemption from application of a new law due to previously existing circumstances; nonconforming use.

Grant Transferring real estate by means of a deed. Grantee Person receiving a grant of real property.

Granting Clause
A deed clause stating a grantor’s intent to transfer an interest in real property.

Grantor
A person who conveys his interest in real property.

Gratuitous Agency
An agency relationship where a real estate licensee is not compensated for his or her services, but still owes the principal all statutory obligations due to every client.

Gross Income
The actual income received from property before the deduction for any expenses.

Gross Income Multiplier
A conversion factor derived from the sales price of a comparable rental property divided by its gross rent and any other miscellaneous income. This factor is multiplied by the estimated gross rent of the subject to estimate its value.

Gross Lease
A lease for which the tenant pays a fixed amount to the landlord and the landlord pays all expenses related to ownership.

Gross Living Area
Residential space that is finished, heated, and above grade. Garages, finished basements, and storage areas do not count in GLA. Also called Livable Area.

Gross Monthly Income
The income you earn in a month before taxes and other deductions. It also may include rental income, self-employed income, income from alimony, child support, public assistance payments, and retirement benefits.

Gross Rent Multiplier (GRM)
A conversion factor derived from the sales price of a comparable rental property divided by its gross monthly rent. This factor is multiplied by the estimated gross rent of the subject to estimate its value. Also called Gross Monthly Rent Multiplier (GMRM).

Ground Rent
Payment for the use of land when title to a property is held as a leasehold estate (that is, the borrow- er does not actually own the property, but has a long-term lease on it).

Group Home
A residential property where a small number of unrelated people in need of care, support, or supervision can live together.

Growing-Equity Mortgage (GEM)
A fixed-rate mortgage in which the monthly payments increase according to an agreed-upon schedule, with the extra funds applied to reduce the loan balance and loan term.

Guardian’s Deed
A deed authorized by a guardian, which is a person assigned by the court to handle the affairs of an incapacitated person.

H

Habendum Clause
A clause in a deed, usually beginning with “to have and to hold,” that describes the type of estate granted.

Half Timbering
A construction method in which the external walls have exposed wood framing constructed of timber frames, with other materials such as plaster or brick filling the space between them.

Hazard Insurance
Insurance cover- age that compensates for physical damage to a property from fire, wind, vandalism, or other covered hazards or natural disasters.

Heterogeneity
A characteristic of real property; each piece of land, each building, and each house is a unique piece of real estate. Also called Uniqueness.

Highest and Best Use
The most profitable, legally permitted, feasible, and physically possible use of a piece of property.

Holder in Due Course
One who acquires a negotiable instrument in good faith and for consideration, and thus has certain rights above the original payee.

Holdover Tenant
A lessee who remains in possession of property after the lease has expired; a tenant who refuses to surrender possession of property at the tenancy’s end.

Home Acquisition Debt
A loan that a taxpayer takes out to buy, build, or substantially improve a qualified home.

Home Energy Rating System (HERS)
A measurement of a home’s energy efficiency used primarily in the United States; in the HERS Index, the higher the score, the less energy efficient the home is.

Home Equity Debt
A loan that does not qualify as home acquisition debt but is secured by a qualified home.

Home Equity Conversion Mortgage (HECM)
A special type of mortgage developed and insured by the Federal Housing Administration (FHA) that enables older home owners to convert the equity they have in their homes into cash, using a variety of payment options to address their specific financial needs. Sometimes called a “re- verse mortgage.”

Home Equity Line of Credit (HELOC)
Available money that a homeowner can borrow, secured by a second mortgage on the principal residence. The homeowner can access HELOC funds at any time up to a predetermined borrowing limit and use them for non-housing expenditures.

Home Equity Loan
A loan taken by a homeowner that is secured by a mortgage on her principal residence; not for the purchase of the property.

Home Inspection
A professional inspection of a home to determine the condition of the property. The inspection should include an evaluation of the plumbing, heating and cooling systems, roof, wiring, foundation and pest infestation.

Homeowner’s Insurance
A policy that protects you and the lender from fire or flood, which damages the structure of the house; a liability, such as an injury to a visitor to your home; or damage to your personal property, such as your furniture, clothes or appliances

Home Warranty
A contract between a homeowner and a home warranty company that provides coverage for the covers repair or replacement of named components of the home for a specified period of time, such as one year.

Homeowners Association (HOA)
A nonprofit association comprised of homeowners in a subdivision, responsible for enforcing the subdivision’s CC&Rs and managing other community affairs.

Homeowner’s Warranty (HOW)
Insurance offered by a seller that covers certain home repairs and fixtures for a specified period of time.

Homestead
A statutory or legal life estate recognized in some states that protects the estate belonging to a deceased person for the use of a surviving spouse and minor children.

Horizontal Property Acts
A generic name given to state laws that create the legal framework that allows a condominium form of ownership. These acts make it possible for lenders to provide mortgages on condominiums, for tax authorities to assess property taxes, etc.

Housing Expense Ratio
The relationship of a borrower’s total monthly housing expense to gross monthly income, expressed as a percentage (Total Housing Expense ÷ Income = Ratio%). Also called Income-to-Payment Ratio or Front-End Ratio.

Housing and Urban Development (HUD)
An agency of the federal government that oversees many federal housing programs.

HUD-1 Settlement Statement
A final listing of the closing costs of the mort- gage transaction. It provides the sales price and down payment, as well as the total settlement costs required from the buyer and seller.

HVAC
Heating, ventilation, and air conditioning.

Hybrid Loan
An adjustable-rate mortgage (ARM) that offers a fixed rate for an initial period, typically three to ten years, and then adjusts every six months, annually, or at another specified period, for the remainder of the term.

Hypothecation
The act of pledging property to be the security for a loan without giving up possession of it (as with a mortgage).

I

Immobility
Incapable of being moved; fixed in location, such as land.

Implied Agency
An agency relationship created through the behavior (actions or words) of one or both parties.

Implied Contract
An agreement that hasn’t been put into words but is implied by actions of the parties.

Implied Warranty of Habitability
An implied guarantee that the property is safe and fit for human habitation; treated by law as an implicit provision in every residential lease, regardless of the express terms of the lease. Also called Covenant of Habitability.

Improvements
Additions to real property; can be natural (e.g., trees or a lot feature), but usually are man-made; substantial fixtures, such as buildings.

Incentive Zoning
A system by which developers receive zoning incentives on the condition that they provide specific physical, social, or cultural benefits to the community.

Incidental Authority
The authority to do everything reasonably necessary to carry out the principal’s express orders.

Income Approach
An appraisal method that estimates the value of real estate by analyzing the amount of revenue, or income, the property currently generates, or could generate. Also called Capitalization Approach.

Income Property
Real estate developed or purchased to produce income, such as a rental unit.

Increasing and Decreasing Returns
Economic principle stating the addition of more factors of production will add higher amounts to new income up to a certain point, which is the point where the maximum value of the asset has been reached; any further addition of factors of production will do nothing to increase the value.

Incurable Depreciation
Elements of a structure which are neither physically possible nor economically feasible to correct.

Independent Contractor
Under common law, a person who contracts to do a job for another, but who maintains control over how the task is carried out, rather than following detailed instructions.

Index
A number used to compute the interest rate for an adjustable-rate mortgage (ARM). The index is generally a published number or percentage, such as the average interest rate or yield on U.S. Treasury bills. A margin is added to the index to determine the interest rate that will be charged on the ARM. This interest rate is subject to any caps on the maximum or minimum interest rate that may be charged on the mortgage, stated in the note.

Index Lease
A lease in which the amount of the rent is tied to some common index indicator such as the Consumer Price Index or the Wholesale Price Index. As the agreed-upon index increases, the rent goes up by the same percentage of change.

Individual Retirement Account (IRA)
A tax-deferred plan that can help you build a retirement nest egg.

Inflation
An increase in the cost of goods or services, or too many people wanting too few goods.

In-House Transaction
A situation in which a single brokerage represents both the buyer and seller in the same real estate transaction.

Inheritable
An interest in land that can be passed to a relative upon the death of the owner.

Injunction
A court-ordered prohibition against a particular act, as opposed to a judgment for money. Also called Injunctive Relief.

