California Real Estate Principles Vocabulary

ad valorem

A Latin phrase meaning "according to value" that is used to describe a tax charge in relation to the value of the property taxed.

action to quiet title

A court proceeding brought to establish title to real property

actual fraud

A deliberate misrepresentation made in reckless disregard of its truth of falsity; the suppression of truth; a promise made without the intention to perform it; or any other act intended to deceive

affirmative fraud

A deliberate statement of a material fact that the speaker knows to be false and on which the speaker intends another person to rely on his or her detriment

bankruptcy

A federal possession of the assets of an insolvent debtor and sells the nonexempt assets of pay off creditors on a pora rata basis; title to the debtor's assets is held by a trustee in bamkruptcy

acknowledgment

A formal declaration made before an authorized person by a person who the execution of the instrument is the person's own act.

broker-office

A licensed broker who is an officer of a brokerage that is set up as a corporation and who is designated as the broker responsible for supervision of licensed employees of the brokerage

acre

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

adverse possession

A method of acquiring title to real property by occupying the property against the interest of the true owner and fulfilling other statutory requirements.

acceleration clause

A provision in a real estate financing instrument that allows the lender to declare the remaining indebtedness due and payable on the happening of certain conditions, such as the sale of the property or the borrower's default in payment

associate licensee

A real estate salesperson or broker who works as the employee of a real estate broker

brownfield

A site identified by the Environmental Protection Agency as containing hazardous substances, pollutants, or contaminants

abstract of title

A summary or digest of all recorded transfers, conveyances, legal proceedings, and any other facts relied on as evidence of title to show continuity of ownership and indicate any possible impairments to title.

arm's-length transaction

A transaction in which neither party acts under duress and both have full knowledge of the property's assets and defects, the property involved has been on the market a reasonable length of time, there are no unusual circumstances, and the price represents the normal consideration for the property sold, without unusual financing terms

assessed value

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

accretion

Accession by natural forces, such as alluvion

blind ad

Ad in which the name of the person placing the ad is not mentioned

bilateral contract

Agreement in which both parties make a promise to do something or to refrain from doing something and both are obligated to fulfill the promise

alluvion

Alluvium; the increase of soil along the bank of water by natural forces

benefit assessment

Amount owed by owners of property that is enhanced by the construction or renovation of improvements

attorney-in-fact

An agent who has been granted a power of attorney by a principal

binding contract

An agreement that can be enforced in a court of law if one of the parties to the agreement fails to fulfill any of its terms

appraisal

An estimate of a property's monetary value on the open market; an estimate of a property's type and condition, its utility for a given purpose, or its highest and best use.

broker's price opinion (BPO)

An estimate of property value that is not an appraisal but is developed by a real estate broker based on comparable sales in the area

balloon payment

An installment payment on a promissory-usually the final payment-that is significantly larger than the other installment payments

bond

An obligation; a real estate bond is a written obligation issued on security of a mortgage or trust deed

assumption

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

bulk transfer of goods

Any transfer of a substantial part of the materials, supplies, merchandise, equipment, or other inventory of a business that is not in the ordinary course of the business's activities

appurtenance

Anything affixed (attached) to or used with land for its benefit that is transferred with the land.

building permit

Approval granted by the appropriate municipal, county, or other governing authority of an improvement to real estate following review of the building plan submitted by the permit applicant and revision of the plan as required

capital assets

Assets of a permanent nature used in the production of income, such as land, buildings, machinery, and equipment; usually distinguishable under income tax law from "inventory," assets held for sale to customers in the ordinary course of the taxpayer's trade or business

apparent authority

Authority to act as an agent that someone appears to have but does not actually have, which will place no obligation on the party the agent claims to represent if that party is in no way responsible for the reprensentation

anchor blots

Bolts that fasten the sill plate of a wood-frame house to the house's foundation, required in California since 1931 for all new construction as an earthquake safety measure.

California Bureau of Real Estate (CalBRE)

California agency that administers the Real Estate Law, including the licensing of real estate brokers and salespeople

California Department of Public Health

California agency that regulates construction activities affecting the water supply and other public health issues; formerly part of the California Department of Health Services

California Department of Insurance

California agency that regulates insurers

California Department of Business Oversight (DBO)

California agency that regulates licensees and industries formerly under the control of the Department of Corporations and Department of Financial Institutions

Business and Professions Code

California code that contains the Real Estate Law, which includes real estate licensing, transaction requirements, and Subdivided Lands Law

California Franchise Tax Board

California department that collects state personal income taxes and bank corporation taxes

California Bureau of Real Estate Appraisers (BREA)

California office that licenses and regulates real estate appraisers

boot

Cash received in an exchange of property in addition to the property

basis

Cost basis is the dollar amount assigned to property at the time of acquisition under provisions of the Internal Revenue Code for the purpose of determining gain, loss, and depreciation in calculating the income tac to be paid on the sale or exchange of the property; adjusted cost basis is derived after the application of certain additions, such as for improvements, and deductions, such as for depreciation

backfill

Dirt placed against the foundation of a structure after the concrete used to create the foundation wall has cured and the wood forms in which the concrete was poured have been removed

beneficiary statement

Document provided by the lender if the buyer of a property encumbered by an existing loan will take title to the property subject to that loan

abstract of judgment

Document stipulating the outcome of a legal action, which can be filed in any county where the judgement debtor has property.

