ASREB - Vocabulary

Improvement

(1) Any structure, usually privately owned, erected on a site to enhance the value of the property for example, building a fence or a driveway. (2) A publically owned structure added to or benefiting land, such as a curb, sidewalk, street, or sewer.

Covenant of Quiet Enjoyment

(1) The covenant implied by law by which a landlord guarantees that a tenant may take possession of leased premises and that the landlord will not interfere in the tenant's possession or use of the property. (2) The grantor guarantees that the grantee's title will be good against third parties who might bring court actions to establish superior title to the property, If the grantee's title is found to be inferior, the grantor is liable for damages.

Bonding

Bonding insurance is a way of insuring against loss caused by a lack of competence, or by fraud or dishonesty.

Special Agent (limited)

One who is authorized by a principal to perform a single act or transaction; a real estate broker is usually a ______ authorized to find a ready, willing, and able buyer for a particular company.

Agent

One who is authorized to act for a principal.

Real Estate Broker

One who is licensed by the state to represent a buyer or seller in a real estate transaction in exchange for a commission.

Ready, Willing, and Able Buyer

One who is prepared to buy property on the seller's terms and is ready to take positive steps to consummate the transaction.

Heir (Hereditament)

One who might inherit or succeed to an interest in land under the state law of decent when the owner dies without leaving a valid will.

Aggrieved

To cause grief or to injure one's legal rights.

Bequeath

To leave personal property property to another by will, as a bequest. To leave real property by will is to devise.

Statutory Law

Written laws adopted by a legislative body such as U.S. Congress or State Legislatures. Statutes are enacted either by bill or joint resolution. Federal Statutes take precedence over state statutes and state statutes are superior to common law. Statutory law is inferior to constitutional law.

Time-share Ownership

Ownership that involves the acquisition of a specific period of time, or that percentage of interest, usually in a vacation home or resort.

CAN-SPAM Act of 2003

"Controlling the Assault of Non-Solicited Pornography and Marketing Act" is enforced by the FTC and established requirements for those who send commercial email: 1. False or misleading information is banned. 2. Deceptive subject lines are prohibited. 3. Email must give recipients an opt-out message. 4. Commercial email must be identified as an advertisement and include the sender's valid physical postal address.

Single Agency

The representation of a single principal.

Mile

5,280 feet

Formal Will

A Written Will that is Written, Signed and Witnessed.

Bona Fide Buyer

A buyer who is acting in good faith for valuable consideration.

Modification

A change in any of the terms of the loan agreement.

Urban

A densely settled city property.

Bill of sale

A document used to transfer Personal Property.

Funding Fee

A fee paid to the VA to guarantee a VA Loan.

Grantee

A person conveyed an interest in a piece of property.

Competent

A legal or natural person who is legally qualified and mentally capable to transact business.

Express Agency

An agency relationship based on a formal agreement.

Frozen Asset

An asset that cannot be easily converted into cash without taking a loss..

Menace

An illegal use of threats of violence to get a party to accept a contract.

Tax Shelter

An investment motivated primarily to obtain an income tax deduction to apply against taxable income earned from other sources.

Appraised Value

An opinion of the current market value of a property.

Agreement to Sale

Another name for a Purchase Contract.

Expiration

Date it ends

FHA Title II

FHA insures 203(b) Home Loans.

FDIC

Federal Deposit Insurance Association: Insures deposits for a depositor up to a certain dollar amount.

Recission

The cancellation of a contract by law or consent by the parties involved.

Actual Age

The chronological age of a structure.

Prepaid Expenses

The costs for taxes, insurance and assessments paid before the due date.

Perimeter

The distance around the outside of an object or geometric figure.

Simple Interest

The interest computed only on the principal amount of a loan.

Redemption

The right of a defaulted property owner to recover her property by curing the default.

Conveyance

The transfer of title of property.

Actual Theory

Theory of land use development along major highways.

Co-Ownership

Title ownership held by two or more persons.

FHLMC

Federal Home Loan Mortgage Corporation or Freddie Mac: Active in the secondary mortgage market.

Littoral Rights

(1) A landowner's claim to use water in large navigable lakes and oceans adjacent to 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, managing broker, or salesperson. (2) The revocable permission for a temporary use of land - a personal right that cannot be sold.

Principal

(1) A sum loaned or employed as a fund or an investment, as distinguished from its income or profits. (2) The original amount (as in loan) of the total due and payable at a certain date. (3) A main party to a transaction - the person for whom the agent works.

Lot Reservation

$5,000 max deposit; can't sell without a public report, but can take a reservation; 15 days to give public report after approval; 7 days to enter into contract after receipt of public report (deposit refunded if no contract).

Title

(1) The right to ownership of land. (2) The evidence of ownership of land.

Fixture

*Personal property that is now affixed and is considered real property: It's permanently attached to a house, such as drapery rods, toilets, built-in bookcases or a furnace.

Finder's Fees

1. A monetary payment which is prohibited or limited in most states to a party who locates suitable property or a purchaser who is other than a licensed broker; 2. A fee usually charged by a Real Estate Broker in exchange for locating a rental property. These types of fees are permissable by law.

Delivery of Deed

1. Does the grantor have the necessary intent to pass title? No physical transfer of deed is required. 2. Recording raises presumption of delivery, even if Grantee knows nothing about the deed.

Merger

1. In contract law, the doctrine that says preliminary agreements are presumed to be included in the final agreement. 2. In real estate law, the doctrine that a lesser interest is absorbed by a greater estate when both are owned by the same person.

Defeasible - Determinable

1. Language: "To A, until/while/so long as..." 2. Duration: potentially infinite, so long as event does not occur. 3. Transferability: alienable, devisable, descendible, subject to condition. 4. Future interest: possibility of reverter (held by grantor).

Intangible

A property such as goodwill that cannot be touched.

Adjacent

1. Lying near, close, or contiguous; adjoining; neighboring: a motel adjacent to the highway. 2. Just before, after, or facing: a map on an adjacent page.

Endorsement

1. The act of signing one's name. 2. An addition to or modification of an insurance policy which expands or changes coverage of the policy.

Renunciation (renounce)

1. The act or an instance of renouncing; a giving up formally or voluntarily, often at a sacrifice, of a right, claim, title, etc. 2. A written statement or declaration of this. Example: Disclaimer Deed

Legislation

1. The act or process of lawmaking; 2. A proposed or enacted law.

Fee

1. The term fee is of Old English derivation and means an estate of inheritance in real property. See Fee Simple and Fee Simple Estate. 2. A compensation for a particular act.

Clear Title

A property that does not have liens, defects or other legal encumbrances.

Acre

43,560 sq. ft.: If it were in the shape of a square it would measure approx 208.71 ft. on each side.

Master Plan

A "comprehensive plan" to guide the long term physical development of a particular area.

FHA

Federal Housing Administration or FHA. FHA insures lenders against loss by requiring the borrower to pay a mortgage insurance premium.

Neighborhood Plan

A Neighborhood Plan sets boundaries and provides guidance for future growth and development.

Curable Obsolescense (Depreciation): Curable Defect

A deficiency in a property that is easy or inexpensive to fix, such as chipping paint.

W-2

A W-2 Form is a United States federal tax form issued by employers and stating how much an employee was paid in a year.

General Lien

A lien that encumbers both real and personal property. (The right of a creditor to have all of a debtor's property - both real and personal - sold to satisfy debt.)

Pur Autre Vie

A life estate that is measured by the life of a person other than the grantee.

Limited Partnership

A ______ , consists of one or more general partners as well as ______. The business is run by the general partner or partners. The ______ are not legally permitted to participate, and each can be held liable for business losses only to the extent of their investment.

Property Disclosure Report

A ______ must be given to the buyer before an offer is made and accepted or the buyer will have three days in which to rescind the contract, based on any negative disclosures.

Seller Broker

A ______ represents the interest of the seller.

Mortgagee

A bank or other financial institution that lends money to the borrower. The borrower is considered the mortgagor.

Severalty Ownership

Ownership of real property by one person only, also called sole ownership.

Lease

A binding agreement that contains the terms and conditions of a renter's occupancy.

Common Law

A body of laws based on custom, usage and rulings by courts in various jurisdictions.

Cooperative Corporation

A business trust that holds the title to a cooperative residential building and grants occupancy rights to shareholders in the corporation.

Accelerated Depreciation

A bookkeeping method that depreciates property faster in the early years of ownership.

Trustor

A borrower in a deed of trust loan transaction.

Eviction - Constructive

A breach of a covenant of warranty or quiet enjoyment such as the inability of a lessee to obtain possession because of a major defect in title or a condition making occupancy hazardous or unfit for its intended use.

Munjal v. Baird & Warner, Inc.

A broker or salesperson has no duty to discover "latent material defects" if a seller has not disclosed these defects to them prior to sale.

Managing Broker

A broker who has supervisory responsibilities for licensees in one or, in the case of a multi office company, more than one office and who has been appointed as such by the sponsoring broker.

Patent Deed

A grant or franchise of land from the United States government.

Limited liability company (LLC)

A business structure that combines the most attractive features of limited partnerships and corporations. The members of an ______ enjoy the limited liability offered by a corporate form of ownership and the tax advantages of a partnership.

Arms Length Transaction

A business transaction in which all parties have equal bargaining opportunity.

Walk-Through

A buyer's final inspection of the home to determine if conditions in the purchase agreement have been satisfied.

Vendee

A buyer, usually under the terms of a land contract.

Lien

A claim laid by one person or company on the property of another as security for money owed.

Codicil

A change to a will that adds or subtracts provisions or clarifies portions of the document.

Amendment

A change to an existing contract.

Title Search

A check of public title records to ascertain that the seller is the legal owner and that there are no claims or liens against the property.

Postdated checks

A check that has a featured date instead of the actual date; it should not be deposited until the date on the check

Chattel Mortgage

A claim on personal property rather than on real property used to secure or guarantee a promissory note to acquire personal property.

Encumbrance

A claim or lien on a property that complicates the title process.

Restrictive Covenants

A clause in a deed that limits the way the real estate ownership may be used.

Exculpatory Clause

A clause in a document that relieves the landlord of any blame or guilt as relating to the actions of the tenants: An Escape Clause.

Alienation Clause

A clause in a loan document calling for the entire balance due and payable when the property is sold.

Subject to the Mortgage

A clause in a loan document where a buyer agrees to take over the existing loan payments, but not to assume any personal liability for the loan beyond the value of his or her equity in the property.

Or More Clause

A clause in a promissory note that permits the borrower to payoff the loan at any time with no penalty.

Prior Mortgage Clause

A clause in a subordinate mortgage (a 2nd mortgage) which states that it is subject to a prior mortgage.

Defeasance Clause

A clause used in leases and mortgages that cancels a specified right upon the occurrence of a certain condition, such as cancellation of a mortgage on repayment of the mortgage loan.

Mortgage acceleration clause

A clause which allows a lender to demand that the entire balance of the loan be repaid in a lump sum under certain circumstances. The ______ is usually triggered if the home is sold, title to the property is changed, the loan is refinanced or the borrower defaults on a scheduled payment.

HUD-1 Uniform Settlement Statement

A closing statement or settlement sheet that outlines all closing costs on a real estate transaction or refinancing.

Curtesy

A life estate, usually a fractional interest, given by some states to the surviving husband in real estate owned by his deceased wife. Abolished in most states.

Syndicate

A combination of people or firms formed to accomplish a business venture of mutual interest by pooling resources. In a real estate investment ______, the parties own and/or develop property, with the main profit generally arising from the sale of the property.

Interest Rate Caps

A limit on the amount that can be charged to the monthly payment of an adjustable-rate mortgage during an adjustment period.

Mortgage Broker

A company that matches lenders with prospective borrowers who meet the lender's criteria. The ______ does not make the loan, but receives payment from the lender for services.

Mortgage Banker

A company that provides home loans using its own money. The loans are usually sold to investors such as insurance companies and Fannie Mae.

Prior Appropriation

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

Discounting

A concept which is a means of converting cash flow into present value at a selected rate of return that is based upon the premise that one would pay less than $1 today for the right to receive $1 at some future time.

Contingency

A condition specified in a purchase contract, such as a satisfactory home inspection.

Moral Turpitude

A conduct that is contrary to the social duty one party owes to another and is criminal in nature.

Counteroffer

A new offer made in response to an offer received. It has the effect of rejecting the original offer, which cannot be accepted thereafter unless revived by the offeror.

Listing Agreement

A contract between an owner (as principal) and a real estate sponsoring broker (as agent) by which the sponsoring broker is employed as agent to find a buyer for the owner's real estate on the owner's terms, for which service the owner agrees to pay a commission.

Bilateral Contract

A contract binding two or more parties.

Executed Contract

A contract in which all terms and conditions have been met.

Expressed Contract

A contract in which the terms are specifically stated either orally or in writing.

Void

A contract is ______ when it has no legal force or effect because it lacks some or all of the essential elements of a contract.

Enforceable

A contract or agreement under which either party can be compelled to perform by a court of law or equity.

Sales Contract

A contract signed by the buyer and seller that details the terms of a home purchase.

Valid Contract

A contract that complies with all the essentials of a contract and is binding and enforceable on all parties to it.

Unenforceable Contract

A contract that has all the elements of a valid contract, yet neither party can sue the other to force performing of it.

Voidable Contract

A contract that seems to be valid on the surface but may be rejected or disaffirmed by one or both of the parties.

Implied Contract

A contract under which the agreement of the parties is demonstrated by their acts and conduct. (Can be created unintentionally.)

Goodwill

A contractual "consideration" that is based on love and affection rather than money and is usually considered to be a gift.

Quitclaim Deed

A conveyance by which the grantor transfers whatever interest she has in the real estate, without warranties or obligations. Granting clause example: "I, ______, remise, release, alienate, and convey..."

Bargain and Sale Deed

A conveying deed that has three covenants but no warranties, frequently used in a law transaction.

Dominant Tenement

A property that includes in its ownership the appurtenant right to use an easement over another person's property for a specific purpose.

Forbearance

A course of action a lender may pursue to delay foreclosure or legal action against a delinquent borrower.

Suit for Specific Performance

A court action in which the defaulting party is sued to perform under the terms and conditions agreed to in the contract.

Suit to Quiet Title

A court action intended to establish or settle the title to a particular property, especially when there is a cloud on the title.

Quiet Title

A court action to remove a cloud on the title.

Garnishment

A court directive, to a party who is holding the assets of another, to freeze said assets.

Suit for Possession

A court suit initiated by a landlord to evict a tenant from leased premises after the tenant has breached one of the terms of the lease or has held possession of the property after the lease's expiration.

