Aceable Real Estate: Georgia Pre-Licensing

involuntary alienation

"transfer of title to property without the owner's consent, usually carried out by operation of law

limited agency

(see special agency)

dominant tenement

The parcel of land that benefits from an easement appurtenant by having the right to cross another owner's adjacent land

mortgage insurance premium (MIP)

a borrower-paid insurance required for fha loans, in order to insure lender in case of borrower default/foreclosure

transaction coordinator

a broker who facilitates a transaction absent of any agency relationship with either party to the contract; has no fiduciary duties for ministerial acts performed; also known as a facilitator

operating budget

a budget created by using anticipated revenues and expenses for a property over a period of one year

joint venture

a business arrangement that a partnership uses when joining forces for a single business objective achieved through one or a series of related projects; this arrangement will not be of an ongoing nature

limited partnership

a business entity composed of both general and limited partners. the general partners manage the business and limited partners are passive investors.

general partnership

a business entity in which all co-owners actively share power, responsibilities, and profit

chlordane

a chemical compound formerly used in pesticides that is dangerous to human health

escalation clause

a clause in a lease allowing payments to increase in relation to a specified factor or index

defeasance

a clause in a security document that indicates that the loan has been satisfied and that either the title will be conveyed to the borrower or the lien on the borrower's title will be removed

acceleration clause

a clause in a security instrument which makes the entire loan amount due immediately upon default

Due on Sale/Alienation Clause

a clause in the mortgage contract that triggers the right of the lender to demand payment in full of the loan upon the sale or conveyance of the property

habendum clause

a clause within a deed that clarifies the type and extent of interest conveyed by the granting clause

tie-in agreement

a conditional agreement stipulating that a product or service desired by a party will be offered only on the condition that the party also agree to purchase a second product or service; considered an antitrust violation

implied contract

a contract created by the actions of the parties rather than by express agreement

lease

a contract in which one party conveys property to another for a specific predetermined period of time, generally in return for periodic payment

void contract

a contract lacking legal or binding force; often used with phrase "null and void"

counteroffer

a contract proposal submitted in response to a previous offer, modifying the terms of the original offer; considered a rejection of the original offer

subordination agreement

a contract that gives a mortgage recorded at a later date priority over a previously recorded mortgage

executory contract

a contract that has not yet been fully performed (both sides have not yet completed their obligations)

sales contract

a contract used in the sale of real property that outlines the responsibilities of the parties and terms of the sale; also known as a purchase agreement, purchase contract, or purchase and sale agreement.

bilateral contract

a contract wherein both parties are obligated to perform in an exchange of promises

unilateral contract

a contract wherein one party makes a promise and is obligated to perform if a second party chooses to accept the offer and perform in exchange for that which was promised

voidable contract

a contract wherein the wronged party has the option to perform, enforce, or void the contract

deficiency judgment

a court's decision to attach a judgement (lien) against a debtor in the event that a property's sale price does not cover outstanding debts

FICO score

a credit scoring system created by the Fair Isaac Corporation

multiple listing service (MLS)

a database in which local member brokers share listings so that fellow member brokers can procure buyers for those properties and establish compensation for properties sold jointly

special warranty deed

a deed that only protects against defects that occurred while the grantor held title

master deed

a deed used to convey land to a condominium developer

deed In trust

a deed used to convey ownership interest to the trustee under a land trust

tax deed

a deed used to convey the title to a property sold in a tax foreclosure sale

bargain and sale deed

a deed without any covenants or warranties against encumbrances that only implies the grantor has possession of the property and holds the right to convey title

fee simple condition subsequent

a defeasible fee estate that comes with specific requirements (or conditions)

Department of Housing and Urban Development (HUD)

a department in the federal government which is in charge of enforcing federal fair housing laws

legal description

a description of a property that is distinct and precise enough to distinguish it from all other properties

datum

a designated base reference point to elevation used by surveyors to determine the elevations of land or property in an area

certificate of title

a document prepared by a title attorney detailing the chain of title and offering an opinion on the marketability of the seller's title

lis pendens

a document recording at the courthouse giving notice that a lawsuit is pending on a particular piece of property

material fact

a fact that, if known, could cause someone to take a different course of action or make a different decision regarding the property to be purchased

Americans with Disabilities Act

a federal civil rights law passed in 1990 which prohibits discrimination against and create standards for people with disabilities

Civil Rights Act of 1866

a federal law that prohibits discrimination in housing based on race

Fair Housing Act of 1968

a federal law that prohibits discrimination in housing based upon race, color, religion, or national origin and was amended to include sex, disability, and familial status

reverse mortgage

a financial arrangement where a homeowner pledges equity to a lender in exchange for periodic payments of the pledged equity; essentially selling off equity in their home in exchange for monthly payments

monument

a fixed landmark, whether natural or human-made, used as a reference point in a metes and bounds legal description

graduated-payment mortgage

a fixed-rate mortgage that has a lower initial interest rate in its first years, but includes gradual increases each year

judicial foreclosure

a foreclosure that is processed through the court

special agency

a form of agency relationship in which agents are limited in scope and are only authorized to perform acts permitted by their principal

timeshare

a form of co-ownership where each owner has use of the property at a different prescribed period of time, also known as interval ownership

freehold estate

a form of ownership with an indeterminate length

Government National Mortgage Association (Ginnie Mae)

a government-owned entity that supports the secondary mortgage market by guaranteeing mortgage-backed securities (MBS) insured by the U.S. government

