Terminologies in Real Estate 2

• ENCROACHMENT

- A building, part of building, or obstruction which intrudes upon or invades a highway or sidewalk or trespasses upon property of another.

• PACTO DE RETRO SALE

- A contract of sale with the stipulation that the vendor shall have the right to buy back the property within the agreed period

• QUITCLAIM

- A deed of release or renunciation of a legal right. A deed to relinquish any interest in property which the grantor may have had an protest or adverse claim.

• WARRANTY DEED .

- A deed used to convey real property which contains warranties of title and quiet possessions. In a warranty deed, the grantor is to defend the premises against the lawful claims of the third person

• MASTER DEED

- A document executed by a property owner which creates or converts his properly into a condominium pursuant to Rep. Act. 4726

• LIEN

- A hold or claim which one person has upon a property of another as security for a debt or charge, judgments, mortgages

• PERCENTAGE LEASE

- A lease of a property in which the rental is based upon the volume of sales made upon the leased property

• MECHANICS LIEN

- A lien created by law which exists in favor of persons who have performed or furnished materials in the erection or repair of a building

• OPEN END MORTGAGE

- A mortgage containing a clause which permits the mortgagor to borrow additional money after the loan has been reduced, without re-writing the mortgage

• OPEN MORTGAGE

- A mortgage which can be paid off at any time even before its maturity.

• FIDUCIARY

- A person in a position of trust and confidence, as between a principal and a broker; the broker as fiduciary owes certain loyalty which cannot be breached under rules of agency.

• PRINCIPAL

- A principal is commonly known as the person who engages the agent for representation.

• FORECLOSURE

- A procedure where by property pledged as security for a debt is sold to pay the debt in the event of default in payments or terms. It is a process instituted by a mortgagee by which the mortgaged property is sold at public auction to satisfy the principal obligation which the debtor failed to fulfill. The property that has been transfered to the bank through a foreclosure proceeding is called a Foreclosed Property, which is also known as Bank Acquired Asset.

• ESCALATION CLAUSE

- A provision in a contract providing for periodic proportional upward or downward adjustment of price or consideration

• PACTUM COMMISSORIUM

- A stipulation which authorizes the mortgagee to appropriate the property as his own upon failure of the debtor to fulfill the principal obligation

• PACTUM DE NON ALIENDO

- A stipulation which prohibits the mortgagor from alienating the property within the period of the mortgage

• EARNEST MONEY

- A sum of money tendered by a buyer to the seller which if accepted by the seller shall form part of the purchase price and as proof of the perfection of the contract. It is a sign of good faith on the part of the buyer. Actually, it is a partial payment of the purchase and it must be deducted therefrom. (see also BINDER)

• UNEARNED INCREMENT

- A value added to land for which the owner is in no way responsible, like the increase of population

• WRIT OF EXECUTION

- A writ authorizes and directs the proper officer of the court, usually the sheriff to carry into effect a judgment or decree of the court.

• DEED

- A written instrument which, when properly executed and delivered, conveys title.

• ESCROW

- An agreement entrusted to a third person to be held by him until the performance or fulfillment of some act or condition ETHICS - That branch of moral science, idealism, justness, and fairness, which treats of the duties that a member of a profession or craft owes to the public, to his clients or patron, and to his professional brethren or members.

• LIS PENDENS

- An annotation in the title which serves as notice that the property is subject to a pending litigation. Lis pendens is Latin for "suit pending."This may refer to any pending lawsuit or to a specific situation with a public notice of litigation that has been recorded in the same location where the title of real property has been recorded.

• ENCUMBRANCE

- Anything which affects or limits the fee simple title to property, such as mortgages, easements, or restrictions of any kind. Liens are money encumbrances which make the property security for the payment of a debt or obligations, such as mortgages and taxes.

• LATCHES

- Delay or negligence in asserting one's legal right

• ECC

- Environmental Compliance Certificate is the document issued by the DENR Secretary or the Regional Executive Director certifying that based on the representation of the proponent and the preparers, as reviewed and validate by the EIARC, the proposed project or undertaking will not cause a significant negative environmental impacts; that the proponent has complied with all the requirements of the EIS System, and that the proponent is committed to implement its approved EMP in the EIS or mitigation measures in IEE.

• EMP

- Environmental Management Plan is a section of the EIS that details the prevention, mitigation, contingency and monitoring measures to enhance positive impacts and minimize negative impacts of a proposed project or undertaking.