Initial Interest Rate
The original interest rate for an adjustable-rate mortgage (ARM). Sometimes known as the “start rate.”

Injunctive Relief
A court-ordered prohibition against a specific act or conduct, as opposed to a judgment for money. Also called Injunction.

Inquiry
A request for a copy of your credit report by a lender or other business, often when you fill out a credit application and/or request more credit. Too many inquiries on a credit report can hurt your credit score; however, most credit scores are not affected by multiple inquiries from auto or mortgage lenders within a short period of time.

Inquiry Notice
When circumstances should have alerted someone to a possible problem prompting further investigation, a person may be held to have had notice of the problem even if he or she does not have actual knowledge of it.

Installment 
The regular periodic payment that a borrower agrees to make to a lender.

Installment Debt
A loan that is repaid in accordance with a schedule of payments for a specified term (such as an automobile loan).

Insurable Title
Title to property that a title insurance company has agreed to insure against defects that could affect its ownership or value.

Interest
1. A right or share in something, such as a parcel of real estate. 2. A charge a borrower pays to a lender for the use of the lender’s money.

Interest Accrual Rate
The percentage rate at which interest accumulates or increases on a mortgage loan.

Interest Rate
The cost of using money expressed as a percent per period.

Interest Rate Cap
For an adjustable- rate mortgage (ARM), a limitation on the amount the interest rate can change per adjustment or over the lifetime of the loan, as stated in the note.

Interest Rate Ceiling
For an adjust- able-rate mortgage (ARM), the maximum interest rate, as specified in the mort- gage note.

Interest Rate Floor
For an adjustable- rate mortgage (ARM), the minimum interest rate, as specified in the mortgage note.

Intermediation
The flow of funds through financial intermediaries (such as banks and thrifts) on its way to borrowers. Money deposited at financial institutions that then make the money available to corporate borrowers is an example of intermediation.

Interstate Land Sales Full Disclosure Act
A federal law that protects consumers from fraud and abuse in the sale or lease of land. The Act is regulated by the U.S. Department of Housing and Urban Development (HUD) and attempts to prevent marketing schemes that entice consumers to purchase land sight unseen.

Intestate
The state of dying without making a will, causing the decedent’s estate to pass on according to the state laws of descent and distribution.

Invalid
Without legal force.

Investment Property
A property purchased to generate rental income, tax benefits, or profitable resale rather than to serve as the borrower’s primary residence. Contrast with “second home.”

Irrevocable
Not capable of being changed or terminated.

Involuntary Alienation
When title to property is transferred during the owner’s lifetime without his consent.

Involuntary Lien
A lien that arises by operation of law, without the consent of the property owner.

IRS Form 1099-S
A tax form indicating the seller’s proceeds from the sale or transfer of real estate that a settlement officer submits to the Internal Revenue Service.

IRV Formula
A simple calculation for finding the net operating income (I), the capitalization rate (R), or the value (V) of an investment property. When any two factors are known, the third can be determined. Also called Capitalization Rate Formula.

J

Joint Tenancy
A form of co-ownership in which the co-owners have equal undivided interests and the right of survivorship. Requires the unities of time, title, interest, and possession.

Joint Venture
Two or more individuals or companies joining together for one project or a series of related projects, but not as an ongoing business.

Joists
Long beams of wood or steel that span the perimeter a foundation or the load-bearing walls of a roof.

Judgment Lien
A recorded claim against another for a wrongful act, as ordered by a court (often for money owed). The result of a judgment lien can be the forced public sale of real estate.

Judicial Foreclosure
A lawsuit filed by a lender or other creditor to foreclose on a mortgage or other lien; a court-ordered sheriff’s sale of the property to repay the debt.

Jumbo Loan
A loan that exceeds the maximum loan amount that Fannie Mae and Freddie Mac will buy, making it nonconforming.

Junk Fees
Charges assessed to a borrower by the loan originator that serve little if any function and are often hidden in the mortgage documents. Junk fees may or may not pay for an actual service to the borrower, but they typically are not known to the borrower prior to signing.

Junior Lien
An encumbrance that is second in priority to a previously recorded lien or to a lien to which the encumbrance has been subordinated.

Junior Mortgage
A loan that is subordinate to the primary loan or first-lien mortgage loan, such as a second or third mortgage.

Just Compensation
Generally, the fair market value for property; a requirement when the government exercises its constitutional power of eminent domain.

K

Keogh Funds
A tax-deferred retirement savings plan for small business owners or self-employed individuals who have earned income from their trade or business. Contributions to the Keogh plan are tax-deductible.

Kickback
Fee or other compensation given as undisclosed commission for business referrals. Kickbacks are prohibited by RESPA.

N

National Association of Realtors® (NAR®)
America’s largest trade association, representing members involved in all aspects of the residential and commercial real estate industries, including brokers, salespeople, property managers, appraisers, and counselors.

National Do Not Call Registry
National registry managed by the Federal Trade Commission that limits commercial telemarketers from phoning consumers who place their telephone numbers on a list.

Negative Amortization
An increase in the balance of a loan caused by adding unpaid interest to the loan balance; this occurs when the payment does not cover the interest due.

Negligence
Conduct that falls below the standard of care that a reasonable person would exercise under the same circumstances; an unintentional breach of a legal duty resulting from carelessness, recklessness, or incompetence.

Negotiable Instrument
A promissory note or other finance instrument that is freely transferrable.

Neighborhood
A contiguous area labeled by similar traits or physical boundaries. Also called Market Area.

Net Lease
A lease agreement that requires the lessee (tenant) to pay some of the operating expenses and other costs of the property in addition to paying the rent.

Net Listing
A compensation strategy in which the seller sets a net amount that is acceptable for the property; if the actual selling price exceeds that amount, the broker is entitled to keep the excess as commission. Net listings are illegal in many states and discouraged in others.

Net Monthly Income
Your take-home pay after taxes. It is the amount of money that you actually receive in your paycheck.

Net Operating Income (NOI)
Net income after all operating expenses have been deducted.

Net to Seller
An estimate of the money a seller should receive from a real estate transaction based on a certain selling price after all costs and expenses have been paid. Also called Seller’s Net.

Net Worth
The value of a company or individual’s assets, including cash, less total liabilities.

Net Zero Home
A home that produces as much energy as it consumes.

Nonconforming Loan
Loan that does not meet Fannie Mae/Freddie Mac standards and, thus, cannot be sold on the secondary market.

Nonconforming Use
Property use that doesn’t conform to current zoning laws but is allowed because the property was being used that way before the new zoning law was passed. Also referred to as being “grandfathered in.”

Nonexclusive Buyer Agency Agreement
An agreement between a buyer and any number of brokers where a broker earns a commission only if he is the one who introduces the buyer to the property she purchases.

Nonhomogeneity
A characteristic of real property; each piece of land, each building, and each house is a unique piece of real estate. Also called Uniqueness or Heterogeneity.

Nonjudicial Foreclosure
Foreclosure by a trustee under the power of sale clause in a deed of trust without the involvement of a court; not used in all states.

Non-Liquid Asset
An asset that cannot easily be converted into cash.

Nonmarital Property
Any property that was owned prior to the marriage or civil union or that was given or devised by will only to one spouse or legal partner during the term of the marriage or civil union.

Nonpublic Personal Information
A consumer’s personal financial information that would not be easily obtainable by the general public, such as credit reports, bank accounts, transactions.

Nonrecourse Loan
A loan in which the lender cannot collect the personal assets of the borrower or the borrower’s heirs when the collateral for the loan is sold for less than the amount owed on the loan.

Notary Public
A person with the authority to take oaths and acknowledgments.

Note
A signed instrument acknowledging the existence of a debt and the promise to pay.

Notice of Foreclosure
The notification given by a lender to a borrower who has failed to repay a debt according to the terms of the loan, accelerating the due date of the debt to the present and requiring the borrower to repay the entire outstanding balance of the loan at once.

Note Rate
The interest rate stated on a mortgage note, or other loan agreement.

Notice to Quit
A landlord’s notice to a tenant, demanding that he vacate the leased property. Also called Notice to Vacate.

Novation The substitution of a new contract for the original contract. Both parties must give their consent.

Null and Void
Invalid and unenforceable.