Guardian

A party lawfully appointed by a court who is vested with the power and duty to care for and manage the affairs of a person who is legally incompetent and unable to do so himself.

Felony

A crime more serious than one termed a misdemeanor and which is defined by several of the U.S. statutes and codes and includes crimes punishable by imprisonment and or death in a state prison or penitentiary.

Misdemeanor

A criminal offense of lesser grade than that of a felony and usually punishable only by fine.

Affirmation of Value

A declaration that a certain set of facts are truthful: In this case, that the value is.

Administrator's Deed

A deed conveying the property of one who died without a will ( intestate).

Trustee's Deed

A deed executed by a trustee conveying land held in a trust.

Gift Deed

A deed for which the consideration is for love and affection and not monetary.

Deed in Lieu of Foreclosure

A deed given by the mortgagor to the mortgagee when the mortgagor is in default under the terms of the mortgage. This is a way for the mortgagor to avoid foreclosure.

General Warranty Deed

A deed in which the grantor fully warrants good clear title to the premises. Used in most real estate deed transfers, ______ offers the greatest protection of any deed. Granting clause example: "I,______, convey and warrant..."

Special Warranty Deed

A deed in which the grantor warrants, or guarantees, the title only against defects arising during the period of tenure and ownership of the property and not against defects existing before that time. Granting clause example: "I,______, remise, release, alienate, and convey..."

Title Transfer

A deed is the legal instrument used to transfer title (ownership) in real estate.

Reconveyance Deed

A deed used by a trustee under a deed of trust to return title to the trustor.

Incurable Obsolescence (Depreciation): Incurable Defect

A defect in a property that cannot be fixed, such as an adjacent hazardous waste site, or that would cost too much to repair relative to the value of the property.

Gap

A defect in the chain of title of a particular parcel of real estate; a missing document or conveyance that raises doubt as to the present ownership of the land.

Realtor

A designation for an agent or broker who is a member of the National Association of Realtors.

Appraisal Report

A detailed written report on the value of a property based on recent sales of comparable sites in the area.

Metes and Bounds Description

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 point of beginning.

Estoppel

A legal doctrine which prohibits a person from going back on previous facts or acts of conduct.

Mortgage

A legal document specifying a certain amount of money to purchase a home at a certain interest rate, and using the property as collateral.

Equity

A determination of the value of a property after existing liens are deducted.

Draws

A disbursement of a portion of the mortgage funds, typical with construction loans, that is made in advance as improvements to the property occur.

Lien Waiver

A disclaimer presented to the landowner who ordered the work with the names of the general contractor and all subcontractors. At the completion of the work the document should be signed by the contractor releasing their lien rights.

Public Report

A disclosure statement required by the Subdivided Land Law in which the sellers real property under certain circumstances must reveal specified information to potential buyers; the buyer is not obligated until they have read the report and signed the receipt.

Affiliated Business Disclosure

A disclosure that a company or individual referring settlement services has either an affiliate relationship with or a direct or beneficial ownership interest of more than 1% in a provider of settlement services.

Residential Real Property Disclosure Report

A disclosure that is meant for the seller to reveal any material defects in the residence that the seller is aware of. Even if the property is being sold "As is" the seller is still required to disclose any known problems and/or defects with the property. It is the responsibility of the listing agent to make sure that the seller fills out the Residential Real Property Disclosure Report. The agent is not to fill it out the report. If a material defect is disclosed in the Residential Real Property Disclosure Report after acceptance by the prospective buyer, then the prospective buyer may, within three business days after receipt of that report by the prospective buyer, terminate the contract.

Legacy

A disposition of money or personal property by will.

Federal Home Loan Bank (FHB)

A district bank of the Federal Home Loan Bank System that lends only to member financial institutions such as savings and loan associations.

Special Purpose Properties

A property with limited uses and marketability, such as a church, theater, school, or public utility.

Satisfaction of Mortgage

A document acknowledging the payment of a mortgage debt.

Employment Contract

A document evidencing formal employment between employer and employee or between principal and agent. In real estate business, this generally takes the form of a listing agreement or management agreement.

Agreement for Sale

A document giving equitable title to a Buyer, Vendee, of Real Property: Also called Contract for Deed. Parties are usually called Vendor and Vendee.

Sheriff's Deed

A document giving ownership rights in property to a buyer at a sheriff's sale (a sale held by a sheriff to pay a court judgment against the owner of the property). The giving of said deed begins a Statutory Redemption period.

Certificate of Sale

A document issued at a judicial sale, which entitles the buyer to receive a deed after court confirmation of the purchase of the property.

Financing Statement

A document recorded to protect a creditors interest in a personal property.

Homestead - Abandonment of

A document recorded to terminate a homestead.

Satisfaction of Judgment

A document signed by a judgment creditor (the party owed the money judgment) stating that the full amount due on the judgment has been paid. It should be filed with the court clerk, notarized and recorded. if there is an abstract of judgment on record (a document showing the amount of the judgment, which is a lien on any real property belonging to the defendent).

Power of Attorney

A document that authorizes an individual to act on behalf of someone else. The principal is the person represented in the Power of Attorney.

Deed of Trust

A document that gives a lender the right to foreclose on a piece of property if the borrower defaults on the loan.

Escrow Instructions

A document that sets forth the duties of the escrow agent, as well as the requirements and obligations of the parties, when a transaction is closed through an escrow.

Estoppel Certificate

A document used to verify the terms and balances on existing leases or loans.

Misrepresentation

A false or misleading statement or assertion or presenting something not in accordance with the facts from one person to another in words or by conduct.

Comprehensive Environmental Response, Compensation, and liability Act (CERCLA)

A federal law administered by the EPA that establishes a process for identifying parties responsible for creating hazardous waste sites.

Equal Credit Opportunity Act (ECOA)

A federal law that prohibits a lender or other creditor from refusing to grant credit based on the applicant's sex, marital status, race, religion, national origin or age. The law also prohibits a creditor from refusing to grant credit because the applicant receives public assistance.

Truth-in-Lending Act (Reg. Z)

A federal law that protects consumers in a variety of ways. One of its key provisions allows a consumer to cancel a home-improvement loan, second mortgage or other loan if the home was pledged as security (except for a first mortgage or first trust deed) until midnight of the third business day after the contract was signed.

Origination Fee

A fee charged by most lenders--also called points--for processing a loan. A point is 1 percent of the total loan amount.

Fee Simple Determinable

A fee interest in real estate that may be automatically terminated if certain circumstances are violated.

Trust

A fiduciary arrangement whereby property is conveyed to a person or institution, called a trustee, to be held and administered on behalf of another person, called a beneficiary. The one who conveys the ______ is called the trustor.

General Agency

A fiduciary relationship whereby the agent is given the power to bind (sign for) the principal for certain business purposes.

Gross Income Multiplier (GRM)

A figure used as a multiplier of the gross annual income of a property to produce an estimate of the property's value.

FHA Firm Commitment

A final statement that FHA will insure a specified loan.

Non-Assumption Clause

A loan provision that prohibits the transfer of a mortgage to another borrower without lender approval.

Social Obsolescence

A loss in value of property due to incurable factors outside the property meaning the same as economic obsolescence.

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).

Bankruptcy

A financial situation when a person's liabilities exceed his ability to pay.

Buydown

A financing technique used to reduce the monthly payments for the first few years of a loan. Funds in the form of discount points are given to the lender by the builder or seller to buy down or lower the effective interest rate paid by the buyer, thus reducing the monthly payments for a set time.

Punitive Damages Recordation

A fine, used to punish the wrongdoer, is assessed in excess of the damages actually suffered and then recorded.

Monument

A fixed natural or artificial object used to establish real estate boundaries for a metes-and-bounds description.

Rent

A fixed, periodic payment made by a tenant of a property to the owner for possession and use, usually by prior agreement of the parties.

Non-Judicial foreclosure

A foreclosure in which the mortgage lender notifies the borrower with a notice of default. Since the mortgage loan terms already specify that a sale process kicks off right away (without going through the court system) - the lender can start the foreclosure process very quickly. Then the borrower has a fixed period of time (which varies state by state) to either sell the home, or negotiate to solve the financial problem. If the consumer does not accomplish this on their own, the mortgage lender then can come in and auction off the home to the highest bidder.

Certificate of Reasonable Value (CRV)

A form indicating the appraised value of a property being financed with a VA loan.

Ostensible Agency

A form of implied agency relationship created by the action of the parties involved rather than by written agreement or document.

Holder in Due Course

A party who has taken a note, check or bill of exchange in the due course of a transaction, before it was overdue and in good faith and for value and without knowledge that it has been previously dishonored and without notice of any defect at the time.

Interval Ownership

A form of ownership that creates a sole ownership in a property for only a specific part of a year. The buyer purchases a right to use the property in contrast to time sharing, which creates a joint interest in the property. See Timesharing.

Letter of Intent

A formal statement that the buyer intends to purchase the property for a certain price on a certain date.

Holographic will

A party who has taken a note, check or bill of exchange in the due course of a transaction, before it was overdue and in good faith and for value and without knowledge that it has been previously dishonored and without notice of any defect at the time.

Undivided Interest

A fractional ownership without a physical division into shares.

Fee Tail

A freehold estate that may terminate when and if the grantor's specified heirs die: unlawful in most states.

Real Estate Recovery Fund

A fund established to cover claims of aggrieved parties who have suffered monetary damage through the actions of a real estate licensee.

Estate in Remainder

A future interest given by the grantor to a third person to take effect upon the termination of a life estate.

Life estate - In remainder

A future interest given by the grantor to a third person to take effect upon the termination of a life estate.

Landlord

A party who is called a lessor that rents property to another when done under a lease.

Devise

A gift of real property by will. The donor is the devisor, and the recipient is the devisee.

Security Deposit

A payment by a tenant, held by the landlord during the lease term and kept (wholly or partially) on default or destruction of the premises by the tenant.

Radon

A ground-generated radioactive gas that seeps into some homes through sump pumps, cracks in the foundation and other inlets. A leading cause of lung cancer, ______ is found in mostly the northern half of the country.

Federal Reserve Board

A group of economists and other experts who set the nation's monetary policy. Its chief tool to control inflation is the power to control interest rates.

Homeowners' Association

A group that governs a modern subdivision or planned community. An association collects monthly fees from all owners to pay for maintenance of common areas, handle legal and safety issues, and enforce the covenants, conditions and restrictions set by the developer.

Fixed-Rate Mortgage

A home loan with an interest rate that will remain at a specific rate for the term of the loan. About 75 percent of all home mortgages have ______.

Consent Order (Decree)

A judgment whereby the defendant agrees to stop the alleged illegal activity without admitting any wrongdoing or guilt

Confidentiality

A key element to fiduciary duties; client information obtained during the term of the brokerage agreement must not be shared unless the principal authorizes disclosure.

Nonhomogeneous

A lack of uniformity; dissimilarity. Because no two parcels of land are exactly alike, real estate is said to be non-homogeneous.

Puffing

A legal exaggerated or superlative comments or opinions.

Payment Cap

A legal limit on the amount a monthly payment can increase on an adjustable-rate mortgage.

Law of Diminishing Returns

A law that applies when money spent on improvements no longer produces an increase in income or value.

Law of Increasing Returns

A law that applies when money spent on improvements produces an increase in income or value.

Proprietary Lease

A lease given by the corporation that owns a cooperative apartment building to the shareholder for the shareholder's right as a tenant to and individual apartment.

Lease Interest (Option)

A lease in which the lessee (tenant) has the right to purchase real property under certain conditions such as a stipulated price or within a stipulated time frame either during or at the end of the lease term.

Index Lease

A lease in which the rental payment varies in accordance with variations in an agreed-upon established index of prices or costs.

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 ______.

Ground Lease (or Rent)

A lease or rental of land only, on which the tenant usually owns a building or is required to build as specified in the lease. Such rental agreements or leases are usually long-term net leases; the tenant's rights and obligations continue until the rental agreement or lease expires or is terminated through default.

Net lease

A lease requiring that the tenant 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 tenant's gross sales at the premises; it usually stipulates a base monthly rental plus a percentage of any gross sales above a certain amount.

Sandwich Lease

A leasehold interest that exists when subleasing property that is between the primary lease and the operating lease when the holder of a sublease in turn sublets to another, his or her position is that of being sandwiched between the original lessee and operating lessee.

Specific Performance

A legal action to compel a party to carry out the terms of a contract.

Covenants in Deed

A legal assurance or promise in a deed or other document, or implied by the law.

Agency

A legal relationship in which the principal appoints an agent to act in his behalf.

Warranty

A legally binding promise to do something in the future.

Trustee

A legally empowered person who holds or controls a piece of property for another person.

Notice of Default

A lender's initial action when a mortgage payment is late and attempts to reconcile the issue out of court have failed.

Pre-Approval Letter

A letter from a lender that informs a seller about the amount of money that a potential buyer can obtain.

Designated Broker (agent)

A licensee authorized by a sponsoring broker to act as the agent for a specific principal in a particular transaction.

Specific Lien

A lien affecting or attaching only to a certain, specific parcel of land or piece of property.

Equitable Lien

A lien created by a court to ensure the payment of a judgment as well as by agreement.

Tax Lien

A lien imposed by law upon a property to secure the payment of taxes.

Statutory Lien

A lien imposed on property by statute - a tax lien, for example; in contrast to an equitable lien, which arises out of common law.

Authorization to Sell

A listing contract whereby a representative is employed by a seller to secure a buyer for the property.

Natural Person

A living person as distinguished from a legal person such as an organization or a corporation.

Percentage Loan

A loan in which a lender may give favorable terms, such as a low interest rate, in return for a percentage of ownership in the venture or property.

Straight (term) Loan

A loan in which only interest is paid during the term of the loan, with the entire principal amount due with the final interest payment.

Flexible Payments

A loan payment plan in which the payments increase over a set number of years.

Prepayment

A loan payment that is greater than the amount due or in advance of the due date.

Variable Interest Rate

A loan rate that moves up and down based on factors including changes in the rate paid on bank certificates of deposit or Treasury bills.

Home Equity Loan

A loan that allows owners to borrow against the equity in their homes.

Junior Lien

A loan that subordinate to the primary loan.

Wraparound Mortgage

A loan to a buyer for the remaining balance on a seller's first mortgage and an additional amount requested by the seller. Payments on both loans are made to the lender who holds the ______.

Rate-Improvement Mortgage

A loan with a clause that entitles a borrower to a one-time cut in the interest rate without going through refinancing.

