California Real Estate Principles, 10.1 Edition

Beneficiary

(1) One entitled to the benefit of a trust; (2) one who receives profit from an estate, the title of which is vested in a trustee; or (3) the lender on the security of a note and deed of trust.

Ad Valorem

A Latin phrase meaning "according to value." Usually used in connection with real estate taxation.

Baseboard

A board placed against the wall around a room next to the floor.

Acceleration Clause

A clause in a trust deed or mortgage giving the lender the right to call all sums owed to the lender to be immediately due and payable upon the happening of a certain event.

Abstract of Judgment

A condensation of the essential provisions of a court judgment. A creditor who is awarded a money judgment in California must still collect the money that they are owed. The two most common steps they take are to garnish wages (if possible) and to record an 'abstract of judgment' in any county where the debtor owns real estate. The abstract then creates a lien against the property

Breezeway

A covered porch or passage that is open on two sides and that connects the house and the garage or two parts of the house.

Advance Fee

A fee paid in advance of any services rendered. The practice of obtaining a fee in advance for the advertising of property or businesses for sale. Said fees can be incorrectly obtained, thereby becoming a violation of real estate laws and regulations.

Acknowledgment

A formal declaration before a duly authorized officer by a person who has executed an instrument that such execution is his or her act and deed.

Appropriation of

A legal term including the act or acts involved in the taking and reducing to personal possession of water occurring in a stream or another body of water and of applying such water to beneficial uses or purposes.

Assumption Fee

A lender's charge for changing over and processing new records for a new owner who is assuming an existing loan.

Building Line

A line set by law a certain distance from a street line in front of which an owner cannot build on his or her lot (a setback line)

Amortized Loan

A loan that is completely paid off, interest and principal, by a series of regular payments that are equal or nearly equal. Also called a level payments loan

Bench Marks

A location indicated on a durable marker by surveyors.

Acre

A measure of land equaling 160 square rods, or 4,840 square yards, or 43,560 square feet, or a tract about 208.71 feet square.

Abstraction

A method of valuing land. The indicated value of the improvement is deducted from the sales price

Adjustable Rate Loan

A mortgage where the interest rate may go up or down, thereby the monthly payment may decrease or increase over the life of the loan.

Administrator/Administratrix

A person appointed by the probate court to administer the estate of a person deceased.

Broker

A person employed by another for a fee to carry on any of the activities listed in the license law definition of a broker.

Affiant

A person who makes an affidavit.

ALTA Owner's Policy

A residential owner's extended coverage policy that provides buyers or owners the same protection the ALTA policy gives to lenders. Also called an ALTA-R policy.

Annuity

A series of assured equal or nearly equal payments to be made over a period of time or a lump sum payment to be made in the future. The series of installment payments due to the landlord under a lease. The series of installment payments due to a lender. Real estate finance is most concerned with the first definition

Blanket Mortgage

A single mortgage that covers more than one piece of real estate.

Affidavit

A statement or declaration reduced to writing, sworn to or affirmed before some officer who has authority to administer an oath or affirmation

Beam

A structural member transversely supporting a load.

Abstract of Title

A summary or digest of the conveyances, transfers, and any other facts relied on as evidence of title, together with any other elements of record that may impair the title. An abstract of title is a written history of all the recorded documents and proceedings related to a specific property.

Building Code

A systematic regulation of construction of buildings within a municipality established by ordinance or law.

Assignment

A transfer or making over to another of the whole of any property, real or personal, in possession or in action, or of any estate or right therein.

Board Foot

A unit of measurement of lumber that is one foot wide, one foot long, and one inch thick; 144 cubic inches.

Assessed Valuation

A valuation placed upon property by a public officer or board as a basis for taxation

Bearing Wall or Partition

A wall or partition supporting any vertical load in addition to its own weight.

Agreement of Sale

A written agreement or contract between seller and purchaser in which they reach a meeting of minds on the terms and conditions of the sale. Often called a deposit receipt.

Bill of Sale

A written instrument given to pass title of personal property from the vendor to the vendee.

AMO

Accredited Management Organization.

Anticipation, Principle of A

Affirms that value is created by anticipated benefits to be derived in the future.

ALTA Title Policy

An American Land Title Association-approved title policy. A type of title insurance policy that expands the risks normally insured against under the standard type of policy to include unrecorded mechanics' liens; unrecorded physical easements; facts a physical survey would show; water and mineral rights; and rights of parties in possession, such as tenants and buyers under unrecorded instruments

Accretion

An addition to land from natural causes as, for example, from gradual action of the ocean or river waters.

Binder

An agreement to consider a down payment for the purchase of real estate as evidence of good faith on the part of the purchaser. Also, a notation of coverage on an insurance policy that is issued by an agent and given to the insured prior to the issuing of the policy.

Appraisal

An estimate and opinion of value; a conclusion resulting from the analysis of facts.

Betterment

An improvement upon property that increases the property value and is considered a capital asset, as distinguished from repairs or replacements where the original character or cost is unchanged.

Appreciation

An increase in value that can result from inflation or from the interaction of supply and demand forces

Assumption Agreement

An undertaking or adoption of a debt or an obligation resting primarily upon another person.

Blacktop

Asphalt paving used in streets and driveways.

Capital Assets

Assets of a permanent nature used in the production of an income, such as land, buildings, machinery, and equipment. Under income tax law, they are usually distinguishable from "inventory," which comprises assets held for sale to customers in ordinary course of the taxpayers' trade or business

Built-in

Cabinets or similar features built as part of a house

Axial Growth

City growth that occurs along main transportation routes. Usually takes the form of star shaped extensions outward from the center.

Bilateral Contract

Contract in which a promise from one person is made in exchange for a promise from another person.