O

Obedience
A fiduciary duty that requires a licensee to follow the (legal) instructions of the principal, obey the parameters of the agency relationship, and not stray beyond the scope of authority.

Obsolescence
A loss in value due to reduced desirability and usefulness of a structure because its design and construction have become obsolete. A loss due to a structure’s becoming old fashion, not in keeping with today’s standards or needs, with consequential loss of income.

Occupancy Standard
The establishment of the maximum number of occupants allowable in a given rental dwelling, intended to help promote an adequate and safely occupied inventory of housing.

Offer
The first step in forming a contract when one party makes an offer to another party. An offer requires intent to contract and definite terms. A formal bid from the home buyer to the home seller to purchase a home.

Offer and Acceptance
The necessary elements of mutual assent; for example, an agreement of one party to buy and another party to sell.

Offer of Cooperation
Usually published in a multiple listing service that includes the amount (most frequently a percentage of the sales price or a flat fee) offered as compensation to another brokerage for participating in a property transaction, for example, as a selling agent, buyer’s agent, or leasing agent.

Offeree
A person who receives an offer or to whom an offer is made.

Offeror
A person who makes an offer.

Open House
When the seller’s real estate agent opens the seller’s house to the public. You don’t need a real estate agent to attend an open house.

Open Listing
A nonexclusive listing, given by a seller to as many brokers as he chooses. If the property sells, only the broker who is the procuring cause is entitled to commission.

Open Market Operations
When the Federal Reserve Board sells or buys government securities (or U.S. dollars) as a means of controlling supply and demand and confidence in those items.

Open–End Mortgage
A loan containing a clause that allows the mortgagor to borrow additional money without rewriting the mortgage.

Operating Budget
A budget created to project the income and expenses for a property over a one-year period.

Opt Out
A consumer’s right to terminate future electronic communication from business and commercial entities.

Option to Purchase
A contract giving the optionee the right, but not the obligation, to buy property owned by the optionor at an agreed-upon price during a specified period.

Optionee
A person to whom an option is given.

Optionor
A person who gives an option.

Order of Eviction
A court-ordered directive to a public officer (often the sheriff or marshal) to seize the property to regain possession for the owner.

Ordinance
A statute enacted by the legislative branch of a local government.

Origination
The process of making or initiating a new loan.

Original Principal Balance
The total amount of principal owed on a mortgage before any payments are made

Origination Fee
A fee charged by a lender to cover the administrative costs of making a loan, usually based on a percentage of the loan amount. See Point.

Ostensible Agent
A person who has been given the appearance of being an employee or acting (an agent) for another (principal), which would lead anyone dealing with the ostensible agent to reasonably believe he or she was an employee or agent.

Outbuilding
An accessory structure other than the main structure on land.

Overage Rent
The amount above the base rent that a tenant owes according to the terms of a percentage lease. Also called Percentage Rent.

Owner Financing
A transaction in which the property seller provides all or part of the financing for the buyer’s purchase of the property

Owner-Occupied Property
A property that serves as the borrower’s primary residence.

Owner’s Policy
A type of title insurance issued in the name of the property owner. Coverage runs from the time of purchase for as long as the policyholder owns the property.

Ownership in Severalty
Ownership by a single individual person or legal entity, as opposed to co-ownership. Also called Sole Ownership or Separate Property.

P

Partial Payment
A payment that is less than the scheduled monthly payment on a mortgage loan.

P.O.C. (Paid Outside of Closing)
Any expenses associated with a real estate transaction that are paid outside of closing. Such payments should be noted on a settlement statement.

Package Mortgage
A mortgage where personal property (e.g., appliances) is included in a real estate sale and financed with one contract.

Parcel
A specific lot or piece of real estate, particularly a specified part of a larger tract.

Parol Evidence
Evidence concerning negotiations or oral agreements that were not included in a written contract, altering or contradicting the terms of the written contract.

Partial Performance
A potential remedy to breach of contract where the injured party agrees to accept less than the full terms of the original contract. Also called Accord and Satisfaction.

Partially Amortized Mortgage
A method of loan repayment in which the balance of the outstanding loan is not zero at maturity, and thus a balloon payment is due at that time.

Partition, Judicial
A court action to divide real property among its co-owners, so that each owns part of it in severalty, or (if it’s not practical to physically divide the property) each gets a share of the sale proceeds.

Partition, Voluntary
When co-owners agree to terminate their co-ownership, dividing the property so each owns a piece of the property in severalty.

Pass-Through
An additional operating cost that is passed from a property owner to a tenant, such as when property taxes go up.

Patent Defect
A visible, apparent defect that can be seen in a reasonably thorough inspection of property.

Payment Cap
A limit on the amount of mortgage payment increases that can occur with an adjustable rate mortgage.

Payment Change Date
The date on which a new monthly payment amount takes effect, for example, on an adjust- able-rate mortgage (ARM) loan.

Pecuniary Loss
Monetary loss.

Percentage Lease
A lease for which the tenant’s rent is calculated as a percentage of the tenant’s sales.

Periodic Tenancy
A leasehold estate that continues for successive periods of equal length (such as from week to week or month to month), until terminated by proper notice from either party. Also called Periodic Estate, Estate from Year to Year, or Period-to-Period Tenancy.

Permits
Official government documents that acknowledge work a person wants to do on a property and allow it to be done.

Personal Property
Tangible items that (usually) are not permanently attached to or part of real estate; any property that is not real property; movable property not affixed to land. Also called Chattel or Personalty.

Physical Deterioration
The loss in value due to wear and tear of the structure. Pitch A roof’s vertical rise in inches, divided by its horizontal span in feet.

PITI
An acronym for the four primary components of a monthly mortgage payment: principle, interest, taxes, and insurance (PITI).

PITI Reserves
A cash amount that a borrower has available after making a down payment and paying closing costs for the purchase of a home. The principal, interest, taxes, and insurance (PITI) reserves must equal the amount that the borrower would have to pay for PITI for a predefined number of months.

Planned Unit Development (PUD)
A type of subdivision in which developers do not have to comply with all standard zoning and subdivision regulations such as setback and lot size requirements.

Planning Board
A local entity consisting of appointed members who hold public hearings, investigate solutions for the planning issues in the community, and make long-term recommendations; a planning board is also responsible for approving development projects in the community. Also called Planning Commission.

Plat
A detailed survey map of a subdivision, recorded in the county where the land is located. Subdivided property is often called platted property. Also called Plat Map.

Platform Framing
A technique of framing where a platform is built over the basement or crawl space, and then studs are extended up to the next level, where another platform is built; finally, studs are extended to the roofline.

Platted Property
Land that has been subdivided into blocks and lots.

Plottage
An increase in value, over the cost of acquiring the separate parcels, by successful assemblage, usually due to a change in use.

Pocket Listing
A property for which a broker holds a signed listing agreement with a seller that is not entered into the multiple listing service (MLS).

Point
One percent of the loan amount. A fee charged by a lender for making a loan, calculated based on the loan amount.

Police Power
The constitutional power of state and local governments to enact and enforce laws that protect the public’s health, safety, morals, and general welfare.

Porter’s Wage Escalation Formula
Ties the rent escalation to the wages of the building’s cleaning and building maintenance personnel (called “porters”). The formula provides tenants’ rent will increase a specific amount per square foot for a specified increase in the porter’s hourly wages.

Portfolio Lenders
Financial institutions that make real estate loans that they keep and service in-house instead of selling them on the secondary markets.

Possession
The physical control of real property.

Possessory Interest
An interest in property that entitles the holder to possess and occupy the property, now or in the future; an estate, which may be either a freehold or leasehold.

Power of Attorney
An instrument authorizing one person (called an attorney-in-fact) to act as another’s agent, to the extent stated in the instrument.

Power of Sale Clause
A clause that allows the trustee to sell trust deed property, without court supervision, when terms of the trust deed are not kept.

Preapproval
A process by which a lender provides a prospective borrower with an indication of how much money he or she will be eligible to borrow when applying for a mortgage loan. This pro- cess typically includes a review of the applicant’s credit history and may involve the review and verification of in- come and assets to close.

Pre-Approval Letter
A letter from a mortgage lender indicating that you qualify for a mortgage of a specific amount. It also shows a home seller that you’re a serious buyer.