Variable Rate Mortgage

A loan with an interest rate that hinges on factors such as the rate paid on bank certificates and Treasury bills.

Amortized Loans

A loan with scheduled periodic payments of both principal and interest. This is opposed to loans with interest-only payment features, balloon payment features and even negatively amortizing payment features.

Caisson

A long cylindrical reinforced concrete foundation element formed by drilling into firm soil and pouring concrete into the hole.

Comprehensive Plan

A long-term land use plan sometimes known as a master plan that can be updated and revised based on changing needs and growth.

Conventional Loan

A long-term loan a lender makes for the purchase of a home.

Economic Obsolescence

A loss in value due to factors outside the property lines of the subject property that adversely affect the usability and value of the subject property or its actual or potential income. Also known as Social Obsolencence and Environmental Obsolencence.

Balloon Payment

A lump sum paid to liquidate a debt, or paid any time during a loan period.

Plat Map

A map of a town, section, or subdivision indicating the location and boundaries of individual properties.

Relief map

A map that depicts land configuration, usually with contour lines.

Benchmark

A mark made on a permanent object that has a known location and elevation.

Money Market

A market for borrowed funds which are generally only short-term funds

Secondary Mortgage Market

A market of packaged home loans that are resold as securities to investors. Major players are Fannie Mae and Freddie Mac.

Prescription

A means of acquiring incorporeal interests in land of another, such as an easement by continued long-term use, which typically is established in the statute of limitations.

Mutual Assent

A meeting of the minds between parties.

Straight-Line method

A method of calculating depreciation for tax purposes, computed by dividing the adjusted basis of a property by the estimated number of years of remaining useful life.

Lot-and-Block (Recorded Plat) System

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

Delinquent Mortgage

A mortgage that involves a borrower who is behind on payments. If the borrower cannot bring the payments up to date within a specified number of days, the lender may begin foreclosure proceedings.

Junior Mortgage

A mortgage that is subordinate to the primary mortgage.

Graduated-Payment Mortgage (GPM)

A mortgage that requires a borrower to make larger monthly payments over the term of the loan. The payment is unusually low for the first few years but gradually rises until year three or five, then remains fixed.

Escrow

A neutral third party holds the documents and money involved in a real estate transaction and ensures that all conditions of a sale are met. ______ also refers to a special account that a lender establishes to hold monthly installments from the borrower to cover property taxes and insurance.

Nondisturbance Clause

A mortgage condition by which the mortgagee agrees not to terminate leases (if the lessees are in compliance with lease terms) in the event of mortgage foreclosure.

Balloon Loan

A mortgage in which monthly installments are not large enough to repay the loan by the end of the term. As a result, the final payment due is the lump sum of the remaining principal.

Restructured Loan

A mortgage in which new terms are negotiated.

Seasoned

A mortgage in which the periodic payments have been made for a long period of time and which shows that the borrower's payment pattern is well established.

Qualifications

A mortgage lender's approval requirements an applicant must meet in order to obtain a mortgage.

Open-End loan

A mortgage loan that is expandable by increments up to a maximum dollar amount, the full loan being secured by the same original mortgage.

Participation Mortgage

A mortgage loan wherein the lender has a partial equity interest in the property or receives a portion of the income from the property.

Adjustable-Rate Mortgage (ARM)

A mortgage loan with the interest rate on the note periodically adjusted based on an index which reflects the cost to the lender of borrowing on the credit markets.

Level-Payment Plan

A mortgage on real estate that is paid off by making a series of nearly equal payments at regular intervals where a part of the payment goes to interest and the remainder goes to reduce the amount of the unpaid principal on the loan. See Amortized Loan.

Assumable Mortgage

A mortgage that can be transferred to another borrower.

Blanket Mortgage

A mortgage that covers more than one property owned by the same borrower (a security that covers more than one parcel of land); providing for each parcel's partial release from the mortgage lien on repayment of a definite portion of the debt.

Equity Participation

A mortgage transaction in which the lender in addition to receiving a fixed rate of interest on the loan acquires an interest in the borrower's real property and shares in the profits derived from the income or upon the sale of the property.

Commercial Bank

A national or state-chartered bank which operates on a basis of stock ownership and where the dividends are distributed to the shareholders and where the depositors have no share in the management.

Incorporeal Right

A nonpossessory right in real estate; for example, an easement or a right-of-way.

Purchase-Money Mortgage (PMM)

A note secured by a mortgage or deed of trust given by a buyer, as borrower, to a seller, as lender, as part of the purchase price of the real estate.

Unilateral Contract

A one-sided contract wherein one party makes a promise so as to induce a second party to do something. The second party is not legally bound to perform; however, if the second party does comply, the first party is obligated to keep the promise.

Improved Lot

A parcel of land which has been changed from its natural state through the creation of roads, buildings or other structures.

General Partnership

A partnership in which all the partners participate in the operation and management of the business and share full liability for business losses and obligations.

Redemption Period

A period of time established by state law during which a property owner has the right to redeem her real estate from a foreclosure or tax sale by paying the sales price, interest, and costs. Many states do not have mortgage redemption laws.

Month-to-Month Tenancy

A periodic tenancy under which the tenant rents for one month at a time. In the absence of a rental agreement (oral or written), a tenancy is generally considered to be a ______.

Occupancy Permit

A permit issued by the appropriate local governing body to establish that the property is suitable for habitation by meeting certain safety and health standards.

Commissioner

A person authorized by the Governor to head the Arizona Department of Real Estate.

Universal Agent

A person empowered to do anything the principal could do to a particular business or activity. The agent's authority to act on behalf of the principal is virtually unlimited.

Life Tenant

A person in possession of a life estate.

Consumer

A person or entity seeking or receiving licensed activities.

Superfund

A popular name of the hazardous waste cleanup fund established by the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA).

Executor

A person that is appointed in a will to carry out its provisions.

Licensee

A person to whom a license has been granted.

Associate Broker

A person who as qualified as a real estate broker but still works for, and is supervised by, another broker.

Testator

A person who has made a valid will.

Salesperson

A person who holds a salesperson license and is employed by a real estate broker.

Client

A person who is being represented by a licensee: the principal.

Adult

A person who is in his or her majority: usually 18 years old.

Legatee

A person who receives personal property by will.

Buyer Agency Agreement

A principal-agent relationship in which the sponsoring broker is the agent for the buyer, with fiduciary responsibility to the buyer.

Regular Employee

A person working an average of 20 hours per week for a person or entity who would be considered as an employee under the IRS.

Spouse

A person's husband or wife.

Future Interest

A person's present right to an interest in real property that will not result in possession or enjoyment until sometime in the future, such as a reversion or right of reentry.

Principal Residence

A person's primary residence used in income tax matters also known as a domicile.

Deficiency Judgment

A personal judgment levied against the borrower when a foreclosure sale does not produce sufficient funds to pay the mortgage debt in full.

Time is of the Essence

A phrase in a contract that requires the performance of a certain act within a stated period of time.

Security

A piece of property designated as collateral.

Gable Roof

A pitched roof with two sloping sides.

Ingress

A place or means of going in or an entrance. See Egress.

Market

A place where goods can be bought and sold and a price established.

Title Insurance

A policy issued to lenders and buyers to protect any losses because of a dispute over the ownership of a piece of property.

Rent Loss Insurance

A policy that covers any loss of rent or rental value in the event of fire or other damage that renders the property uninhabitable.

Blanket Insurance Policy

A policy that covers more than one person or piece of property.

Section

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

Tenancy at Will

A possession of premises by permission of an owner or landlord and having no fixed term.

Attorney-at-Law

A practitioner in a court of law who is legally qualified to prosecute and defend actions in such court on the retainer of clients.

Right of Way

A privilege operating as an easement upon land which an owner does by grant or by agreement give to another the right to pass over a specific part of the owner's land, to construct a roadway or use as a roadway.

Judicial Foreclosure

A procedure to handle foreclosure proceedings as civil matters.

VA Loans

A program that allows most veterans to purchase a house without a down payment.

Cooperative

A project in which a corporation holds title and sells shares representing individual units to buyers who then receive a proprietary lease as their title.

Mixed-Use Development

A project that combines several different functions, such as residential space above a commercial establishment or an entire development combining commercial, residential and public accommodations.

Conditional Commitment

A promise by a lender to make a loan if the borrower meets certain conditions.

Famial Status

A protected class under Fair Housing Law. A family is one or more persons under 18 years living with a parent or guardian.

Multiple Listing Clause

A provision in an exclusive listing for the authority and obligation on the part of the listing broker to distribute the listing to other brokers in the multiple listing organization.

Right to Recission

A provision in the federal Truth-in-Lending Act that allows borrowers to cancel certain kinds of loans within three days of signing.

Minimum Services

A provision of the Real Estate License Act of 2000 that requires licensees to perform the following for clients. (1) Accept delivery of and present to the client all offers and counteroffers to buy, sell, or lease the client's property or the property the client seeks to purchase or lease. (2) Assist the client in developing, communicating, negotiating, and presenting offers, counteroffers, and notices that relate to the offers and counteroffers until the lease or purchase agreement is signed and all contingencies are satisfied or waived. (3) Answer the client's questions relating to the offers, counteroffers, notices, and contingencies.

Assumption Clause

A provision that allows a buyer to take responsibility for the mortgage from a seller.

Assessor

A public official who establishes the value of a property for taxation purposes.

Installment Contract

A purchase agreement in which the buyer does not receive title to the property until all installments are paid.

Mortgage - Assumption

A purchase of property wherein the grantee accepts liability for the payment of the existing note secured by a mortgage or trust deed against the property and becomes a co-guarantor with the seller for the payment of the loan unless the lender releases.

Locked-in

A rate-lock or rate commitment: a lender's promise to the borrower to hold a certain interest rate and a certain number of points for a certain period of time while their loan application is processed.

Blind Ad

A real estate ad that does not indicate that a brokerage firm is involved.

Cooperating Broker

A real estate broker who finds a buyer for a property that another broker has listed.

Buyer's Broker

A real estate licensee who represents prospective residential buyers exclusively. They owe the buyer/principal the common law or statutory agency duties.

Buyer's Agent

A real estate licensee who represents the prospective purchaser in a transaction. They owe the buyer/principal the statutory agency duties.

Package Loan

A real estate loan used to finance the purchase of both real property and personal property, such as in the purchase of a new home that includes carpeting, window coverings, and major appliances.

Tax Deferment

A real estate transaction in which one real property in whole or in part is exchanged for another "like kind property" to defer the payment of capital gains tax. Also referred to as a Tax-Free Exchange.

Credit History

A record of an individual's current and past debt payments.

Homestead - Declaration of

A recorded document that protects a homeowner from foreclosure by certain judgment creditors.

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.

Government Survey System

A rectangular survey system established by congress in 1785 to standardize the description of land acquired by the newly formed federal government.

Physical Obsolescence (depreciation): Physical deterioration

A reduction in a property's value resulting from a decline in physical condition; can be caused by action of the elements or by ordinary wear and tear.

Usury

A reference to illegally excessive interest charged on any loan.

National Do Not Call Registry

A registry managed by the federal trade commission that lists the phone numbers of consumers who have indicated their preference to limit the telemarketing calls they receive.

Dual Agent or Agency

A relationship in which a real estate agent or broker represents both parties in a transaction.

Fiduciary Relationship

A relationship of trust and confidence, as between trustee and beneficiary, attorney and client, or principal and agent.

Binder

A report issued by a title insurance company that details the condition of a home's title and provides guidelines for a title insurance policy.

Easement

A right given to a third party to use a portion of the property for certain purposes, such as power lines or water mains.

Survivorship

A right in an estate owned by two or more parties in equal shares that is created by a single transfer document. Upon the death of a joint tenant the surviving joint tenants take the entire decedent's share of the property, so nothing passes to the heirs of the deceased.

Estate

A right or interest one has in all property, real and personal.

Estate in Land

A right or interest one has in real property.

Quiet Enjoyment

A right that a tenant (typically) or an owner has to the use of the property without interference or possession with others.

Possessory Rights

A right that an owner or another person holding a right, such as a tenant, has to control, take custody of and use property.

Appurtenant

A right, privilege, or improvement belonging to, and passing with, the land.

Parole Evidence Rule

A rule of evidence providing that a written agreement is the final expression of the agreement of the parties, not to be varied or contradicted by prior or contemporaneous oral or written negotiations.

Sheriff's Sale

A sale of property by the sheriff under authority of a court's writ of execution in order satisfy an unpaid obligation.

Short Sale

A sale of real estate in which the sale proceeds fall short of the balance owed on the property's mortgage loan.

Amortization

A schedule of payments that will eventually extinguish the entire obligation.

Subordinate Loan

A second or third mortgage.

Branch Office

A secondary place of business, apart from the principal or main office, from which real estate business is conducted. A branch office usually must be run by a licensed real estate broker working on behalf of the broker.

Collusion

A secret agreement or conspiracy between two or more parties to defraud another of his or her lawful rights or to obtain a forbidden lawful object.

Asking Price

A seller's initial price for a property.

Vendor

A seller, usually under the terms of a land contract.

C Corporation

A separate legal structure that helps shield business owner's personal assets from judgments against the company. C Corporations have a specific structure that includes shareholders, directors, and officers. Profits are taxed when earned and again when distributed to shareholders as dividends: double taxation. Shareholders cannot deduct corporate losses.

Bridge Loan

A short-term loan for borrowers who need more time to find permanent financing.

Interim Financing

A short-term loan usually made during the construction phase of a building

Option

A situation in which a buyer puts down money for the right to purchase a piece of real estate within a set time period but does not have an obligation to buy.

Government National Mortgage Association

Commonly known as Ginnie Mae, this agency buys home loans from lenders, pools them with other loans and sells shares to investors. Ginnie Mae differs from its cousins, Fannie Mae and Freddie Mac, in that it only purchases loans backed by the federal government.

Sole Proprietorship

A sole proprietor is someone who owns an unincorporated business by himself. An exception is, if you are a solemember of an LLC, you are not a sole proprietor if you elect to treat the LLC as a corporation.

Uniform Settlement Statement (HUD-1)

A special form that itemizes all charges to be paid by buyer and seller in connection with settlement.

Reverse Mortgage

A special type of loan available to equity-rich, older owners. Repayment is not necessary until the borrower sells the property or moves into a retirement community.

Private Mortgage Insurance (PMI)

A special type of loan insurance that many lenders require borrowers to purchase if the borrower's down payment is less than 20 percent of the home's purchase price.

