Real Estate - The CE Shop

" girder

"Another term for "beam" which spans the distance from one side of the foundation to the other on which the joists rest for support. Ex. Although girder and beam are often used interchangeably, girder often means that it is made of steel; beam is used more often with wood.

" improvement

"Anything added to the land which benefits the land, such as a building, driveway, etc. Ex. Vacant land increases in value when improvements are added.

" personal property

"Anything that's not real property Ex. Mia was surprised to learn that the sellers took the freestanding fountain with them. She hadn't realized that it was personal property.

" special flood hazard areas (SFHAs)

"Areas designated as prone to flooding; used to determine cost of flood insurance Ex. Brady lived in a special flood hazard area and was required to carry flood insurance by his lender.

" wetlands

"Areas of standing water, wet all or most of the year, that support aquatic plants, including bogs, marshes, swamps, and sloughs, with very high diversity of species Ex. Many states have laws and policies in place to protect ecosystems such as wetlands.

" group home

"As defined in fair housing law, a dwelling occupied by two or more unrelated people with disabilities Ex. The disabilities may be physical, developmental, or behavioral, and support services may or may not be provided to the individuals.

" plasterboard (aka wallboard)

"Building material used to make walls that consists of large pieces of plaster covered with paper. Ex. One of the messier jobs in construction is the installation of plasterboard, especially when a lot of cutting is involved—the plaster dust goes everywhere.

" wallboard (aka plasterboard)

"Building material used to make walls that consists of large pieces of plaster covered with paper. Ex. One of the messier jobs in construction is the installation of wallboard, especially when a lot of cutting is involved—the plaster dust goes everywhere.

" wholesaling

"Buying real property at deep discounts and immediately selling for a small profit Ex. Now that Brent had been investing in real estate for a few years, he discovered his real knack was in wholesaling.

" intestate succession

"Determines how the deceased's property is to be distributed when the person died without a will Ex. Because David died without a will, his home passed to his heir - in this case, his daughter Sarah.

" improvement location certificate (ILC)

"Developed from a spot survey; often requested by lenders and title companies when a property changes hands; offers reasonable assurance regarding property boundaries and possible encroachments Ex. Lenny Lending ordered an ILC to make sure the property they were issuing a loan for was where they thought it was.

" operation of law

"Dictates the manner in which parties automatically acquire rights or liabilities due to established rules of law, and not through an agreement or act of their own Ex. Even though the recently deceased David bequeathed his home to his brother in his will, the operation of law mandated that the home would pass to David's wife, since the two of them owned the home in tenancy by the entirety.

" prepaid items

"Items a seller paid in advance and that the buyer must reimburse at closing, e.g., utilities Ex. Bob had already purchased a winter's worth of heating oil when he decided to sell his house. The buyer, Jill, will reimburse him for the portion of the oil she'll use after she buys his house.

" monetary damages

"A cash award granted to a party as an outcome of a legal action Ex. The court awarded Steve monetary damages when Becky intentionally ran over his golf clubs.

" step-up/graduated rent

"A gradual increase in rent, agreed upon at lease signing Ex. When Pat rented office space in the Peach Tree Office Park, he signed a 5-year lease, with the increases in rent each year laid out in the lease document.

" joists

"A horizontal length of timber or steel supporting part of the structure of a building, usually arranged in parallel between foundation, walls or beams to support a ceiling or floor. Ex. Before her contractor gave her a bid for her second floor bathroom, he needed to see which way the flooring joists were running. "Good news," he said, "Your joists run the right way, so I won't have to cut through all of them to get the pipes in here."

" sinkhole

"A depression in the ground caused by gradual erosion or a sudden cave-in Ex. Sinkholes may be man-made or nature-made, and can cause damage to nearby improvements

" fuse

"A device that melts and opens the circuit, interrupting electrical power when overheating occurs. Ex. Fuses are still in use in many older homes; the problem is, they give their "life" for the cause and must be replaced when they do their job correctly (because they melt).

" short sale

"A distressed homeowner sells a property for less than is owed; requires lender approval Ex. Tallah did a short sale on her home; she owed $240,000 and it only brought $225,000. Her lender may pursue the difference in a deficiency judgment.

" reasonable skill and care

"A duty owed to a client by an agent, reasonable care requires the agent to act at the utmost professional level in serving the client. Ex. Jason showed reasonable skill and care when he recommended to his client that he have an HVAC specialist inspect the furnace; it looked old and in need of repair.

" violation

"A failure to abide by a rule or law Ex. A violation of real estate law may result in reprimand, fines, and license revocation or suspension.

" flood insurance

"Required when properties are in designated flood areas; covers the costs of damage resulting from flooding Ex. Because Nolan's property was in a designated flood area, he was required to purchase flood insurance. He was glad he did when his property later flooded, and his insurance compensated him for the damage.

" Truth in Lending Act (TILA)

"Requires disclosure of all financing terms when specific trigger terms are used in advertising Ex. Due to the Truth in Lending Act, it's illegal for a lender to state """"0% financing!"""" in a financing ad if the remaining terms aren't disclosed.

" reversionary interest

"Right of repossession of the property by the owner after the end of the life estate Ex. Carmen may give her investment home to her great aunt with the provision that at her great aunt's death the ownership returns to Carmen. During her great aunt's life, Carmen has a reversionary interest.

" subsurface rights

"Rights related to the use of minerals and other products below the surface of the property Ex. In order for someone to extract oil from your property, you would have to lease or sell your subsurface rights.

" property manager

"Someone who manages real estate for another for compensation; duties include generating income, budgeting, market analysis, advertising, and negotiating leases Ex. Not all property managers deal with tenants on a daily basis. Some simply manage the profitability and safeguard the value of the building.

" principal

"The amount being borrowed, or the amount left to be repaid. Ex. Anita's principal payment was $200 per month. Her interest payment was $800 per month. As she paid on her mortgage loan over time, the amount that applied toward principal increased.

" real property tax rate

"The amount charged against assessed value of a property Ex. Multiply assessed value by tax rate to compute annual property taxes.

" commission

"The amount of brokerage fee received for a real estate transaction Ex. Janice's commission was 5%. But she had to give 2.5% of that to the buyer's agent, which left her with 2.5%. Then she had to give 50% of that to her broker, which left her with 1.25%.