Predatory Lending
Loan tactics that take advantage of ill-informed consumers through excessively high fees, misrepresented loan terms, or frequent refinancing that does not benefit the borrower.

Preliminary Title Report
A search of liens, encroachments, easements, and any recorded documents in the county records in order to issue title insurance.

Prepaid Expenses
Expense items on a settlement statement the seller has already paid in advance, usually at the beginning of a month for the rest of the month, or at the beginning of the year for the rest of the year or longer.

Prepayment
Any amount paid to reduce the principal balance of a loan before the scheduled due date.

Prepayment Clause
A contract clause that gives a lender the right to charge the borrower a penalty for paying off a loan early.

Prepayment Penalty
Additional money charged by a lender for the borrower paying a loan off early. Not permitted for FHA-insured loans or VA-guaranteed loans.

Prequalification
The informal process of determining how much a potential homebuyer might be eligible to borrow.

Pre-Qualification Letter
A letter from a mortgage lender that states that you’re pre-qualified to buy a home, but does not commit the lender to a particular mortgage amount.

Prescriptive Easement
An easement obtained by the open, notorious, hostile, and continuous use of the property belonging to someone else for a statutory period of time.

Preventive Maintenance
Routine maintenance and inspections to keep equipment and the property in good working order.

Price
The amount asked, offered, or paid for a property.

Price-Fixing
An antitrust violation that occurs when two or more competitors agree to fix the prices that they will charge. In real estate it might occur when brokers agree with other brokers on commission rates; even the implication that brokers have discussed and/or reached agreement on fees could be illegal.

Primary Market
A financial domain in which various entities—including banks and other financial institutions—produce and issue new securities, such as stocks, bonds, and mortgage loans.

Prime Rate
The short-term interest rate a bank charges its most creditworthy customers.

Principal
1. The person who gives authority to an agent, thereby creating an agency relationship. Also called Client. 2. TThe amount of money borrowed or the amount of the loan that has not yet been repaid to the lender. This does not include the interest you will pay to borrow that money. The principal balance (sometimes called the outstanding or unpaid principal balance) is the amount owed on the loan minus the amount you’ve repaid.

Principle of Decreasing Returns
Theory that says that beyond a certain point, the added value of a feature, addition, repair, etc., is less than the actual cost of that item. Also called Principle of Diminishing Returns.

Principle of Increasing Returns
The theory that the added value of an additional feature, addition, repair, etc., is more than the actual cost of the item.

Principal Meridian
North-south lines designated and named throughout the country for use with the government survey system. They are based off the prime meridian, which is the line of longitude passing through the Royal Greenwich Observatory in England (0 degrees).

Private Mortgage Insurance (PMI)
Insurance offered by private companies to insure a lender against a borrower’s default on a loan.

Private Restriction
A restriction imposed on property by a previous owner or the subdivision developer; a restrictive covenant, or a condition in a deed.

Probate
A judicial proceeding in which the validity of a will is established and the executor is authorized to distribute the estate property; when there is no valid will, a judicial proceeding in which an administrator is appointed to distribute the estate to heirs according to the laws of intestate succession.

Procurement Fee Compensation arrangement typically paid to a licensee by a tenant representative for finding space for the tenant. Procurement fees are often fixed fees but could be percentage-based.

Procuring Cause
An uninterrupted series of events leading to the creation of a contract; the party whose efforts resulted in the creation of a binding contract for sale; for example, a broker whose efforts resulted in an executed contract, thus entitling the broker to a commission.

Professional Association
A corporation made up entirely of persons who have a specific type of license or other legal authorization for the purpose of delivering services in one specific area.

Proforma Statement
A schedule of the projected income and expenses for a real estate investment over a given period.

Progression
A principle that says the value of a smaller and less expensive home is positively affected when it is surrounded by larger and more expensive homes. Usually said about the “worst” home in the “best” area.

Promissory Note
A financing instrument that evidences a promise to pay a specific amount of money to a specific person within a specific time frame. A written, legally binding promise to repay a debt.

Property Inspection
An evaluation of the conditions of a property by a trained professional, often required by a lender before approval of a loan is granted. Inspections usually include looking for evidence of termites, structural integrity, septic systems, etc.

Property Management Agreement
A written agreement that creates an agency relationship between the property owner/investor and the property manager.

Property Management
Leasing or renting, or offering to lease or rent, real property of others for a fee, commission, compensation, or other valuable consideration pursuant to a property management employee contract.

Property Manager
A person hired by a real property owner to administer, market, and maintain property, especially rental property.

Proprietary Lease
An exclusive, longer-term lease given to a person who lives in and owns stock in a cooperative.

Pro-Rata Share
The equitable distribution of expenses among tenants for the operating expenses of a building, generally based on the percentage of the property occupied by the tenant.

Proration
The allocation of expenses between buyer and seller in proportion to their actual usage of the item or service.

Public Accommodation
An establishment that is intended to be available to everyone, either as a place of business or commerce or for federal, state, or local government business. It includes hotels, restaurants, retail, gas stations, theaters, museums, etc.

Puffing
Superlative statements about the quality of a property that should not be considered assertions of fact.

Punitive Damages
A damages award that is added to compensatory damages to punish the defendant for malicious or outrageous conduct and discourage others from engaging in similar acts.

Purchase and Sale Agreement
A document that details the price and conditions for a transaction. In connection with the sale of a residential property, the agreement typically would include: information about the property to be sold, sale price, down payment, earnest money deposit, financing, closing date, occupancy date, length of time the offer is valid, and any special contingencies.

Purchase Agreement
A contract in which a seller promises to convey title to real property to a buyer in exchange for the purchase price. Also called Purchase and Sale Agreement, Purchase Contract, Sales Contract, or Earnest Money Agreement.

Purchase Money Mortgage
Generally describes a mortgage used to finance the purchase of real property; may specifically refer to a situation where the seller finances all or part of the sale price of real property for the buyer.

Q

Qualifying Guidelines
Criteria used to determine eligibility for a loan.

Qualifying Ratios
Calculations that are used in determining the loan amount that a borrower qualifies for, typically a comparison of the borrower’s total monthly income to monthly debt payments and other recurring monthly obligations.

Quality Control
A system of safeguards to ensure that loans are originated, underwritten and serviced according to the lender’s standards and, if applicable, the standards of the investor, governmental agency, or mortgage insurer.

Quantity Survey Method
A cost approach appraisal method where the appraiser counts the number and type of each part and material that were used to construct the building, plus adding a cost for labor, profit, permits, etc.

Quiet Enjoyment
The right of an owner or lessee legally in possession of property to uninterrupted use of the property without interference from the former owner, lessor, or any third party claiming superior title.

Quiet Title
A court action to remove a cloud on the title.

Quitclaim Deed
A deed that grants any interest in property that the grantor may have without making any promises, including the promise that the grantor has any interest in the property being conveyed; often used to clear clouds on title.

R

Radiator
A heating device consisting of a series of connected pipes, typically inside an upright metal structure, through which steam or hot water is circulated.

Radon
Decaying uranium that emanates from the earth as an odorless, colorless, and tasteless gas; may cause cancer if allowed to build up in high concentrations.

Range
The six-mile distance between range lines in the rectangular survey system.

Range Line
A line that runs parallel to a principal meridian, marking the land into six-mile strips known as ranges; they are numbered east or west of a principal meridian in the rectangular survey system.

Rate Cap
The limit on the amount an interest rate on an adjustable-rate mort- gage (ARM) can increase or decrease during an adjustment period.

Rate Lock
An agreement in which an interest rate is “locked in” or guaranteed for a specified period of time prior to closing. See also “Lock-in Rate.”

Rate of Return
A percentage relationship between the investment price or equity invested and the composite returns.

Ratified Sales Contract
A contract that shows both you and the seller of the house have agreed to your offer. This offer may include sales contingencies, such as obtaining a mortgage of a certain type and rate, getting an acceptable inspection, making repairs, closing by a certain date, etc.

Real Estate
The actual physical land and everything, both natural and man-made, that is attached (or appurtenant) to it.

Real Estate Cycles
General swings in real estate activity, resulting in increasing or decreasing activity and property values, during different phases of the cycle.