Term Loan

A specific type of loan having a stated length which is normally under five years, on which only interest is paid and at the expiration of the term, the entire principal is paid.

Legal Description

A specific way of identifying and locating a piece of real estate that is acceptable to a court.

Grace Period

A specified amount of time to make a loan payment after its due date without penalty.

Quadrangle

A square-shaped land area used in the government survey system method of land description that is 24 miles on each side and contains 16 townships. See United States Government Survey System.

Lender's Policy

A statement as to the condition of the title of real property ownership and insuring it against claims by the payment of a one-time-only premium which protects the lender against title defects, liens and encumbrances.

Disclosure

A statement to a potential buyer listing information relevant to a piece of property, such as the presence of radon or lead paint.

Tier Line (township strip)

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

Range Lines

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.

Recorded Plat

A subdivision map filed with the county recorder's office that shows the lot, block number, location and boundaries of an individual parcel of land.

Topographical Survey

A survey that maps and shows the physical features, such as the slope and contour, of a parcel of real estate or an area of land.

Affidavit of Value

A sworn document that identifies the Grantor and Grantee and states the value paid for real property; signed by both parties and notarized.

Torrens' System

A system used in certain states that was created by Sir Robert Torrens which gives evidence of land title by registration with a public authority usually called a registrar in which the state by law insures the quality of title against certain defects.

Accelerated Cost Recovery System

A tax calculation that provides greater depreciation in the early years of ownership of real estate or personal property.

Assessment (Improvement Taxes)

A tax charged to the owner of real property for the benefits received. Tax is usually based on a pro-rata share. Valuation for the tax is based on assessed value: an official valuation of real property for tax purposes based on appraisals by government officials.

Capital Losses

A tax deductible loss on real property that has been held for more than six months. See Capital Gain.

Conveyance Tax

A tax imposed on the transfer of real property.

Ad Valorem tax

A tax levied "according to value". Arizona property taxes are based on Ad Valorem.

Capital Gains Tax

A tax placed on the profits from the sale of real estate or investments; Tax that individuals pay on money gained from the sale of a capital asset, such as property or stocks.

Loan-to-Value Ratio

A technical measure used by lenders to assess the relationship of the loan amount to the value of the property

Leasehold estate

A tenant's right to occupy real estate during the term of a lease, generally considered to be a personal property interest.

Percolation Test

A test used to determine the ability of soil to accommodate a septic system.

Illusory Contract

A thing that is deceptive; deceiving by false appearances or an illusion and not real.

Broker

A third party who, for a fee, acts as an intermediary in a business transaction.

Indeterminate Duration

A timeframe that is not definitely or precisely determined or fixed.

Owner's Policy

A title insurance policy taken out to protect the interest owner of real estate rather than the lender's interest.

Extended Coverage Policy

A title insurance policy that normally covers items in the public record plus questions of survey and unrecorded mechanics liens.

American Land Title Assoc. (ALTA) policy

A title insurance policy that protects the interest in a collateral property of a mortgage lender who originates a new real estate loan.

Legal Title

A title which lacks the full bundle of rights commonly associated with ownership and which might be being held by a trustee under a trust deed.

Sale-Leaseback

A transaction in which the buyer leases back the property to the seller for a specified period of time.

Installment Sale

A transaction in which the sales price is paid in two or more installments over two or more years. If the sale meets certain requirements, a taxpayer can postpone reporting such income until future years by paying tax each year only on the proceeds received that year.

Owner Financing

A transaction in which the seller of a property agrees to finance all or part of the purchase.

Exchanging

A transaction where like properties are traded, usually for tax benefits.

Assignment of Lease

A transfer of all or part of the tenants rights in a lease to another party

Anchor Tenant

A triple A Tenant that gives exposure and stability to a shopping center.

External Obsolescence

A type of incurable depreciation caused by negative factors not on the subject property, such as environmental, social or economic forces. The loss in Value cannot be reversed by spending money on the property.

Customer

The third party or non-represented consumer for who some level of service is provided (ministerial acts).

Tenancy by the Entirety

A type of concurrent estate in real property held by a Husband and Wife whereby each owns the undivided whole of the property, coupled with the Right of Survivorship, so that upon the death of one, the survivor is entitled to the decedent's share.

Conditional Acceptance

A type of counteroffer which claims to accept the offer, but expressly makes the acceptance contingent on the offeror's assent to additional or different terms.

Bearing Wall

A wall in a building that supports a ceiling load

Party Wall - Common

A wall that is located on or at a boundary line between two adjoining parcels of land and is used by the owners of both properties.

Correction Deed

A written instrument which corrects an error in a recorded deed.

Certificate of Title

A written opinion on the status of a piece of property based on an examination of the public record.

Fee Simple Defeasible

A type of property ownership in which the grant of title or duration of ownership is dependent on a specified condition.

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 payee's right to payment.

Nonconforming Use

A use of a property that is permitted to continue after a zoning ordinance prohibiting it has been established for the area.

Subjective Value

A value in appraising that is used in the income and market data approaches that is created in the mind and is the amount people are willing to pay regardless of its true market value.

Loan Value

A value which determines the highest amount a lending institution will lend on a property.

Patent Defect

A visible deficiency in a piece of property, such as a cracked basement slab or a sagging porch.

Formaldehyde

A volatile organic compound (VOC). Potential sources in the home include pressed wood products, such as particleboard or fiberboard; smoking; and glues and adhesives.

Contractual Lien

A voluntary obligation such as a mortgage or trust deed.

Egress

A way out, an outlet or an exit.

Testament

A will.

Without Recourse

A without recourse endorsement especially refuses to assume any responsibility to subsequent holders for the payment of a debt instrument that gets transferred by endorsement.

All Inclusive Deed of Trust

A wraparound loan arrangement whereby a Deed of Trust is used in place of a mortgage.

Subordination Agreement

A written agreement between holders of liens on a property that changes the priority of mortgage, judgment, and other liens under certain circumstances.

Affidavit of Title

A written statement, under oath by a seller or grantor of real property and acknowledge by a notary public, in which the grantor identifies himself and indicates marital status, certifies that the title is without defects, and certifies he is in possession of the property.

Tenancy at Sufferance

A wrongful holding of premises by a tenant after his or her lease has terminated.

Collateral Security

Additional security that a borrower supplies to obtain a loan.

Contiguous

Adjacent; touching, adjoining or in close proximity.

Mortgage Clauses

Acceleration; Alienation; Default; Defeasance; Due-on-Sale; Escalation; Estoppel; Locked-in; Or more; Prepayment; Subordination

Impound account

Account established by a mortgage lender to pay a borrower's property tax and insurance costs. Mortgage payments are increased to include these costs, and the funds collected are disbursed when the payments are due.

Adverse Possession

Acquiring title to real property due to continuous, open and hostile use for a prescribed length of time.

Descent

Acquisition of an estate by inheritance in which an heir succeeds to the property by operation of law.

Subagent

Agent to an agent: When an agent brings a buyer to a property, they in effect act as a ______ to the listing agent.

Employee

Agent; Someone who works as a direct ______ of an employer and has ______ status. The employer is obligated to withhold income taxes and Social Security taxes from the compensation of ______.

Proration

Agreed-upon percentages of certain expenses associated with a piece of property that must be paid by the buyer or the seller at the time of closing.

Estate of Inheritance

All freehold estates are estates of inheritance and can descend to heirs except for life estates. See Estate In Fee or Fee Simple Estate.

Escrow Moneys

All moneys, promissory notes, or any other type or manner of legal tender or financial consideration deposited with any person for the benefit of the parties to the transaction.

Personalty

All property other than realty and is also known as chattels.

Amendatory Clause

Also known as the FHA escape clause; states that a buyer getting an FHA loan can rescind the contract if the appraisal is lower then the purchase price.

Tenant Improvements

Alterations to the interior of a building to meet the functional demands of the tenant.

ALTA

American Land Title Association: A national association of title companies.

FHA Conditional Commitment

An FHA appraisal based on a future loan commitment. The property has qualified, but a buyer has not yet qualified.

Interest Only Loan

An ______ is a loan in which, for a set term, the borrower pays only the interest on the principal balance, with the principal balance unchanged.

Unrecorded Deed

An ______ transfers ownership from one party to another without being officially recorded.

Trust Account

An account established by a broker under the provisions of the license law that is apart and physically segregated from the broker's own funds, in which the broker must deposit all funds collected for clients or any other persons until the completion occurs.

Neutral Escrow Account

An account overseen and administered by someone who is a licensed escrow holder.

Broker's Trust Account

An account set up by a broker, at a bank or other recognized depository (i.e.: escrow account), into which the broker deposits all funds (earnest money, etc.) entrusted to the agent by the principal or others; Signers: broker or licensees under the broker for sales account; max. broker funds = $500.00; Funds must be deposited within 24 hours; Records must be stored for 5 years after closing date of transaction.

Escrow Account

An account that a lender or mortgage servicer establishes to hold funds for the payment of expenses such as homeowners insurance and property taxes. Also known as an impound account.

Mortgage Relief

An acquired freedom from mortgage debt, generally through a mortgage assumption by another party or debt retirement, which in a tax-free exchange is considered to be boot received.

Agent by Necessity

An act of law or circumstances, requiring a Limited Agent to act beyond his authority. Principal's consent not necessary.

Latent defect

An invisible problem in a piece of property such as bad wiring, termite damage or lead paint.

Civil Rights Act of 1866

An act that prohibits racial discrimination in the sale and rental of housing.

Mortgage Disclosure Improvement Act (MEDA)

An act which set timelines for certain disclosures which now affects the date of closings. Three business days from application to provide the truth-in-lending statement and good-faith estimate, seven business days before the signing of loan documents, after the borrower receives the final truth-in-lending statement and good-faith estimate, and three business days to wait for closing if the APR has changed more than 0.125 percent from the original or most recent TIL and GFE.

Foreclosure

An action by which property used as security is sold to pay the debt. (This is the legal process reserved by a lender to terminate the borrower's interest in a property after a loan has been defaulted. When the process is completed, the lender may sell the property and keep the proceeds to satisfy its mortgage and any legal costs. Any excess proceeds may be used to satisfy other liens or be returned to the borrower.)

Addendum

An addition or change to a contract.

Two-Step Mortgage

An adjustable mortgage with two interest rates, one for the first five or seven years of the loan, and the other for the remainder of the loan term.

Agency Coupled With An Interest

An agency relationship in which the agent has an interest, usually financial, in the subject property.

General Agent

An agent having the power to perform any and all acts on behalf of a principal as expressed in a legal document.

Allocation of Customers or Markets

An agreement among real estate companies to divide their markets and refrain from competing for each other's business. This is Illegal under antitrust laws.

Contract

An agreement between two or more parties that creates or modifies an existing relationship.

Acceptance

An agreement binding one to the terms of an offer.

Surety Bond

An agreement by an insurance or bonding company to be responsible for certain possible defaults, debts, or obligations contracted for by an insured party. In the real estate business a ______ is generally used to ensure that a particular project will be completed at a certain date or that a contract will be performed as stated.

Tax Credit

An amount by which tax owed is reduced directly.

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.

Floor Value

An appraisal concept which states that the sales price of comparable properties set the lowest market price.

Band of Investment

An appraisal method used for income property that establishes a capitalization rate by using mortgage interest rates and available rate of return, to acquire the debt and equity in said property. This method develops a direct cap rate by using a weighted average of debt financing and equity financing. The function is as follows: Cap Rate = (% debt financing * interest rate) + (% equity financing * interest rate).

Regression

An appraisal principle that states that between dissimilar properties, the value of the better quality property is affected adversely by the presence of the lesser quality property.

Substitution

An appraisal principle that states that the maximum value of a property tends to be set by the cost of purchasing an equally desirable and valuable property, assuming that no costly delay is encountered in making the ______.

Principle of Progression

An appraisal term which states that real estate of lower value is enhanced by the proximity of higher-end properties.

Principle of Regression

An appraisal term which states that the value of higher-end real estate can be brought down by the proximity of too many lower-end properties.

Trade Fixture

An article installed by a tenant under the terms of a lease and removable by the tenant before the lease expires.

Transfer Tax

An assessment by state or local authorities at the time a piece of property changes hands.

Partnership

An association of two or more individuals who carry on a continuing business for profit as co-owners. Under the law a ______ is regarded as a group of individuals rather than as a single entity. A general ______ is a typical form of joint venture in which each general partner shares in the administration, profits, and losses of the operation. A limited ______ is a business arrangement whereby the operation is administered by one or more general ______ and funded, by and large, by limited or silent ______who are, by law responsible for losses only to the extent of their investments.

Executory Contract

An contract in which all terms and conditions have not been met.

Infancy

An early stage of existence.

Easement by Prescription

An easement acquired by continuous, open, and hostile use of the property for the period of time prescribed by state law.

Easement by Necessity

An easement allowed by law as necessary for the full enjoyment of a parcel of real estate; for example, a right of ingress and egress over a grantor's land.

Easement by Condemnation

An easement created by the government or government agency that has exercised its right under eminent domain.

Appurtenant Easement

An easement that is annexed to the ownership of one parcel and allows the owner the use of the neighbor's land.

Easement in Gross

An easement that is not created for the benefit of any land owner by the owner of the easement that attaches personally to the easement owner. Example: a right granted by Eleanor Franks to Joe Fish to use a portion of her property for the rest of his life would be an ______.

Easement Appurtenant

An easement which is annexed to the ownership of one parcel of land that allows one party the use of his or her neighbor's land and which runs with the land when the title is transferred to another party.

Servient Easement

An easement, on a property which is subject to or burdened by the easement, that benefits another property which is called the dominant tenement.

Dominant Easement

An easements that benefits the dominant tenant.

Mortgage Loan Originators (MLOs)

Anyone who for compensation or expectations of compensation, takes a residential mortgage loan by phone or in person.

Location

An economic characteristic, sometimes called area preference or situs which refers to peoples preferences for given areas. It is the most important economic characteristic of land.

Person

An entity having legal responsibility.

Corporation

An entity or organization, created by operation of law, whose rights of doing business are essentially the same as those of an individual. The entity has continuous existence until it is dissolved according to legal procedures.

Back-to-back Escrow

An escrow set up to oversee the concurrant sale of one property and the purchase of another property by the same party.

Less-Than-Freehold-Estate

An estate commonly called a leasehold that exists for a definite period of time or for successive periods of time until terminated.

Freehold

An estate held in fee simple or, for life; no predetermined time for termination.

Defeasible Fee Estate

An estate in which the holder has a fee simple title that may be divested on the occurrence or nonoccurrence of a specified event. Two categories: fee simple on condition precedent (fee simple determinable) and fee simple on condition subsequent.

