Aceable Real Estate: Georgia Pre-Licensing
involuntary alienation
"transfer of title to property without the owner's consent, usually carried out by operation of law
limited agency
(see special agency)
dominant tenement
The parcel of land that benefits from an easement appurtenant by having the right to cross another owner's adjacent land
mortgage insurance premium (MIP)
a borrower-paid insurance required for fha loans, in order to insure lender in case of borrower default/foreclosure
transaction coordinator
a broker who facilitates a transaction absent of any agency relationship with either party to the contract; has no fiduciary duties for ministerial acts performed; also known as a facilitator
operating budget
a budget created by using anticipated revenues and expenses for a property over a period of one year
joint venture
a business arrangement that a partnership uses when joining forces for a single business objective achieved through one or a series of related projects; this arrangement will not be of an ongoing nature
limited partnership
a business entity composed of both general and limited partners. the general partners manage the business and limited partners are passive investors.
general partnership
a business entity in which all co-owners actively share power, responsibilities, and profit
chlordane
a chemical compound formerly used in pesticides that is dangerous to human health
escalation clause
a clause in a lease allowing payments to increase in relation to a specified factor or index
defeasance
a clause in a security document that indicates that the loan has been satisfied and that either the title will be conveyed to the borrower or the lien on the borrower's title will be removed
acceleration clause
a clause in a security instrument which makes the entire loan amount due immediately upon default
Due on Sale/Alienation Clause
a clause in the mortgage contract that triggers the right of the lender to demand payment in full of the loan upon the sale or conveyance of the property
habendum clause
a clause within a deed that clarifies the type and extent of interest conveyed by the granting clause
tie-in agreement
a conditional agreement stipulating that a product or service desired by a party will be offered only on the condition that the party also agree to purchase a second product or service; considered an antitrust violation
implied contract
a contract created by the actions of the parties rather than by express agreement
lease
a contract in which one party conveys property to another for a specific predetermined period of time, generally in return for periodic payment
void contract
a contract lacking legal or binding force; often used with phrase "null and void"
counteroffer
a contract proposal submitted in response to a previous offer, modifying the terms of the original offer; considered a rejection of the original offer
subordination agreement
a contract that gives a mortgage recorded at a later date priority over a previously recorded mortgage
executory contract
a contract that has not yet been fully performed (both sides have not yet completed their obligations)
sales contract
a contract used in the sale of real property that outlines the responsibilities of the parties and terms of the sale; also known as a purchase agreement, purchase contract, or purchase and sale agreement.
bilateral contract
a contract wherein both parties are obligated to perform in an exchange of promises
unilateral contract
a contract wherein one party makes a promise and is obligated to perform if a second party chooses to accept the offer and perform in exchange for that which was promised
voidable contract
a contract wherein the wronged party has the option to perform, enforce, or void the contract
deficiency judgment
a court's decision to attach a judgement (lien) against a debtor in the event that a property's sale price does not cover outstanding debts
FICO score
a credit scoring system created by the Fair Isaac Corporation
multiple listing service (MLS)
a database in which local member brokers share listings so that fellow member brokers can procure buyers for those properties and establish compensation for properties sold jointly
special warranty deed
a deed that only protects against defects that occurred while the grantor held title
master deed
a deed used to convey land to a condominium developer
deed In trust
a deed used to convey ownership interest to the trustee under a land trust
tax deed
a deed used to convey the title to a property sold in a tax foreclosure sale
bargain and sale deed
a deed without any covenants or warranties against encumbrances that only implies the grantor has possession of the property and holds the right to convey title
fee simple condition subsequent
a defeasible fee estate that comes with specific requirements (or conditions)
Department of Housing and Urban Development (HUD)
a department in the federal government which is in charge of enforcing federal fair housing laws
legal description
a description of a property that is distinct and precise enough to distinguish it from all other properties
datum
a designated base reference point to elevation used by surveyors to determine the elevations of land or property in an area
certificate of title
a document prepared by a title attorney detailing the chain of title and offering an opinion on the marketability of the seller's title
lis pendens
a document recording at the courthouse giving notice that a lawsuit is pending on a particular piece of property
material fact
a fact that, if known, could cause someone to take a different course of action or make a different decision regarding the property to be purchased
Americans with Disabilities Act
a federal civil rights law passed in 1990 which prohibits discrimination against and create standards for people with disabilities
Civil Rights Act of 1866
a federal law that prohibits discrimination in housing based on race
Fair Housing Act of 1968
a federal law that prohibits discrimination in housing based upon race, color, religion, or national origin and was amended to include sex, disability, and familial status
reverse mortgage
a financial arrangement where a homeowner pledges equity to a lender in exchange for periodic payments of the pledged equity; essentially selling off equity in their home in exchange for monthly payments
monument
a fixed landmark, whether natural or human-made, used as a reference point in a metes and bounds legal description
graduated-payment mortgage
a fixed-rate mortgage that has a lower initial interest rate in its first years, but includes gradual increases each year
judicial foreclosure
a foreclosure that is processed through the court
special agency
a form of agency relationship in which agents are limited in scope and are only authorized to perform acts permitted by their principal
timeshare
a form of co-ownership where each owner has use of the property at a different prescribed period of time, also known as interval ownership
freehold estate
a form of ownership with an indeterminate length
Government National Mortgage Association (Ginnie Mae)
a government-owned entity that supports the secondary mortgage market by guaranteeing mortgage-backed securities (MBS) insured by the U.S. government
Federal Home Loan Mortgage Corporation (Freddie Mac)
a government-sponsored enterprise created in 1970 to further support the secondary mortgage market, and specifically, to support smaller thrift banks
Federal National Mortgage Association (Fannie Mae)
a government-sponsored enterprise created to act as a secondary mortgage market facility that could purchase, hold, and sell fha-insured loans
reliction
a gradual increase in land area when water gradually withdraws
polychlorinated biphenyls (PCBs)
a group of human-made organic chemicals made of carbon, hydrogen, and chlorine atoms that were used in hundreds of industrial and commercial applications prior to 1979 and can cause a variety of adverse health effects
holographic will
a handwritten will created solely by the testator and not witnessed
superior lien
a higher priority lien
urea-formaldehyde foam insulation (UFFI)
a human-made insulation material that becomes dangerous because of the gases released from the material after it hardens
metes and bounds
a land survey process in which a licensed land surveyor starts at a readily identifiable point of beginning and defines the boundaries of a property in terms of distances and compass directions, finally returning to the point of beginning
Sherman Antitrust Act
a landmark law passed in 1890 that prohibits the formation of trusts, or monopolies, in the marketplace; this law governs business by regulating anti-competitive conduct to **promote fair competition on behalf of american consumers
Dodd-Frank Act
a law passed in response to the subprime mortgage crisis that created the consumer finance protection bureau.