Real Estate Market
The mechanism by which rights and interests in real estate are sold, prices set, supply adjusted to demand, space allocated among competing alternate uses, and land– use patterns set.

Real Estate Investment Trust (REIT)
A company that owns and often operates income- producing real estate; it is organized as a trust with the investors as the beneficiaries.

Real Estate Owned (REO)
Property acquired by a lending institution through foreclosure and held in inventory.

Real Estate Professional
An individual who provides services in buying and selling homes. The real estate professional is paid a percentage of the home sale price by the seller. Unless you’ve specifically contracted with a buyer’s agent, the real estate professional rep- resents the interest of the seller. Real estate professionals may be able to refer you to local lenders or mortgage brokers, but are generally not involved in the lending process.

Real Estate Settlement Procedures Act (RESPA
Federal law dealing with real estate closings that provides specific procedures and guidelines for the disclosure of settlement costs. Implemented by Regulation X, which is under the oversight of the Consumer Financial Protection Bureau.

Real Property
The physical land and everything attached to it, and the rights of ownership (bundle of rights) in the real estate. Also called Realty.

REALTOR®
Any real estate licensee who is a member of the National Association of REALTORS® (NAR) and his or her affiliated state/local boards. Only members may use the term REALTOR® as it’s a registered trademark of NAR.

Reasonable Accommodation
Any change or modification in the environment or the way things are customarily accomplished (e.g., rules, services, policies) that enables a qualified individual with a disability to enjoy equal opportunities.

Reasonable Modification
A structural modification that is made to allow persons with disabilities the full enjoyment of the housing and related facilities.

Reasonable Skill and Care
A fiduciary duty that requires agents to protect clients from foreseeable harm, act in accordance with the high standards set by their profession, and perform their duties as promised.

Receiver
A court–appointed person who is charged with preserving a property, collecting rents, and doing anything necessary to maintain the property’s condition.

Reciprocity
The recognition that states give whereby a licensee of one state can be involved in real estate transactions in other states.

Recital
An element in a deed that identifies how and when the grantor took title to the property. Also called Source Clause.

Reconciliation
The appraisal process of analyzing the values derived from the different appraisal approaches to arrive at a final value estimate or opinion.

Recorder
The public official who keeps records of transactions that affect real property in the area. Sometimes known as a “Registrar of Deeds” or “County Clerk.”

Recording
The filing of a lien or other legal documents in the appropriate pub- lic record.

Recording Fees
Charges for filing documents at the county recorder’s office so that they become part of the public record.

Recourse Loan
A loan in which, in the event of default, the lender can take action against the borrower personally in addition to foreclosing on the property.

Rectangular Survey System
Method of land description used in about 30 states based on imaginary lines of longitude (meridians) and latitude (base lines). Also called Government Survey System.

Redemption Period
The right of a mortgagor (borrower) to make good on a default within a specified time and receive the property back.

Redlining
When a lender refuses to make loans secured by property in a certain neighborhood because of the racial or ethnic composition of the neighborhood.

Referee’s Deed
A deed issued by the court to a property buyer from a bankruptcy sale.

Referral
For the purposes of RESPA, any oral or written action directed to a person that has the effect of affirmatively influencing the selection of a provider of a settlement service or business.

Referral Fee
Consideration of any kind paid or demanded for the referral of a potential or actual buyer, seller, lessor, or lessee of real estate.

Refinancing
A description of an extension of the existing financing either through the same lender or through a new financial arrangement.

Reformation
Changes or modifications to a contract by a court to reflect the true intention of the parties, such as to remedy a minor clerical error.

Regression
A principle that says the value of a larger, more expensive home is negatively affected when it is surrounded by smaller, less expensive homes. Usually said about the “best” home in the “worst” area.

Regulation Z The rules implementing the Truth in Lending Act that require borrowers to be shown how much they are going to pay for credit in dollars and percentages; requires the use of the annual percentage rate (APR) and full disclosure of credit terms in advertising once any specific financials are mentioned.

Rehabilitation Mortgage
A mortgage loan made to cover the costs of repair- ing, improving, and sometimes acquiring an existing property.

Rejection
An irreversible refusal of an offer by an offeree.

Reliction
When a body of water gradually recedes, exposing land that was previously underwater.

Remainder
A future interest that becomes possessory when a life estate terminates, and that someone other than the grantor of the life estate holds.

Remainderman
A person, other than the grantor, who has a future interest in the fee estate when a life estate ends. A remainder interest is inheritable.

Remaining Term
The original number of payments due on the loan minus the number of payments that have been made

Remediation
The act of stopping or reversing something specific, often environmental damage.

Rent
The payment made for the use of land.

Rentable Square Feet
The usable square feet plus a pro-rata portion of the common areas shared among all of the tenants, such as corridors, lobbies, and restrooms. This is the number typically used for calculating base rent. Also called Gross Square Feet.

Renunciation
When someone who has been granted something or has accepted something later gives it up or rejects it, as when a broker withdraws from an agency relationship with a client.

Repayment Plan
An arrangement by which a borrower agrees to make additional payments to pay down past due amounts while still making regularly scheduled payments.

Replacement
Building the functional equivalent of the original building, using modern materials, usually the same size, layout, quality, and utility as the original.

Replacement Cost
The cost to replace damaged personal property without a deduction for depreciation.

Reproduction
Building an exact duplicate of the original building, giving the new structure the exact same look and feel as the original.

Reproduction Cost
The cost of exactly duplicating a structure using the same material and design.

Rescission
The termination of a contract with each party giving anything acquired under the contract back to the other party (verb form is to rescind).

Reserve Requirement
The percentage of customers’ deposits that commercial banks are required to keep on deposit, either on hand at the bank or in the bank’s own accounts; in other words, money the bank cannot lend to other people.

Reserves
Cash on deposit or other highly liquid assets a borrower must have to cover two months of PITI mortgage payments after they make the cash down payment and pay all closing costs.

Reserves for Replacement
An amount of money, considered as an operating expense, set aside for future replacement of major items, such as the roof or heating system.

Resident Manager
Represents a property management firm and may live on the premises of the building being managed.

Residential Lead-Based Paint Hazard Reduction Act
A federal law that requires sellers and landlords to disclose known lead paint hazards for homes built before 1978.

Residual Income
The amount of a borrower’s income remaining after subtracting taxes, housing expenses, and all recurring debts and obligations; a factor when qualifying prospective borrowers for VA-guaranteed loans.

Restitution
The return of consideration by both parties when a contract is rescinded.

Restrictive Covenant
A restriction on real property use imposed by a former owner; promise to do or not do an act relating to real property; usually an owner’s promise to not use property in a particular way. May or may not run with the land.

Return of Investment
The protection of an investor’s equity in an investment.

Return on Investment (ROI)
The gain/profit an investor experiences from an investment relative to its cost to acquire.

Reverse Mortgage
Allows qualified homeowners age 62 or older to convert equity in the home into a lump sum, a monthly cash stream, or a line of credit; becomes due when the last surviving borrower dies, sells the home, or ceases to live in the home for 12 consecutive months.

Reversion
A future interest that becomes possessory when a temporary estate (such as a life estate) terminates, and that the grantor (or grantor’s successors in interest) holds. Also called Reversionary Interest

Reversioner
The person who has a future estate interest in reversion.

Revocation
1. The cancellation of an offer by its withdrawal. Verb form: To revoke. 2. The permanent cancellation of a real estate license.

Rider
An addition, amendment, or addendum to a document or contract.

Revolving Debt
Credit that is extended by a creditor under a plan in which (1) the creditor contemplates repeated transactions; (2) the creditor may impose a finance charge from time to time on an outstanding unpaid balance; and (3) the amount of credit that may be ex- tended to the consumer during the term of the plan is generally made available to the extent that any outstanding balance is repaid.

Right of First Refusal
A provision in an agreement that requires the owner of a property to give another party the first opportunity to purchase or lease the property before he or she offers it for sale or lease to others.

Right of Preemption
An option to be given the first chance to buy or lease property if the owner decides to sell or lease it after receiving a bona fide offer from a third party. Also called Right of First Refusal.

Right of Redemption
The legal ability to buy back one’s property within the time specified in each state after a judicial sale by paying the debt, interest, and certain costs.

