Real Estate - Definitions

Littoral Rights

(1) A landowners claim to use water in large navigable lakes and oceans adjacent to his or her property. (2) The ownership rights to land bordering these bodies of water up to the high-water mark.

License

(1) A privilege or right granted to a person by a state to operate as a real estate broker or salesperson. (2) The revocable permission for a temporary use of landa personal right that cannot be sold.

Amendment

A change to the existing content of a contract (i.e., if words or provisions are added to or deleted from the body of the contract); must be initialed by all parties.

Carbon Monoxide (CO)v

A colorless, odorless gas that occurs as a by-product of fuel combustion that may result in death in poorly ventilated areas.

Prior Appropriation

A concept of water ownership in which the landowners right to use available water is based on a government-administered permit system.

Executory Contract

A contract under which something remains to be done by one or more of the parties.

Fee Simple Determinable

A fee simple estate qualified by a special limitation. Language used to describe limitation includes the words so long as, while, or during.

Promissory Note

A financing instrument that states the terms of the underlying obligation, is signed by its maker, and is negotiable (transferable to a third party).

Mold

A form of fungus that can be found almost anywhere and can grow on almost any organic substance, so long as moisture, oxygen, and an organic food source are present. Mold growth can gradually destroy what it is growing on, as well as cause serious health problems.

Condemnation

A judicial or administrative proceeding to exercise the power of eminent domain, through which a government agency takes private property for public use and compensates the owner.

Lessor

A landlord.

Gross Lease

A lease of property according to which a landlord pays all property charges regularly incurred through ownership, such as repairs, taxes, insurance, and operating expenses. Most residential leases are gross leases.

Net Lease

A lease requiring the tenant to pay not only rent but also costs incurred in maintaining the property, including taxes, insurance, utilities, and repairs.

Percentage Lease

A lease, commonly used for commercial property, whose rental is based on the tenants gross sales at the premises; it usually stipulates a base monthly rental plus a percentage of any gross sales above a certain amount.

Metes-and-bounds

A legal description of a parcel of land that begins at a well-marked point and follows the boundaries, using directions and distances around the tract, back to the place of beginning.

Net Listing

A listing based on the net price the seller will receive if the property is sold. Under a net listing, the broker can offer the property for sale at the highest price obtainable to increase the commission. This type of listing is illegal in many states.

Open Listing

A listing contract under which the brokers commission is contingent on the brokers producing a ready, willing, and able buyer before the property is sold by the seller or another broker.

Exclusive-right-to-sell Listing

A listing contract under which the owner appoints a real estate broker as his or her exclusive agent for a designated period of time to sell the property on the owners stated terms and agrees to pay the broker a commission when the property is sold, whether by the broker, the owner, or another broker.

Exclusive-agency Listing

A listing contract under which the owner appoints a real estate broker as his or her exclusive agent for a designated period of time to sell the property, on the owners stated terms, for a commission. The owner reserves the right to sell without paying anyone a commission if the sale is to a prospect who has not been introduced or claimed by the broker.

Subdivision Plat

A map of a subdivision indicating the location and boundaries of individual properties.

Multiple Listing Service (MLS)

A marketing organization composed of member brokers who agree to share their listing agreements with one another in the hope of procuring ready, willing, and able buyers for their properties more quickly than they could on their own. Most multiple listing services accept exclusive right-to-sell or exclusive-agency listings from their member brokers.

Lot-and-block (recorded Plat) System

A method of describing real property that identifies a parcel of land by reference to lot and block numbers within a subdivision, as specified on a recorded subdivision plat.

Asbestos

A mineral once used in insulation and other materials that can cause respiratory diseases.

Radon

A naturally occurring gas from the decay of radioactive materials.

Sections

A portion of a township under the rectangular (government) survey system. A township is divided into 36 sections, numbered 1 through 36. A section is a square with mile-long sides and an area of one square mile, or 640 acres.

Contingencies

A provision in a contract that requires a certain act to be done or a certain event to occur before the contract becomes binding.

Deed Restrictions

A provision in the deed which prohibits the grantee from unrestricted use of the property. Such restrictions include size of improvements, percentage of masonry, and distance from something. Any restriction that violates any law is unenforceable; however, the deed remains valid.

Mortgage

A real estate loan. Texas does not use the mortgage form, which is a two-party instrument (the mortgagor and the mortgagee).