statute of frauds
a law which requires certain types of contracts, including those conveying interest in real property, to be in writing to be enforceable
quiet title suit
a lawsuit brought with the purpose of removing any outstanding ownership claim, title defect, or encumbrance on a property
graduated lease
a lease in which the rental rate increases over time in specific increments
net lease
a lease in which the tenant pays a base rent rate plus all or part of the operating expenses
estate for years
a lease with a specific starting and ending date, also called a tenancy for years
periodic estate
a leasehold estate which automatically renews until canceled by either party, a.k.a. estate from period-to-period, periodic tenancy, estate from year to year
mortgage
a legal agreement between a creditor and borrower in which the creditor lends money with interest to the borrower for the purchase of property with the condition that the creditor takes ownership of the title if the borrower defaults in repayment of the loan
statute of limitations
a legal concept that establishes time limits for bringing certain kinds of legal actions
trust
a legal entity where control of some asset or property is transferred by a grantor (trustor) to a third party (trustee) to be held for the benefit of another (beneficiary)
power of attorney
a legal instrument used to confer the right of one individual to act on behalf of another
doctrine of laches
a legal principle used to bar dated claims; used in conjunction with an unreasonable delay or negligence in asserting or defending one's rights
specific performance
a legal remedy that requires the party in breach of contract to perform in accordance with the terms of the contract (as opposed to paying damages)
due diligence
a legal term used to describe the reasonable steps a person must take in order to satisfy a legal requirement
contract
a legally enforceable and binding agreement between parties wherein a promise to do or not do something is given in exchange for valuable consideration
loan commitment
a lender's approval of a specific loan for a specific property; occurs upon completion of final loan approval step
quiet enjoyment
a lessee's right to possess a property without interference from lessor, previous owner, or anyone else about the claim to the title
general lien
a lien for which the real estate and personal property may be sold to satisfy the debt
special assessment lien
a lien placed against property to collect taxes for a specific improvement benefiting the property
specific lien
a lien that applies to a certain property only
senior lien
a lien that comes first on the priority of liens, often a tax lien; also called a superior lien
junior lien
a lien that has another (senior) lien superseding it in priority; also called an inferior lien
pur autre vie
a life estate characterized by ownership lasting only for the duration of a designated party's lifetime
protection period
a limited time frame after an agency agreement ends where an agent can be owed compensation *if* certain situations occur
parallel
a line of latitude
discount point
a loan fee used to decrease a loan's interest rate
blanket mortgage
a loan for which more than one collateral property acts as security
home equity loan
a loan in which funds are borrowed using the homeowner's equity for collateral; the funds can be used for any purpose
seller financing
a loan provided by the seller to the purchaser of the property
plat
a map indicating the locations and dimensions of lots in a lot and block system
seller's market
a market condition in which the number of properties for sale does not meet the demand (number of people looking to buy)
demand
a measure of the general desire for an asset or commodity at a given time
acre
a measurement of land equal to 43,560 square feet
square mile
a measurement of land equal to 640 acres
principal meridian
a meridian used in reference to a baseline to identify ranges, tiers, and townships in the rectangular survey method of land description
loan flipping
a mortgage fraud scheme that involves an inflated appraisal and a straw buyer.
subprime loan
a mortgage with an interest rate higher than prime mortgages due to the higher risk associated with a less qualified borrower
adjustable-rate mortgage (ARM)
a mortgage with an interest rate that can be adjusted based on fluctuations in the cost of money
agency agreement
a mutual binding understanding between two parties that authorizes another party to act on their behalf
asbestos
a naturally occurring mineral fiber that is commonly used in insulation but if airborne or inhaled, can cause severe respiratory health issues
lead
a naturally occurring mineral that has been used in the manufacturing of paint and water pipes and is toxic to humans
promissory note
a negotiable financial instrument that is evidence of a debt and a promise to pay that debt; often referred to as "the note"
open listing
a nonexclusive listing agreement that gives multiple brokers (and owners themselves) the right to sell the property
negotiable instrument
a note that is transferable and assignable
balloon payment
a payment at the end of a loan period which includes the total outstanding balance of the loan.
arrears
a payment that occurs at the end of a period to compensate for charges accrued during that time.