Right of Rescission
The right of a consumer to rescind any credit transaction involving his or her principal residence as collateral (except first mortgages), lasting up to midnight of the third business day after the transaction.

Right of Survivorship
A characteristic of statutory survivorship tenancy, joint tenancy, and tenancy by the entirety; surviving co-tenants automatically acquire a deceased co-tenant’s interest in the property.

Right of Way (ROW)
An easement giving the holder the right to cross another person’s land.

Riparian Rights
Water rights of landowners whose land touches a natural body of water, such as a stream, a river, or an inland lake.

Risk
The probability that events will not occur as expected.

Risk Management
Identifying, managing, and minimizing the potential risks on the property.

Root of Title
The deed or other document of transfer that was the first recorded, going back at least as far as required by state law.

Rough-Ins
Any type of interior work to a house or building that is not part of the finish work (e.g., plumbing, HVAC, electrical).

Roundtable Closing
A settlement procedure conducted with all parties present.

Rule of Capture
A legal principle that grants a landowner the right to all oil and gas produced by wells on his or her land, even if it migrated from underneath land belonging to another.

Runs with the Land
Rights, conditions, or restrictions that are associated with the property as opposed to the individual who owns the property. They pass from owner to owner when the land is conveyed; an appurtenance.

Rural Housing Service (RHS)
An agency within the U.S. Department of Agriculture (USDA), which operates a range of programs to help rural communities and individuals by providing loan and grants for housing and community facilities. The agency also works with private lenders to guarantee loans for the purchase or construction of single- family housing.

S

Sale-and-Leaseback
A method for financing commercial or industrial properties in which a company constructs the building, and then becomes a tenant by selling the building to an investor.

Sales Comparison Approach
An appraisal method that estimates the value of real property by performing a market analysis of the area where the subject property is located. Data are collected and adjustments made for the differences in the properties.

Sales Contract
An agreement in which the buyer and seller agree to the terms and conditions of the sale of property. Also called Purchase Agreement.

Salesperson
Generically speaking, a real estate licensee who is associated with a licensed broker and as such may perform most of the acts a broker can on behalf of the broker. Also called Sales Associate.

Satisfaction of Lien
The document a mortgagee gives the mortgagor acknowledging the debt has been paid in full and the mortgage is no longer a lien against the property. Also called Discharge of Mortgage, Satisfaction of Mortgage, or Release of Lien.

Savings and Loan Association
An institution whose primary function is to promote thrift and homeownership. All savings and loan associations must be chartered, either by the federal government or by the state in which they are located. Federally chartered savings and loan associations are owned by the depositors.

Scarcity
A physical characteristic of real property that says there is a limited supply of real estate; the perceived supply of a good or service relative to the demand for the item.

Secondary Financing
When a buyer borrows money from another source in addition to the primary lender to pay for part of the purchase price or closing costs; usually requires a subordination agreement.

Secondary Market
A financial domain in which investors buy and sell securities such as stocks, bonds, or mortgage loans—that were created in the primary market.

Second Mortgage A mortgage subordinate to a first mortgage. Also called Junior Mortgage.

Section Part of a township, one-mile by one-mile square. Used for the rectangular survey system; one section equals 640 acres, 36 sections equal one township.

Section 203(b) FHA Loan
The standard FHA-insured loan program. There are no income limits on this type of loan. The borrower must meet all FHA qualifying standards, and the property cost must not exceed the maximum FHA mortgage amounts.

Section 502 Loan
Loan program through the U.S. Department of Agriculture that either guarantees loans made by approved private lenders or makes direct loans if no local lender is available.

Section 8
Federal program that authorizes the payment of rental housing assistance to private landlords on behalf of low-income households.

Secured Loan
A loan that is backed by property such as a house, car, jewelry, etc.

Securitization
The act of pooling mortgages and then selling them as mortgage-backed securities.

Securities
A financial form that shows the holder owns a share or shares of a company (stock) or has loaned money to a company or government organization (bond).

Security
The property that will be given or pledged as collateral for a loan.

Security Deposit
Money a tenant gives a landlord at the beginning of the tenancy to ensure the tenant will comply with lease terms. The landlord may retain all or part of the deposit at the end of the tenancy to cover unpaid rent, repair costs, or other damages.

Seizin
The possession of a freehold estate; ownership. Also spelled Seisin or Seizen.

Self-Dealing
The conduct of a fiduciary that consists of taking advantage of his position in a transaction and acting in his own interests rather than in the interests of his clients.

Seller Take-Back
An agreement in which the seller of a property provides financing to the buyer for the home purchase. See also “Owner Financing.”

Seller’s Agent
A licensee representing the interests of the seller of a property. Also called Listing Agent.

Seller’s Market
A situation in the housing market when a large number of buyers are looking for housing in an area of limited availability.

Selling Agent
The licensee who secures a buyer for a property; may also be the buyer’s agent if an agency relationship was created.

Service members Civil Relief Act
A federal law that restricts the enforcement of civilian debts against certain military personnel who may not be able to pay because of active military service. It also provides other protections to certain military personnel.

Servicer
A firm that performs servicing functions, including collecting mortgage payments, paying the borrower’s taxes and insurance and generally managing borrower escrow accounts.

Servicing
The tasks a lender performs to protect the mortgage investment, including the collection of mortgage payments, escrow administration, and delinquency management.

Servient Tenement
Property burdened by an easement; the owner of the servient tenement (the servient tenant) is required to allow someone who has an easement (the dominant tenant) to use his property.

Setback
The legal distance that a building must be from a designated position such as a property line; determined by zoning requirements.

Settlement
The process of completing a loan transaction at which time the mortgage documents are signed and then recorded, funds are disbursed, and the property is transferred to the buyer (if applicable). Also called closing or es- crow in different jurisdictions. See also “Closing”

Settlement Officer
The person charged with coordinating the activities and documentation necessary for completing a real estate transaction; usually the one who prepares the settlement statement and conducts the closing. Also called Closing Officer, Closing Agent, Escrow Agent, or Title Agent.

Settlement Services
Any service provided in connection with a prospective or actual settlement of a real estate transaction, including, but not limited to, those provided by lenders, title companies, real estate brokers, property inspectors, attorneys, appraisers, etc.

Settlement Statement
A document that lists all closing costs on a consumer mortgage transaction.

Severable
The concept that one part or provision of a contract that can be held unenforceable without making the entire contract unenforceable.

Severalty Ownership
Ownership by one person.

Severance
A process through which fixtures are detached from the land and so revert back to personal property.

Share Loan
A co-op loan signifying a buyer is purchasing shares in a corporation rather than a mortgage for ownership of property.

Sheathing
A layer of boards or other wood or fiber materials applied to the outer studs, joists, and rafters to strengthen the structure and serve as a base for exterior weatherproof covering.

Sheriff’s Deed
A deed issued by the court to a property buyer from a foreclosure sale. Also called Master Commissioner’s Deed.

Sheriff’s Sale
A foreclosure sale held after a judicial foreclosure. Also called Execution Sale. Short Sale A lender-approved sale from which the proceeds are not sufficient to cover the mortgage amount(s).

Single-Family Properties
One- to four-unit properties including detached homes, townhouses, condominiums, and cooperatives, and manufactured homes attached to a permanent foundation and classified as real property under applicable state law.

Site
A parcel of land with enhancements, such as grading and utility installation, that make it ready for a building or structure.

Site Valuation
The value of land with the enhancements necessary to make it ready for building, such as water, sewer, electricity, etc.

Situs
A place where something exists; the exact position of a piece of property, giving it value.

Slab-on-Grade Construction
A concrete foundation built directly on the ground.

Slander
Defamation of another’s character or reputation through that which is spoken or heard.

Sloped Joist
A roof construction with joists angled up from the outer load-bearing walls to the pitch of the roof allowing for vaulted ceilings.

Soft Second Loan
A second mortgage whose payment is forgiven or is deferred until resale of the property.

Sole Proprietorship
A business owned and managed by one person (or for tax purposes, legally married spouses) who is personally liable for all business debts. It could be organized under a fictitious or assumed name.

Spam
The use of any electronic messaging system to send unsolicited bulk messages indiscriminately.