Federal Home Loan Mortgage Corporation (Freddie Mac)

a government-sponsored enterprise created in 1970 to further support the secondary mortgage market, and specifically, to support smaller thrift banks

Federal National Mortgage Association (Fannie Mae)

a government-sponsored enterprise created to act as a secondary mortgage market facility that could purchase, hold, and sell fha-insured loans

reliction

a gradual increase in land area when water gradually withdraws

polychlorinated biphenyls (PCBs)

a group of human-made organic chemicals made of carbon, hydrogen, and chlorine atoms that were used in hundreds of industrial and commercial applications prior to 1979 and can cause a variety of adverse health effects

holographic will

a handwritten will created solely by the testator and not witnessed

superior lien

a higher priority lien

urea-formaldehyde foam insulation (UFFI)

a human-made insulation material that becomes dangerous because of the gases released from the material after it hardens

metes and bounds

a land survey process in which a licensed land surveyor starts at a readily identifiable point of beginning and defines the boundaries of a property in terms of distances and compass directions, finally returning to the point of beginning

Sherman Antitrust Act

a landmark law passed in 1890 that prohibits the formation of trusts, or monopolies, in the marketplace; this law governs business by regulating anti-competitive conduct to **promote fair competition on behalf of american consumers

Dodd-Frank Act

a law passed in response to the subprime mortgage crisis that created the consumer finance protection bureau.

statute of frauds

a law which requires certain types of contracts, including those conveying interest in real property, to be in writing to be enforceable

quiet title suit

a lawsuit brought with the purpose of removing any outstanding ownership claim, title defect, or encumbrance on a property

graduated lease

a lease in which the rental rate increases over time in specific increments

net lease

a lease in which the tenant pays a base rent rate plus all or part of the operating expenses

estate for years

a lease with a specific starting and ending date, also called a tenancy for years

periodic estate

a leasehold estate which automatically renews until canceled by either party, a.k.a. estate from period-to-period, periodic tenancy, estate from year to year

mortgage

a legal agreement between a creditor and borrower in which the creditor lends money with interest to the borrower for the purchase of property with the condition that the creditor takes ownership of the title if the borrower defaults in repayment of the loan

statute of limitations

a legal concept that establishes time limits for bringing certain kinds of legal actions

trust

a legal entity where control of some asset or property is transferred by a grantor (trustor) to a third party (trustee) to be held for the benefit of another (beneficiary)

power of attorney

a legal instrument used to confer the right of one individual to act on behalf of another

doctrine of laches

a legal principle used to bar dated claims; used in conjunction with an unreasonable delay or negligence in asserting or defending one's rights

specific performance

a legal remedy that requires the party in breach of contract to perform in accordance with the terms of the contract (as opposed to paying damages)

due diligence

a legal term used to describe the reasonable steps a person must take in order to satisfy a legal requirement

contract

a legally enforceable and binding agreement between parties wherein a promise to do or not do something is given in exchange for valuable consideration

loan commitment

a lender's approval of a specific loan for a specific property; occurs upon completion of final loan approval step

quiet enjoyment

a lessee's right to possess a property without interference from lessor, previous owner, or anyone else about the claim to the title

general lien

a lien for which the real estate and personal property may be sold to satisfy the debt

special assessment lien

a lien placed against property to collect taxes for a specific improvement benefiting the property

specific lien

a lien that applies to a certain property only

senior lien

a lien that comes first on the priority of liens, often a tax lien; also called a superior lien

junior lien

a lien that has another (senior) lien superseding it in priority; also called an inferior lien

pur autre vie

a life estate characterized by ownership lasting only for the duration of a designated party's lifetime

protection period

a limited time frame after an agency agreement ends where an agent can be owed compensation *if* certain situations occur

parallel

a line of latitude

discount point

a loan fee used to decrease a loan's interest rate

blanket mortgage

a loan for which more than one collateral property acts as security

home equity loan

a loan in which funds are borrowed using the homeowner's equity for collateral; the funds can be used for any purpose

seller financing

a loan provided by the seller to the purchaser of the property

plat

a map indicating the locations and dimensions of lots in a lot and block system

seller's market

a market condition in which the number of properties for sale does not meet the demand (number of people looking to buy)

demand

a measure of the general desire for an asset or commodity at a given time

acre

a measurement of land equal to 43,560 square feet

square mile

a measurement of land equal to 640 acres

principal meridian

a meridian used in reference to a baseline to identify ranges, tiers, and townships in the rectangular survey method of land description

loan flipping

a mortgage fraud scheme that involves an inflated appraisal and a straw buyer.

subprime loan

a mortgage with an interest rate higher than prime mortgages due to the higher risk associated with a less qualified borrower

adjustable-rate mortgage (ARM)

a mortgage with an interest rate that can be adjusted based on fluctuations in the cost of money

agency agreement

a mutual binding understanding between two parties that authorizes another party to act on their behalf

asbestos

a naturally occurring mineral fiber that is commonly used in insulation but if airborne or inhaled, can cause severe respiratory health issues

lead

a naturally occurring mineral that has been used in the manufacturing of paint and water pipes and is toxic to humans

promissory note

a negotiable financial instrument that is evidence of a debt and a promise to pay that debt; often referred to as "the note"

open listing

a nonexclusive listing agreement that gives multiple brokers (and owners themselves) the right to sell the property

negotiable instrument

a note that is transferable and assignable

balloon payment

a payment at the end of a loan period which includes the total outstanding balance of the loan.

arrears

a payment that occurs at the end of a period to compensate for charges accrued during that time.