Fee Simple Estates

An estate of unlimited duration, also referred to as an estate of inheritance.

Estate at Will

An estate that gives the lessee the right to possession until the estate is terminated by either party; the term of this estate is indefinite.

Good-Faith Estimate (GFE)

An estimate from an institutional lender that shows the costs a borrower will incur, including loan-processing charges and inspection fees.

Comparative Market Analysis (CMA)

An estimate of the value of a property based on an analysis of sales of properties with similar characteristics.

Market Analysis (comparables)

An estimate of value developed for the purpose of arriving at a selling or market price.

Home Inspection

An examination of a home's construction, condition and internal systems by an inspector or contractor prior to purchase.

Personal Representative

An executor, guardian or administrator who represents another party under contract or judicial appointment.

Zoning Ordinance

An exercise of police power by a municipality to regulate and control the character and use of property.

Perpetuity

An existence without any time limits which would theoretically be forever.

Deferred Maintenance

An existing need for maintenance repairs and rehabilitation that has been postponed, unfulfilled or delayed causing a decline in a building's physical condition and thus value.

Blockbusting

An illegal action, usually concerning fair housing: creates panic selling for monetary gain.

Waste

An improper use or an abuse of a property by a possessor who holds less than fee ownership, such as a tenant, life tenant, mortgagor, or vendee. Such ______ ordinarily impairs the value of the land or the interest of the person holding the title or the reversionary rights.

Unearned Increment

An increase in real estate value due to no effort on the part of the owner and often simply due to an increase in population and thus a general rise in demand for land.

Appraiser

An independent person trained to provide an unbiased opinion of value in an impartial and objective manner.

Administrator

An individual appointed by the court to handle the estate of a party who dies without a will.

Examination of Title

An inspection by a title company of public records and other documents to determine the chain of ownership of a property.

Tax Deed

An instrument given to a purchaser after the expiration of the redemption rights.

Trust Deed

An instrument used to create a mortgage lien by which the borrower conveys title to a trustee, who holds it as security for the benefit of the note holder (the lender); also called the deed of trust.

Chattel Real

An intangible personal property right which is attached to or annexed to real estate of which a lease on real property is an excellent example.

Estate for Years

An interest for a certain exact period of time in property leased for a specified consideration.

Estate from Period to Period

An interest in leased property that continues from period to period, week to week, month to month, or year to year.

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.

Cloud on Title

An invalid encumbrance on real property.

Debt

An obligation to repay some amount owed. This may or may not be monetary.

Backup Offer

An offer to buy submitted to a seller with the understanding that the seller has already accepted a prior offer; a secondary offer. Sometimes seller accepts the backup offer contingent on the failure of the first transaction to complete.

Deed of Reconveyance

An official document from a mortgage holder releasing the debtor from the mortgage. It is evidence that the mortgage has been paid in full. The mortgage note is marked paid, the original mortgage is returned and a deed of reconveyance is issued to the home owner showing the mortgage has been paid off.

Appraisal

An opinion of the value of the property given for a specified date in time.

Express Agreement

An oral or written contract in which the parties state the contract's terms and express their intentions in words.

Nuncupative will

An oral will declared by the testator in her final illness, made before witnesses and afterward reduced to writing.

Life estate - Conventional

An possessory freehold estate or interest in real property being held for the duration of the life of a named person who could be the person holding estate or of the life of another.

ADA: Americans with Disabilities Act

Federal law designated to eliminate discrimination against individuals with disabilities by requiring equal access to accomodations.

Cease and Desist

An order by a court or administrative agency prohibiting a person or business from continuing an activity. Used in real estate brokerage to prevent antitrust behavior among firms or in illegal discrimination.

Riparian Rights

An owner's rights in land that borders on or includes a stream or river. These rights include access to and use of the water.

Estate for Life

An possessory freehold estate or interest in real property being held for the duration of the life of a named person who could be the person holding estate or of the life of another.

Mortgage Insurance premium (MIP)

An up-front premium charged at closing for all FHA loans.

APR

Annual percentage rate. Tha calculations of all financing charges pertaining to a loan expressed in an annual rate.

Second Mortgage: Secondary Financing

Another loan placed upon a piece of property.

Megan's Law

Federal legislation that promotes the establishment of state registration systems to maintain residential information on every person who kidnaps children, commits sexual crimes against children, or commits sexually violet crimes.

High-Rise

Any building higher than six stories.

Material Fact

Any fact that, if known, might reasonably be expected to affect the course of events.

Protected Class

Any group of people designated as such by the Department of Housing and Urban Development (HUD) in consideration of federal and state civil rights legislation. Currently includes ethnic minorities, women, religious groups, the handicapped, and others.

Alternative Mortgage

Any home loan that does not conform to a standard fixed-rate mortgage.

Capital Improvement

Any improvement that extends the life or increases the value of a piece of property.

Civil Action

Any lawsuit between private parties.

Personal Property

Any moveable property in a house such as furniture or appliances.

Incompetent

Any person who is not insane but is mentally incapable by reason of old age, disease, weakness of mind or any other cause that is unable, unless assisted, to properly manage and take care of himself and/or his property and by reason thereof could easily be misled.

Tangible

Any real or personal property that may be physically touched or handled or perceived by the senses such as land, its fixed improvements, furnishings, merchandise, cash, leases, etc.

Unsecured Debt

Any type of debt or general obligation that is not collateralized by a lien on specific assets of the borrower in the case of bankruptcy or liquidation.

Valuable Consideration

Anything necessary for a contract to be enforceable that is promised or given of value such as money by one party to induce another party to enter into a contract for real property, personal property or personal services.

Boot

Anything of value given to make up the difference in value or equity between two properties exchanged.

Consideration

Anything that is legal, has value and induces a person to enter into a contract.

Exclusive Right-to-Sell Listing

Appointing one broker in a listing agreement, who will be paid regardless of who sells the property, including the owner.

Exclusive Agency Listing

Appointing one broker in a listing agreement, with the owner reserving the right to sell the property without paying a commission.

Running With the Land

Appurtenant

A.A.C.

Arizona Administrative Code (laws of my license) - originates from Arizona State Law- Commissioner's Rules

ADRE

Arizona Department of Real Estate

Advisory Board

Arizona Real Estate Advisory Board regulates those engaged in the real estate profession in Arizona: comprised of 9 members; term is six years; no compensation.

A.R.S.

Arizona Revised Statutes

Values (types)

Assessed; Capitalized; Insurance; Loan; Market; Objective; Salvage.

Affidavit of Disclosure

Az Revised Statutes requires the recording of an Affidavit of Disclosure for the sale of "Five or fewer parcels of land, other than subdivided land, in an unincorporated area of a county." It must be provided at 7 days before transfer of property and buyer must acknowledge receipt; within 5 days of receipt, buyer has the right to rescind.

First Right of Refusal

Buyer is first in line to buy a property (no money changing) - conditional on seller wanting to sell.

Capitalization

Capitalized Value: A mathematical formula that investors use to compute the value of a property based on net income. Net income divided by rate is equal to value.

Deed Restrictions

Clauses in a deed limiting the future uses of the property.

Employer

Client

Note Types

Co-Maker; Level Payments; Variable Payments: Negotiable Instrument; Novation P.I.T.I.; Promissory; Seasoned; Or More Clause; Origination Fee.

Inchoate

Commenced but not completed, partially done. Example: Terms of a document have been agreed upon, but the signatures on the document have not been completed.

Force and Effect of Law

Commissioner's power.

Good Consideration

Consideration for the interest in the property must be shown, but can retain privacy regarding the exact amount paid.

Excess Rent

Contract rent that exceeds the economic rent.

Oral Contract

Contractual arrangements that are not in writing and are usually not legally binding.

Non-Recurring Closing Costs

Costs that are one-time only fees for such items as an appraisal, loan points, credit report, title insurance and a home inspection.

CC&Rs

Covenants, Conditions, and Restrictions; private restrictions imposed by subdivision developers.

Private Controls

Deed Restrictions: The limitations in the deed to a property that dictate specific ways that a property must or must not be used.

Conveying Deed

Deed must adequately describe land to be conveyed, if description fails, then conveyance might fail for lack of definiteness; BUT address can save if it clarifies the property description.

Brownfields

Defunct, derelict, or abandoned commercial or industrial sites; many have toxic waste.

Actual Eviction

Direct actions of a landlord to remove a tenant from the premises thru legal process.

Common-Area Assessments

Fees paid by the owners of a condominium project or planned-unit development to maintain, repair, improve or operate common areas.

Discount Points

Fees that a borrower pays at the time the lender makes the loan. A point equals 1 percent of the total loan amount.

Worth

Equal in value to something specified; Material or market value; The quality that renders something desirable, useful or valuable: Wealth, riches.

Government Restrictions (PEET)

Even a fee simple estate is subject to limitations on ownership. These limitations may be public, private, or both, depending on the interest in the estate. Government restricts ownership in 3 primary ways: 1. Police Power 2. Eminent Domain 3. Taxation

Property

Everything that is capable of being lawfully owned and acquired with the rights of ownership and which is classified into one of two groups: personal property or real property.

Permanent Access

Example: Perpetual Easement - An easement with no time limits.

Exempt Sale

Exempt from public report - bulk sales to one buyer, previously issued report, or commercial or industrial uses.

Closing Costs

Expenses incidental to the sale of real estate, including loan, title and appraisal fees.

Additional Principal Payment

Extra money included in the monthly payment to help reduce the principal and shorten the term of the loan. This may activate a prepayment penalty clause.

Federal Agencies

Federal Deposit Ins.Corp (FDIC); Federal Home Loan Bank (FHB); Federal reserve Board (FRB); Federal National Mortgage Assoc. (FNMA).

FHA Title I

FHA insures Home Improvement Loans.

Actual Notice

Facts that are known to be true; direct knowledge.

Breach of Contract

Failure to perform a contractual obligation.

Carryback

Financing in which the seller takes back a note for part of the purchase price secured by a junior mortgage, a wraparound mortgage or a land contract.

Title Company

Firms that ensure that the title to a piece of property is clear and provide title insurance.

K-1 Form

Form received by partners or owners of LLC, S-Corp., or other entity, that passes through taxes to owners. Prepared by the entity to outline each person's portion of income, loss and deductions.

Government Lot

Fractional sections in the rectangular (government) survey system that are less than one quarter section in area.

Natural Fruits

Fruits of the land such as crops, trees and grasses that grow naturally and independently of man's cultivation. They're normally part and parcel of the land and pass with the land upon a convyance of the land.

GNMA

Ginnie Mae (active in the Secondary Mortgage Market): The Government National Mortgage Association buys home loans from lenders, pools them with other loans and sells shares to investors. It differs from its cousins, Fannie Mae and Freddie Mac, in that it only purchases loans backed by the federal government.

Marketable Title

Good or clear title, reasonably free from the risk of litigation over possible defects.

Department of Housing and Urban Development (HUD)

Government agency that administers the Fair Housing Act, governs RESPA, and provides standardized forms such as the 1003 loan application, the HUD-1 settlement statement, and the good-faith estimate (GFE).

Testate

Having made and left a valid will.

Flood Insurance

Hazard coverage that is required in designated flood areas.

Breach Earnest Money

If a buyer breaches a contract, then the earnest money will be forfeited.

Fee Simple Conditional

If previously agreed conditions are violated, the grantor must take action to terminate the grantees interest in property: not automatic termination.

Point of Beginning (POB)

In a metes-and-bounds legal description, the starting point of the survey, situated in one corner of the parcel; all metes-and bounds descriptions must follow the boundaries of the parcel back to the point of beginning.

Salvage Value

In computing depreciation for tax purposes, the reasonably anticipated fair market value of the property at the end of its useful life after being fully depreciated which must be considered with all methods of depreciation.

Revocation

In contract law, the withdrawal of an offer by an offeror. Unless an offer is irrevocable, it can be revoked at any time prior to acceptance without liability.

Life estate - Legal

In real estate, the degree, quantity, nature and duration of interest, share, right, equity of which riches or fortune may consist and which a person holds in real property.

Principal Baseline

In the Government Rectangular Survey System, the reference line that runs east and west and crosses the principal meridian.

Township

In the survey of United States public lands, it is a territorial subdivision six miles long, six miles wide and containing 36 sections, each one mile square which is located between two range lines and two township lines.

Capital Gains

Income of a capital item that results from the sale of an asset and not from the usual course of business, the amount by which, the net sale proceeds exceeds the adjusted cost basis (book value). Gains are used for income tax computations and are taxed.

Fair Housing Act

Landmark federal law passed in 1965 and amended in 1988 that makes it illegal to deny rent or refuse to sell to anyone based on race, color, religion, sex or national origin. The 1988 amendment expanded the protections to include family status and disability.

Condominium

Individual units in a building or development in which owners hold title to the interior space while common areas such as parking lots, community rooms and recreational areas are owned by all the residents.

Confidential Information

Information given by a client to a licensee during the term of a brokerage agreement that (1) the client requests the licensee keep in confidence; (2) relates to the client's negotiating position; or (3) could do damage to the client's negotiating position if disclosed.

Multiperil Policies

Insurance policies that offer protection from a range of potential perils, such as those of a fire, hazard, public liability, and casualty.

Fraud

Intentional deception that when relied upon causes financial loss or personal injury. (A deception intended to cause a person to give up property or a lawful right.)

Prepaid Interest

Interest paid before it is due. For example, at the close of a real estate transaction borrowers usually pay for the interest on their loan that falls between the closing period and the first monthly payment.

Fractional Sections

Irregular sections due to the curvature of the earth: There are 11 Fractional and 25 Full Sections in a Township. ( Each _______section consists of a parcel of land less than 160 acres, usually found at the edge of a rectangular survey.)

100% location

Is when there is no better use for a site than the retail store that is being planned for that site.

Treasurer's Deed

Issued when property is deeded back to the state for back taxes; property can then be sold at public auction and purchases pays for at least 6 years of back taxes, fees and costs to the Treasurer and Board of Supervisors and the cost to record each deed.

Bundle of Rights

It is the exclusive right of an individual to own, possess, use, enjoy and dispose of real property

Joint Tenancy

Ownership by two or more people that gives equal shares of a piece of property. Rights pass to the surviving owner or owners.

Concurrant Tenanancy

Joint property ownership; three types: 1. Tenancy in common 2. Joint tenancy 3. Tenancy by the entirety

Federal Home Loan Mortgage Corporation

Known as Freddie Mac, the corporation was established to purchase primarily conventional mortgage loans in the secondary mortgage market.