Special Agent
An agent with limited authority to do a specific thing or conduct a specific transaction. Also called Limited Agent.

Special Assessment
A tax levied only against properties that benefit from a public improvement (e.g., a sewer or streetlight) to cover the cost of the improvement; creates a special assessment lien (an involuntary, specific lien).

Special Warranty Deed
A deed in which the grantor warrants against defects that have occurred after the grantor acquired title.

Specific Lien
A lien that attaches only to a particular parcel of property.

Specific Performance
Legal remedy in which a court orders someone who has breached a contract to perform as agreed, rather than paying monetary damages.

Specifications
Written documents describing in detail the requirements for the scope of construction, including materials, standards, and expected quality of the finished structure. Also called Specs.

Spot Zoning
The illegal rezoning of a single parcel or a small area to benefit one or more property owners rather than carry out the objectives of the master plan.

Square Foot Method
A cost approach appraisal method for determining the cost of a building, relying on cost manuals.

Stable Monthly Income
Income that can reasonably be expected to continue in the future.

Statute
A law passed by a state legislature.

Statute of Frauds
A state law that requires certain types of contracts to be in writing and signed to be enforced.

Statute of Limitations A law requiring parties to file a particular type of lawsuit within a specified time after the event giving rise to the suit occurred.

Statutory Nonemployee
A real estate licensee who is treated as an independent contractor for tax purposes when specified conditions are met: proper licensing; compensation based on sales; and services performed under a written contract.

Statutory Right of Redemption
Allows a mortgagor (debtor) to redeem property for a set timeframe after a foreclosure sale, regardless of the timing of other events. Time frames vary by state; not available in all states.

Statutory Right of Reinstatement
A way for borrowers to cure the default by bringing the mortgage current—including all accumulated costs and fees—between the time they receive a notice of foreclosure and the time a foreclosure action is filed.

Statutory Year
A year based on a monthly rate that considers each month to be 30 days. There are 360 days in a statutory year. Also called Banker’s Year.

Steering
Channeling prospective buyers or tenants to particular neighborhoods based on their race or membership in another protected class.

Stigmatized Property
A property that is undesirable to most people because of a past event, such as a crime or death. Such stigmas as not considered material facts that must be disclosed.

Straight Loan
A non-amortized loan in which the regular payments cover only the interest over the term of the loan. Also called Bullet Loan.

Straight-Line Depreciation
Simple depreciation method that takes the total cost of a building and divides that by the number of years the building is expected to be useful.

Straw Buyer
A person who receives payment from a conspirator for the use of that person’s name and credit history to apply for a loan, generally as part of a mortgage fraud scheme. Also called Straw Owner or Straw Purchaser.

Strict Foreclosure
A foreclosure action where the court establishes a date by which the borrower must pay the balance in full; once the deadline passes, the lender is awarded title to the property. This type of foreclosure is uncommon.

Stud
A vertical beam that serves to frame a structure (also known as a wood-framing member). Subagent A real estate licensee who acts as a representative of his or her broker’s client, providing the same duties and responsibilities of that broker.

Subdivided Land
Land that has been divided into two or more parcels for the purpose of development, such as a residential subdivision.

Subject Property
Property for which a value estimate is sought. Also called Base.

Sublease
The transfer when the original lessee retains a reversion. Primary liability remains with the original lessee.

Subordinate Financing
Any mortgage or other lien with lower priority than the first mortgage.

Subordination Agreement A written agreement between lienholders on a property that changes the priority of mortgages, judgments, and other liens.

Subprime Loan
Loan that has more risks than allowed in the conforming market. Also called B-C Loans or B-C Credit.

Substantial Performance
When a promisor doesn’t perform all of his contractual obligations but does enough so that the promisee is required to fulfill her part of the deal.

Substitution
A principle that says an informed buyer will not pay more for a property, or a feature in a property, than a comparable substitute.

Subsurface Rights The implication that an owner of land has rights to the land below the surface to the center of the earth, even though this part is not documented.

Suit
A court action to enforce a legal claim or right.

Suit to Quiet Title
A lawsuit to determine who has title to a piece of property, or to remove a cloud from the title. Also called Quiet Title Action.

Superfund Amendments and Reauthorization Act (SARA)
An act that amended CERCLA, designated more money to the Superfund trust, and established new environmental laws and regulations.

Supply and Demand
An economic principle that says that for all products, goods, and services when supply exceeds demand, prices will fall, and when demand exceeds supply, prices will rise.

Survey
The formal process of locating and measuring the boundaries of a property and identifying the improvements, encroachments, and easements that are associated with that parcel.

Sweat Equity
A borrower’s contribution to the down payment for the purchase of a property in the form of labor or services rather than cash.

Syndicate
An association of people or entities formed to operate an investment business. A syndicate is not a recognized legal entity; it can be organized as a corporation, partnership, or trust. Also called Syndication.

T

Tacking
Successive periods of use or possession by more than one person that are added together to equal the number of years required under state law for easement by prescription or adverse possession.

Takeout Loan
A loan that provides permanent financing after construction is complete.

Taking
The government’s unconstitutional condemnation of private property for public use without just compensation.

Tax Base
The total tax–assessed value of all real property in a particular jurisdiction. Tax Rate The rate, normally stated in units of $100, multiplied by the assessed value of property to determine the amount of the property tax due.

Tax Depreciation
The expensing of the cost of business or investment property over a set number of years, determined by the IRS to be an asset’s useful life (27 1/2 years for residential property; 39 years for non-residential property).

Tax Shelter
Property or other investments that give owners certain income tax advantages, such as deductions for property taxes, mortgage interest, and depreciation.

Taxation
The right of government to require contribution from citizens to pay for government services.

Taxes and Insurance
Funds collected as part of the borrower’s monthly payment and held in escrow for the payment of the borrower’s, or funds paid by the borrower for, state and local property taxes and insurance premiums.

Tenancy at Sufferance Possession of property by a tenant who once had a valid lease but stays on after the lease expires without the landlord’s permission. Also called Estate at Sufferance.

Tenancy at Will
When a tenant is in possession with the owner’s permission, but with no definite lease term and no rent being paid (or rent is not paid on a regular basis); e.g., a landlord lets a holdover tenant remain on the premises without paying rent until the landlord finds a new tenant. Also called Estate at Will.

Tenancy by Entirety
A form of property co-ownership by legally married spouses, in which each spouse has an undivided one-half interest without the other’s consent. Not recognized in all states.

Tenancy from Period to Period
A leasehold that is automatically renewed for the same term as in the original lease; notice needed to terminate. Also called Periodic Tenancy or Estate from Year to Year.

Tenancy in Common
A form of co-ownership in which two or more persons each have an undivided interest in the entire property (unity of possession), but no right of survivorship.

Tenant
Someone in lawful possession of real property, especially, someone who has leased property from the owner.

Tendering Performance
An unconditional offer by one party to perform his part of a contract. Also called Tender.

Term Mortgage
A method of financing in which only interest is paid during the term of the loan. At maturity, generally five years or less, the entire principal is due. Also called Straight Loan.

Termite Inspection
An inspection to determine whether a property has termite infestation or termite damage. In many parts of the country, a home must be inspected for termites before it can be sold.

Testate
Refers to someone who has died and left a will.

Tester A person working with a fair housing organization who pretends to be interested in buying or renting property from someone suspected of unlawful discrimination. Also called Checker.

Third-Party Origination
A process by which a lender uses another party to completely or partially originate, pro- cess, underwrite, close, fund, or pack- age a mortgage loan. See also “Mortgage Broker.”

Tie-In Agreement
An antitrust violation in which one transaction or agreement is contingent on a second transaction or agreement. Also called Tying Agreement.

Time is of the Essence
A clause added to a contract that voids the contract when the deadline passes. The party that fails to perform by the deadline is in material breach of the contract.

Timeshare
A form of property ownership in which several buyers purchase interests in real estate with each party having the right to use the property and facilities for a designated period of time.

Title
The actual, lawful ownership interest in a property; title is not a document but a concept.

Title Company
A company that examines and insures title claims for real estate purposes through a thorough examination of property records.

Title Insurance
Insurance policy that protects lenders and homeowners against losses resulting from undiscovered title defects and encumbrances.