purchaser

a person who acquires or attempts to acquire an interest in land

broker

a person who is licensed to represent one of the parties in a real estate transaction in exchange for a commission or other valuable consideration

time is of the essence

a phrase that communicates to parties of a contract that they must perform their contractual duties by a specific date and time in order to avoid a breach of contract

disability or handicap

a physical or mental impairment that substantially limits one or more major life activities, the record of such impairment, or being regarded as having such an impairment

landlocked

a piece of land which is is not accessible by any public means

marketing plan

a plan created to secure the other party needed to carry out a real estate transaction that includes sales and advertising.

management proposal

a plan that a property manager creates for managing the property that includes an analysis of the market along with the financial standing, operating budget, and other important factors of the property

title insurance

a policy that protects homeowners (and likewise, lenders) from certain financial losses due to title issues, such as defects, encumbrances, and liens

cash reserve

a portion of funds allocated to pay for variable expenses

estate

a possessory interest in real property

binder

a preliminary agreement for the sale of a property secured by a valuable deposit from the potential buyer, which binds the seller to a good faith agreement to sell the subject property, provided that a sale contract meeting the conditions determined is executed within the prescribed period; also known as a *Letter of Intent (LOI)*

probate

a process by which courts determine and grant the appropriate ownership interest of an estate to creditors, taxing entities, and heirs of an owner who dies intestate

escrow

a process in which funds and/or financial documents are held by a disinterested third party on behalf of the other two parties in the real estate transaction until specific conditions are satisfied

fee simple defeasible

a property interest characterized by perpetual ownership on the condition that the property is used for a certain purpose or under specific conditions. ownership reverts back to the original owner if these stipulations are violated.

net operating income (NOI)

a property's annual income that remains after paying its operating expenses

obsolescence

a property's loss of value due to economic or functional factors

offer

a proposition made by an offeror to an offeree to agree to the terms of a binding contract; becomes a contract upon acceptance

covenant of seisin

a protection in which the grantor states they hold the title conveyed in the deed, a.k.a. covenant of seizin

deed restriction

a provision in a deed that restricts the land use of a property

contingency

a provision within a contract that makes performance conditional upon the occurrence of a stated event

capitalization rate (cap rate)

a rate of return that calculates the percentage of expected annual income earned over a property's value; the present value for expected future income earned

salesperson

a real estate license holder who is associated with a licensed broker for the purpose of performing real estate brokerage acts on the broker's behalf

Torrens System

a recording system used in some states in which the state holds all records of land and title ownership, evidenced by a certificate of title

depreciation

a reduction in value for any reason

environmental assessment; a.k.a. environmental site assessment

a report prepared for a real estate holding that identifies potential or existing environmental contamination liabilities

comparative market analysis (CMA)

a report that compares the prices of recently sold or listed homes ("comparables") in order to estimate the market value of a similar property (the "subject property") located in the same area

property management report

a report that informs the property owner(s) of their property's expenses, income, and disbursements; prepared by the property manager

exclusion

a right included in the bundle of legal rights to real property which empowers the owner to allow or deny others' use of the property

contract for deed

a sales contract in which the buyer pays the seller for the property in multiple installments for a predetermined length of time, and the seller holds the title until the property has been fully paid for; also known as an *installment sales contract* or *land contract*

laws of descent and distribution

a set of laws that sets out the process of passing an estate to heirs when the owner dies intestate

building code

a set of regulations pertaining to building design, materials, safety, sanitation, and structure

township

a square area of land with sides of 6 miles each, consisting of 36 square-mile sections and identified in reference to a meridian and baseline in the rectangular survey system

misrepresentation

a statement, written or spoken, that is false or misleading; can be actionable if also found to be fraudulent

elective share

a statutory right in some states which allows the surviving spouse to claim an interest in a decedent's real and personal property regardless of the provisions established by a will

syndication

a style of investing in which investors combine their capital and employ an expert to use that capital to obtain, manage, and sell an investment property for profit.

planned unit development

a subdivision that includes residential dwellings along with nonresidential real estate, departing from normal zoning and subdivision regulations; recreational facilities may be co-owned by pud lot owners as tenants in common

planned unit development (PUD)

a subdivision that includes residential dwellings along with nonresidential real estate, departing from normal zoning and subdivision regulations; recreational facilities may be co-owned by pud lot owners as tenants in common

block and lot system

a system of legal land description that identifies a piece of platted property by referring to the section, lot, and block numbers in a subdivision; a.k.a. the recorded plat method

rectangular survey system

a system of legal land description that uses the global lines of longitude and latitude to create a surveyed grid of meridians, base lines, townships, and ranges to describe a piece of land; a.k.a. the government survey system

community property

a system of property co-ownership, most commonly applied to married couples, which describes what is joint property and what is individual property

ad valorem taxes

a tax calculated according to the assessed value of a piece of real estate

construction mortgage

a temporary mortgage used to finance a construction project

estate at sufferance

a tenant's occupancy of a property beyond their lease's terms and without the landlord's consent, also called tenancy at sufferance

estate at will

a tenant's occupancy of a property with the landlord's consent

sublease

a tenant's transfer of part of their right of possession in a leased property to another person for a period of the lease term

market

a theoretical construct that isolates the selling and purchasing of any one particular commodity from the economy as a whole

equilibrium

a theoretical market condition in which levels of supply and demand are balanced

marketable title

a title that is free from significant encumbrances or defects that might otherwise prevent a purchaser from enjoying or eventually selling the property

color of title

a title transfer that is defective in a way that is unknown to the new owner

instrument of conveyance

a tool that transfers a grantor's interest in real property

living trust

a trust established by a living trustor in order to convey legal title of property to a trustee for the benefit of a named beneficiary

real estate investment trust (REIT)

a trust that invests in, owns, or acquires real property and is owned by investors who share the trust's profits according to shares.