Laches

Laches means delay or negligence in asserting one's legal rights.

Real Property

Land and any permanent fixtures on it, including buildings, trees and minerals.

Real Estate

Land and anything permanently affixed to it, including buildings, fences and other items attached to the structure.

Unsubdivided Land

Land divided or proposed to be divided for the purpose of sale or lease into 6 or more lots or parcels that are at lease 36 acres but less than 160 acres each.

Servient Tenement

Land on which an easement exists in favor of an adjacent property (called dominant estate); also called a servient estate.

Homestead

Land that is owned and occupied as the family home. In many states, a portion of the area or value of this land is protected or exempt from judgments for debts.

Unimproved Lot

Land that is vacant or returned to nature or lacking in essential appurtenant improvements required to serve a useful purpose. Example: Any of the following activities on a piece of raw land will result in improved land: landscaping and grating.

Defeasible - Condition

Language: "To A, but if X event occurs, grantor reserves the right to reenter and retake." Grantor must use clear durational language AND must carve out the right to reenter. The estate is NOT automatically terminated, but it can be cut short at the grantor's option, if the condition occurs. Future Interest: Right of entry/power of termination or reacquisition.

Federal Fair Housing Act

Law enacted by congress that prohibits discrimination by race, color, religion, national origin, sex, familial status, and handicap. The law relates primarily to the sale or lease of residential real estate.

Antitrust laws

Laws designed to preserve the free enterprise of the open marketplace by making illegal certain private conspiracies and combinations formed to minimize competition.

Bequest

Leaving personal property to an heir through a will.

Prepayment Penalty

Lenders can impose a ______ on a borrower who pays a loan off before its expected end date.

Township Lines

Lines running east and west, parallel to the base line and six miles apart.

Prequalification

Many lenders will ______ a borrower who is shopping for a loan by completing a preliminary assessment of the buyer's ability to pay for a home.

Appraisal Methods

Market Analysis: Market Data Approach (Comparables) Cost Approach (Summation) Income Approach (Capitalization)

Multiple Offers

Offers to purchase the same property by several, different, competing buyers.

General Plan

Master plan of long-term physical development adopted by cities and counties.

Administrative Fine

Max Fine = $1000 per offense

Temporary Broker's License

May be issued by the Commissioner to a specified, licensed or unlicensed, person for the purpose of closing the existing or pending business of a licensed Designated Broker/Broker upon their death, disability by sickness, injury or insanity. Specified persons include spouse, next of kin, employee, legal guardian, etc.

Ratification

Method of creating an agency relationship in which the principal accepts the conduct of someone who acted without prior authorization as the principal's agent.

Earnest Money

Money a buyer gives with an offer to purchase a property. Also called a deposit.

Secret Profit

Money not on settlement statement.

Reserve Fund

Money set aside by a homeowners association for major repairs or improvements.

Office of Thrift Supervision (OTS)

Monitors and regulates the savings and loan industry. ______ was created by FIRREA (the department).

Budget Payment

Monthly payment including PITI: Principal, Interest, Taxes and Insurance.

FHA loans

Mortgages that are insured by the Federal Housing Administration. The FHA's 203(b) loan program provides low-rate mortgages to buyers who make a down payment as small as 3 percent. The agency also operates loan plans for investors and purchasers of rural property.

Loan Origination Fee

Most lenders charge borrowers an ______, or points for processing a loan. A point is 1 percent of the total loan amount.

Subdivision and Development Ordinances

Municipal ordinances that establish requirements for subdivisions and development.

Constructive Notice

Notice given to the world by recorded documents. All people are charged with knowledge of such documents and their contents, whether or not they have actually examined them.

Beneficiary's Notice to Trustee

Notice to trustee from beneficiary that the mortgagor is in defaul. Beneficiary then sends a notice to the mortgagor.

Acre Foot

One acre of land with water one foot deep: 325,850 gal. of water.

Meridian

One of a set of imaginary lines running north and south and crossing a base line at a definite point, used in the rectangular (government) survey system of a property description.

Basis Point

One one-hundredth of one percent.

Lessor

One that conveys property by lease, e.g., a landlord of rented premises.

Lessee

One that holds real or personal property under a lease, e.g., a tenant of rented premises.

Legator

One that makes a will; a testator.

Assignee

One to whom interest in property is transferred.

Attorney-in-Fact

One who has written authorization to act for another under a Power-of-Attorney.

Tenant (tenancy)

One who holds or possesses lands or tenements by any kind of right or title.

Arrears

Paid after its usage such as AZ property taxes and interest on loans.

Abutting Land

Parcels of land having common boundaries.

Variance

Permission obtained from zoning authorities to build a structure or conduct a use that is expressly prohibited by the current zoning ordinances.

Chattel

Personal property such as furniture, clothing or a car.

Unauthorized Practice of Law

Persons or entities who engage in the practice of law but are not authorized to practice law pursuant to state law.

Lead-Based Paint Hazard Reduction Act

Persons selling or leasing residential housing constructed before 1978 must disclose the presence of known lead-based paint and provide purchasers or tenants with any relevant records or reports.

Functional Depreciation (Obsolescence)

Physical features that are in the property and no longer desirable. May be curable or incurable. (A loss of value to an improvement to real estate arising from functional problems, often caused by age or poor design.)

Investment Property

Real estate that generates income, such as an apartment building or a rental house.

Seizin

Possession of real property under claim of freehold estate (fee simple).

Prospect

Potential client.

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 seller's deed to the buyer.

Federal Fair Housing Act 1988

Prohibits discrimination based on handicap and familial status. These items were added to the 1968 act.

Federal Fair Housing Act 1968

Prohibits discrimination based on race, religion, color, creed, natural origin, and sex.

Comparables

Properties used as comparisons to determine the value of a certain property.

Community Property

Property accumulated through the joint efforts of husband and wife. It is a classification of property peculiar to certain states.

Income Property

Property that is not occupied by the owner but is used to generate income.

Brownfields Legislation

Provides federal funding to states and localities to clean up brownfields sites.

Contract for Sale

Purchase Money Mortgage or Deed of Trust.

As-Is Condition

Purchase or sale of a property in its existing condition.

Self-Employed Broker

Real estate brokers and agents are self-employed independent contractors in most cases.

Rules and Regulations

Real estate licensing authority orders that govern licensees' activities; they usually have the same force and effect as statutory law.

Servient Estate

Real property which has an easement or other use imposed upon it in favor of another property (called the dominat estate), such as right of way or use for access to an adjoining property or utility lines. The property giving usage is the servient estate, and the property holding usage of the easement is the dominant estate.

External Depreciation

Reduction in a property's value caused by outside factors (those that are off the property).

Federal Reserve System

Regulatory agency for federally charted commercial banks (the country's central banking system), which controls the nation's monetary policy by regulation the supply of money and interest rates.

Subordination

Relegation to a lesser position, usually in respect to a right or security.

Mortgage Insurance

Required by lenders in some loans to protect them from a possible default . All conventional loans with less than a 20 percent down payments require private ______, or PMI.

Air Rights

Right to use the Airspace above a property

Alluvium

Sand, clay and other material deposited by flowing water.

Seller Disclosure Form

Sellers are required to provide this form to buyers, identifying any property defects that the seller may be aware of.

Construction Loan (Other names: Interim, Bridge, Gap, Swing)

Short-term loans a lender makes for the construction of homes and buildings. The lender disburses the funds in stages.

Disclaimer Deed

Signed by one spouse prior to the other spouse acquiring property, in order to prevent it from becoming community property. Signed at time of purchase. No covenants or warranties.

Acknowledgment

Signing a legal document before a notary public or other authorized person.

Lien Theory

Some states interpret a mortgage as being purely a lien on real property. The mortgagee thus has no right of possession but must foreclose the lien and sell the property if the mortgagor defaults.

Title Theory

Some states interpret a mortgage to mean that the lender is the owner of mortgaged land. On full payment of the mortgage debt, the borrower becomes the landowner.

Minor

Someone who has not reached the age of majority and therefore does not have legal capacity to transfer title to real property.

Devisor

Someone who is giving a gift of real property by will.

Independent Contractor

Someone who is retained to perform a certain act but who is subject to the control and direction of another only as to the end result and not as to the way in which the act is performed. Unlike an employee an ______ pays for all expenses, Social Security, and income taxes, and receives no employee benefits. Most real estate salespeople are ______.

Property Manager

Someone who manages real estate for another person for compensation. Duties include collecting rents, maintaining the property, and keeping up all accounting.

Homeowners' Warranty

Special insurance policies that cover certain home repairs for a specified amount of time.

Due-on-Sale Clause

Standard language in a mortgage which states that the loan must be paid when a house is sold.

Blue Sky Law

State laws regulating the sale of investment securities.

Enabling acts

State legislation that confers zoning powers on municipal governments.

Township Tiers

Strips of land designated by consecutive numbers north or south of the base line.

Tort

Suing each other.

General Real Estate Tax

Taxes based on the value of the property being taxed. Also called Ad Valorem tax.

Moratorium

Temporary suspension of development or utilities connections imposed by local government.

Statute of Limitations

That law pertaining to the period of time within which certain actions must be brought to court.

Habendum clause

That part of a deed beginning with the words "to have and to hold," following the granting clause and defining the extent of ownership the grantor is conveying.

Vested

That which is bestowed upon or secured by someone such as title to property.

Government Check

The 24-mile-square parcels composed of 16 townships in the rectangular (government) survey system of legal description.

Actual Delivery

The Grantor physically hands the Deed to the Grantee.

Forfeiture

The Losing of Equity one has in a property due to nonperformance of an obligation, such as an Agreement for Sale. The process by which the Vendor retakes the property from the Vendee due to default by the Vendee.

RESPA

The Real Estate Settlement Procedures Act (RESPA) is a federal law passed in 1975 requiring the disclosure to borrowers of details about closing costs and settlement procedures. RESPA requires that consumers receive disclosures at various times in the transaction and outlaws kickbacks that increase the cost of settlement services. RESPA is a HUD consumer protection statute designed to help homebuyers be better shoppers in the home buying process, and is enforced by the Department of Housing and Urban Development (HUD).

Probate Court

The Superior Court that has authority over the property of deceased persons as well as minors and insane persons.

Objective Value

The value used in the income and market data approaches of appraisal that can be easily determined using data directly from the market.

Homestead Exemption

The ______ is limited to $7,500 for one person and $15,000 for two or more persons living at the same homestead. The exemption does not apply against taxes and debts for purchase or improvement of the property. If a husband and wife own a property, the law usually requires that both of them sign a conveyance or mortgage regarding the real estate for it to be applicable or enforceable against both spouses.

Margin

The ______ represents the lenders cost of doing business.

Liquidity

The ability to sell an asset and convert it into cash, at a price close to its true value, in a short period of time.

Adverse Use

The access and use of property without the owner's consent.

Accrued Depreciation

The accumulated physical, economic and functional depreciation that applies to a property as of a specific date.

Authorization

The act of authorizing; an instrument that authorizes: sanction.

Brokerage

The act of bringing together two or more parties in exchange for a fee or commission.

Loan Term

The amount of a time set by the lender for a buyer to pay a mortgage. Most conventional loans have 30-year or 15-year ______.

Unit-in-Place Method

The appraisal method of estimating building costs by calculating the costs of all of the physical components in the structure, with the cost of each item including its proper installation, connection, and so forth; also called the segregated cost method.

Square-Foot Method

The appraisal method of estimating building costs by multiplying the number of square feet in the improvements being appraised by the cost per square foot for recently constructed similar improvements.

Recording and Recordation (of Deed)

The act of entering or recording documents affecting or conveying interests in real estate in the recorder's office established in each county. Until it is ______ a deed or mortgage ordinarily is not effective against subsequent purchasers or mortgagees.

Alienation

The act of transferring property to another. ______ may be voluntary, such as by a gift or sale, or involuntary, as through eminent domain or adverse possession.

Reinstatement

The activation of a suspended, revoked, or inoperative license.

Basis

The actual price paid for the property.

Street Address

The address where a person or organization can be found.

Majority

The age often known as legal age or adulthood at which time a person acquires the legal capacity and is therefore capable of entering into binding contracts.

Genuine Assent

The agreement must not be based on one party's deceiving another, on an important mistake, or on the use of unfair pressure exerted to obtain the offer or acceptance.

Index Method

The appraisal method of estimating building costs by multiplying the original cost of the property by a percentage factor to adjust for current construction costs.

Cash Flow

The amount of cash a rental property investor receives after deducting operating expenses and loan payments from gross income.

Supply

The amount of goods available in the market to be sold at a given price. The term is often coupled with the term demand.

Demand

The amount of goods people are willing and able to buy at a given price; often coupled with the term supply.

Down payment

The amount of money a buyer agrees to give the seller when a sales agreement is signed. Complete financing is later secured with a lender.

Hard Money

The cash including the cash proceeds from a private money loan. Private lender will often require property equity as collateral; shorter terms and higher interest rates than soft money loans.

Original Principal Balance

The amount of principal owed on a loan before a borrower makes any payments.

Return on Investment

The amount of profit a property generates.

Supply and Demand

The appraisal principle that follows the interrelationship of the ______ of real estate. As appraising is based on economic concepts, this principle recognizes that real property is subject to the influences of the marketplace just as in any other commodity.

Conformity

The appraisal principle that holds that the greater the similarity among properties in an area, the better they will hold their value.

Livery of Seizin

The appropriate ceremony from common law for transferring the possession of lands from a grantor to a grantee. Also known as Seizin or Investiture.

Attorney General

The chief law officer of a nation or state who represents the government in litigation and serves as its principal legal adviser.

Water Rights

The collective rights to a water supply or a guarantee of access to nearby body of water.

Assemblage

The combining of two or more adjoining lots (smaller parcels of land) into one larger tract to increase their total value. Also known as plottage.

Freddie Mac

The common name for the Federal Home Loan Mortgage Corporation, a congressionally chartered institution that buys mortgages from lenders and resells them as securities on the secondary mortgage market.

Intestate

The condition of a property owner who dies without leaving a valid will. Title to the property will pass to the decedent's heirs as provided in the state law of descent.

Replacement Cost

The construction cost at current prices of a property that is not necessarily an exact duplicate of the subject property but serves the same purpose or function as the original.

Reproduction Cost

The construction cost at current prices of an exact duplicate of the subject property.

Construction to Permanent Loan

The conversion of a construction loan to a longer-term traditional mortgage after construction has been completed.

Capital Expenditure

The cost of a capital improvement such as investments in land, buildings, machinery, and equipment.