" annexation

"The conversion of personal property into real property Ex. When Mrs. Goldman planted the rosebushes in her yard, the resultant annexation meant that the rosebushes were now made part of the property.

" origination fee

"The cost of making the loan; on a conventional loan, this refers to the amount of points the borrower pays Ex. Janice paid a $3,000 loan origination fee, which was 3 points. Her neighbor got a loan from the same lender and negotiated to have the loan origination fee waived. Janice wished she'd know this was even possible.

" maturity

"The date on which the principal balance of a loan or bond, for example, becomes due and payable. Ex. Alvin purchased a five-year certificate of deposit. Five years later, upon the CD's maturity, Alvin could either reinvest in a new certificate of deposit, or obtain his money and interest earned.

" Uniform Standards of Professional Appraisal Practice (USPAP)

"The federal standards that appraisers must abide by when appraising federally related transactions Ex. Because Momo was appraising a property for which a federal loan was involved she had to follow USPAP standards.

" condominium

"The fee simple ownership of a unit in a multi-unit building Ex. In a condominium ownership, the ownership is of the airspace the unit occupies plus an undivided interest in common elements.

" unity of person

"The fifth unity required to take property as tenants by the entirety, based on the legal principle that married couples constitute a single legal entity Ex. This form of ownership gives each spouse an equal, undivided interest in the property.

" PITI (principal, interest, taxes, and insurance)

"The four expenses in a budget mortgage payment Ex. To determine affordability, borrowers should figure out if the PITI payment each month is within their means.

" reliction

"The gradual creation of land when adjacent water levels recede Ex. Thanks to the receding of the lake, Sammy was now the proud owner of another three feet of mud.

" water table

"The ground saturation point Ex. Sheri found that her water table was actually 200 feet below the surface, making drilling for a well quite expensive.

" legal purpose

"The idea that a contract must not propose to do anything illegal; such a contract would be unenforceable Ex. Because Mario was intending to buy Marisa's home in order to serve as a meth lab, the contract was unenforceable.

" platform construction

"The most common form of framing used in residential construction, platform framing consists of a framing structure resting on as subfloor platform. Ex. Also called a western frame, platform framing is a building frame having studs only one story high, regardless of the number of stories built. Each story has a box sill, or platform.

" offeror/offeree

"The offeror is the person making the offer; the offeree is the person to whom the offer is being made Ex. Sam, the offeror, offered Delilah, the offeree, $1 million for her oceanfront estate.

" priority

"The order in which liens are paid Ex. Because Debtor 36 had filed a lien before Debtors 1-35, he had lien priority, and was paid first from the proceeds of the foreclosure sale.

" sphere of influence

"The people who know, like and trust you Ex. Beth knew that, to succeed in real estate, she should concentrate most of her marketing efforts on her sphere of influence.

" interest (financing)

"The percentage fee charged on the amount loaned. Ex. Annual interest on a loan can be determined by multiplying the rate of interest by the principal balance.

" interest (property)

"The right or claim a person has to property Ex. As a beneficiary to her grandmother's will, Susie has an interest in both the farm house and and the mountain chalet.

" surface rights

"The right to use, or an ownership interest in, the surface of a property, including both land and water Ex. Ownership of surface rights do not include air rights or mineral rights; however, most homeownership rights include all three.

" water rights

"The rights to use the water either on or adjacent to ones land. Ex. Water rights are an important consideration if the landowner intends to farm.

" Residential Lead-Based Paint Hazard Reduction Act

"Law that requires sellers, landlords, and their agents to disclose the presence of any known lead hazards in the home Ex. Houses built before 1978 most likely have lead in their paint, so certain safety precautions need to be taken by anyone doing work on the home, and the possibility of lead paint must be disclosed.

" staging

"Preparing a property for show or sale by removing clutter, moving furniture, adding accessories, etc. Ex. Monica always recommended that her clients hire a professional stager. She had seen what staging a property could do for quick sales, not to mention sales price, and recommended the service highly.

" loft lease

"Rental of floor space for wide open loft type spaces; structural changes are generally not permitted Ex. For his floral design business, Yves signed a loft lease on one of the new renovated warehouses downtown.

" curtesy

"A husband's interest in the real estate owned by his deceased wife; a form of legal life estate Ex. When his wife died, Abe gained a curtesy estate in their home.

" power of attorney

" The right to act for someone else in a legal transaction. Ex. Mike was going to be out of town, so he gave his brother power of attorney to sign real estate documents for him.

" pur autre vie

"""For the life of another""; a life estate that lasts for the life of someone other than the life tenant Ex. Emma granted possession of her home to her nephew for the term of his mother's life, after which it would pass to her favorite charity, Cats and Canaries.

" acre

"43,560 square feet Ex. The Jones farmhouse was on 10 acres. Their parcel had 435,600 square feet.

" Equal Credit Opportunity Act (ECOA)

"A 1974 federal law that prohibits discrimination based on protected class status when providing credit Ex. Due to ECOA, minorities of all types now equal access to credit at fair terms.

" Home Mortgage Disclosure Act (HMDA)

"A 1975 law that requires financial institutions to make mortgage data available to the public Ex. Congress believed that blighted areas were caused in part because financial institutions failed to provide adequate home financing to qualified applicants at reasonable terms and conditions. HMDA requires financial institutions to provide the public with information that demonstrates its actions in serving the housing credit needs of their communities.

" quadrangle

"A 24-mile by 24-mile parcel (16 townships) as defined by the government's rectangular survey system. Ex. James pointed to the quadrangle on a survey map. """"This section of townships will most benefit the new railroad.""""

" reconciliation (closing)

"A balancing of both sides of the Closing Disclosure Ex. A property prepared closing statement results in a reconciliation with equal balances on both side of the debit/credit columns.

" survey

"A blueprint or map showing measurements, boundaries and area of a property, sometimes required by lenders to ensure that no encroachments exist Ex. EZ Mortgage asked Vince to pay for a survey of Karen's property to verify boundary lines and ensure there were no encroachments.

" sole proprietorship

"A business of one person Ex. Pat liked to work alone, so he could be sure to control all the decisions and interests of his business, so he created a sole proprietorship.