• ECA

- Environmentally Critical Area is an area that is environmentally sensitive.

• ECP

- Environmentally Critical Project is a project that has a high potential for significant negative environmental impact.

• ESTOPPEL

- Estoppel is one way of how an agency relationship is created. It means that if the principal makes third persons to believe that someone is his agent and that third party deals with the agent, then the principal cannot deny the agency relationship even though it did not exist in fact.

• OBSOLESCENCE

- Impairment of desirability and usefulness brought by physical, economic, functional deterioration, or other causes. Loss in value due to reduced desirability and usefulness of a structure because its design and construction becomes obsolete; loss because of becoming old fashioned and not in keeping with modern needs with consequent loss of income.

• DEFICIENCY JUDGMENT

- It is a judgment for the mortgagor to pay the balance of the obligation if the proceeds of the foreclosure sale is not sufficient to cover the principal obligation.

• TACITA RECONDUCTA

- It means that if at the end of the period of lease, the lessee continues to enjoy the thing leased with the acquiescence of the lessor, it is understood that there is an implied new lease.

• FEE SIMPLE

- Largest estate of ownership in real property in which the owner holds all rights not reserved by society. Absolute ownership.

• DEPRECIATION

- Loss in value brought about by deterioration through ordinary wear and tear and action of the elements, functional or economic obsolescence.

• METES AND BOUNDS

- Measurements and boundaries. A term used in describing the boundary lines of land, setting forth all the boundary lines, together with their terminal points and angles.

• VALUE IN EXCHANGE

- Objective Value. Property's value to an impartial buyer who represent the market.

• DACION EN PAGO

- Payment in kind. Payment of the debt or obligation with a property

• PENRO

- Provincial Environment and Natural Resources Officer of the DENR

• RATIFICATION

- Ratification is one way of how an agency relationship is created. It means that if a person having no authority whatsoever purports to act as an agent and the purported principal later adopts the acts of that agent, an agency relationship has retroactively been created.

• ESCHEAT

- Reversion of property to the state owing to lack of any heirs capable of inheriting; or due to other causes provided by law

• EQUITY OF REDEMPTION

- Right of the original owner to reclaim property sold through judicial foreclosure proceedings by payment of debt, interests, and cost.

• VALUE IN USE

- Subjective Value. The property's value to its occupants or users.

• UNDER IMPROVEMENTS

- That improvement which does not sufficiently improve the land to product he highest and best value of return of which the land is capable.

• PROCURING CAUSE

- The act of a broker leading to the meeting of minds between the parties to a transaction or the consummation of a transaction.

• OPTION MONEY

- The amount paid to a property owner in consideration of giving a prospective buyer or lessee the exclusive right to buy or lease his property within a specified period at the agreed price and term. (Within the option period, the owner cannot sell or lease except to the person who paid the option money).

• LISTING

- The broker's "stock in trade" or the property being handled by the broker: it can be referred to also as the contract between the owner and broker: or the authority of the broker to negotiate the transaction of a property for a commission.

• DEFEASANCE CLAUSE

- The clause in a mortgage that gives the mortgagor the right to redeem his property upon the payment of his obligations to the mortgagee

• ZONING ORDINANCE

- The exercise of police power by the municipality or city and regulating and controlling the character and use of property .

• DEFAULT

- The failure to fulfill a duty or promise or to discharge an obligation; an omission or failure to perform any act.

• OVER IMPROVEMENT

- The improvement which does not produce an adequate return for the amount invested on a building or property. An improvement which is not suitable to the site on which it is placed due to excessive size or cost.

• FORFEITURE

- The loss of money or anything of value, due to failure to perform, such as under an agreement to purchase

• ECONOMIC LIFE

- The period over which a property will yield a return on the investment, over and above the economic or ground rent to land

• ECONOMIC RENT

- The potential rent which a property can command, considering rental of similar or comparable properties in the neighborhood.

• FAIR MARKET VALUE

- The price which a willing seller will sell and a willing buyer will buy, neither being under abnormal pressure.