Adjusted Cost Basis

The cost of any improvements the seller makes to the property. Deducting the cost from the original sales price provides the profit or loss of a home when it is sold.

Annual Percentage Rate (APR)

The cost of the loan expressed as a yearly rate on the balance of the loan.

Industrial Fruit

The crops growing on a property which require annual care and are usually considered to be a possession of the tenant.

Unities of Ownership

The four unities that are traditionally needed to create a joint tenancy - unity of title, time, interest, and possession.

Facade

The from of a building; the part seen from the street.

Judgment

The decision of a court or law. If a court decides that a person must repay a debt, a lien may be placed against that person's property.

Depreciation - Obsolescence

The decline in value of a piece of property. Types: Curable, Incurable, Economic, Functional, Physical, and Social.

Credit Rating

The degree of credit worthiness assigned to a person based on credit history and financial status.

Entity

The difference between the fair market value of a property and that amount an owner owes on any mortgages or loans secured by the property.

Obligatory Advance

The disbursements of money over the period of a construction loan which the lender is bound to make under the terms of the loan.

Partition

The division of co-tenants' interests in real property when the parties do not all voluntarily agree to terminate the co-ownership; takes place through court procedures.

Termination Statement

The document recorded to cancel and remove a financing statement previously filed under the Uniform Commercial Code.

Reduction Certificate (payoff statement): Reduction in Mortgage Certificate

The document signed by a lender indicating the amount required to pay a loan balance in full and satisfy the debt; used in the settlement process to protect both the seller's and buyer's interests.

Satisfaction Piece

The document that is recorded in a satisfaction.

Procuring Clause

The effort that brings about the desired result. Under an open listing the sponsoring broker who is the ______ of the sale receives the commission.

Reliction

The exposure of land that has been covered by water that occurs when the water recedes.

S Corporation

The same as a C Corporation except that Taxable income is passed through to the shareholders to be taxed directly on their 1040 returns. A form K-1 is sent to shareholder informing them of their pro rata share of taxable income.

Default

The failure to fulfill a duty or promise or discharge an obligation, such as making monthly mortgage payments.

Regulation Z

The federal code issued under the Truth-in-Lending Act which requires that a borrower be advised in writing of all costs associated with the credit portion of a financial transaction.

Real Estate Settlement Procedures Act (RESPA)

The federal law that requires certain disclosures to consumers about mortgage loan settlements. The law also prohibits the payment or receipt of kickbacks and certain kinds of referral fees.

Interest

The fee borrowers pay to obtain a loan. It is calculated based on a percentage of the total loan.

Application Fee

The fee that a lender charges to process a loan application.

Appraisal Fee

The fee that an appraiser charges to estimate the market value of the property.

Gross Rent Multiplier (GRM)

The figure used as a multiplier of the gross monthly income of a property to produce an estimate of the property's value.

Eminent Domain

The government's right to condemn private land for public use, such as the routing of a public highway.

Police Power

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

Accretion

The gradual buildup of land by wind or water.

Assumption of Mortgage

The grantee taking title to real property and assuming liability for an existing obligation. The original mortgagor still remains liable.

Covenant of Warranty Forever

The grantor promises to compensate the grantee for the loss sustained if the title fails at any time in the future.

Covenant of Further Assurance

The grantor promises to obtain and deliver any instrument needed to make the title good. For example, if the grantor's spouse has failed to sign away dower rights, the grantor must deliver a quit-claim deed to clear the title.

Covenant of Seisin

The grantor warrants that she owns the property and has the right to convey title to it. The grantee may recover damages up to the full purchase price if the covenant is broken.

Covenant against Encumbrances

The grantor warrants that the property is free from liens or encumbrances, except for any specifically stated in the deed. Encumbrances generally include mortgages, mechanics' liens, and easements. If the covenant is breached, the grantee may sue for the cost of removing the encumbrances.

Fee Simple

The highest form of ownership under the allodial system. (This type of ownership is the maximum interest a person can have in a piece of real estate. It entitles the owner to use the property in any manner they see fit, in accordance with state and local laws. Granting clause example: "to ______ and to his/her heirs and assigns forever.".)

Principle of Conformity

The idea that a house will more likely appreciate in value if its size, age, condition and style are similar to, or conform to, other houses in the neighborhood.

Commingling

The illegal act by a real estate licensee of placing client or customer funds with personal funds.

Steering

The illegal practice of channeling home seekers to particular areas, either to maintain the homogeneity of an area or to change the character of an area, which limits their choices of where they can live.

Housing Discrimination

The illegal practice of denying an individual or group the right to buy or rent a home based on race, color, religion, national origin, sex, disability or family status.

Net 0perating Income (NOI)

The income projected for an income-producing property after deducting losses for vacancy, collection, and operating expenses.

Appreciation

The increase in property value due to external or internal causes.

Plottage Increment (Assemblages)

The increase in value or utility resulting from the consolidation (assemblage) of two or more adjacent lots into one larger lot.

Progression

The increasing of a property's value due to its neighbors.

Yield

The interest earned on an investment by an investor or by a bank on the money it has loaned which is also called a return.

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 another's name.

Lessor's Interest

The interest in property, of an owner or landlord, who entered into a lease agreement and granted a tenant possession and use.

Compound interest

The interest paid on the principal balance in a mortgage and on the accrued and unpaid interest of the loan.

Discount Rate

The interest rate set by the Federal Reserve that member banks are charged when they borrow money through the Fed.

Repayment Plans

The price one party pays for the use of land or real property to its owner as a return on his or her investment.

Sweat Equity

The investment of labor or services that is put into improving real property to gain possession and title in lieu of a monetary investment.

Agency Law

The large body of common law that governs agency; a mixture of contract law and tort law.

Sublease (subletting)

The leasing of premises by a lessee to a third party for part of the lessee's remaining term.

Note

The legal document that requires a borrower to repay a mortgage at a certain interest rate over a specified period of time.

Deed

The legal document that transfers ownership of a piece of real property.

Forgery

The legal offense of imitating or counterfeiting documents or signatures in an effort to deceive.

Statutory Right of Redemption

The legal right of a mortgagor to redeem the property after it has been sold at a foreclosure sale. This right is granted by state law for a limited period of time, depending on the state.

Dower

The legal right or interest, recognized in some states, that a wife acquires in the property her husband held or acquired during their marriage. During the husband's lifetime the right is only a possibility of an interest; on his death, it can become a real interest in land.

Voluntary Alienation

The legal term for the voluntary transfer of title.

Beneficiary

The lender under a deed of trust security: the lender who makes a loan; also called a mortgagee. The person borrowing money is the mortgagor.

Acceleration

The lender's right to call the entire loan all due and payable if certain conditions are violated.

Rental Contract

The price one party pays for the use of land or real property to its owner as a return on his or her investment. It also includes obligations of the tenant and owner.

Rate Cap

The limit on the amount the interest rate can be increased at each adjustment period in an adjustable-rate loan. The limit also may set the maximum interest rate that can be charged during the life of the loan.

Obsolescence

The loss of value due to factors that are outmoded or less useful. ______ may be functional or economic.

Prime Rate

The lowest commercial interest rate charged by banks on short-term loans to their most creditworthy customers.

Principal Meridian

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 or legal description.

Legal Rate (Interest)

The maximum legal interest rate is 10% in Arizona unless a different rate is contracted for in writing, in which event any rate of interest may be agreed to.

Front Footage

The measurement of a parcel of land by the number of feet of street or road frontage.

Annexation

The method of attaching personal property to real property so that it becomes a fixture.

Evidence of Title

The method one uses to show ones proof of ownership.

Setback

The minimum distance a house or buildings must be from the lot line.

Excess Monies (Excess Rent)

The monetary difference between contract rent and economic rent.

Credit

The money a lender extends to a buyer for a commitment to repay the loan within a certain time frame.

Primary Mortgage Market

The mortgage market in which loans are originated, consisting of lenders such as commercial banks, savings and loan associations, and mutual savings banks.

Will

The most basic legal document outlining the disposition of a person's estate in the event of death.

Estate - Inheritable

The most complete form of ownership of real property which is a freehold estate that can be passed by descent or by will after the owner's death. Also known as Estate Of Inheritance or Fee Simple Estate.

Market Value

The most probable price property would bring in an arm's length transaction under normal conditions on the open market.

Commission

The negotiable percentage of the sales price of a home that is paid to the agents of the buyer and seller.

Adjusted Sales Price

The net sales price of a piece of property where the commissions and other closing costs are subtracted form the actual sales price.

Economic Life

The number of years during which an improvement will add value to the land.

Effective Age

The number of years of age that is indicated from the condition of the improvement rather than from its actual chronological age.

Fannie Mae

The official name of the Federal National Mortgage Association, it is a congressionally chartered, shareholder-owned company that buys mortgages from lenders and resells them as securities on the secondary mortgage market.

Chain of Title

The official record that details the ownership history of a piece of property.

Optionor

The one who gives the option who is usually the owner of the real property.

Optionee

The one who receives an option who might be the potential purchaser of real property.

Priority

The order of position or time. The ______ of liens is generally determined by the chronological order in which the lien documents are recorded; tax liens, however, have ______ even over previously recorded liens.

Resolution Trust Corporation

The organization created by FIRREA to liquidate the assets of failed savings and loan associations.

Initial Interest Rate

The original interest rate on an adjustable mortgage.

For Sale By Owner (FSBO)

The owner acts as the agent to avoid paying a sales commission.

Market Price

The price a property actually sells for; also called sales price.

Statute of Frauds

The part of a state law that requires that certain instruments, such as deeds, real estate sales contracts, and certain leases, be in writing to be legally enforceable.

Directional Growth

The path or direction in which the residential sections of a city are destined or determined to expand.

Annuity

The payment of a fixed sum to an investor at regular intervals.

Damages

The payment to a party who has suffered a loss or has been harmed by a sustained injury either to his or her person, property or relative rights through an act or default of another which is used to make up for the wrong.

Capitalization Rate (CAP rate)

The percentage rate of return estimated from the net income of a piece of property.

Lienee

The person or entity on whose property is placed a lein: which is form of encumbrance that usually makes their specific property security for the payment of a debt or discharge of an obligation such as judgments, taxes, mortgages, deeds of trust, etc.

Lienor

The person or entity that places a lein on another's property; A lien is a form of encumbrance which usually makes specific property security for the payment of a debt or discharge of an obligation such as judgments, taxes, mortgages, deeds of trust, etc.

Offeree

The person to whom the offer is made.

Mortgagor

The person who borrows money to purchase a house. The lender is called the mortgagee.

Grantor

The person who conveys an interest in a piece of property to another person.

Offeror

The person who makes the offer.

Situs

The personal preference of people for one area over another.

Boilerplate

The standard, preprinted language that exists in a contract.

Highest and Best Use

The possible use of a property that would produce the greatest net income and thereby develop the highest value.

Value

The power of a good or service to command other good in exchange for the present worth of future rights to its income or amenities.

Power of Sale

The power that an instrument such as a trust deed grants to a trustee or mortgagee to sell the secured property without judicial proceedings if a borrower defaults in payment of the promissory note or otherwise breaches the terms of the mortgage.

Redlining

The practice by a bank or insurance company to deny credit or insurance to people based on ethnic background or neighborhood.

Price Fixing

The practice of setting prices for products or services rather than letting competition in the open market establish those prices. This practice is Illegal under antitrust laws.

Township

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

Subdivision

The process in which the owner of a large piece of property divides it into smaller parcels.

Warehousing

The process of assembling a number of similar mortgage loans into one package prior to offering them to investors.

Syndication

The process of combining parties or firms into a joint venture of mutual interest.

Cost Approach (Summation)

The process of estimating the value of a property by adding to the estimated land value the appraiser's estimate of the reproduction or replacement cost of the building, less depreciation.

Income Approach (Capitalization)

The process of estimating the value of an income-producing property through capitalization of the annual net income expected to be produced by the property during its remaining useful life.

Estate at Sufferance

The tenancy of a lessee who lawfully comes into possession of a landlord's real estate but who continues to occupy the premises improperly after his lease rights have expired.

Refinancing

The process of replacing an older loan with a new mortgage that has better terms.

Surrender

The process of voluntary cancellation of a lease by the mutual consent of lessor and lessee.

Underwriting

The process that lenders go through to evaluate the risks posed by a particular borrower and to set appropriate conditions for the loan.

Condemnation

The process the government uses to take private property for public use without the consent of the owner.

Tax Sale

The public sale of a property by the government for nonpayment of taxes.

Lease Purchase

The purchase of real property, the consummation of which is preceded by a lease, usually long term. Typically done for tax or financing purposes.

Economic Rent

The reasonable rental expectancy the property could command if it were available for rent at the time of its valuation.

Devisee

The recipient of a gift of real property by will.

Fiduciary Duty

The relationship of loyalty (confidentiality), trust and obedience that buyers and sellers expect from a real estate agent. The term also applies to legal and business relationships.

Estate in Reversion

The remnant of a life estate left by the grantor where possession will begin when a lesser estate granted by him or her to another ends.

Life estate - In reversion

The remnant of a life estate left by the grantor where possession will begin when a lesser estate granted by him or her to another ends.

Remainder Interest (Remainderman)

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.

Eviction - Actual

The removal of a tenant by a legal process.

Joint Liability

The responsibility of two or more people to fulfill the terms of a home loan or debt.

Reversionary Right

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

Right-of-Way

The right given by one landowner to another to pass over the land, construct a roadway, or use as a pathway, without actually transferring ownership.

Equitable Right of Redemption

The right of a defaulted property owner to recover the property prior to its sale by paying the appropriate fees and charges.

Assignment of Rents

The right of a lender to collect rents from the borrowers tenants in case of loan default.

Ownership

The right of one or more parties to possess, use, enjoy and to dispose of property and to exclude all others.

Prior Appropriation

The right to use any water, with the exception of limited domestic use, is controlled by the state rather than by the landowner adjacent to the water.

Allodial System

The rights of individuals to private ownership of real property.

Corporeal Rights

The rights to possess and alter visible or tangible real or personal property.

Multiple Listing Service (MLS)

The service combines the listings for all available homes in an area, except For-Sale-By-Owner (FSBO) properties, in one directory or database.

Arbitration

The settling of a dispute between two parties by a neutral party.

Execution

The signing and delivery of an instrument. Also a legal order directing an official to enforce a judgment against the property of a debtor.