purchaser
a person who acquires or attempts to acquire an interest in land
broker
a person who is licensed to represent one of the parties in a real estate transaction in exchange for a commission or other valuable consideration
time is of the essence
a phrase that communicates to parties of a contract that they must perform their contractual duties by a specific date and time in order to avoid a breach of contract
disability or handicap
a physical or mental impairment that substantially limits one or more major life activities, the record of such impairment, or being regarded as having such an impairment
landlocked
a piece of land which is is not accessible by any public means
marketing plan
a plan created to secure the other party needed to carry out a real estate transaction that includes sales and advertising.
management proposal
a plan that a property manager creates for managing the property that includes an analysis of the market along with the financial standing, operating budget, and other important factors of the property
title insurance
a policy that protects homeowners (and likewise, lenders) from certain financial losses due to title issues, such as defects, encumbrances, and liens
cash reserve
a portion of funds allocated to pay for variable expenses
estate
a possessory interest in real property
binder
a preliminary agreement for the sale of a property secured by a valuable deposit from the potential buyer, which binds the seller to a good faith agreement to sell the subject property, provided that a sale contract meeting the conditions determined is executed within the prescribed period; also known as a *Letter of Intent (LOI)*
probate
a process by which courts determine and grant the appropriate ownership interest of an estate to creditors, taxing entities, and heirs of an owner who dies intestate
escrow
a process in which funds and/or financial documents are held by a disinterested third party on behalf of the other two parties in the real estate transaction until specific conditions are satisfied
fee simple defeasible
a property interest characterized by perpetual ownership on the condition that the property is used for a certain purpose or under specific conditions. ownership reverts back to the original owner if these stipulations are violated.
net operating income (NOI)
a property's annual income that remains after paying its operating expenses
obsolescence
a property's loss of value due to economic or functional factors
offer
a proposition made by an offeror to an offeree to agree to the terms of a binding contract; becomes a contract upon acceptance
covenant of seisin
a protection in which the grantor states they hold the title conveyed in the deed, a.k.a. covenant of seizin
deed restriction
a provision in a deed that restricts the land use of a property
contingency
a provision within a contract that makes performance conditional upon the occurrence of a stated event
capitalization rate (cap rate)
a rate of return that calculates the percentage of expected annual income earned over a property's value; the present value for expected future income earned
salesperson
a real estate license holder who is associated with a licensed broker for the purpose of performing real estate brokerage acts on the broker's behalf
Torrens System
a recording system used in some states in which the state holds all records of land and title ownership, evidenced by a certificate of title
depreciation
a reduction in value for any reason
environmental assessment; a.k.a. environmental site assessment
a report prepared for a real estate holding that identifies potential or existing environmental contamination liabilities
comparative market analysis (CMA)
a report that compares the prices of recently sold or listed homes ("comparables") in order to estimate the market value of a similar property (the "subject property") located in the same area
property management report
a report that informs the property owner(s) of their property's expenses, income, and disbursements; prepared by the property manager
exclusion
a right included in the bundle of legal rights to real property which empowers the owner to allow or deny others' use of the property
contract for deed
a sales contract in which the buyer pays the seller for the property in multiple installments for a predetermined length of time, and the seller holds the title until the property has been fully paid for; also known as an *installment sales contract* or *land contract*
laws of descent and distribution
a set of laws that sets out the process of passing an estate to heirs when the owner dies intestate
building code
a set of regulations pertaining to building design, materials, safety, sanitation, and structure
township
a square area of land with sides of 6 miles each, consisting of 36 square-mile sections and identified in reference to a meridian and baseline in the rectangular survey system
misrepresentation
a statement, written or spoken, that is false or misleading; can be actionable if also found to be fraudulent
elective share
a statutory right in some states which allows the surviving spouse to claim an interest in a decedent's real and personal property regardless of the provisions established by a will
syndication
a style of investing in which investors combine their capital and employ an expert to use that capital to obtain, manage, and sell an investment property for profit.
planned unit development
a subdivision that includes residential dwellings along with nonresidential real estate, departing from normal zoning and subdivision regulations; recreational facilities may be co-owned by pud lot owners as tenants in common
planned unit development (PUD)
a subdivision that includes residential dwellings along with nonresidential real estate, departing from normal zoning and subdivision regulations; recreational facilities may be co-owned by pud lot owners as tenants in common
block and lot system
a system of legal land description that identifies a piece of platted property by referring to the section, lot, and block numbers in a subdivision; a.k.a. the recorded plat method
rectangular survey system
a system of legal land description that uses the global lines of longitude and latitude to create a surveyed grid of meridians, base lines, townships, and ranges to describe a piece of land; a.k.a. the government survey system
community property
a system of property co-ownership, most commonly applied to married couples, which describes what is joint property and what is individual property
ad valorem taxes
a tax calculated according to the assessed value of a piece of real estate
construction mortgage
a temporary mortgage used to finance a construction project
estate at sufferance
a tenant's occupancy of a property beyond their lease's terms and without the landlord's consent, also called tenancy at sufferance
estate at will
a tenant's occupancy of a property with the landlord's consent
sublease
a tenant's transfer of part of their right of possession in a leased property to another person for a period of the lease term
market
a theoretical construct that isolates the selling and purchasing of any one particular commodity from the economy as a whole
equilibrium
a theoretical market condition in which levels of supply and demand are balanced
marketable title
a title that is free from significant encumbrances or defects that might otherwise prevent a purchaser from enjoying or eventually selling the property
color of title
a title transfer that is defective in a way that is unknown to the new owner
instrument of conveyance
a tool that transfers a grantor's interest in real property
living trust
a trust established by a living trustor in order to convey legal title of property to a trustee for the benefit of a named beneficiary
real estate investment trust (REIT)
a trust that invests in, owns, or acquires real property and is owned by investors who share the trust's profits according to shares.