California Foreclosure Reduction Act

Effective January 1, 2013, revised procedure for nonjudicial foreclosures; also known as the California Homeowner Bill of Rights

anticipation, principle of

Expectation that property will offer future benefits, which tends to increase present value

adjustable-rate mortgage (ARM)

Finance instrument whose interest rate will vary according to the change in an identified index or rate such as the 11th District Cost of Funds

acquisition cost

For FHA-insured loans, the price to procure property, including purchase price and all nonrecurring closing costs, including discount points, FHA application fee, service charge and credit report, FHA appraisal, escrow, document preparation, title insurance, termite inspection, reconveyance, and recording fees

basis point

For financing and investing purposes, 1/100 of 1%

base value

For property tax assessment purposes, the full cash value of a parcel of real estate as of February 28, 1975, or the date of a subsequent sale or other reassessment event

abandonment

Giving up possession or ownership of property by non-use, usually accompanied by some affirmative act, such as removing one's belongings from an apartment.

CalVet loan

Home or farm loan procured through the California Veterans Farm and Home Purchase Program

Alien Registration Receipt Card

Identification card, referred to as the green card, that provides proof of the legal presence in the United States of someone who is a citizen of another country

after-acquired title

If title is acquired by a grantor only after a conveyance to a grantee, the deed to the grantee becomes effective at the time the grantor actually receives title.

base lines

Imaginary lines that run east-west and intersect meridians that run north-south to form the starting point of land measurement using the rectangular survey system of land description

adjusted gross income

Income from all sources less deductions for taxes, depreciation, and other allowable deductions

acceptance

Indication by the person to whom an offer is made (the offeree) of agreement to the terms of the offer. If the offer requires a writing, the acceptance must also be in writing

action for declaratory relief

Legal proceeding brought to determine the respective rights of the parties before a controversy arises

California finance lender and California Finance Lenders Law

Licensee under the California Finance Lenders Law who is in the business of making consumer loans or commercial loans in which personal property may be used as collateral

area

Measure of the floor or ground space within the perimeter of a building or land parcel

asbestos

Naturally occurring fibrous silicate mineral linked with various forms of cancer if inhaled and which, until the 1970s, was used for its insulating properties its spray-on and batting applications in homes and commercial structures; remediation can be by containment or removal and requires following strict procedures.

beneficiary

One on whose behalf a trustee holds property conveyed by a trustor; the lender under a deed of trust

agent

One who acts for and with authority from another person, called the principal; a special agent is appointed to carry out a particular act or transaction, and any other agent is a general agent (general agent)

California Residential Mortgage Lending Act

Part of the Financial Code that regulates mortgage bankers

assignor

Party making an assignment of rights to someone else

assignee

Party to whom an assignment of rights is made

Administrator

Personal representative of the estate of a decedent, appointed by the probate court. See also executor.

adjustable-rate note

Promissory note that serves as evidence of a debt that carries an interest rate that will vary according to the change in an identified index or rate, such as the 11th District Cost of Funds.

adjusted cost basis

Purchase price of property plus cost of specified improvements, less any depreciation deductions taken on the property

alienation clause

See due-on-sale clause

appropriation, right of

See right of appropriation

all-inclusive trust deed

See wraparound mortgage or trust deed

attorney-at-law

Someone licensed by the state to practice law

building code

Standards for building, planning, and construction established by state law and local ordiance

California Solar Initiative

State law effective January 1, 2008, that requires municipal utilities to offer a solar incentive program to customers

capital gain

The amount by which the net resale proceeds of a capital item exceed the adjusted cost basis of the item

business opportunity

The assets of an existing business enterprise, including its goodwill

actual authority

The authority an agent has because it is specified in the agency agreement, or that the agent believes he or she has because of an unintentional or a careless act of principal

balance, principle of

The combination of land uses that results in the highest property values overall

book value

The current value for accounting purposes of an asset expressed as original cost plus capital additions minus accumulated deprication

breach of contract

The failure of a duty imposed by law or by contract, either by omission or commission

bundle of rights

The legal rights of ownership of real property, including the rights of possession, use, disposition, and exclusion of others from the property

actual age

The number of years since completion of a building; also called historical or chronological age

assessor

The official responsible for determining assessed values

amortized loan

The payment of a financial obligation in installments; recovery over a period of time of cost or value. A loan has negative amortization when the loan payments do no cover all of the interest due, which then is added to the remaining loan balance

blockbusting

The practice on the part of unscrupulous speculators or real estate agents of inducing panic selling of homes at prices below market value, especially by exploiting the prejudices of property owners in neighborhoods in which the racial makeup is changing or appears to be on the verge of changing

attachment

The process by which real or personal property of a party to a lawsuit is seized and retained in the custody of the court

accession

The process of manufactured or natural improvement or addition to property

air rights

The real property right to the reasonable use of the airspace above the surface of the land

agency

The relationship between a principle and the agent of the principle that arises out of a contact, whether express or impiled, written or oral, by which 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 Consumer Financial Protection Bureau for implementing the federal Truth-in-Lending Act

avulsion

The tearing or washing away of land along the bank of a body of water by natural forces

alienation

The transferring of property to another, an involuntary transfer of title

bequest

Transfer of property, particularly person property, called a legacy, by will. See also devise

assignment

Transfer of rights from on party to another, usually for compensation

bracing

Use of one or more construction methods, such as plywood wall sheathing, to enable a structure to withstand the pressures caused by high winds and earth movement.

bill of sale

Written instrument that conveys title to person property

agency confirmation form

Written statement required for a residential transaction involving property of one to four residential units, in the wording required by the California Civil Code, and signed by the property seller as well as the listing agent and selling agent (if different from the listing agent), that indicates the seller's understanding of the relationship of the seller to the listing and selling in the transaction.

agency disclosure form

Written statement required for a residential transaction involving property of one to four residential units, using the wording required by the California Civil Code, and signed by both buyer and seller in a transaction, that explains the various relationships of those involved in a residential property