Negative Amortization

The situation occurs when a borrower's monthly payment is not large enough to cover both the principal and interest of a loan. As a result, the outstanding balance of the loan actually grows larger with each payment rather than smaller. Most fixed-rate loans are not subject to ______, but many adjustable-rate mortgages are susceptible.

Listing Broker

The sponsoring broker in a multiple listing situation from whose office a listing agreement is initiated as opposed to the cooperating sponsoring broker, from whose office negotiations leading up to a sale are initiated.

Novation P.I.T.I.

The substitution or exchange of a new P.I.T.I. loan or contract for an old one by the mutual agreement of the parties: such as where parties to an agreement accept a new debtor in the place of the previous one.

Interest Rate

The sum, expressed as a percentage, charged for a loan. Interest payments on most home loans are tax- deductible.

Abstract of Judgment, Law

The summary of a court judgment that creates a lien against a property when filed with the county recorder.

Abstract of Title

The summary of all documents that appear on public record effecting real property.

Employing Broker

The supervising broker from a real estate company organized as a sole proprietorship.

Foundation

The supporting portion of a structure on which all else rests.

Ethics

The systems of moral principles and rules that becomes standards for professional conduct.

Repossession

The taking back of property by a lender or seller from the borrower or buyer, usually due to default.

Attachment

The taking of property into custody pending the outcome of a legal action.

Mortgage-Interest Deduction

The tax write-off that the Internal Revenue Service allows most owners to claim for the annual interest payments they make on their real estate loans.

License Term

The term for a real estate licensee is for 2 years.

Gross Income

The total income of a household before taxes or expenses are subtracted.

Adjusted Gross Income

The total potential gross income minus vacancy and credit loss; also called Effective Gross Income.

Demise

The transfer of interest or conveyance of an estate primarily by lease.

Fiduciary

The trust and confidence an agent owes a principal in an agency relationship: (1. Loyalty (confidentiality); 2. Obedience ).

Real Estate Investment Trusts (REITs)

The trusts are publicly traded companies that own, develop and operate commercial properties.

Abandonment of Homestead

The two most common ways of abandoning a declared homestead are either 1) through the use of a declaration of abandonment, or 2) by operation of law.

Leverage

The use of a small amount of cash (5 percent or 10 percent down payment) to buy a piece of property.

Undue Influence

The using of a fiduciary or confidential relationship to obtain a fraudulent or unfair advantage of the weakness of mind, distress or necessity to control another.

Compensation

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

Insurance Value

The value at which an insurer will recognize any loss.

Book Value

The value of an asset carried on the books of business.

Assessed Value

The value placed on real or personal property for tax purposes.

Dedication

The voluntary transfer of private property by its owner to the public for some public use, such as for streets of schools.

Surface Water

The water resulting from rains and melting snow that spreads over the surface of the ground which an owner may not divert onto the land of another without their permission.

Groundwater

The water that exists under the earth's surface within tiny spaces or crevices in geological formations.

Conversion

The wrongful appropriation of property belonging to another; also, the process of changing a property's status from rental to condominium.

Sherman Antitrust Act

This act prohibits monopolies and any contracts, combinations, and conspiracies that unreasonably restrain trade.

Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA)

This act restructured the savings and loan association regulatory system; enacted in response to the savings and loan crisis of the 1980s.

Inflation

This event occurs when there is more money available than there are goods and services to be purchased. Mortgage rates, which are determined by the marketplace and the actions of the Federal Reserve Board and Wall Street, are sensitive to ______ fears.

Homeowners' Insurance

This insurance includes hazard coverage for any damages that may affect the value of a house, in addition to personal liability and theft coverage.

Renewal Option

This is an agreement by Landlord to provide Tenant the exclusive right to lease space beyond the original lease term for a pre-arranged term and amount.

Implied Agency

This occurs when the actions of the parties indicate that they have mutually consented to an agency.

Hazard insurance

This provision of homeowners insurance covers damage by fire, wind or other disaster. It is required by all lenders before a loan is approved.

Actual Damages

Those damages that a court of law will recognize and that are a direct result of a wrong.

Amenities

Those desirable features, extras, of a property that may benefit an owner.

Bare Naked Title

Title held by a trustee in a deed of trust document. The trustee does not have any of the bundle of rights provided in ownership.

Insurable Title

Title to property that a company agrees to insure against defects and disputes.

Attest

To affirm to be true or genuine; specifically: to authenticate by signing as a witness.

Levy

To assess; to seize or collect. To ______ a tax is to assess a property and set the rate of taxation. To ______ an execution is to officially seize the property of a person to satisfy an obligation.

Rescind

To cancel a contractual agreement.

Hypothecate

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

Abatement

To reduce an amount such as the removal or the encapsulation of asbestos.

Segregate

To separate or divide people, activities or institutions along racial, sexual, or religious lines.

Assign

To transfer the right, title and interest in the property of one person (the assignor) to another (the assignee). There are assignments of mortgages, sales contracts, contracts for deed, leases, and options.

Assignment

Transferring an interest from one party to another in a purchase contract or lease.

Offer & Acceptance

Two essential components of a valid contract; a "meeting of the minds".

Tenants (tenancy) In Common

Two or more owners who share interest in a specific property. Each individual owner has the right to partition, Unlike joint tenants, ______ have right of inheritance.

Co-Tenants

Two or more tenants who rent the same property under the same agreement. Each co-tenant is 100% responsible for carrying out the rental agreement, which includes paying the entire rent if the other tenant skips town and paying for damage caused by the other tenant.

Agency by Ratification

Unauthorized actions of an agent that are later approved by the principal.

Land Contract

Under a ______ , the seller (also known as the vendor) retains legal title. The buyer (called the vendee) takes possession and gets equitable title to the property. The buyer agrees to give the seller a down payment and pay regular monthly installments of principal and interest over a number of years. The buyer also agrees to pay real estate taxes, insurance premiums, repairs, and upkeep on the property.

Separate Property

Under community property law, property owned solely by either spouse before the marriage, acquired by gift or inheritance after the marriage, or purchased with separate funds after the marriage.

Homeowners Protection Act of 1998

Under this act private mortgage insurance (PMI) must terminate automatically when the borrower reaches a 22 percent equity position based on the original value of the property at the time the loan was originated with no allowance for appreciation or depreciation if the loan was written after July 29, 1999, and the borrower is current on mortgage payments.

Subdivided Land

Undeveloped land that is divided into smaller, usable lots and sold to potential users.

Duress

Unlawful constrain or action exercised on a person whereby the person is forced to perform an act against his will. A contract entered into under ______ is voidable.

Bring Down Fee

Updating the title report from the original report before the recording of the loan documents.

Right of Survivorship

Upon the death of a joint tenant, the deceased's interest transfers directly to the surviving joint tenant(s).

Adjusted Basis

Used to determine gains or losses when property is sold: Original cost of the property, plus the value of any capital expenditures for improvements to the property, minus the depreciation. (After calculating the adjusted basis, subtract it from the sales price of the property to determine gains or losses.)

1099 Form

Used to report miscellaneous income such as royalties and income from contractual work.

Opinion of Value

Usually in writing, may be a letter simply stating the appraiser's opinion of value; most often found in an appraisal report.

Subrogation

Waiving of rights: The substitution of one creditor for another, with the substituted person succeeding to the legal rights and claims of the original claimant. ______ is used by title insurers to acquire from the injured party rights to sue to recover any claims the insurers have paid.

Reconveyance

When a borrower completely pays off the mortgage, the property is reconveyed to them from the lender.

PITI (Principal, Interest, Taxes, Insurance)

When a buyer applies for a loan, the lender will calculate the ______, ______, ______and ______. The figure is designed to represent the borrower's actual monthly mortgage-related expenses.

Possession

When a buyer signs the papers and receives the keys to the house, the buyer officially takes ______.

Contemporaneous Offers

When a buyer's agent is acting as designated agent for multiple prospective buyers who the designated agent has reason to believe are making or preparing to make offers to purchase the same property, the buyers have the option of being referred to another designated agent. (Clients must be provided with written disclosure)

Special Assessment

When a homeowners' association needs or wants extra funds, it levies a special assessment upon the owners.

Statutory Right of Reinstatement

When the defaulting mortgagor wishes to cure the default and reinstate the loan as if no acceleration had occurred. The mortgagor has the right to exercise this statutory right for a period of 90 days after service of summons or publication date. At the lender's discretion, expressed through an attorney, the right of reinstatement may be extended to run as long as the equitable right of redemption.

Involuntary Alienation

When title is transferred without the owner's consent

Granting Clause (Grant)

Words in a deed of conveyance that state the grantor's intention to convey the property at the present time. This clause is generally worded as "convey and warrant"; "grant"; "grant, bargain, and sell"; or the like.

Value-in-Exchange

Worth: what a particular good is worth in exchange for some other good; trading value.

Conditional-Use permit

Written governmental permission allowing a use inconsistent with zoning but necessary for the common good, such as locating an emergency medical facility in a predominantly residential area.

Municipality

1. A city or town that has corporate status and local government. 2. The governing body of such an area; Synonymous with Township.

Asbestos

A fire-resistant mineral used for building (insulation) and household products that has been found to cause lung cancer.

Closing Statement

A document which details the final financial settlement between a buyer and seller and the costs paid by each party.

Purchase Agreement

A document which details the purchase price and conditions of the transaction.

Release clauses

A document, also known as a deed of reconveyance, that transfers all rights given a trustee under a deed of trust loan back to the grantor after the loan has been fully repaid.

Eviction

A legal procedure to remove a tenant for reasons including failure to pay rent.

Probate

A legal process by which a court determines who will inherit a decedent's property and what the estate's assets and liabilities are.

Trust Deed Lien

A lien on the property of a trustor that secures a deed of trust loan.

Mortgage Lien

A lien or charge on the property of a mortgagor that secures the underlying debt obligations.

Involuntary Lien

A lien placed on property without the consent of the property owner.

Voluntary Lien

A lien that a homeowner willingly gives to a lender.

Open Listing

A property given to a number of brokers to market at the same time. (Most MLSs do not permit this type of listing.)

Constructive Eviction

Actions of a landlord that so materially disturb or impair a tenant's enjoyment of the leased premises that the tenant is effectively forced to move out and terminate the lease without liability for any further rent.

Types of Agency

Actual (listing agreement); Dual (representing both sides); Estoppel (ostensible/implied: not in writing); Expressed (orally: unenforcable, or written); Ratification (ratify agency by what they do; Sub (listings).

Tacking

Adding or combining successive periods of continuous occupation of real property by adverse possessors. This concept enables someone who has not been in possession for the entire statutory period to establish a claim of adverse possession.

Feudal System

All rights of land ownership remain with the king.

Tenements

All things which may be owned that are of a permanent nature such as land and buildings and in a more restrictive sense a house or a dwelling.

Asset

All valuable items held by a person which may be used to liquidate a debt.

Legal Blemish

Blemishes on a piece of property, such as a zoning violation or fraudulent title claim.

Beneficial Use

Benefiting from a property because the use and title belongs to him/her, although the legal title may belong to another person.

Mortgage: Types of

Blanket; Chattel; Junior; Open-end; Package; Reverse; Subordinate.

Liability Coverage

Coverage for injuries or losses sustained within a unit.

Interest Rate Buy-Down Plans

For cash-short buyers, some sellers are willing to advance funds from the sale of the home to buy down the interest rate and reduce the buyer's monthly obligation.

FNMA

Federal National Mortgage Association or Fannie Mae, purchases paper from primary lenders.

Estate Taxes

Federal taxes on a decedent's real and personal property.

Point

Fees charged by lenders at the time a loan is originated. A point is equal to 1 percent of the total loan amount.

Encroachment

Fences or other structures that extend into the property of another owner.

Public Control

Government regulations limiting the use of real property.

Monetary Policy

Governmental regulation of the amount of money in circulation through such institutions as the Federal Reserve Board.

Emblements

Growing crops, such as grapes and corn that are produced annually through labor and industry; also called "fructus industrials".

Option Listing

Listing with a provision that gives the listing sponsoring broker the right to purchase the listed property.

Home Equity Conversion Mortgage

Loans made to older owners who want to convert equity into money. Because borrowers are qualified on the basis of the value of their home, e, the loan is not the same as a home equity loan. Also known as reverse mortgages.

Meeting of the Minds

Offer and Acceptance: Two essential components of a valid contract.

Debit

On a closing statement, an amount charged; that is, an amount that the debited party must pay.

Accrued Items

On a closing statement, items of expense that are incurred but not yet payable, such as interest on a mortgage loan or taxes on real property.

Assignor

One who transfers a specified interest and rights in a property.

Listings: 3 Types

Open (non-exclusive); Exclusive Agency; Exclusive Right to Sell.

Adjusted Purchase Price

Original purchase price plus capital improvements.

FHA Title III

Originally established FNMA: Fannie Mae.

Surface Rights

Ownership rights in a parcel of real estate that are limited to the surface of the property and do not include the air above it (air rights) or the minerals below the surface (subsurface rights).

Subsurface Rights

Ownership rights in a parcel of real estate to the water, minerals, gas, oil, and so forth that lie beneath the surface of the property.

Planned-Unit Development (PUD)

Residents own the home and the land, and share the use and financial responsibility for common areas.

National Flood Insurance Act of 1968

Required owners who finance property with federal or federal related mortgage loans, in flood prone areas known as special flood hazard areas (SFHAs) to obtain flood insurance.

Lot Releases

Requires the public report be complete, accurate and in compliance with regulations, before the release of a lot for distribution.

Mechanic's Lien

Subcontractors or suppliers sometimes will file an encumbrance, or ______, against a property to seek payment.

Mortgage - Subject to

Subject to Mortgage: A clause in a loan document where a buyer agrees takes over the existing loan payments but not to assume any personal liability for the loan beyond the value of his or her equity in the property.

Novation

Substituting a new obligation for an old one or substituting new parties to an existing obligation.

Avulsion

Sudden removal of land or sudden movement of soil from one property to another caused by change in a river's course or by flood. The land that is removed by avulsion remains the property of the original owner.

Rectangular (Government) Survey System

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

Criminal Law

The body of law dealing with crimes and their punishment.

Close of Escrow (COE): Closing

The final procedure in which documents are signed and recorded, and the property is transferred.

Reconciliation

The final step in the appraisal process in which the appraiser combines the estimates of value received from the sales comparison, cost and income approaches to arrive at a final estimate of market value for the subject property.

Correlation

The final step, also know as reconciliation, in the appraisal process by the appraiser involving the interpretation of the data derived from the cost approach, the market approach and the income approach leading to a final single determination of market value.

Anticipation

The present value of property is determined by the future benefits to be obtained from that property.