quitclaim deed
a type of deed that conveys any interest, title, or right to a parcel of land the grantor has at the time the deed is executed
life estate
a type of estate limited to the duration of a measuring life
fee simple determinable
a type of fee simple defeasible estate which causes the title to automatically revert to the original owner if the deed requirements regarding property use are violated
mold
a type of fungus found in damp building materials that can release toxins into the environment
mechanic's lien
a type of involuntary, specific lien that a mechanic or materialman can impose upon a property if the property owner fails to pay for materials or work done on the property
triple-net lease
a type of lease requiring the tenant to pay a prorated portion of all the operating expenses for the property.
special use permit
a variance that allows an out-of-zone use that benefits the community, and is included as a permitted special use in a zoning ordinance
market or customer allocation
a violation of antitrust laws in which competitors agree to divide markets amongst themselves
party wall
a wall shared by two separate properties; the owners on each side share the right of use, often as an easement
nuncupative will
a will created verbally by a party directly before their death, a.k.a. oral will
written brokerage engagement
a written agreement between two parties where one party agrees to provide a specified service to the other
management agreement
a written contract between a property owner and a property manager to establish all duties of the property manager, including operation and leasing activities
master plan
a written document created by the local planning board to guide the future growth and development of a community
will
a written or verbal legal statement by an owner (testator) prescribes the method of distribution of the owner's estate to heirs
per se violations
acts that are considered inherently illegal
Interest
additional money paid to a lender for the use of their money
implied agency
agency that is created by the actions, conduct, and words of either or both parties without ever being expressly requested
mutual consent
agreement by all parties to either create, amend, or terminate a contract
ground lease
also known as a land lease, it is the lease of bare, undeveloped land
abstract of title
an abbreviated history of a property, including information on any transfers, grants, wills, conveyances, liens, and encumbrances
straight-line cost recovery
an accounting method in which depreciation expenses are deducted from a property's income
ministerial acts
an action performed for another according to established procedures or guidelines and without the need for discretion or individual judgment
subagency
an agency agreement in which broker a (or their agent) is operating as the agent of broker b on behalf broker b's client
single agency
an agency arrangement in which one agent represents one party in a real estate transaction; the party may be either a seller or a buyer.
cooperating brokerage
an agency arrangement in which two brokerages collaborate to achieve a real estate transaction for a specific piece of property.
designated agency
an agency arrangement wherein both parties to the transaction are represented by their own agent, but both agents are employed by the same brokerage; by necessity each client enjoys an agency relationship exclusively with the named agent within the brokerage
dual agency
an agency relationship wherein both the buyer and the seller are represented by the same broker in an in-house real estate transaction; requires written consent from both parties
general agency
an agent who is authorized to manage all of a principal's affairs within certain specified areas; enjoys broader authority than that of a special agent but less than that of a universal agent
group boycott
an agreement between two or more competitors to not do business with another competitor for the purpose of inducing the other competitor to change its business practices or fail altogether; considered an antitrust violation
exclusive right to sell agreement
an agreement in which the seller guarantees the named broker receives a commission if the property is sold, regardless of who brings the buyer
exclusive agency listing
an agreement in which the seller has an exclusive relationship with a broker but retains the right to sell the property to named prospects
net listing
an agreement in which the seller names an amount they will accept for a property and if the sales price exceeds that amount, the broker receives the excess as commission; illegal
deed in lieu of foreclosure
an alternative to foreclosure in which the defaulting borrower voluntarily transfers the property title to the lender and the borrower cancels the foreclosure
reserve allowance
an amount of money allocated from a property's income to cover future repair and maintenance costs, also called a replacement reserve
tax district
an area in which a taxing entity is authorized by the government to levy taxes
wraparound mortgage
an arrangement in which the seller of a property extends a mortgage to a buyer; the seller maintains their original loan and continues to pay it while also receiving mortgage payments from the buyer
easement in gross
an easement that applies to the person or entity, not the specific land
substitution
an economic principle stating that the value of a good or service is affected by the cost of getting a similar (substitute) item elsewhere
fee simple absolute
an estate without restrictions that is freely given to heirs
appraised value
an estimation of property's value as of a specific date, performed by a certified appraiser
capital expenditure
an expense paid in order to improve a property
base line
an imaginary line of latitude used in the rectangular survey system of land description to identify townships in relation to proximity to a principal meridian
meridian
an imaginary line of longitude used to identify a certain area of the earth's surface along a north-south direction
variable expense
an inconsistent, irregular expense; dependent on factors such as the size, condition, type, and age of the property
plottage
an increase in overall value resulting from the successful assemblage of multiple plots
fiduciary
an individual upon whom is placed the highest levels of trust and confidence when acting on behalf of another
appraiser
an individual who is trained and licensed to perform appraisals, which estimate the value of real property
associate broker
an individual who meets the licensure requirements to be a real estate broker but provides real estate brokerage services as an independent contractor to a real estate broker
tester
an individual who, without any bona fide intent to rent or purchase a home, apartment, or other dwelling, poses as a prospective buyer or renter for the purpose of gathering information, which may indicate whether a housing provider is complying with fair housing laws
agent
an individual with authority to act on behalf of another; a state license is required to operate as an agent in real estate
customer
an individual with whom a license holder has no agency relationship nor fiduciary duties but to whom fairness and honesty are still required
conveyance
an instrument that transfers a grantor's interest in real property
leasehold estate
an interest in the occupation of a property, established through a lease, a.k.a. non-freehold or less-than-freehold
easement
an interest in, or a right to use, another individual's land or property, generally for a specific, limited purpose.