" corporation

"A business organization owned by stockholders that exists as a legal entity Ex. IBM Corporation has more than 400,000 employees.

" real estate investment trust (REIT)

"A business owned by shareholders who invest in properties or mortgages Ex. Craig's favorite REIT invested in mortgages.

" subject to clause

"A buyer can purchase a property ""subject to"" the seller's loan; the buyer is supposed to continue payment of that loan, but the seller is still ultimately liable for it Ex. Tammy bought Sam's house subject to his loan. If Tammy stops making payments, though, Sam will still be ultimately responsible for them.

" sales contingency

"A buyer's ability to continue with a transaction is dependent on the buyer's current home selling first Ex. Sellers are often reluctant to accept contingent offers, and when they do, they usually reserve the right to continue to market and show the property to other buyers.

" walk-through

"A buyer's final inspection of a property to determine if all of the conditions to the purchase agreement have been satisfied and that the home is in the same condition it was in when it went under contract Ex. Evelyn was very eager to do the final walk-through of her new townhome before she bought it; a fireplace was on her list of """"must-haves"""" and it wasn't working at the home inspection. She was eager to see if the required repair had been made.

" inverse condemnation

"A claim for compensation by a landowner that the landowner's property was harmed by the public taking of an adjacent property. Ex. When Dee's neighbor's property was taken for a highway, Dee's property value plummeted, so she made a claim for inverse condemnation, seeking restitution for the loss in her property value.

" escalation clause

"A clause in a purchase offer that allows buyers to state they'd pay more for the property if a higher competing offer comes in Ex. Jerome's escalation clause stated, ""The buyer is willing to increase his offer to $1,000 over the highest offer received, with the purchase price limited to $245,000.""

" right of inheritance

"A co- ownership position in which a co-owner's interest may be willed to another person Ex. If there's a right of survivorship, the co-owner doesn't have the right to will interest in the property to an heir.

" right of survivorship

"A co-ownership position in which the death of one of the owners simply increases the interest of the others; ownership cannot be devised (passed down to heirs) Ex. The three amigos owned a triplex in a joint ownership, each owning one-third of the property. Amigo #1 died, so Amigos 2 and 3 now each own half of the property because of their right of survivorship.

" footing

"A concrete base below the frost line that supports the foundation. Ex. The footing supports the foundation wall, and therefore the entire structure of the building.

" lally columns

"A concrete-filled column for structural support Ex. Lally columns are often used in basements or crawl spaces to support sagging floor joists. In some applications they are tantamount to a temporary "jack" but are often used for permanent support.

" sick building syndrome

"A condition where people start getting headaches and respiratory problems due to being in an environment with poor ventilation or other air quality issues Ex. Some toxins, such as off-gassing of chemicals used in carpeting and other manufacturing materials, can be an issue in new construction or when remodeling. But toxins used in household cleaners can also be problematic.

" condominium hotel, condotel, condo hotel

"A condominium project that includes a rental desk; allows short-term occupancy, and is operated similar to a commercial hotel, even though the units are individually owned. Often found in resort areas, such as Hawaii. Ex. Marissa investigated a condo at the Maui Banyan condotel. She liked the idea of having a registration desk, but found that financing was more difficult than with a traditional condo.

" timeshare

"A condominium-type property that is occupied for short periods by multiple unrelated individuals. These individuals may own real interest in the property or simply the right to use the property for specific times and duration. Ex. Helen bought a time share on the Oregon coast that allowed her to have her own place when she visited her daughters for two weeks a year.

" Fair Credit Reporting Act

"A consumer protection law regulating disclosure of consumer credit reports by credit reporting agencies and establishes procedures whereby consumers can correct mistakes in their records Ex. The Fair Credit Reporting Act passed in 1970 with the mission of ensuring fairness, accuracy and privacy of the personal information contained in the files of the credit reporting agencies.

" lease

"A contract that transfers possession for consideration Ex. Jefferson is leasing an apartment from Lila for one year. He signs a one year lease, which is a contract that allows him to possess the apartment for that time, but does not transfer ownership.

" sweat equity

"A contribution to the value of a property made in labor, rather that funds. Ex. Jeff and Eleanor are partners in investment properties. Eleanor puts up the funds and Jeff's contribution is in sweat equity. He rehabilitates the property and when it sells, they split the profits accordingly.

" indirect cost

"A cost for an expenditure other than materials and labor. Ex. Legal fees are indirect costs of construction.

" quiet title

"A court action to remove a cloud on a title Ex. Because the records indicated there was an unpaid debt which created a lien against the title, even though the debt had been paid off, the Martins initiated a suit to quiet the title.

" lien

"A creditor's legal right to have their debt paid out of the property of a defaulting debtor, usually by a court sale Ex. When Marcus did not pay his contractor, the contractor put a mechanic's lien on Marcus's property.

" adjustment (loan)

"A debit or credit at closing to coincide with appropriate closing costs Ex. When the document preparation fees were more than anticipated, both sides received an adjustment at closing.

" note

"A debtor's contractual promise to repay Ex. Diego wants to buy Claire's Harley, but he doesn't have the cash to buy it outright. He signs a note promising to repay her in monthly installments until the bike's paid off.

" functional obsolescence

"A decrease in property value resulting from poor or outdated design or material Ex. Because Seamus's property was built using asbestos siding, ceiling tile and floor tile, it was functionally obsolete.

" habendum clause

"A deed clause containing the words ""to have and to hold,"" and which describes the interests and rights of the grantee Ex. The habendum clause provisions must agree with the provisions stated in the granting clause.

" trustee's deed

"A deed executed by a trustee that conveys land held within a trust. Ex. A trustee's deed is often by a trustee in bankruptcy to sell real property of the debtor.

" quitclaim deed

"A deed that does not offer any warranties but simply releases the current owner's claims to the property Ex. When Bill and Martha divorced, Martha signed over her interest in their property to Bill through a quitclaim deed.

" general warranty deed

"A deed that grants the most protection to the buyer because it carries all the possible covenants of the grantor. Also known as a full covenant and warranty deed. Ex. Nellie was nervous about accepting a deed that was not a full covenant and warranty deed. She was worried that her title might be impacted by another's claim or an unknown encumbrance.