quitclaim deed

a type of deed that conveys any interest, title, or right to a parcel of land the grantor has at the time the deed is executed

life estate

a type of estate limited to the duration of a measuring life

fee simple determinable

a type of fee simple defeasible estate which causes the title to automatically revert to the original owner if the deed requirements regarding property use are violated

mold

a type of fungus found in damp building materials that can release toxins into the environment

mechanic's lien

a type of involuntary, specific lien that a mechanic or materialman can impose upon a property if the property owner fails to pay for materials or work done on the property

triple-net lease

a type of lease requiring the tenant to pay a prorated portion of all the operating expenses for the property.

special use permit

a variance that allows an out-of-zone use that benefits the community, and is included as a permitted special use in a zoning ordinance

market or customer allocation

a violation of antitrust laws in which competitors agree to divide markets amongst themselves

party wall

a wall shared by two separate properties; the owners on each side share the right of use, often as an easement

nuncupative will

a will created verbally by a party directly before their death, a.k.a. oral will

written brokerage engagement

a written agreement between two parties where one party agrees to provide a specified service to the other

management agreement

a written contract between a property owner and a property manager to establish all duties of the property manager, including operation and leasing activities

master plan

a written document created by the local planning board to guide the future growth and development of a community

will

a written or verbal legal statement by an owner (testator) prescribes the method of distribution of the owner's estate to heirs

per se violations

acts that are considered inherently illegal

Interest

additional money paid to a lender for the use of their money

implied agency

agency that is created by the actions, conduct, and words of either or both parties without ever being expressly requested

mutual consent

agreement by all parties to either create, amend, or terminate a contract

ground lease

also known as a land lease, it is the lease of bare, undeveloped land

abstract of title

an abbreviated history of a property, including information on any transfers, grants, wills, conveyances, liens, and encumbrances

straight-line cost recovery

an accounting method in which depreciation expenses are deducted from a property's income

ministerial acts

an action performed for another according to established procedures or guidelines and without the need for discretion or individual judgment

subagency

an agency agreement in which broker a (or their agent) is operating as the agent of broker b on behalf broker b's client

single agency

an agency arrangement in which one agent represents one party in a real estate transaction; the party may be either a seller or a buyer.

cooperating brokerage

an agency arrangement in which two brokerages collaborate to achieve a real estate transaction for a specific piece of property.

designated agency

an agency arrangement wherein both parties to the transaction are represented by their own agent, but both agents are employed by the same brokerage; by necessity each client enjoys an agency relationship exclusively with the named agent within the brokerage

dual agency

an agency relationship wherein both the buyer and the seller are represented by the same broker in an in-house real estate transaction; requires written consent from both parties

general agency

an agent who is authorized to manage all of a principal's affairs within certain specified areas; enjoys broader authority than that of a special agent but less than that of a universal agent

group boycott

an agreement between two or more competitors to not do business with another competitor for the purpose of inducing the other competitor to change its business practices or fail altogether; considered an antitrust violation

exclusive right to sell agreement

an agreement in which the seller guarantees the named broker receives a commission if the property is sold, regardless of who brings the buyer

exclusive agency listing

an agreement in which the seller has an exclusive relationship with a broker but retains the right to sell the property to named prospects

net listing

an agreement in which the seller names an amount they will accept for a property and if the sales price exceeds that amount, the broker receives the excess as commission; illegal

deed in lieu of foreclosure

an alternative to foreclosure in which the defaulting borrower voluntarily transfers the property title to the lender and the borrower cancels the foreclosure

reserve allowance

an amount of money allocated from a property's income to cover future repair and maintenance costs, also called a replacement reserve

tax district

an area in which a taxing entity is authorized by the government to levy taxes

wraparound mortgage

an arrangement in which the seller of a property extends a mortgage to a buyer; the seller maintains their original loan and continues to pay it while also receiving mortgage payments from the buyer

easement in gross

an easement that applies to the person or entity, not the specific land

substitution

an economic principle stating that the value of a good or service is affected by the cost of getting a similar (substitute) item elsewhere

fee simple absolute

an estate without restrictions that is freely given to heirs

appraised value

an estimation of property's value as of a specific date, performed by a certified appraiser

capital expenditure

an expense paid in order to improve a property

base line

an imaginary line of latitude used in the rectangular survey system of land description to identify townships in relation to proximity to a principal meridian

meridian

an imaginary line of longitude used to identify a certain area of the earth's surface along a north-south direction

variable expense

an inconsistent, irregular expense; dependent on factors such as the size, condition, type, and age of the property

plottage

an increase in overall value resulting from the successful assemblage of multiple plots

fiduciary

an individual upon whom is placed the highest levels of trust and confidence when acting on behalf of another

appraiser

an individual who is trained and licensed to perform appraisals, which estimate the value of real property

associate broker

an individual who meets the licensure requirements to be a real estate broker but provides real estate brokerage services as an independent contractor to a real estate broker

tester

an individual who, without any bona fide intent to rent or purchase a home, apartment, or other dwelling, poses as a prospective buyer or renter for the purpose of gathering information, which may indicate whether a housing provider is complying with fair housing laws

agent

an individual with authority to act on behalf of another; a state license is required to operate as an agent in real estate

customer

an individual with whom a license holder has no agency relationship nor fiduciary duties but to whom fairness and honesty are still required

conveyance

an instrument that transfers a grantor's interest in real property

leasehold estate

an interest in the occupation of a property, established through a lease, a.k.a. non-freehold or less-than-freehold

easement

an interest in, or a right to use, another individual's land or property, generally for a specific, limited purpose.