electromagnetic field (EMF)
an invisible field of energy produced by electricity
fixture
an object that was once personal property but *is now firmly attached to the land* in such a way that it is considered to be real property
operating expense
an occasional or continuous expense required for the operation of an income-producing property
carbon monoxide
an odorless, colorless gas that occurs as a by-product due to incomplete combustion when burning such fuels as wood, oil, and natural gas
radon
an odorless, radioactive gas produced by the decay of other radioactive materials in rocks under the surface of the earth; can cause lung cancer
revolving debt
an ongoing line of credit, as with a credit card, where the amount of debt can fluctuate as the borrower uses it to manage cash flow issues
parol contract
an orally created contract or the oral modification of a written contract; enforceability depends on circumstances surrounding creation
ratification
an unauthorized action taken on behalf of a principal which is accepted and legitimized after the fact by the principal
collusion
an unlawful agreement between competitors to monopolize a market, disadvantage other competitors, or otherwise undertake activities in violation of fair trade laws
cloud
any claim to or encumbrance on the title to a property which affects transferability
price fixing
any effort made by competitors to jointly establish a fixed rate, price, or commission; considered an antitrust violation
property
any item which may be owned, including the rights associated with ownership
legal life estate
any life estate created by a function of law as opposed to the actions or desires of a property owner
conventional loan
any loan that is neither insured by the government nor guaranteed by the government
buyer's market
any market that is experiencing an excess of sellers or supply, creating more favorable conditions for buyers.
improvement
any non-natural structure built on or affixed to land
branch office
any office that is geographically separate from the main or home office
third party
any person involved in a real estate transaction who is not your client; includes not only customers (the non-client principal in a transaction) but also all other non-client participants in a transaction such as title officers, lenders, appraisers, etc.
non-conforming use
any property use with is inconsistent with the land use controls for that area, regardless of legality
comparable (comp)
any property which has sold and is similar enough in features, location, and proximity in time to inform the value of a subject property
patent defect
any structural defects that are easily discoverable upon inspection
latent defect
any structural defects that cannot be detected by ordinary inspection
personal property (a.k.a. chattel)
any unattached, movable asset on the property not considered real estate (land plus improvements); also known as personal property or personalty
capital improvement
any upgrade or improvement to a property that falls outside the scope of normal repair and maintenance, usually with the intention of increasing value
liquid assets
assets that can be quickly converted to cash without losing their value
Real Estate Owned (REO) property
bank-owned property that has been through the foreclosure process
conversion
changing real property to personal property, and vice versa; also the illegal act of mixing a fiduciary's funds with an agent's personal funds
chlorofluorocarbons (CFCs)
chemical compounds containing chlorine, fluorine, and carbon atoms that were once used in refrigerator coolant, air conditioners, and dehumidifiers
non-prorated expense
closing costs that are not split between the parties
joint tenancy
co-ownership in which the parties have an equal and undivided interest in the property; includes the right of survivorship rather than inheritance
tenancy in common
co-ownership with individual, undivided interest in the property; includes rights of inheritance rather than survivorship
loan estimate
combines and replaces the good faith estimate and the initial truth-in-lending (til) statement; highlights the most important elements of the transaction
legal title
complete legal ownership of real property and the bundle of rights associated
evidence of title
constructive or actual notice of real property ownership
credit report
contains information regarding an individual's credit history (loan payments, etc.) as well as the present credit status of all open credit accounts
debt service
current debt obligations
liquidated damages
damages established by the contract to be paid as compensation in the event of default
servient tenement
describes the parcel of land that must allow an adjacent owner to cross; an easement appurtenant exists at the expense of this party
doctrine of prior appropriation
doctrine granting a state the power to control and regulate all water resources within its borders
easement by condemnation
easement in which private property is taken for public use via eminent domain; declaration that a structure must be closed or demolished because it is unfit for occupants
origination points
fees pay for the cost of issuing the loan
long-term debt
financial obligations often paid as installments over a predetermined time frame, which can extend for years
eviction
forced removal of a tenant due to a default under the terms of the lease
earnest money
funds paid to confirm or commit to a contract
option
gives one party the right to perform a non-obligatory action within a time period (ex: terminating a contract or the right of first refusal)
Annual Percentage Rate (APR)
how much the borrower will pay in interest over the course of a year
usury
illegally lending money at unfair interest rates
predatory lending
imposing unfair and abusive loan terms on borrowers.
supply
in real estate, the amount of properties that are vacant or are available for sale or rent
Federal Deposit Insurance Corporation (FDIC)
independent agency that provides deposit insurance to depositors in u.s. banks
community association manager
individual who provides administrative and operational services to a community association in exchange for consideration; requires specific licensure
purchase-money mortgage
instrument given by the purchaser to a seller who "takes back" a note for part or all of the purchase price
private mortgage insurance (PMI)
insurance that protects the lender if a borrower defaults on a conventional loan; usually required when the borrower has less than 20% equity
adverse possession
involuntary transfer of title from an owner who does not use or inspect their land for a number of years to another person who has some claim to the land and takes possession
conventional life estate
is a life estate in which the measuring life is that of the life tenant; it is an estate created by a deed that lasts for the duration of the tenant's life
accession
is the right to all that one's own property produces, including that which is added, either naturally or by human action, to the property already owned.