" referee's/sheriff's deed

"A deed which contains no covenants or warranties but does imply ownership (seisin); often used in bankruptcy proceedings and foreclosures Ex. Jan was a real estate investor who frequently purchased foreclosures. Due to the uncertain ownership chain, she often received referee's deeds, without warranties or covenants.

" deed in lieu of foreclosure

"A defaulting borrower voluntarily conveys the deed to the lender to avoid foreclosure Ex. An offer of a deed in lieu of foreclosure does not have to be accepted by the lender; the lender may choose to foreclose.

" material defect

"A defect in the property or title that could cause a reasonable person to not purchase a property, or cause the buyer to value the property lower Ex. The fact that the carpeting in the living room was an ugly lime green wasn't considered a material defect, but the leaky roof was.

" HUD/Department of Housing and Urban Development

"A department of the U.S. whose mission is to create affordable homes for all Ex. Every HUD-assisted project must be examined to ensure that it does not negatively impact the surrounding environment and that the site itself will not have adverse effect on end users.

" certificate of deposit

"A deposit held in a bank for a specified term which earns interest (e.g., one-year CD, three-year CD). Ex. Georgio had some extra money in savings and decided to buy a five-year CD. Interest rates were higher than he could get in his savings account, and he had no use for the money for at least five years.

" mixed-use developments

"A development with mixed zoning uses, generally commercial and residential Ex. Tina lived in a mixed-use development. Below her apartment was a deli. She smelled salami all day long.

" mediation

"A dispute resolution process whereby a neutral party hears each side and attempts to get the parties to resolve their differences. Ex. Brenda agreed to mediation, but when the mediator told her she should give the bicycle to Harry, Brenda refused.

" partition

"A division of a piece of property Ex. When tenants in common don't get along, sometimes they will ask the courts to help them partition the property: "You take your half; I'll take mine," is the idea.

" proration

"A division of expenses and income between buyer and seller according to who owes what to whom Ex. Karen had prepaid some expenses and had not yet paid her property tax. These items were prorated between the parties in the closing statement so both paid their fair share.

" title commitment

"A document outlining that a title insurance policy will be issued to the buyer provided certain conditions are met (usually a required payoff of liens or other title defects) Ex. A title commitment is issued after a detailed title search uncovers any outstanding liens, mortgages, or other title defects that would prevent the title from transferring clearly.

" sales contract

"A document that buyers and their agents use to prepare the purchase offer for the sellers Ex. What a busy but great week! New licensee Cade had helped his five buyer clients prepare sales contracts. Now it was time for negotiations--his favorite part.

" bill of sale

"A document transferring title to personal property. Ex. When Ginger sold her golf cart to Mary Anne, they used a bill of sale to complete the transaction.

" material fact

"A fact that would influence a reasonable person in making a decision; if not disclosed a person's decision would have been different Ex. A material fact could impact the value of the property if the truth was known, or it could cause a seller not to accept a buyer's offer (e.g., the buyer is actually not financially qualified to complete the transaction).

" misrepresentation

"A false statement of a material fact in a real estate transaction, either intentionally or through lack of proper care Ex. When Jerome told Kirby that the roof repairs wouldn't cost more than a few hundred dollars, and Kirby purchased the property and then learned it would need a complete tear-off, this was misrepresentation.

" Department of Veterans Affairs

"A federal agency that guarantees residential mortgages made to eligible veterans and active military personnel. Ex. Scott obtained a loan guaranteed by the VA, which allowed him to get into his house for 0% down.

" Federal Trade Commission (FTC)

"A federal body formed through an act of Congress in 1914 with the power to declare trade practices that conflict with basic policies of antitrust legislation to be unfair Ex. The FTC has the authority to enforce compliance with the Sherman Act and sections of the Clayton Act, which supplements the Sherman Act.

" Safe Drinking Water Act

"A federal law enacted in 1974 that governs state drinking water regulations Ex. The state department of health makes sure that the commonwealth is in compliance with the regulations set forth in the Safe Drinking Water Act.

" Federal Trade Commission Act

"A federal law passed to prevent unfair methods of competition and deceptive advertising; created the Federal Trade Commission Ex. The FTC Act is the primary statute of the Federal Trade Commission.

" Interstate Land Sales Full Disclosure Act

"A federal law regulating interstate land sales Ex. The Interstate Land Sales Full Disclosure Act of passed in 1968 to help regulate interstate land sales and protect consumers from fraud and abuse in the sale or lease of land. Among other provisions, the Act requires land developers to register subdivisions of 100 or more non-exempt lots or condominium units.

" National Flood Insurance Program (NFIP)

"A federal program created to help mitigate future flood losses through the use of building and zoning ordinances, and by providing homeowners with access to affordable flood insurance protection Ex. Since the town of Misty Glen was located in a floodplain, the town council decided to partipate in the NFIP to help ensure that the community would be able to minimize future flood risks

" point

"A fee equal to 1% of a loan amount. It's typically paid upfront to lower the interest rate on a loan. Ex. For a conventional, 30-year fixed rate loan, the interest rate may be 6% with a charge of 1 point, or 1% of the loan.

" referral fee

"A fee paid to someone who receives a client or customer for service to the person referring the client or customer Ex. Jamie's brokerage paid a referral fee to Sue's brokerage when Sue referred Jamie a client. The fee was paid at closing.

" gross income multiplier

"A figure used as a multiplier of gross annual income of a property; used to estimate property value for properties of five-plus units. Ex. The GIM represents the ratio between the sales price and effective gross income. GIM = sales price divided by effective gross income.

" gross rent multiplier

"A figure used as a multiplier of gross monthly rent of a property; used to estimate property value for properties of one to four units. Ex. The GRM = Price divided by gross rent.

" pro forma

"A financial statement based on assumptions and projections. Ex. Ray wanted to see the effects of different financing options for a new investment. His accountant prepared a pro forma statement with projected balance sheets, income statements, and statements of cash flows.

" estate for years

"A fixed-termination type of lease that may be for a day, week, month, year, several years, or any definite period of time; when the specified date occurs, the lease terminates automatically Ex. Carmine agreed to rent Bill's apartment for 11 days, after which their lease terminated. This is an estate for years, even though it is only for 11 days.

