Texas Principles of Real Estate - Real Estate U

Amendment

A change in legal document made by adding, altering, or omitting a certain part of the term.

Adverse possession

A claim made against the lands of another by virtue of open and notorious possession of the lands by claimant.

Alienation clause

A clause in a contract giving the lender certain rights in the event of a sale or other transfer of mortgaged property.

Abstract of Title

A condensed history or summary of all transactions affecting a particular tract of land.

Acceleration clause

A condition in a real estate financing instrument giving the lender the power to declare all sums owing lender immediately due and payable upon the happening of an event, such as sale of the property, or a delinquency in the repayment of a note.

Bilateral contract

A contract in which each party promises to do something.

Certificate of occupancy

A document issued by a local government agency after satisfactory inspection of a structure authorizing that the structure can be occcupied.

Constructive notice

A fact, imputed to a person by law, which should have been discovered because of the person's actual notice of circumstances and the inquiry that a prudent person would have been expected to make.

Americans With Disabilities Act (ADA)

A federal law protecting the rights of individuals with physical or mental impairments.

Civil Rights Act of 1866

A federal law that prohibits all discrimination on the basis of race.

Asbestos

A fibrous mineral found in many building materials that, when improperly disturbed, can cause serious lung disease.

Cooperative

A form of ownership in which stockholders in a corporation occupy property owned by the corporation under a lease.

Condominium

A form of ownership of real property recognized in all states that consists of individual ownership of some aspects and coownership in other aspects of the property.

Curtsey

A husband's interest in the real property of his wife.

Civil Rights Act of 1964

A law that prohibited discrimination on the basis of race, sex, color, national origin, or gender in any housing program receiving federal money.

Associate broker

A licensed real estate broker who chooses to work under the name and supervision of another broker.

Associate licensee

A licensee who is licensed under a broker, or who has written into a written contract with the broker to act as the broker's agent in a real estate transaction.

Construction Loan

A loan made to finance the actual construction or improvement on land. Funds are usually dispersed in increments as the construction progresses.

Amortized loan

A loan to be repaid, interest and principle, in a series of regular payments that are equal or nearly equal without any special balloon payment prior to maturity.

Corrective maintenance

A maintenance task performed to identify, isolate, and rectify a fault so that the failed equipment, machine, or system can be restored to an operational condition within the tolerances or limits established for inservice operations.

Bench mark

A monument used to establish the elevation of the point, usually relative to Mean Sea Leve;, but often to some local datum.

Balloon mortgage

A mortgage in which the scheduled payment will not amortize the loan over the mortgage term; therefore, for the debt to be fully satisfied , a final payment called a balloon payment, larger than the uniform payments, is required.

Adjustable Rate Mortgage (ARM)

A mortgage loan which bears interest at a rate subject to change during the term of the loan, predetermined or otherwise.

Conventional mortgage

A mortgage securing a loan made by investors without governmental underwriting, i.e., which is not FHA insured or VA guaranteed. The type is customarily made by a bank or savings and loan association.

Credit score

A number assigned to a person that indicates to lenders their capacity to repay a loan.

Administrator

A person appointed by the court to settle affairs of an individual dying without a will.

Agent

A person authorized to act on behalf of another

Conditions in title

A provision in a deed that upon happening, or failure to happen, of a certain event, limits, enlarges, changes, or terminates the title of the purchaser.

Counter offer

A response to an offer to enter into a contract, changing some of the terms of the original offer. A counter offer is a rejection of the offer (not a form of acceptance), and does not create a binding contract unless accepted by the original offerer.

Blanket mortgage

A single mortgage which covers more than one piece of real property.

Avulsion

A sudden and perceptible loss of land by the action of water as by a sudden change in the course of a river.

Affidavit

A sworn statement in writing.

Building code

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

Chain of title

A term applied to the past series of transactions and documents affecting the title to a given parcel of land.

Assignment

A transfer of benefits or obligations within a contract to a 3rd party who is not originally a party to the contract.

Assessed value

A valuation placed on piece of property by a public authority as a basis for levying taxes on the property.

Breach of contract

A violation of the terms or conditions of a contract without legal excuse.

Contract

A voluntary, legally enforceable promise between two legally competent parties, to perform some legal act in exchange for legal consideration.

Bill of sale

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

Appraisal

A written statement, independently and impartially prepared by a qualified appraiser setting forth an opinion in a federally regulated transaction as to the market value of an adequately described property as of a specific date. It is supported by the presentation and analysis of relevant market information. An opinion of value.

Addendum

Additional pages of material that are added to and become part of a contract.

Covenants

Agreements written into deeds and other instruments promising performance or nonperformance of certain acts, or stipulating certain uses or nonuses of the property.

Closing statement

An accounting of the funds received and disbursed in a real estate transaction.

Accession

An addition to property through the efforts of man or by natural forces.

Confidentiality

An agent is obligated to safeguard his/her principal's lawful confidences and secrets. Therefore, a real estate broker must keep confidential any information that may weaken a principal's bargaining position. The duty of confidentiality precludes a broker who represents a seller from disclosing to a buyer that the seller can, or must, sell a property below the listed price. Conversely, a broker who represents a buyer is prohibited from disclosing to a seller that the buyer can, or will, pay more than what has been offered for a property. The duty of confidentiality does not include an obligation by a broker who represents a seller to withhold known material facts about the condition of the seller's property from the buyer, or to misrepresent the property's condition. To do so constitutes misrepresentation and may impose liability on both the broker and/or the seller.

Commision

An agent's compensation for performing the duties of the agency; in real estate practice, a percentage of the selling price of property, percentage of rentals, etc. A fee for services.

Buyer agency agreement

An employment contract that appoints a brokerage firm as a buyer's agent for the purpose of finding a suitable property for the buyer.