asset
item of value
null and void
lacking legal or binding force; invalid
void
lacking legal or binding force; used to describe a contract that is either illegal or impossible to complete
real property
land from the surface to the center of the earth and upward into space, all attachments, and the bundle of legal rights of ownership
real estate
land plus improvements
antitrust laws
laws designed at preventing unfair or anti-competitive practices such as price fixing, collusion, monopolies, etc.
percolating water rights
laws that govern the use and ownership of underground water
homestead laws
laws which protect a homeowner from loss of their principal residence from the claims of most creditors and require both spouses to execute any instruments of conveyance
gross lease
lease in which the tenant will be responsible for the payment of a fixed monthly charge, while the landlord is responsible for paying all operating expenses, a.k.a. full service lease
partition suit
legal action brought with the purpose of terminating the ownership interest of a co-owner to real property
certificate of occupancy (CO)
legal document from a local authority that authorizes a building to be occupied; issued after the building has passed all required inspections
zoning ordinance
local laws that control how land is used and what structures can be built in a designated district
proprietary lease
long-term and exclusive lease given to resident and stock owner of a cooperative
external obsolescence
loss of property value caused by negative forces outside the property which are beyond the control of the owner
functional obsolescence
loss of value because a property's function or appearance has gone out of style or has been replaced by a more appealing or effective version
fee simple estate
maximum ownership of real property; also called a fee or a fee simple absolute and is of indefinite duration, freely transferable, and freely inheritable
income capitalization approach
method of estimating the value of a property by applying a rate of return to the net income it produces
cost approach
method of estimating the value of a property by determining how much it would cost to replace the building or other improvements, minus the cost of depreciation, plus the value of the land itself
routine maintenance
monitoring, assessing, and attending to the needs of a facilities most necessary features
easement
non-possessory interest in a property that burdens the title
section
one of 36 equal square miles in a township
independent contractor
one who contracts to do work according to their own methods, and is responsible to their employer only as to the results of that work
transfer tax
one-time tax issued by the state that must be paid when a property is transferred from one owner to another
sole proprietorship
ownership of a business by a lone individual
bundle of rights
ownership of land with all of the legal rights of possession, control, quiet enjoyment, exclusion, transfer, and encumber
subsurface rights (a.k.a. mineral rights)
ownership rights to all that is found beneath the surface of the tract of land owned, extending downward to the center of the earth
preventative maintenance
periodic, routine inspections to catch minor issues before they worsen and to keep equipment and property in good working order
benchmark
permanent markers of known location and elevation above sea level as established by a government survey team (such as the USGS)
variance
permission granted by the government so that property may be used in a manner not allowed by the current zoning
trade fixture
personal property that is owned by and needed for a tenant's business
encroachment
physical property that crosses the boundary into a neighboring landowner's property
emblements
plants or crops intended for harvest and treated as personal property
common elements
portions of a shared ownership property not controlled by any one owner or tenant. examples include parking lots, lobbies, fitness centers, elevators, etc.
validity
possessing accuracy and, in context of contractual status, being legally binding and enforceable
enforceability
possessing the essential elements necessary to be legally binding and obligate performance; used to describe the compelling nature of a valid contract
covenants, conditions, and restrictions (CCRs)
private restrictions similar to deed restrictions that dictate what homeowner may do with their property
sales comparison approach
property appraisal method that estimates value by comparing the subject property to the sales prices of similar properties in the same market area
collateral
property liened by a lender in order to assure payment of the loan and protect the lender's investment
condominium
property where each owner has a separate interest in their own unit and undivided interest in the common areas
stigmatized property
property with suppressed market value unrelated to its physical condition or features; frequently as result of death of an occupant, murder, suicide, or a belief the property is haunted
title records
public records that catalogue all real estate information in the county, including owners' names, liens, easements, encumbrances, etc.
brownfield
real property, the expansion, redevelopment, or reuse of which may be complicated by the presence or potential presence of a hazardous substance, pollutant, or contaminant
fixity
refers to the fact that real estate exists in a fixed location and cannot be moved; describes this truth about land from an economic viewpoint
marital status
refers to whether a person is married, single, divorced, or widowed
land-use control
regulations that specify how the owners of individual parcels of real estate in a given area may use property
littoral rights
rights that govern lakefront or oceanfront property and usually allow the property owner to use the water bordering their property
riparian rights
rights that govern the use of flowing water, such as rivers and streams that pass through or border a property
appurtenances
rights that run with real property ownership; most often transferred with the property, but possible to sell separately
bridge loan
short-term loan used to transition from one loan to another; can connect borrower from construction loan to eventual mortgage loan (or current home to their new home)
property manager
someone who is hired by a property owner to market, maintain, and oversee the day-to-day operation of a property (usually a rental property)
consideration
something of value exchanged by the parties as evidence of agreement to the terms of a contract
ethics
standards of conduct agreed upon and recognized by a particular group or culture
rule of capture (a.k.a. law of capture)
states that a landowner who drills a well for gas or oil on their land is entitled to all that well produces, even if the gas or oil migrates from beneath a neighbor's property.