" urea-formaldehyde foam insulation (UFFI)

"A foam insulation containing large amounts of formaldehyde Ex. While contractors have stopped using UFFI, the material is still in use in many homes. However, most of its toxins are released in the first two to three years making older insulation relatively benign.

" tenancy in common

"A form of ownership that includes an undivided interest in the property; owners may sell, convey, mortgage or transfer their interest without the consent of co-owners Ex. Bailey and her brother Bill inherited their uncle's house. The will did not specify how they were to take title, so they were automatically made tenants in common.

" severalty

"A form of ownership that severs the interests of all others; complete, exclusive ownership Ex. When a single person purchases a home, it is common for the ownership to be in severalty—an exclusive interest in the property.

" incurable depreciation

"A form of physical depreciation indicated by a loss in value that is not economically feasible to remedy because the increase in value from the ""fix"" would not equal the cost to fix it Ex. The Bakers had to live with the incurable depreciation of their split level designed home. Even though the design was no longer popular, it was an incurable depreciation they had to face. Fixing it would cost more than they could recoup at sales time.

" purchase money mortgage

"A form of seller financing in which a mortgage is given by the buyer to the seller toward the purchase price; buyers use this as down payment financing. Ex. Chet could not qualify for a loan, so he bought his uncle's land using a purchase money mortgage.

" slab-on-grade construction

"A foundation that is a concrete slab, instead of a foundation wall. Possible only on level terrains. Ex. With a slab-on-grade-construction, the concrete is poured directly onto the ground, eliminating either a crawl space or basement.

" truss

"A framework of rafters, posts, and struts, supporting a roof; usually manufactured offsite Ex. The truss system has for the most part replaced the rafter system in current construction, in part because its installation can usually be done in a day compared to a week for a rafter-type system.

" life estate

"A freehold estate granted for someone's lifetime Ex. Emma wrote her will out to include possession of her home to her nephew for the term of his life, after which it would pass to her favorite charity, Cats and Canaries.

" replacement reserve fund

"A fund set aside for replacement of common property (e.g., a parking lot) in a common interest community, such as a condominium development. Ex. Because the homeowners association hadn't collected enough dues for the replacement reserve fund from the owners, when the roofs of the buildings needed to be replaced, each owner was assessed $1,800 to cover the costs.

" homeowners association

"A governing body made up of homeowners or their appointees to manage aspects of living in a community (e.g. fence heights, paint colors, amenities, etc.) Ex. The Brighton Wood homeowners association (HOA) scheduled maintenance of the pool and gardens for the enjoyment of the homeowners, who paid quarterly dues for that privilege.

" rectangular survey system

"A governmental survey system that describes land in reference to principal meridians and baselines. Ex. Mort scratched his head at the legal description for his uncle's property, which used the rectangular survey system and read """"SW1/4 NW14 S13, T1SR20E,"""" and referred to the southwest quarter of the northwest quarter of Section 13 of Township 1 South Range 20 East.

" limited liability company (LLC)

"A hybrid business formation that combines the limited liability features of a corporation with the tax efficiencies and operational flexibility of a partnership Ex. Unlike shareholders in a corporation, the profits and losses are passed through the business to each member of the LLC. Members report profits and losses on their personal tax returns, just as business partners do.

" conservation easement

"A landowner chooses to create a legal agreement with a land trust or government entity that includes permanent use and development restrictions Ex. When owners create a conservation easement, they lose some rights to the property, because the easement constrains use of the land.

" statute of frauds

"A law stating that contracts involving the creation or conveyance of an interest in real property must be in writing to be enforceable Ex. When Ted's customer, Fred, balked at the idea of signing a contract to buy some land, Ted explained the statute of frauds.

" Megan's Law

"A law which requires the local authorities to publish the location of registered sex offenders in the area Ex. Due to Megan's law, it was easy for a licensee to point concerned clients to appropriate resources to determine whether registered sex offenders lived nearby.

" proprietary lease

"A lease held by the shareholder of a cooperative which allows the shareholder the right to occupy the shareholder's unit. Ex. When Mary Lou applied became a member of Greener Grass Cooperative, instead of a deed to her unit, she received a proprietary lease to occupy the unit.

" subordinate lease

"A lease in which the lender retains the right to evict the tenant if the borrower defaults Ex. Jameson was livid! Due to his subordinate lease clause, he was being evicted from his home simply because his landlord--the building's owner--defaulted on his loan.

" triple net lease

"A lease in which the tenant is required to pay rent plus taxes, insurance, and maintenance costs Ex. Charlene entered into a triple net lease with her landlord, so she'd pay the rent and any associated taxes, insurance, and maintenance costs for renting out the space for her nail salon.

" eviction

"A legal action to remove the tenant and the tenant's belongings from the premises Ex. Mona hasn't paid her rent in months, so her landlord, Ewan, took her to court and won the eviction rights.

" doctrine of laches

"A legal condition in which unused or unclaimed rights may be lost Ex. Although the covenants of the Happy Camper Mobile Home Park prohibited pets, this restriction was not enforced, and eventually disappeared through the doctrine of laches.

" lot and block

"A legal description that refers to lot and block number within a subdivision as indicated on a recorded subdivision plat. Ex. When April looked up her tax record it included the lot-and-block legal description of her property, which read in part: Lawndale, Block 4, Lot 6.""""

" living trust

"A legal document in which assets are placed by a trustor during the trust-maker's lifetime and then transferred to a designated beneficiary at the trust-maker death by a chosen representative, called a successor trustee. Ex. Ramona established a living trust, of which she controlled until her death, at which time the assets of the trust would pass to her nephew, the beneficiary.

" partnership

"A legal form of business relationship between two or more people; may take the form of a limited partnership or a general partnership Ex. Common law regards a partnership as a group of individuals rather than a single entity.

" piggyback (split) loan

"A legal way for borrowers to avoid having to purchase private mortgage insurance (PMI) when they put less than 20% down; involves two separate loans Ex. Evan has saved $30,000 for a down payment, which isn't quite enough to avoid paying PMI on the loan for his new $200,000 condo. So he gets a piggyback loan to make up the difference.

" listing agreement

"A legally binding contract between the seller and real estate licensee in which the dates of service, terms of compensation, and authority to market and list the property are provided Ex. Gina is a real estate salesperson who contracts with her aunt, Ruby, to sell her property. Gina and Ruby sign a listing agreement that includes the terms of their arrangement and contractually obligates both parties to those terms.