Title Report
A report issued by a title company disclosing the condition of the title to a specific piece of property; evidence of marketable title.

Title Search An inspection of the public record to determine all rights and encumbrances affecting title to a piece of property.

Title Theory State
State in which a mortgagee holds actual title to property until the loan is repaid.

Topography
A description of surface features of land.

Tortious Interference
The causing of harm by disrupting something that belongs to someone else, for example, interfering with a contractual relationship so that one party fails to execute the promises made.

Townhome
Property developed for co-ownership where each co-owner has a separate fee simple interest in an individual unit, including its roof and basement, as well as the land directly beneath the unit, and an undivided interest in the common areas of the property.

Township
Square division of land, six miles by six miles, in the rectangular survey system. One township contains 36 sections.

Township Line
East-west lines that run parallel to baselines in the rectangular survey system.

Township Tier
The six-mile distance between township lines in the rectangular survey system.

Trade Equity
Real estate or assets given to the seller as part of the down payment for the property.

Trade Fixtures
Items of personal property that are annexed to leased property, are necessary to a trade or business, and are removable by the tenant prior to the expiration of the lease.

Traditional Agency
An agency relationship where the seller is the only client and the buyer has no representation.

Transactional Brokerage
A brokerage relationship in which a licensee provides only administrative services to buyers and sellers to assist in a transaction, remaining neutral and having no fiduciary responsibility toward either party. Also called Facilitational Brokerage, Transaction Broker, or Non-Agency.

Transfer Tax
A tax levied on the transfer of a piece of real property from one person to another; it could be levied by the state, the county, or the municipality. Also called Excise Tax.

Transferability
The ability to exchange goods and services. In real estate legal rights are transferred.

Treasury Index
An index that is used to determine interest rate changes for certain adjustable-rate mortgage (ARM) plans. It is based on the results of auctions by the U.S. Treasury of Treasury bills and securities.

TRID Rule
The TILA-RESPA Integrated Disclosure rule, issued by the Consumer Financial Protection Bureau to create standardized, consumer-friendly disclosure documents, including the Loan Estimate and the Closing Disclosure.

Trigger Term
A word or phrase that describes a loan, including the down payment, terms, and monthly payment. If an ad uses a trigger phrase, disclosures are needed to tell everything about the loan. Also called Trigger Phrase.

Triple Net Lease
A lease in which the tenant pays all the expenses associated with the owning the property, in addition to paying the rent. Also called Net-Net-Net.

Trusses
A framework of rafters, posts, and beams that forms the support for a roof.

Trust
A legal arrangement in which title to property (or funds) is vested in one or more trustees who manage the property (or invest the funds) on behalf of the trust’s beneficiaries, in accordance with instructions set forth in the document establishing the trust.

Trustee
A person appointed to manage a trust on behalf of the beneficiaries; in a trust deed, an independent third party that holds the trust instrument.

Trustor
The property owner who grants a trust to a third party for the benefit of someone else.

Truth in Lending Act (TILA
Federal law that requires disclosure of the terms of credit by a creditor to a prospective borrower. Implemented by Regulation Z, which is under the oversight of the Consumer Financial Protection Bureau.

Two- to Four- Family Property
A residential property that provides liv- ing space (dwelling units) for two to four families, although ownership of the structure is evidenced by a single deed; a loan secured by such a property is considered to be a single-family mort- gage.

U

Underground Storage Tank (UST)
A receptacle, at least 10% of which is underground, used to store a variety of substances such as heating oil, gasoline, chemicals, and hazardous waste; an environmental hazard due to corrosion, spills, leaks, and overfills. Regulated by the EPA.

Underwater
A home purchase loan that has a higher balance than the market value of the property. Being underwater may limit the homeowner’s options for refinancing and will prevent the homeowner from selling the property without having the assets to pay the difference needed to pay off the loan.

Underwriter
Individual who evaluates a loan application to determine its risk level for a lender or investor; final decision maker on a loan application.

Underwriting
The process used to determine loan approval. It involves evaluating the property and the borrower’s credit and ability to pay the mortgage.

Undisclosed Dual Agency
A situation where one licensee represents both buyer and seller in a single transaction without the informed consent of both parties; very often may be practiced unintentionally, possibly by implying to one party that he is represented when, in fact, there is no agency agreement.

Undivided Interest
A co-tenant’s interest, giving him the right to possession of the whole property, rather than a particular section of it.

Undue Influence
When a person in a fiduciary capacity or in a position of authority misuses the trust or power in order to unfairly induce a party to enter into a contract.

Unencumbered Property
Property that is free and clear of any liens.

Unenforceable Contract
A contract that a court would refuse to enforce. Some oral contracts or vaguely worded contracts could be deemed unenforceable.

Uniform Commercial Code (UCC)
A general set of laws adopted by most states with the purpose of providing uniformity and fairness in commercial transactions, including the sale and financing of personal property.

Uniform Residential Appraisal Report (URAR)
A standard appraisal report form used by lenders and appraisers because it has been developed and approved by secondary mortgage market players Fannie Mae and Freddie Mac.

Uniform Residential Loan Application (URLA)
A standardized form from Fannie Mae or Freddie Mac that lenders require potential borrowers to complete with pertinent information about the borrower and the property.

Uniform Standards of Professional Appraisal Practice (USPAP)
Professional appraisal standards developed by The Appraisal Foundation, and now recognized throughout the United States as accepted standards of appraisal practice.

Unilateral Contract
A contract in which only one party is legally bound.

Unit-in-Place Method
A cost approach appraisal method for determining the cost of a building that estimates the cost of reproducing a building by looking at the unit cost of each of the component parts of the structure and adding all of these unit costs together.

Unity of Interest
Each co-owner having an equal interest (equal share of ownership) in a piece of property.

Unity of Person
Both co-owners considered to be a single legal entity. Applies only to married couples and is necessary for tenancy by the entirety.

Unity of Possession
Each co-owner being equally entitled to possession of the entire property because the ownership interests are undivided.

Unity of Time
Each co-owner acquiring title at the same time.

Unity of Title
Each co-owner acquiring title through the same instrument (deed, will, or court order).

Universal Agent
An agent authorized to do everything that can be lawfully delegated to a representative.

Unsecured Loan
A loan made on the signature and credit of the borrower, not secured by collateral.

Urban Renewal
The acquisition of certain areas by government action for the purpose of redevelopment.

Urea-Formaldehyde
A potentially toxic chemical used in manufacturing building materials such as particleboard, plywood paneling, carpeting, and insulation.

Urea-Formaldehyde Foam Insulation (UFFI)
A type of insulation that can be blown in or injected behind walls and other areas that are hard to access.

Usable Square Feet
The space actually available and usable for a tenant’s personnel, furniture, and equipment. The actual floor space inside the exterior walls of leased premises. Space the tenant can physically use inclusive of interior walls and columns. Also called Net Square Feet.

USDA Rural Development
Loan programs from the U.S. Department of Agriculture; guarantees loans or makes direct loans for the purchase of an existing home, construction or a new home, renovations or repairs, relocation of a home, or the purchase a site for the loan.

Use Variance
Allows landowners to use their land in a way that is not permitted under current zoning laws, such as commercial use in a residential zone.

Unsecured Loan
A loan that is not backed by collateral.

Usury
Charging a higher interest rate than the law allows.

V

VA-Guaranteed Loan
A mortgage loan made by lenders to eligible veterans that is guaranteed by the U.S. Department of Veterans Affairs, protecting the lender up to specified dollar amounts.

Valid Contract
A binding, legally enforceable contract. It meets all of the legal requirements for contract formation.

Value
The monetary relationship between properties and those who buy, sell, or use those properties.

Valuable Consideration
Anything of value offered as an inducement.

Variable Expense
Operating expense necessary to the property, but dependent on the property’s occupancy level.

Variable Interest Rate Mortgage (VRM)
A type of loan in which the interest rate charged by the lender varies according to some index not controlled by the lender.

Variance
A permit obtained from the local zoning authority allowing the holder to use property or build a structure in a way that deviates from strict compliance with a zoning ordinance.

Vendee
The buyer in a land contract.

Vendee’s Lien
A lien held by the purchaser for the purchase price paid if the seller defaults on the delivery of the deed.

Vendor
The seller in a land contract.