title theory state
states that convey the title to the lender or, more commonly, to a third-party trustee (operating on behalf of the lender) for the life of the loan
lien theory state
states that employ security instruments allowing the borrower to retain title while the lender places a lien on the property to secure the loan
debits
sum of money that is owed
credits
sum of money that is received
underground storage tanks (USTs)
tanks located in the ground underneath properties that store chemicals, fuels, toxic wastes, and other potentially harmful substances
situs
the **economic significance of a property's location
CERCLA
the Comprehensive Environmental Response, Compensation, and Liability act, aka the Superfund
severance
the act of converting real property into personal property
proration
the act of dividing or allocating expenses between buyers and sellers based on the actual period of usage of the item or service
recording
the act of documenting any transfer or claim of interest in the title to real property in public records per state law
general warranty deed, a.k.a. full covenant and warranty deed
the act of documenting any transfer or claim of interest in the title to real property in public records per state law, a.k.a. full covenant and warranty deed
replacement cost
the actual cost of replacement without regard to depreciation of the property
title
the actual ownership of a real property that includes the bundle of rights in which a party may own a legal or equitable interest; not an actual document
EPA (Environmental Protection Agency)
the agency charged with enforcing federal environmental protection laws and taking other actions to protect the environment
contribution
the amount of market value added to a property by an addition or improvement to the property; not necessarily the same as the cost of the improvement
loan-to-value ratio (LTV)
the amount of money being loaned compared to the value of the property
VA entitlement
the amount of money that is guaranteed in a va loan
air space
the area above ground that is owned along with a property. could include space above a piece of land, or the space owned inside a condominium unit.
tier
the area of land between two consecutive baselines
range
the area of land between two consecutive range lines
law of agency
the body of laws affecting agency that have come about as result of custom and/or case law, as opposed to statutory law introduced at the state or federal level
mortgagor
the borrower of the funds in a loan
lien
the claim made by a creditor against real or personal property pledged by a debtor as collateral
principal
the client of a broker in an agency relationship; the parties to a contract in a real estate transaction (as opposed to license holders, lenders, escrow agents, etc.); also, the amount borrowed in a loan from which interest is accrued
security
the collateral for a loan
assemblage
the combining of multiple contiguous pieces of real property into a single tract of land, often resulting in an increase in value
first substantive contact
the critical point at which agency disclosure is required by a license holder; generally occurs at the first face-to-face meeting with the customer and prior to the sharing of any confidential information or initiation of any action in regards to a specific property
procuring cause
the defining action or actions that brought a buyer to purchase a property
assessment
the determination of the value of a property for tax purposes
notice of title
the duty of a real estate owner to make their claim or interest on a subject property publicly accessible
scarcity
the economic characteristic that informs the economic principle of supply and demand
chain of title
the entire chronological record of a property's ownership
Equal Credit Opportunity Act (ECOA)
the equal credit opportunity act, a fair lending law that aims to bar discriminatory lending practices.
intermediation
the facilitation by a third party of a financial transaction between two parties
FHA
the federal housing administration; government agency charged with insuring mortgages
tax sale
the forced sale or auction of a property to cover outstanding debts
performance
the fulfillment of an obligation, duty, or contract
fiduciary duties
the full sum of obligations owed to the client in an agency relationship that ensure that the agent always acts in the best interest of the client
police power
the government right to regulate and restrict land use in order to protect the public; right includes the power to enforce zoning and building codes
erosion
the gradual loss of land over time
redlining
the illegal act of a lender refusing to issue mortgages in a specific area
blockbusting
the illegal act of causing owners to sell their homes by creating fear that members of a protected class are moving into the area
steering
the illegal act of guiding prospective home buyers toward or away from certain neighborhoods because of their membership in a protected class
commingling
the illegal act of mixing personal funds with a client's funds
appreciation
the increase in value of a property
remainder interest
the interest in an estate that will pass to another party (other than the grantor) at the death of the person upon whom the life estate is base
reversionary interest
the interest in an estate wherein, upon the death of the life estate owner, full ownership reverts back to the original fee simple owner (grantor)
escheat
the legal doctrine by which the decedent's property will pass to the state without their consent if that individual dies without a will, a surviving spouse, lineal descendants, or other known heirs
estoppel
the legal principle that prevents an individual from asserting something contrary to that which was implied by previous words or deeds by that individual
actual eviction
the legal process by which someone is expelled from a property and prevented from re-entry
foreclosure
the legal process whereby a lender takes control of a property held by a borrower in default and sells it to recover the lender's losses
mortgagee
the lender of the funds in a loan
economic life
the length of time for which an improvement on property is expected to remain functional and useful
physical deterioration
the loss of value caused by physical wear and tear over time
price mechanism
the manner in which a price is determined by a buyer and seller (a quantification of value) with respect to the forces of supply and demand
utility
the measure of the degree to which something performs a desired function; serves as a component of the thing's value
density
the measure of the proportion of a given area used for residential purposes
universal agency
the most broad type of agency; gives agents the power to act and make decisions on behalf of the principal in all business matters of concern; often granted via a power of attorney
offer and acceptance
the mutual understanding and agreement of the parties of a contract to that contract's terms; process that changes an offer into a contract when the offeree communicates acceptance to the offeror
testate
the name for conditions in which the owner of a property dies having left a valid will
intestate
the name for conditions in which the owner of a property dies without having left a valid will
Opinion of Title
the official opinion of an attorney regarding the condition of a property's title
lien priority
the order in which liens against a property will be settled
freehold tenant
the owner of a freehold estate
Regulation Z
the part of the truth in lending act (tila) that seeks to protect consumers by requiring proper disclosures and fair lending practices
lessor
the party granting the lease, also known as the landlord
lessee
the party to whom the lease is granted, also known as the tenant
testator, a.k.a. testatrix
the party who makes a will, a.k.a. testatrix
buydown
the paying of money upfront to reduce a loan's interest rate and monthly payments
tax rate
the percentage of the value that is taxed
grantor
the person who conveys real property in a real estate transaction
grantee
the person who receives a conveyance of real property in a transaction
hypothecation
the pledging of an asset as collateral to secure a loan without delivery of title, possession, or other ownership rights
equity
the portion of a property's total value owned outright by the holder to title
eminent domain
the power of government to seize private property for public use; government must pay property owner just compensation for exercising power
market value
the price for which a property will theoretically sell under typical conditions
value
the price for which a property will theoretically sell under typical conditions
informed consent
the principle that a client or customer must understand and agree to certain actions or agency relationships prior to implementation
survey
the process and physical product of finding and measuring the boundaries of a piece of real estate, including the location of improvements, encroachments, and easements
underwriting
the process of determining the level of risk a lender is willing to take in extending a loan to a borrower
disintermediation
the process of money flowing out of banks
refinancing
the process of obtaining a new mortgage in an effort to reduce monthly payments, lower interest rates, take cash out of a home for large purchases, or change mortgage companies
amortization
the process of paying off a debt/mortgage in regular installments based on a fixed payment schedule
accretion
the process that results in the gradual increase in land area through deposits of soil by natural forces
loan origination
the process through which a buyer obtains a mortgage loan from a lender
investment
the purchase of an asset with the intention of profiting from it in the future
gross rent multiplier (GRM)
the ratio of the price of investment property to its annual rental income before considering expenses like taxes and insurance, etc
RESPA
the real estate settlement procedures act, passed to eliminate kickbacks in lending and disclose the costs of closing a loan.