" lease agreement

"A legally binding, written contract between an owner/landlord (lessor) and a tenant (lessee) for the tenant to possess the owner's real property for a specified period of time in exchange for a fee (rent or rental payment) Ex. Charlie entered into a lease agreement with his new landlord. He'd pay $1,500 a month for the two-bedroom villa by the seaside.

" foreclosure

"A lender forces the sale of a property because the buyer has defaulted on the loan Ex. The foreclosure process varies by state and can take as little as 60 days and as long as two years or more.

" non-judicial foreclosure

"A lender is able to sell a property in the event of buyer default, without going through the court system; usually granted via a power-of-sale clause in the security instrument Ex. Peach Orchard Bank was able to initiate a non-judicial foreclosure on a property when the buyer stopped making payments, which helped them avoid the extra time and expense of going through court proceedings.

" lot lease provision

"A lender requirement that a portion of a construction or development loan be paid off as each lot is sold. Ex. Mike Grant sold three lots in Grant Meadows. This triggered a lot lease provision, which required him to pay back a portion of his loan.

" escrow analysis

"A lender's look at how escrow funds on deposit by a borrower are holding out. The lender may make adjustments based on anticipated expenses (taxes and insurance). Ex. After Julianne's lender performed an escrow analysis, it determined she was short $249, and invoiced her, giving her the option to pay it in one lump sum, or by increasing her monthly mortgage payment.

" mortgage commitment

"A lender's promise to the borrower that a specified loan will be provided to the borrower. Ex. Tim and Tom breathed a sigh of relief when they received a mortgage commitment from their lender. Now, if the property would only appraise!

" prequalification

"A letter from a lender stating that, on the face of information provided by the borrower, the borrower will likely qualify for the loan. Ex. Most sellers will not accept an offer that requires financing if the prospective buyer has not at least included a letter of prequalification from their lender.

" special assessment

"A levy to fund community improvements Ex. Due to the new city park, all property owners were subject to a special assessment.

" disabled licensee

"A licensed person who's under severe disability of such a nature to prevent that person from being able to attend any instruction lasting at least three hours in duration Ex. Although required to attend an in-person class, Mavis, a disabled licensee, was allowed to take her course online.

" sub-agent (or subagent)

"A licensee from a competing firm who brings the buyer to the deal, but instead of representing the buyer, works under the listing agent as a representative of the seller Ex. Carol was a sub-agent of Jennifer, the seller, although Jim was Jennifer's listing agent. Carol helped try to find a buyer for Jennifer's property.

" general lien

"A lien against a person and all the property owned by that person, whether real or personal (e.g., judgments, estate and inheritance tax liens, income tax liens) Ex. When Fred sued his contractor, he won a judgment for a general lien against him.

" tax lien

"A lien imposed for nonpayment of taxes Ex. Tax liens include estate and inheritance tax liens, income tax liens, property tax liens, corporation franchise tax liens. Only the real property tax lien is specific; the others are general and may cause a lien against all property of the individual.

" involuntary lien

"A lien imposed on a property or person by someone else, such as for nonpayment of taxes Ex. Becky forgot to pay her taxes, and a lien was placed on her property. This was an involuntary lien.

" special lien

"A lien on a specific property. A property tax lien is an example of a special lien. Ex. When Demetria stopped paying her property taxes, the county placed a special lien on her property.

" mechanic's lien

"A lien placed by a laborer on a property for nonpayment of work done Ex. Harry's carpenter put a mechanic's lien on his property for nonpayment of his work.

" voluntary lien

"A lien that is agreed to, such as a mortgage Ex. Scott's mortgage was a voluntary lien against his property.

" life cap

"A limit on the amount that an adjustable rate mortgage can increase over the term of the loan. Ex. Although the index to which her adjustable rate mortgage was tied rose 3%, which would have made her interest rate 8%, the life cap on her ARM was 7%, so that became her new interest rate.

" encumbrance

"A limitation on a property title, such as a lien or easement Ex. Cathy was happy to see from the title report that the only encumbrance on the property she was buying was a power company's easement in gross.

" rent roll

"A list of all the tenants and the particulars about the type of unit, what the tenant is paying for it, and when the lease ends Ex. Keira examined the rent roll for the properties she managed, so she could see where the rent was coming in from. The lease end dates helped her determine when she'd need to market units for re-lease.

" net listing

"A listing agreement in which the broker contracts with the seller to receive all net proceeds from a sale above a specified sales price; illegal in some states Ex. Jerome is listing Kim's house. She tells him she needs to get "at least $225,000," but that any amount above that amount he can keep. If Jerome and Kim sign a listing agreement under these terms, it is an illegal net listing.

" open listing

"A listing agreement that allows the owner to work with multiple brokers, only paying a commission to the broker who procures the buyer Ex. Dwight entered into open listing agreements with five brokers, knowing he'd only pay commission to the one who brought him a buyer.

" secured loan

"A loan backed by collateral (e.g., a mortgage loan in which the property is used as collateral). Ex. he opposite of a secured debt is an unsecured loan, one not connected to a piece of property. Instead of foreclosing and claiming the collateral, the lender may only pursue a judgment against the borrower.

" government loan

"A loan guaranteed, insured, or (in limited cases) made by an agency of the federal government Ex. Both VA and FHA are types of government loans. They're not made directly to consumers, but are instead guaranteed (VA) or insured (FHA) by an agency of the federal government.

" straight loan

"A loan in which the periodic payments go to interest only and the entire loan amount is due at the end of the term Ex. A straight term mortgage is a type of balloon mortgage in which the last payment (the balloon) pays off the balance.

" non-conforming loan

"A loan that doesn't meet the Fed's qualification standards (cannot be sold to Fannie Mae or Freddie Mac) Ex. Harry's loan was a non-conforming loan; therefore he paid a higher rate as the lender assumed a higher risk.

" jumbo loan

"A loan that exceeds conforming loan limits established by Fannie Mae and Freddie Mac Ex. Because her loan was considered a jumbo loan, Anita didn't qualify for the most favorable interest rates, and had to pay a 1/4% premium.