Bracing

Framing lumber nailed at an angle to provide rigidity

Architectural Style

Generally, the appearance and character of a building's design and construction.

Baseline and Meridian

Imaginary lines used by surveyors to find and describe the location of private or public lands.

Capitalization

In appraising, determining value of property by considering net income and percentage of reasonable return on the investment. Thus, the value of an income property is determined by dividing annual net income by the capitalization rate.

Bona Fide

In good faith; without fraud

Capital Gain

Income from the sale of an asset rather than from the general business activity. Capital gains are generally taxed at a lower rate than ordinary income

Cal-Vet Loan

Loan made directly to a veteran by the state of California. The money is obtained from the sale of State Veteran Bonds.

Batten

Narrow strips of wood or metal used to cover joints interiorly or exteriorly; also used for decorative effect

Annual Percentage Rate (APR)

Not an interest rate, but rather percentage rate that reflects the effective interest rate on the loan, including other prepaid financing charges such as loan fees, prepaid interest, and tax service fees.

Appraiser

One qualified by education, training, and experience and tested by the state who is hired to estimate the value of real and personal property based on experience, judgment, facts, and use of formal appraisal processes.

Assignor

One who assigns or transfers property

Attorney in Fact

One who is authorized to perform certain acts for another under a power of attorney; power of attorney may be limited to a specific act or acts or be general.

Agent

One who represents another from whom he or she has derived authority

California Housing Finance Agency Program (CalHFA)

Program designed to help firsttime homebuyers acquire a home in California's expensive housing market.

Buyer's Agent

Real estate broker appointed by a buyer to be the buyer's agent to find property for the buyer.

Bundle of Rights

Rights the law designates that accompany ownership.

Amenities

Satisfaction of enjoyable living to be derived from a home; conditions of agreeable living or a beneficial influence arising from location or improvements.

Attachment

Seizure of property by court order, usually done to have the property available in the event a judgment is obtained in a pending suit.

Bridging

Small wood or metal pieces used to brace floor joists

Alluvion (Alluvium)

Soil deposited by accretion; increase of earth on a shore or bank of a river

Appurtenance

Something annexed to another thing that may be transferred incident to it. That which belongs to another thing, such as a barn, a dwelling, a garage, or an orchard, is incident to the land to which it is attached.

California Association of Realtors (CAR)

State affiliated group that provides services for California members.

California Fair Housing Act (Rumford Act)

State law that forbids discrimination in the sale, rental, lease, or financing of practically all types of housing

Bequest

That which is given by the terms of a will.

Acquisition

The act or process by which a person procures property.

Breach

The breaking of a law or failure of duty by either omission or commission.

Accrued Depreciation

The difference between the cost of replacement new as of the date of the appraisal and the present appraised value.

Advance Commitment

The institutional investor's prior agreement to provide long-term financing upon completion of construction.

Amortization

The liquidation of a financial obligation on an installment basis; also, recovery, over a period, of cost or value

Assessor

The official who has the responsibility of determining assessed values for property taxes.

Adverse Possession

The open and notorious possession and occupancy under an evident claim or right, in denial or opposition to the title of another claimant.

Assignment of Lease

The original lessee is removed from the transaction and the rights and duties pass to a new assignee, who is now primarily liable for the lease

B.T.U. (British thermal unit)

The quantity of heat required to raise the temperature of one pound of water by one degree Fahrenheit.

Capitalization Rate

The rate of interest that is considered a reasonable return on the investment and used in the process of determining value based on net income. It may also be described as the yield rate that is necessary to attract the money of the average investor to a particular kind of investment. This amortization factor can be determined in various ways; for example, by the straight-line depreciation method. (To explore this subject in greater depth, refer to current real estate appraisal texts.

Agency

The relationship between principal and agent that arises out of a contract, either expressed or implied, written or oral, wherein the agent is employed by the principal to do certain acts dealing with a third party.

Backfill

The replacement of excavated earth into a hole or against a structure.

Access Right

The right of an owner to have ingress and egress to and from his or her property. Also called right of way

Air Rights

The rights in real property to use the airspace above the surface of the land.

Avulsion

The sudden tearing away or removal of land by action of water flowing over or through it.

Building, Market Value of

The sum of money that the presence of a structure adds to or subtracts from the value of the land it occupies. Land valued on the basis of highest and best use.

Assumption of Mortgage

The taking of title to property by a grantee, wherein he or she assumes liability for payment of an existing note secured by a mortgage or deed of trust against the property; becoming a coguarantor for the payment of a mortgage or deed of trust note

Alienation

The transferring of property to another; the transfer of property and possession of lands or other things from one person to another

Assessment

The valuation of property for the purpose of levying a tax or the amount of the tax levied.

Accrued Items of Expense

Those incurred expenses that are not yet payable. The seller's accrued expenses are credited to the purchaser in a closing statement.

Assigns; Assignees

Those to whom property is transferred.

Absolute Fee-Simple Title

Title that is absolute and unqualified. It is the best title one can have.

Attest

To affirm to be true or genuine; an official act establishing authenticity

Bequeath

To give or hand down by will; to leave by will.

California Land Title Association (CLTA)

Trade association for title insurance companies that issues standard policies of title insurance

Boot

Unlike property received in an exchange that creates an income tax liability; for example, cash, notes, and personal property.

Assessed Value

Value placed upon property as a basis for taxation.

Acceptance

When the seller or agent's principal agrees to the terms of the agreement of sale and approves the negotiation on the part of the agent and acknowledges receipt of the deposit in subscribing to the agreement of sale.

Balloon Payment

Where the final installment payment on a note is more than twice as great as the preceding installment payments, paying the note in full.

Alienation Clause

e A clause that gives the lender the right to call a loan upon sale of real estate. Also called a due-on-sale clause.