electromagnetic field (EMF)

an invisible field of energy produced by electricity

fixture

an object that was once personal property but *is now firmly attached to the land* in such a way that it is considered to be real property

operating expense

an occasional or continuous expense required for the operation of an income-producing property

carbon monoxide

an odorless, colorless gas that occurs as a by-product due to incomplete combustion when burning such fuels as wood, oil, and natural gas

radon

an odorless, radioactive gas produced by the decay of other radioactive materials in rocks under the surface of the earth; can cause lung cancer

revolving debt

an ongoing line of credit, as with a credit card, where the amount of debt can fluctuate as the borrower uses it to manage cash flow issues

parol contract

an orally created contract or the oral modification of a written contract; enforceability depends on circumstances surrounding creation

ratification

an unauthorized action taken on behalf of a principal which is accepted and legitimized after the fact by the principal

collusion

an unlawful agreement between competitors to monopolize a market, disadvantage other competitors, or otherwise undertake activities in violation of fair trade laws

cloud

any claim to or encumbrance on the title to a property which affects transferability

price fixing

any effort made by competitors to jointly establish a fixed rate, price, or commission; considered an antitrust violation

property

any item which may be owned, including the rights associated with ownership

legal life estate

any life estate created by a function of law as opposed to the actions or desires of a property owner

conventional loan

any loan that is neither insured by the government nor guaranteed by the government

buyer's market

any market that is experiencing an excess of sellers or supply, creating more favorable conditions for buyers.

improvement

any non-natural structure built on or affixed to land

branch office

any office that is geographically separate from the main or home office

third party

any person involved in a real estate transaction who is not your client; includes not only customers (the non-client principal in a transaction) but also all other non-client participants in a transaction such as title officers, lenders, appraisers, etc.

non-conforming use

any property use with is inconsistent with the land use controls for that area, regardless of legality

comparable (comp)

any property which has sold and is similar enough in features, location, and proximity in time to inform the value of a subject property

patent defect

any structural defects that are easily discoverable upon inspection

latent defect

any structural defects that cannot be detected by ordinary inspection

personal property (a.k.a. chattel)

any unattached, movable asset on the property not considered real estate (land plus improvements); also known as personal property or personalty

capital improvement

any upgrade or improvement to a property that falls outside the scope of normal repair and maintenance, usually with the intention of increasing value

liquid assets

assets that can be quickly converted to cash without losing their value

Real Estate Owned (REO) property

bank-owned property that has been through the foreclosure process

conversion

changing real property to personal property, and vice versa; also the illegal act of mixing a fiduciary's funds with an agent's personal funds

chlorofluorocarbons (CFCs)

chemical compounds containing chlorine, fluorine, and carbon atoms that were once used in refrigerator coolant, air conditioners, and dehumidifiers

non-prorated expense

closing costs that are not split between the parties

joint tenancy

co-ownership in which the parties have an equal and undivided interest in the property; includes the right of survivorship rather than inheritance

tenancy in common

co-ownership with individual, undivided interest in the property; includes rights of inheritance rather than survivorship

loan estimate

combines and replaces the good faith estimate and the initial truth-in-lending (til) statement; highlights the most important elements of the transaction

legal title

complete legal ownership of real property and the bundle of rights associated

evidence of title

constructive or actual notice of real property ownership

credit report

contains information regarding an individual's credit history (loan payments, etc.) as well as the present credit status of all open credit accounts

debt service

current debt obligations

liquidated damages

damages established by the contract to be paid as compensation in the event of default

servient tenement

describes the parcel of land that must allow an adjacent owner to cross; an easement appurtenant exists at the expense of this party

doctrine of prior appropriation

doctrine granting a state the power to control and regulate all water resources within its borders

easement by condemnation

easement in which private property is taken for public use via eminent domain; declaration that a structure must be closed or demolished because it is unfit for occupants

origination points

fees pay for the cost of issuing the loan

long-term debt

financial obligations often paid as installments over a predetermined time frame, which can extend for years

eviction

forced removal of a tenant due to a default under the terms of the lease

earnest money

funds paid to confirm or commit to a contract

option

gives one party the right to perform a non-obligatory action within a time period (ex: terminating a contract or the right of first refusal)

Annual Percentage Rate (APR)

how much the borrower will pay in interest over the course of a year

usury

illegally lending money at unfair interest rates

predatory lending

imposing unfair and abusive loan terms on borrowers.

supply

in real estate, the amount of properties that are vacant or are available for sale or rent

Federal Deposit Insurance Corporation (FDIC)

independent agency that provides deposit insurance to depositors in u.s. banks

community association manager

individual who provides administrative and operational services to a community association in exchange for consideration; requires specific licensure

purchase-money mortgage

instrument given by the purchaser to a seller who "takes back" a note for part or all of the purchase price

private mortgage insurance (PMI)

insurance that protects the lender if a borrower defaults on a conventional loan; usually required when the borrower has less than 20% equity

adverse possession

involuntary transfer of title from an owner who does not use or inspect their land for a number of years to another person who has some claim to the land and takes possession

conventional life estate

is a life estate in which the measuring life is that of the life tenant; it is an estate created by a deed that lasts for the duration of the tenant's life

accession

is the right to all that one's own property produces, including that which is added, either naturally or by human action, to the property already owned.