" qualified mortgage

"A loan that meets stringent CFPB guidelines that are designed to curb lending practices that led to the late-2000s financial crisis Ex. Qualified mortgages can't have risky, often confusing features or any surprises for consumers.

" fixed-rate loan

"A loan where the principal and interest payment remains the same over the life of the loan Ex. Fixed-rate loans were seen as a safer choice after adjustable-rate loans contributed to the mortgage crisis of the late 2000's.

" avulsion

"A loss of existing land by the sudden change in a watercourse, washing it away Ex. Brady was aghast when part of his property washed away in a tidal wave. This avulsion caused him to lose 15% of his property.

" plat map

"A map which shows the location of a piece of property in context to its adjoining lots, roads and landmarks. It includes lot, street and block identifiers. Ex. Subdivision developers often offer prospective buyers plat maps that show the location of a given lot within the subdivision, as well as surrounding properties.

" REALTOR(R)

"A member of the National Association of REALTORS(R) Ex. Although often used generically, REALTOR(R) is a registered trademark of the National Association of REALTORS(R) and the term may not be used by non-members.

" lead

"A metallic element found in rocks and soils worldwide Ex. Lead was banned in paint in the 1970s due to its harmful effects on household inhabitants, particularly children.

" legal description

"A method of identifying a property in written words that allows for an unambiguous interpretation of a property's boundaries and location. Ex. Although a street address may hold up in court, it's best to include an accurate legal description as best practice when conveying real property.

" planned unit development (PUD)

"A mix of land uses such as residential and commercial in one contained development Ex. Shari lived in a condo in a PUD. She loved having shopping—and a hair salon—within steps of her front door.

" recession

"A moderate, short-term dip in the economy's health Ex. The recession was caused by high unemployment rates which reduced consumer spending.

" due-on-sale clause

"A mortgage clause that requires the borrower to pay off the loan balance when selling the property Ex. Mortgages with due on sale clauses are not assumable.

" first mortgage

"A mortgage in first place among other recorded loans. Receives payment first in the event of a foreclosure. Ex. Nan obtained a first mortgage when she purchased her house, and a second mortgage several years later. When she was foreclosed on, the first mortgage was paid off first from the proceeds of the foreclosure sale.

" second mortgage

"A mortgage in secondary position to the first mortgage (e.g., a home equity loan) Ex. When a foreclosure occurs, the secondary mortgage doesn't receive proceeds until the first mortgagee is paid off. Sometimes there aren't enough funds to repay both loans.

" subordinate financing

"A mortgage or loan secondary to another. Ex. When Amity took out a home equity line of credit, her lender charged her a premium interest rate because it was subordinate financing, and in the even of a foreclosure, the home equity loan would be paid after her first mortgage.

" monument

"A natural or man-made permanent landmark that serves as a point of reference in a metes and bounds description. Ex. Jill read the metes-and-bounds description of her property, which included the location of an oak tree as a point of reference. This monument had been there for 150 years.

" escrow

"A neutral repository for client trust funds Ex. Jillian, a sponsoring broker, deposits all client earnest money funds into a neutral escrow account until the transaction is completed or terminated, at which time she instructs the funds be disbursed according to the contracted terms.

" credit score

"A number that signifies a borrower's credit risk to lenders Ex. A credit score is calculated from information in the borrower's credit file, and is used by lenders to assess borrowers' credit risk at a given moment in time.

" Insurance score

"A numerical rating that summarizes the likelihood of a person filing an insurance claim during the coverage period Ex. The buyers' insurance score helped them choose the best homeowners policy for their new condo.

" limited partnership

"A partnership in which there is one or more general partners who administer the enterprise, and one or more limited partners who are liable only to the extent of their investment Ex. If John had been a limited partner rather than a general partner, he wouldn't have had to declare bankruptcy.

" legally competent party

"A party has the capacity (legal and mental) to enter into a contract Ex. The judge decided that Sylvia, who suffered from dementia, was not a legally competent party and therefore could not enter into a contract to sell her house.

" pre-payment penalty

"A penalty charged by a lender to a borrower for paying off a loan early Ex. Pre-payment penalties are all but eliminated under new lending rules.

" vacancy rate

"A percentage of all available units in a given market that are unoccupied at a given time Ex. Vacancy rate = number of vacant units ÷ total units

" variance

"A permitted deviation from zoning Ex. Brandy had to obtain a variance for her property as she had to build three feet closer to the road than was permitted in the zoning ordinance.

" fiduciary

"A person in whom another's trust and confidence is placed Ex. A property manager is the fiduciary agent of the owner; as such the property manager must act in the owner's best interest.

" creditor

"A person or entity to who money is owed. Ex. In a bankruptcy proceeding, the individual has to demonstrate he can't repay his creditors to have his debt forgiven by the bankruptcy court.

" customer

"A person related to the transaction whom the agent does not represent Ex. Even though customers are not clients, agents owe to customers the duties of fair and honest dealing, and disclosure of who the agent represents, and disclosure of any material facts.

" co-borrower

"A person who's both responsible for the loan and on the title for the property. Ex. Alice and Jimmy bought a house together. The applied for the loan as co-borrowers, and took title in both of their names.

" independent contractor

"A person whose work is not directly controlled by a supervisor or manager Ex. Most licensees work as independent contractors; although brokers are responsible for their supervision, they do not control the details of licensee's work, hours, location or performance.

" universal agent

"A person with unlimited power to act for another, such as a conservator or one who holds a broad scope power of attorney Ex. As guardian for her nephew, Shawna acted as his universal agent in all matters.

" disability or handicap

"A physical or mental impairment that limits a major life activity Ex. Because of her disability, Megan was allowed to have an assistance animal in her apartment.

" trade fixture

"A piece of equipment or other item that is on or attached to the real estate which is used in a trade or business. The term "trade fixture" is actually a misnomer, because the item, while attached, may be removed by the business owner as a personal item. Ex. When she moved her business location, Candy took the neon business sign flashing "Candy's Chocolates." Even though it was permanently attached to the building, it was a personal item (as a trade fixture) and could be removed legally.

" sheathing

"A plywood covering over the exterior framing members. A final covering is placed over this, usually siding, brick, stucco or stone. Ex. Mike Grant used wafer board for sheathing on his exterior framing. On top of that he put wood or stucco and stone.