Lis Pendens

A recorded legal document giving constructive notice that an action affecting a particular property has been filed in either a state or a federal court.

Counteroffer

A rejection of an offer that may not later be accepted, and a new offer specifying what terms the party is willing to accept.

Land Contract

A sales agreement between seller and buyer; no mortgage or deed of trust involved; title to the property not received by buyer until full payment is made.

Mechanic's Lien

A statutory lien created in favor of contractors, laborers, and materialmen who have performed work or furnished materials in the erection or repair of a building.

Ranges

A strip of land six miles wide, extending north and south and numbered east and west according to its distance from the principal meridian in the rectangular (government) survey system of legal description.

Encroachment

A structure or extension of a structure which extends over a boundary line. The line may be a building line (setback) or property line.

Rectangular Survey System

A system established in 1785 by the federal government, providing for surveying and describing land by reference to principal meridians and base lines.

Ad Valorem Tax

A tax levied according to value, generally used to refer to real estate tax; also called the general tax.

Lessee

A tenant.

Leasehold Estates

A tenants right to occupy real estate during the term of a lease, generally considered a personal property interest.

Marketable Title

A title that is free from encumbrances, defensible, and salable.

Mortgage Lien

A voluntary lien given to a lender by a borrower as security for a real estate loan.

Lease

A written or oral contract between a landlord (the lessor) and a tenant (the lessee) that transfers the right to exclusive possession and use of the landlords real property to the lessee for a specified period of time and for a stated consideration (rent). By state law, leases for longer than a certain period (generally one year) must be in writing to be enforceable.

Negotiable Instrument

A written promise or order to pay a specific sum of money that may be transferred by endorsement or delivery. The transferee then has the original payees right to payment.

Township Lines

All the lines in a rectangular survey system that run east and west, parallel to the base line six miles apart.

Kick-out Clause

Allows the seller to keep the property on the market with full disclosure in the multiple listing service that there is a contract in place, but other offers are welcome. If a new offer is made, there is a specified time (usually no more than 24 to 72 hours) for the original buyers to remove the home sale contingency and proceed with the contract.

Tort

An act that damages another individual and gives rise to legal action.

Liquidated Damages

An amount predetermined by the parties to a contract as the total compensation to an injured party should the other party breach the contract.

Easement By Necessity

An easement allowed by law as necessary for the right of ingress and egress over a grantors land.

Easement Appurtenant

An easement that runs with the land.

Buyer Agency Agreement

An employment contract in which the broker is employed as the buyers agentthe buyer, rather than the seller, is the principal or client.

Lien

An encumbrance that is usually a monetary charge against property that provides security for a debt.

Freehold Estates

An estate in land in which ownership is for an indeterminate length of time, in contrast to a leasehold estate.

Fee Simple Defeasible

An estate in which the holder has a fee simple title that may be divested upon the occurrence or nonoccurrence of a specified event.

Acceptance

An expression of intent to be bound by the terms and conditions of an offer. To bind the agreement, the acceptance must be communicated to the person making the offer. An offer pertaining to real estate must be made in writing and accepted in writing.

Life Estate

An interest in real or personal property that is limited in duration to the lifetime of its owner or some other designated person or persons.

Riparian Rights

An owners rights in land that borders on or includes a stream, river, or lake. These rights include access to and use of the water.

Encumbrance

Anything such as a mortgage, tax, or judgment lien; an easement; or a restriction on the use of the land.

Base Lines

Base Lines

Tacking

Combining successive periods of continuous occupation by different parties to reach the required total number of years necessary to establish a claim for a prescriptive easement.

Water Rights

Common law rights held by owners of land adjacent to rivers, lakes, or oceans; includes restrictions on those rights and land ownership.

Underground Storage Tanks (USTs)

Commonly found on sites where petroleum products are used or where gas stations and auto repair shops are located. In residential areas, tanks are used to store heating oil. Over time, neglected tanks may leak hazardous substances into the environment.

Easement

Easement

Synthetic Stucco

Exterior insulation finish systems (EIFS), which do not allow moisture to escape, possibly leading to moisture problems and mold.

Offer To Purchase

First action taken by one wishing to purchase a property; sometimes called a contract, but it is not in fact a contract until all parties have signed.

Pur Autre Vie

For the life of another. A life estate pur autre vie is a life estate that is measured by the life of a person other than the grantee.

Easement In Gross

Generally used by utility companies to create "utility easements" over other properties, often when the land is developed and recorded prior to building.