asset

item of value

null and void

lacking legal or binding force; invalid

void

lacking legal or binding force; used to describe a contract that is either illegal or impossible to complete

real property

land from the surface to the center of the earth and upward into space, all attachments, and the bundle of legal rights of ownership

real estate

land plus improvements

antitrust laws

laws designed at preventing unfair or anti-competitive practices such as price fixing, collusion, monopolies, etc.

percolating water rights

laws that govern the use and ownership of underground water

homestead laws

laws which protect a homeowner from loss of their principal residence from the claims of most creditors and require both spouses to execute any instruments of conveyance

gross lease

lease in which the tenant will be responsible for the payment of a fixed monthly charge, while the landlord is responsible for paying all operating expenses, a.k.a. full service lease

partition suit

legal action brought with the purpose of terminating the ownership interest of a co-owner to real property

certificate of occupancy (CO)

legal document from a local authority that authorizes a building to be occupied; issued after the building has passed all required inspections

zoning ordinance

local laws that control how land is used and what structures can be built in a designated district

proprietary lease

long-term and exclusive lease given to resident and stock owner of a cooperative

external obsolescence

loss of property value caused by negative forces outside the property which are beyond the control of the owner

functional obsolescence

loss of value because a property's function or appearance has gone out of style or has been replaced by a more appealing or effective version

fee simple estate

maximum ownership of real property; also called a fee or a fee simple absolute and is of indefinite duration, freely transferable, and freely inheritable

income capitalization approach

method of estimating the value of a property by applying a rate of return to the net income it produces

cost approach

method of estimating the value of a property by determining how much it would cost to replace the building or other improvements, minus the cost of depreciation, plus the value of the land itself

routine maintenance

monitoring, assessing, and attending to the needs of a facilities most necessary features

easement

non-possessory interest in a property that burdens the title

section

one of 36 equal square miles in a township

independent contractor

one who contracts to do work according to their own methods, and is responsible to their employer only as to the results of that work

transfer tax

one-time tax issued by the state that must be paid when a property is transferred from one owner to another

sole proprietorship

ownership of a business by a lone individual

bundle of rights

ownership of land with all of the legal rights of possession, control, quiet enjoyment, exclusion, transfer, and encumber

subsurface rights (a.k.a. mineral rights)

ownership rights to all that is found beneath the surface of the tract of land owned, extending downward to the center of the earth

preventative maintenance

periodic, routine inspections to catch minor issues before they worsen and to keep equipment and property in good working order

benchmark

permanent markers of known location and elevation above sea level as established by a government survey team (such as the USGS)

variance

permission granted by the government so that property may be used in a manner not allowed by the current zoning

trade fixture

personal property that is owned by and needed for a tenant's business

encroachment

physical property that crosses the boundary into a neighboring landowner's property

emblements

plants or crops intended for harvest and treated as personal property

common elements

portions of a shared ownership property not controlled by any one owner or tenant. examples include parking lots, lobbies, fitness centers, elevators, etc.

validity

possessing accuracy and, in context of contractual status, being legally binding and enforceable

enforceability

possessing the essential elements necessary to be legally binding and obligate performance; used to describe the compelling nature of a valid contract

covenants, conditions, and restrictions (CCRs)

private restrictions similar to deed restrictions that dictate what homeowner may do with their property

sales comparison approach

property appraisal method that estimates value by comparing the subject property to the sales prices of similar properties in the same market area

collateral

property liened by a lender in order to assure payment of the loan and protect the lender's investment

condominium

property where each owner has a separate interest in their own unit and undivided interest in the common areas

stigmatized property

property with suppressed market value unrelated to its physical condition or features; frequently as result of death of an occupant, murder, suicide, or a belief the property is haunted

title records

public records that catalogue all real estate information in the county, including owners' names, liens, easements, encumbrances, etc.

brownfield

real property, the expansion, redevelopment, or reuse of which may be complicated by the presence or potential presence of a hazardous substance, pollutant, or contaminant

fixity

refers to the fact that real estate exists in a fixed location and cannot be moved; describes this truth about land from an economic viewpoint

marital status

refers to whether a person is married, single, divorced, or widowed

land-use control

regulations that specify how the owners of individual parcels of real estate in a given area may use property

littoral rights

rights that govern lakefront or oceanfront property and usually allow the property owner to use the water bordering their property

riparian rights

rights that govern the use of flowing water, such as rivers and streams that pass through or border a property

appurtenances

rights that run with real property ownership; most often transferred with the property, but possible to sell separately

bridge loan

short-term loan used to transition from one loan to another; can connect borrower from construction loan to eventual mortgage loan (or current home to their new home)

property manager

someone who is hired by a property owner to market, maintain, and oversee the day-to-day operation of a property (usually a rental property)

consideration

something of value exchanged by the parties as evidence of agreement to the terms of a contract

ethics

standards of conduct agreed upon and recognized by a particular group or culture

rule of capture (a.k.a. law of capture)

states that a landowner who drills a well for gas or oil on their land is entitled to all that well produces, even if the gas or oil migrates from beneath a neighbor's property.