• PROBATE

- The proof or act of proving at a court that a last will and testament is actually that of the deceased person

• EMINENT DOMAIN

- The right of the government to acquire property for necessary public or quasi public use

• POLICE POWER

- The right of the state to enact laws and enforce them for the order, safety, health, morals and general welfare of the public

• OPTION

- The right to purchase or lease a property at a certain price for a certain designated period, for which right a consideration is paid

• HIGHEST AND BEST USE PRINCIPLE

- The use for a property which will bring the optimum or highest returns or advantage as of a certain time

• PUT OPTION

- This is a contract that authorizes a Broker to offer a property for sale at a premium profiteering price, which is normally a high price above the normal fair market value. When a real estate owner wants to sell his property that is currently under a Professional Real Estate Management Service (PREMS), he will just order a Put Option to the Broker.

• EMB

Environmental Management and Protected Areas Sector of the DENR

• SALESPERSON

- a Real Estate Salesperson is a duly accredited natural person who performs service for, and in behalf of, a real estate broker who is registered and licensed by the Professional Regulatory Board of Real Estate Service for or in expectation of a share in the commission, professional fee, compensation or other valuable consideration.

• IN HOUSE FINANCING

- also known as VENDOR FINANCING, is a real estate buying at installment basis wherein the mortgage agreement is between the property developer and the buyer. When the buyer fails to fulfill the obligation to pay, the ownership of the property reverts back to the developer. In-house financing usually have higher interest rates compared to bank loan. What is bad in in-house financing is that the seller only issues a Contract-to-Sell. In Bank Financing, the seller issues an Absolute Deed of Sale to the name of the buyer, and then automatically mortgage the property to the bank.

• MULTIPLE LISTING

- an arrangement among a group of real estate brokers to share its listings with a pre arrange agreement especially on commission sharing

• EASEMENT

- he right, advantage or privilege which an individual has in land of another, such as a right of way

• TIE POINT

- is a reference point with known geographic position established by the Bureau of Lands. This term is used in Map Reading.

• TIE LINE

- is an imaginary line connecting from the known geographic position (tie point) to the corner of the titled property. This term is used in Map Reading.

• ESCHEAT

- it is the reservation or automatic conveyance of real property to the State upon the owner's death due to the absence of will heirs or other legal claimants, to the title, or when the owner fails to pay the real estate taxes.

• EIS

-Environmental Impact Statement refers to the documents or studies on the environmental impacts of a project including the discussions on direct and indirect consequences upon human welfare and ecological and environmental integrity.

• EQUITY

-The interest or value which an owner has in real estate over and above the mortgage against it.

• KEY LOT

A lot adjoining a corner, at right angle to it and fronting an intersecting street. (Commonly referred to as a "Tumbok" Lot)

• CUL DE SAC

A passageway with one outlet; a blind alley.

• HOLDOVER CLAUSE

A provision in a listing agreement which entitles the broker to commission even when the sale was closed after the period of the authority provided that the buyer was registered by him with the seller and with whom he has negotiated during the period of his authority. It may also be applied in lease contracts wherein this provision determines what happens when the tenant remains beyond the expiration of the lease; example: after the expiration of lease, the landlord serves an eviction notice to the tenant, but the tenant was given an option to remain upon payment of a P3000 per day additional rent, according to the holdover clause. More about Holdover Clause..

COUNTER OFFER

It is a qualified or conditional acceptance

• PARAPHERNAL LEASE -

Property exclusively owned by the wife

• REIT

Real Estate Investment Trust

• RESA

Real Estate Service Act (R.A. No. 9646)

• RED

Regional Executive Director of DENR

• REAL PROPERY

includes all the rights and benefits related to the ownership of real estate.

• REAL ESTATE DEVELOPMENT PROJECT

means the development of land for residential, commercial, industrial, agricultural, institutional and recreational purposes, or any combination of such including, but not limited to, tourist, resorts, reclamation projects, building or housing projects, whether for individual or condominium ownership, memorial parks and others of similar nature.

• ORDINARY ASSET

refers to all properties specifically excluded from the definition of capital assets under Sec. 39 (A)(1) of the NIRC.

• CUSTOMER

refers to person without representation involved in the transaction involved in the transaction. All agents and brokers have a duty to treat customers fairly.

• REAL ESTATE

refers to the land and all those items which are attached to the land. It is the physical, tangible entity which can be seen and touched, together with all the addition on, above or below the ground.

• REAL ESTATE SERVICE PRACTITIONERS

shall refer to and shall consist of Real Estate Salesperson, Real Estate Broker, Real Estate Appraiser, and Real Estate Consultant. :