Fee Simple Subject To A Condition Subsequent

If an estate is no longer used for the purpose conveyed, it reverts to the original grantor by the right of reentry.

Suit For Specific Performance

If the seller breaches a real estate sales contract, the buyer may sue, asking the court to force the seller to go through with the sale and convey the property as previously agreed.

Point Of Beginning (POB)

In a metes-and-bounds legal description, the beginning point of the survey, which is also the point of ending.

Walk-through Items

Items that must be brought into normal working condition before settlement.

Earnest Money

Money deposited by a buyer under the terms of a contract, to be forfeited if the buyer defaults, but to be applied to the purchase price if the sale is closed.

Covenants, Conditions, And Restrictions (CC&Rs)

Private agreements that affect the land use. They may be enforced by an owner of real estate and included in the sellers deed to the buyer; specifically used in condominium projects.

Home Inspection

Professional inspection of property to ascertain conditions of all systems and appliances; may note minor structural, roof, or moisture problems.

Disclosure

Relevant information or facts that are known or should have been known.

School Section

Section 16 of a township square.

Lien Theory

Supposes that the borrower (real estate) holds legal title to the property while the lender has a lien on the title.

Loan-to-value Ratio (LTV)

The amount borrowed as a percentage of the value or purchase price.

Estate In Land

The degree, quantity, nature, and extent of interest a person has in real property.

Police Power

The governments right to impose laws, statutes, and ordinances, including zoning ordinances and building codes, to protect the public health, safety, and welfare.

Erosion

The gradual and imperceptible wearing away of the land by natural forces, such as wind, rain, and flowing water.

Fee Simple

The highest interest in real estate recognized by the law; the holder is entitled to all rights to the property; the maximum possible estate or right of ownership of real property, continuing forever; also called fee simple absolute.

Commingling

The illegal act by a real estate broker of placing client or customer funds with personal funds. By law, brokers are required to maintain a separate trust or escrow account for other parties funds held temporarily by the broker.

Accretion

The increase or addition of land by the deposit of sand or soil washed up naturally from a river, lake, or sea.

Equitable Title

The interest held by a vendee under a contract for deed or an installment contract; the equitable right to obtain absolute ownership to property when legal title is held in anothers name.

Preapproval Letter

The lender has taken information from the borrower and determined that, if everything the borrower said is true, then the borrower is likely to get the loan.

Principal Meridians

The main imaginary line running north and south and crossing a base line at a definite point; used by surveyors for reference in locating and describing land under the rectangular (government) survey system of legal description.

Homestead

The personal residence of a family or single person which is protected from creditor seizure except real estate loans and mechanics liens.

Townships

The principal unit of the rectangular (government) survey system. A township is a square with 6-mile sides and an area of 36 square miles.

Taxation

The process by which a government or municipal quasi-public body raises monies to fund its operation.

Survey

The process by which boundaries are measured and land areas are determined; the on-site measurement of lot lines, dimensions, and position of a house on a lot, including the determination of any existing encroachments or easements.

Remainder Interest

The remnant of an estate that has been conveyed to take effect and be enjoyed after the termination of a prior estate, such as when an owner conveys a life estate to one party and the remainder to another.

Reversionary Interest

The remnant of an estate that the grantor holds after granting a life estate to another person.

Reversionary Right

The return of the rights of possession and quiet enjoyment to the lessor at the expiration of a lease.

Escheat

The reversion of property to the state or county, as provided by state law, in cases where a decedent dies intestate without heirs capable of inheriting, or when the property is abandoned.

Eminent Domain

The right of a government or municipal quasi-public body to acquire property for public use through a court action called condemnation, in which the court decides that the use is a public use and determines the compensation to be paid to the owner.

Avulsion

The sudden tearing away of land, as by earthquake, flood, volcanic action, or the sudden change in the course of a stream.

Hypothecation

To pledge property as security for an obligation or loan without giving up possession of it.

Township Tiers

Township lines that form strips of land and are designated by consecutive numbers north or south of the base line.

Legal Description

Use of one of the three accepted methods of identifying a specific property: government survey, lot and block, or metes and bounds.

Letter Of Intent (LOI)

Used to outline the basic terms that a buyer may agree to prior to a complex sales agreement. Non-binding language is usually inserted so as to not create a contract. Used primarily in commercial transactions.

Short Sale

When a lender agrees to accept less than the amount due on the mortgage note.