Corporation

An entity established and treated by law as an individual or unit with rights and liabilities, or both, distinct and apart from those of the persons composing it. A corporation is a creature of law having certain powers and duties of a natural person. Being created by law it may continue for any length of time the law prescribes.

Appraised value

An evaluation of a property's value based on a given point in time that is performed by a professional appraiser during the mortgage origination process.

Appreciation

An increase in value.

Balloon payment

An installment payment on a promissory note, usually the final one for discharging the debt, which is significantly larger than the other installment payments provided under the terms of the promissory note.

Bargain and sale deed

Any deed that recites a consideration and purports to convey the real estate; a bargain and sale deed with a covenant against the grantor's act is one in which the grantor warrants that grantor has done nothing to harm or cloud the title.

Consideration

Anything given or promised by a party to induce another to enter into a contract, ex: personal services or even love and affection. It may be a benefit conferred upon one party or a detriment suffered by the other.

Boot

Cash received in a tax-deferred exchange.

Chain

Equal to 66'-0" or 4 rods.

Acre

Equals 43, 560 sq ft or 160 rods.

Actual notice

Express or implied knowledge of a fact.

Chattels

Goods or every species of property movable or immovable which are not real property. Personal property.

Base lines

Imaginary east-west lines which intersect meridian lines to form a starting point for the measurement of land.

Credit

In a closing statement, money to be received or credit given for money or an obligation given.

Alluvion

Increased soil, gravel, or sand on a stream bank resulting from the flow or current of the water.

Ad valorem

Latin for "according to value"

Common law

Law that is derived from court decisions. The body of law that grew from custom and practices developed and used in England "Since the memory of man runneth not to the contract".

Caveat emptor

Let the buyer beware. The buyer must examine the goods or property and buy at his own risk.

Collateral

Marketable real or personal property which a borrower pledges as security for a loan. In mortgage transactions, specific land is the collateral.

Cost approach

One of three methods in the appraisal process. An analysis in which a value estimate of a property is derived by estimating the replacement cost of the improvements, deducting therefrom the estimated accrued depreciation, then adding the market value of the land.

Appraiser

One qualified by education, training, and experience 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 holds a power of attorney for another, allowing him to execute documents such as deeds, mortgages, etc. on behalf of the person granting the power.

Client

Prior to signing a listing agreement, a party in a real estate transaction who will employ an agent.

Community property

Property acquired by husband and/or wife during a marriage when not acquired as the separate property of either spouse. Each spouse had equal rights of management, alienation, and testamentary disposition of community property.

Commercial property

Property that produces rental income or that is used in business. Properties with five or more dwelling units are considered commercial property.

Condemnation

Taking private property for public use, with fair compensation to the owner; exercising the right of eminent domain.

Acknowledgement

The act by which a party executing a legal document goes before an authorized officer (a notary public) and declares the same to be his/her voluntary act.

Covenants, conditions, and restrictions

The basic rules establishing the rights and obligations of owners of real property within a subdivision or other tract of land in relation to other owners within the same subdivision or tract and in relation to an association of owners organized for the purpose of operating and maintaining property commonly owned by the individual owners.

Brokerage

The business of bringing buyers and sellers together and assisting in negotiations for the terms of sale for real estate.

Alluvium

The gradual increase of earth on a shore of an ocean or bank of a stream resulting from the action of the water.

Blockbusting

The illegal practice of inducing homeowners to sell their properties by making representations regarding the entry, or the prospective entry of minority persons into the neighborhood.

Accretion

The increasing in land area from the deposit of soil by the natural action of water.

Beneficiary

The lender on the security of a note and deed of trust.

Closing costs

The miscellaneous expenses buyers and sellers normally incur in the transfer of ownership of real property over and above the cost of the property.

Customer

The party the agents bring to the principal as seller or buyer of the property.

Closing

The process by which all the parties to a real estate transaction conclude the details of a sale or mortgage. The process includes the signing and transfer of documents and distribution of funds.

Attachment

The process by which real or personal property of a party to a lawsuit is seized and retained for payment of an existing note secured by a mortgage or deed of trust against the property, becoming a co-guarantor for the payment of a mortgage or deed of trust note.

Capital gain

The profit realized from the sale of real estate or other investment. Capital loss occurs when an investment property or another type of investment is sold at a loss.

Capitalization rate

The rate of interest which is considered a reasonable return on the investment, and used in the process of determining value based upon net income. Capital investment rate = NOI/Purchase price.

Agency

The relationship between the principal and the principal's agent which 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.

Annual percentage rate (APR)

The relative cost of credit as determined in accordance with Regulation Z of the Board of Governors of the Federal Reserve System for implementing the Federal Truth in Lending Act.

Alternative dispute resolution (ADR)

The resolution of disputes by various means including, but not limited to, negotiation, mediation, and arbitration.

Air rights

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

Bundle of rights

The rights of an owner of a freehold estate to possession, enjoyment, control, and disposition of real property.

Assumption of mortgage

The taking of a title to property by a grantee wherein the grantee assumes liability for payment of an existing note secured by a mortgage or deed of trust against the property, becoming a co-guarantor for the payment of a mortgage or deed of trust note.

Cash flow

The total amount of money remaining after all expenditures have been paid, include the taxes, operating costs, and mortgage payments.

Cost

The total dollar expenditure for labor, materials, and other items related to construction.

Conversion

The unlawful appropriation of another's property, as in the conversion of trust funds.

Conforming loan

Those loans processed on uniform loan forms according to FNMA/FHLMC guidelines.

Assignee

Those to whom property or interests therein will have been transferred

Clouded title

Title that is encumbered or burdened with defects.

Clear title

Title which is not encumbered or burdened with defects.

Commingling

To mingle or mix, for example, a client's funds in the broker's personal or general account.