title theory state

states that convey the title to the lender or, more commonly, to a third-party trustee (operating on behalf of the lender) for the life of the loan

lien theory state

states that employ security instruments allowing the borrower to retain title while the lender places a lien on the property to secure the loan

debits

sum of money that is owed

credits

sum of money that is received

underground storage tanks (USTs)

tanks located in the ground underneath properties that store chemicals, fuels, toxic wastes, and other potentially harmful substances

situs

the **economic significance of a property's location

CERCLA

the Comprehensive Environmental Response, Compensation, and Liability act, aka the Superfund

severance

the act of converting real property into personal property

proration

the act of dividing or allocating expenses between buyers and sellers based on the actual period of usage of the item or service

recording

the act of documenting any transfer or claim of interest in the title to real property in public records per state law

general warranty deed, a.k.a. full covenant and warranty deed

the act of documenting any transfer or claim of interest in the title to real property in public records per state law, a.k.a. full covenant and warranty deed

replacement cost

the actual cost of replacement without regard to depreciation of the property

title

the actual ownership of a real property that includes the bundle of rights in which a party may own a legal or equitable interest; not an actual document

EPA (Environmental Protection Agency)

the agency charged with enforcing federal environmental protection laws and taking other actions to protect the environment

contribution

the amount of market value added to a property by an addition or improvement to the property; not necessarily the same as the cost of the improvement

loan-to-value ratio (LTV)

the amount of money being loaned compared to the value of the property

VA entitlement

the amount of money that is guaranteed in a va loan

air space

the area above ground that is owned along with a property. could include space above a piece of land, or the space owned inside a condominium unit.

tier

the area of land between two consecutive baselines

range

the area of land between two consecutive range lines

law of agency

the body of laws affecting agency that have come about as result of custom and/or case law, as opposed to statutory law introduced at the state or federal level

mortgagor

the borrower of the funds in a loan

lien

the claim made by a creditor against real or personal property pledged by a debtor as collateral

principal

the client of a broker in an agency relationship; the parties to a contract in a real estate transaction (as opposed to license holders, lenders, escrow agents, etc.); also, the amount borrowed in a loan from which interest is accrued

security

the collateral for a loan

assemblage

the combining of multiple contiguous pieces of real property into a single tract of land, often resulting in an increase in value

first substantive contact

the critical point at which agency disclosure is required by a license holder; generally occurs at the first face-to-face meeting with the customer and prior to the sharing of any confidential information or initiation of any action in regards to a specific property

procuring cause

the defining action or actions that brought a buyer to purchase a property

assessment

the determination of the value of a property for tax purposes

notice of title

the duty of a real estate owner to make their claim or interest on a subject property publicly accessible

scarcity

the economic characteristic that informs the economic principle of supply and demand

chain of title

the entire chronological record of a property's ownership

Equal Credit Opportunity Act (ECOA)

the equal credit opportunity act, a fair lending law that aims to bar discriminatory lending practices.

intermediation

the facilitation by a third party of a financial transaction between two parties

FHA

the federal housing administration; government agency charged with insuring mortgages

tax sale

the forced sale or auction of a property to cover outstanding debts

performance

the fulfillment of an obligation, duty, or contract

fiduciary duties

the full sum of obligations owed to the client in an agency relationship that ensure that the agent always acts in the best interest of the client

police power

the government right to regulate and restrict land use in order to protect the public; right includes the power to enforce zoning and building codes

erosion

the gradual loss of land over time

redlining

the illegal act of a lender refusing to issue mortgages in a specific area

blockbusting

the illegal act of causing owners to sell their homes by creating fear that members of a protected class are moving into the area

steering

the illegal act of guiding prospective home buyers toward or away from certain neighborhoods because of their membership in a protected class

commingling

the illegal act of mixing personal funds with a client's funds

appreciation

the increase in value of a property

remainder interest

the interest in an estate that will pass to another party (other than the grantor) at the death of the person upon whom the life estate is base

reversionary interest

the interest in an estate wherein, upon the death of the life estate owner, full ownership reverts back to the original fee simple owner (grantor)

escheat

the legal doctrine by which the decedent's property will pass to the state without their consent if that individual dies without a will, a surviving spouse, lineal descendants, or other known heirs

estoppel

the legal principle that prevents an individual from asserting something contrary to that which was implied by previous words or deeds by that individual

actual eviction

the legal process by which someone is expelled from a property and prevented from re-entry

foreclosure

the legal process whereby a lender takes control of a property held by a borrower in default and sells it to recover the lender's losses

mortgagee

the lender of the funds in a loan

economic life

the length of time for which an improvement on property is expected to remain functional and useful

physical deterioration

the loss of value caused by physical wear and tear over time

price mechanism

the manner in which a price is determined by a buyer and seller (a quantification of value) with respect to the forces of supply and demand

utility

the measure of the degree to which something performs a desired function; serves as a component of the thing's value

density

the measure of the proportion of a given area used for residential purposes

universal agency

the most broad type of agency; gives agents the power to act and make decisions on behalf of the principal in all business matters of concern; often granted via a power of attorney

offer and acceptance

the mutual understanding and agreement of the parties of a contract to that contract's terms; process that changes an offer into a contract when the offeree communicates acceptance to the offeror

testate

the name for conditions in which the owner of a property dies having left a valid will

intestate

the name for conditions in which the owner of a property dies without having left a valid will