beneficiary
the recipient of advantage or gain from an act or instrument such as a trust, will, or insurance policy
commission
the regulatory body responsible for regulating the brokerage industry and licensing real estate practitioners; formally known as the Georgia Real Estate Commission (GREC)
liquidity
the relative difficulty of converting an asset to cash without loss of value
corrective maintenance
the repair or restoration of equipment after it has broken
water rights
the right of a property owner on a waterfront to access and use that water
curtesy/dower
the right of a spouse to inherit property held in their spouse's name after that spouse dies; dower is the word used for women, curtesy for men.
air rights
the right to use the airspace above the surface of land
surface rights
the rights to access the surface area of a parcel of real property
common law
the side of law which arises from judgements and decisions made in courts rather than explicit legislation
point of beginning (POB)
the starting point for a metes and bounds legal description
liability
the state of being responsible for something
right of survivorship
the statutory principle of survivorship tenancy that provides that when one co-owner dies, their ownership interest reverts to the surviving co-owners
avulsion
the sudden loss of land by flood or when a stream or river changes course.
SARA
the superfund amendments and reauthorization act
land
the surface of the earth, including all permanently attached natural features, extending downwards to the center of the earth and upwards to infinity
constructive eviction
the termination of a lease in circumstances in which the landlord defaults and acts, or fails to act, in such a way that the premises become unusable
revocation
the termination of an agreement by the person who granted it, such as when as when a principal terminates an agency relationship or withdraws an offer
effective gross income
the total annual income that a property produces; does not account for any expenses
potential gross income (PGI)
the total rental income a property would receive if the property was 100% leased
tax base
the total taxable assets available in a specific area
Freon
the trademarked name of a harmful chlorofluorocarbon found in older air conditioning units
alienation
the transfer of ownership (title) to real property. alienation may be voluntary or involuntary.
devise
the transfer of real or personal property through a will
assignment
the transference of rights and obligations in a contract from one party to another
discrimination
the unjust or prejudicial treatment of different categories of people, especially on the grounds of race, color, sex, national origin, religion, disability, or other classifications
leverage
the use of a financial instrument or borrowed money to increase a return on investment
highest and best use
the use of a property which is legal, physically possible, financially viable, and produces the greatest yield
assessed value
the value placed on a property by a governmental unit for use in calculating property taxes
taxable value
the value placed on a property by a governmental unit for use in calculating property taxes, minus any exemptions
property management
the vocation of renting or leasing someone else's real property on their behalf in exchange for compensation and in accordance with a property management employee contract
subject to
this provision in a sales contract refers to the purchase of a property that is *subject to* the existing mortgage; in such a sale, the title changes hands, so the buyer owns the house legally, but the seller's old mortgage stays in place
percentage lease
type of (usually commercial) lease in which the tenant pays a base rent amount and a percentage of their business profits to the landlord
familial status
under the fair housing act, a protected class composed of families who have children under 18, pregnant women, and people in the process of obtaining legal custody of a child
severalty
undivided ownership of an estate, with an interest that is exclusive from other owners; often referred to as ownership in severalty or tenancy in severalty
Debt Service Coverage Ratio
used to evaluate income-producing properties; is calculated by dividing the net operating income (cash flow after all expenses and debts are paid) by total debt service (current debt obligations)
debt-to-income ratio
used to measure a borrower's creditworthiness; calculated by dividing all debt (monthly payment + other debt) by monthly income
payment-to-income ratio
used to measure a borrower's creditworthiness; calculated by dividing monthly payment by monthly income
groundwater
water held underground in the soil or in pores and crevices in rock
negative amortization
when a borrower's payment is not large enough to cover the interest due on a loan, the unpaid interest is added to the principal balance
constructive notice
when a property's ownership is recorded publicly, so everyone can know the contents of recorded documents
actual notice
when an individual actually knows of a fact
fraud
wrongful or criminal deception intended to result in financial or personal gain