Opinion of Title

the official opinion of an attorney regarding the condition of a property's title

lien priority

the order in which liens against a property will be settled

freehold tenant

the owner of a freehold estate

Regulation Z

the part of the truth in lending act (tila) that seeks to protect consumers by requiring proper disclosures and fair lending practices

lessor

the party granting the lease, also known as the landlord

lessee

the party to whom the lease is granted, also known as the tenant

testator, a.k.a. testatrix

the party who makes a will, a.k.a. testatrix

buydown

the paying of money upfront to reduce a loan's interest rate and monthly payments

tax rate

the percentage of the value that is taxed

grantor

the person who conveys real property in a real estate transaction

grantee

the person who receives a conveyance of real property in a transaction

hypothecation

the pledging of an asset as collateral to secure a loan without delivery of title, possession, or other ownership rights

equity

the portion of a property's total value owned outright by the holder to title

eminent domain

the power of government to seize private property for public use; government must pay property owner just compensation for exercising power

market value

the price for which a property will theoretically sell under typical conditions

value

the price for which a property will theoretically sell under typical conditions

informed consent

the principle that a client or customer must understand and agree to certain actions or agency relationships prior to implementation

survey

the process and physical product of finding and measuring the boundaries of a piece of real estate, including the location of improvements, encroachments, and easements

underwriting

the process of determining the level of risk a lender is willing to take in extending a loan to a borrower

disintermediation

the process of money flowing out of banks

refinancing

the process of obtaining a new mortgage in an effort to reduce monthly payments, lower interest rates, take cash out of a home for large purchases, or change mortgage companies

amortization

the process of paying off a debt/mortgage in regular installments based on a fixed payment schedule

accretion

the process that results in the gradual increase in land area through deposits of soil by natural forces

loan origination

the process through which a buyer obtains a mortgage loan from a lender

investment

the purchase of an asset with the intention of profiting from it in the future

gross rent multiplier (GRM)

the ratio of the price of investment property to its annual rental income before considering expenses like taxes and insurance, etc

RESPA

the real estate settlement procedures act, passed to eliminate kickbacks in lending and disclose the costs of closing a loan.

beneficiary

the recipient of advantage or gain from an act or instrument such as a trust, will, or insurance policy

commission

the regulatory body responsible for regulating the brokerage industry and licensing real estate practitioners; formally known as the Georgia Real Estate Commission (GREC)

liquidity

the relative difficulty of converting an asset to cash without loss of value

corrective maintenance

the repair or restoration of equipment after it has broken

water rights

the right of a property owner on a waterfront to access and use that water

curtesy/dower

the right of a spouse to inherit property held in their spouse's name after that spouse dies; dower is the word used for women, curtesy for men.

air rights

the right to use the airspace above the surface of land

surface rights

the rights to access the surface area of a parcel of real property

common law

the side of law which arises from judgements and decisions made in courts rather than explicit legislation

point of beginning (POB)

the starting point for a metes and bounds legal description

liability

the state of being responsible for something

right of survivorship

the statutory principle of survivorship tenancy that provides that when one co-owner dies, their ownership interest reverts to the surviving co-owners

avulsion

the sudden loss of land by flood or when a stream or river changes course.

SARA

the superfund amendments and reauthorization act

land

the surface of the earth, including all permanently attached natural features, extending downwards to the center of the earth and upwards to infinity

constructive eviction

the termination of a lease in circumstances in which the landlord defaults and acts, or fails to act, in such a way that the premises become unusable

revocation

the termination of an agreement by the person who granted it, such as when as when a principal terminates an agency relationship or withdraws an offer

effective gross income

the total annual income that a property produces; does not account for any expenses

potential gross income (PGI)

the total rental income a property would receive if the property was 100% leased

tax base

the total taxable assets available in a specific area

Freon

the trademarked name of a harmful chlorofluorocarbon found in older air conditioning units

alienation

the transfer of ownership (title) to real property. alienation may be voluntary or involuntary.

devise

the transfer of real or personal property through a will

assignment

the transference of rights and obligations in a contract from one party to another

discrimination

the unjust or prejudicial treatment of different categories of people, especially on the grounds of race, color, sex, national origin, religion, disability, or other classifications

leverage

the use of a financial instrument or borrowed money to increase a return on investment

highest and best use

the use of a property which is legal, physically possible, financially viable, and produces the greatest yield

assessed value

the value placed on a property by a governmental unit for use in calculating property taxes

taxable value

the value placed on a property by a governmental unit for use in calculating property taxes, minus any exemptions

property management

the vocation of renting or leasing someone else's real property on their behalf in exchange for compensation and in accordance with a property management employee contract

subject to

this provision in a sales contract refers to the purchase of a property that is *subject to* the existing mortgage; in such a sale, the title changes hands, so the buyer owns the house legally, but the seller's old mortgage stays in place

percentage lease

type of (usually commercial) lease in which the tenant pays a base rent amount and a percentage of their business profits to the landlord

familial status

under the fair housing act, a protected class composed of families who have children under 18, pregnant women, and people in the process of obtaining legal custody of a child

severalty

undivided ownership of an estate, with an interest that is exclusive from other owners; often referred to as ownership in severalty or tenancy in severalty

Debt Service Coverage Ratio

used to evaluate income-producing properties; is calculated by dividing the net operating income (cash flow after all expenses and debts are paid) by total debt service (current debt obligations)

debt-to-income ratio

used to measure a borrower's creditworthiness; calculated by dividing all debt (monthly payment + other debt) by monthly income

payment-to-income ratio

used to measure a borrower's creditworthiness; calculated by dividing monthly payment by monthly income

groundwater

water held underground in the soil or in pores and crevices in rock

negative amortization

when a borrower's payment is not large enough to cover the interest due on a loan, the unpaid interest is added to the principal balance

constructive notice

when a property's ownership is recorded publicly, so everyone can know the contents of recorded documents

actual notice

when an individual actually knows of a fact

fraud

wrongful or criminal deception intended to result in financial or personal gain