" market value

"A price at which a willing buyer and willing seller can strike a deal given ordinary market conditions Ex. When real estate professionals prepare a CMA, they are most interested in determining an appropriate market value.

" deed restriction

"A private control which limits the use or appearance of a given property Ex. Manny's deed restriction prevented him from using his property to raise horses.

" septic system

"A private sewer system in which a pipeline connecting to the structure also connects to a drain and septic tank Ex. Cally's septic system backed up when untreated liquid water clogged the absorption field of the system.

" collection

"A process of attempting to recover loaned funds when the borrower is in default. Ex. Because Jewel didn't pay her credit card bill, the credit card company sent her bill to collections. Jewel now receives almost daily calls from the collection agency asking for payment.

" formaldehyde

"A product used in the manufacture of urea-formaldehyde foam insulation, paneling and other products that is a chemical air pollutant. Ex. Because the formaldehyde-containing insulation in his home had been installed nearly 20 years ago, Jason was not overly concerned about any off-gassing effects.

" promissory note

"A promise by the borrower to repay the loan; it includes the terms for repayment Ex. Unlike a mortgage or deed of trust, a promissory note is not recorded; the lender holds the note while the loan is being paid off. When it is fully paid off, the note is returned to the borrower, marked as paid in full.

" operating budget

"A property manager's detailed plan for expenses and income Ex. Ross felt that an operating budget was in many ways a work of fiction, due to the amount of projections that had to be made—but it was necessary for planning purposes, and helped him stay on track for his clients.

" stigmatized property

"A property that buyers may shy away from for reasons other than physical defects, such as a property being the site of a murder Ex. Each state has its own laws regarding what stigmas licensees are required to disclose, and which they can keep mum about.

" multi-family

"A property with more than one dwelling, e.g., a duplex. Ex. Multi-family homes with five or more dwellings are considered commercial residential properties.

" familial status

"A protected class status under the Fair Housing Act which has to do with having minor children. Ex. When the landlord posted a sign that read: "One heartbeat per bedroom" the result could be discrimination based on familial status as families with children who share bedrooms would be prohibited from tenancy.

" lifting clause

"A provision that allows the lien(s) ahead of the junior mortgage to be refinanced without changing their priority in lien positions Ex. Without this clause, a borrower with a second mortgage could never get a lender to agree to a refinance of the first mortgage because the second lienholder would immediately advance to first position as soon as the first mortgage was paid off as part of the refinance.

" lis pendens

"A public notice that a legal issue is pending Ex. Deena was glad she saw the lis pendens notice on the property she was considering making an offer on. She didn't need to get halfway through a transaction and find out there was a judgment against the property!

" constructive notice

"A public recordation of an event; constructive notice means "you could have known if you'd bothered to look it up." Ex. Karen's conveyance of her deed was publicly recorded; this was constructive notice to the world that she had sold her property and that Vince was the new owner.

" radon

"A radioactive gas found worldwide caused by the natural decay of uranium Ex. Unhealthy levels of radon in a home may be lowered through the installation of a filtration system.

" point of beginning

"A reference point marking the beginning point of a metes and bounds description. Ex. Sometimes, in a metes and bounds description, the point of beginning will be a humorous identifier such as """"Beginning where Standfield's donkey and goat always stand at the crest of the southmost knoll ...""""

" credit report

"A report of an individual's credit history. Used by lenders to determine creditworthiness of the individual. Ex. Ann's credit report showed that she had a history of missing her payments. Because of the report, her lender denied her loan.

" possessory

"A right to occupy the property Ex. All homeowners have possessory rights to their property.

" navigable water

"A river or other moving body of water that will accommodate commercial shipping. Ex. Private homeowner use of navigable water is necessarily limited as compared to non-navigable water.

" encryption

"A security measure that turns electronic information into an undecipherable code Ex. Security measures that Elite Realty uses includes encryption of all of its sensitive online data.

" collateralized mortgage obligation (CMO)

"A security that uses mortgage-backed securities as collateral Ex. CMOs are subdivided into tranches. Each tranche has specific rules for distributing income received from the collateral, and has differing balances, maturities, and risks.

" seller carryback

"A seller financing transaction in which the seller carries a portion of the buyer's loan. Ex. Ann got an 80/10/10 loan, with her lender giving her an 80% loan, the seller carrying 10% of the purchase price, and Ann putting 10% down.

" Uniform Residential Landlord Tenant Act of 1972 (URLTA)

"A series of laws intended to lay out standardized responsibilities and rights of both tenants and landlords Ex. Even though few states have adopted this act exactly as it's written, most states have adopted some version of it.

" mortgage broker

"A service professional who acts as a liaison between borrowers and lenders for a fee Ex. Mike Jiminez is a mortgage broker working for Lendwell Brokerage. Mike matches borrower needs with lender products for a fee.

" settlement service provider

"A service provider who assists in a real estate transaction (e.g., title company representative, mortgage broker, real estate broker) Ex. Settlement service providers may not pay one another kickbacks. This would be a violation of RESPA.

" townhome (townhouse)

"A single-family home attached to another on one side; often built in a two-story design Ex. Maurice loved his townhome. He had a small back yard and, fortunately, the neighbor who shared one wall with him was rarely home.

" escrow account

"A special account that's separate from any other business or personal accounts; typically used to hold earnest money Ex. One of Barb's duties was to manage the escrow account for her firm's transactions.

" parcel

"A specific tract of land with specific boundaries. Ex. Shana pored over the developer's blue print and pointed to a large lot near the lake. "I'd like to have my home on this parcel here," she said.

" township

"A square that is six miles by six miles (36 square miles) and makes up the principal unit of the rectangular government survey system. Ex. A complete legal description using the rectangular survey system consists of four segments: the tract description, the section number, the township number and direction, and a range number and direction.

" lien theory

"A state that adopts a lien theory goes under the presumption that a lender's mortgage is a lien on the property. A title theory state says that the lender owns the property until the loan is paid off. Ex. Because Engelbert lived in a lien theory state, he held title to his property even though he financed it. His mortgage created a lien on the property.

" puffery

"A statement of opinion or exaggeration that is generally understood not to be a statement of fact Ex. Emil loved to make his listings sound as fantastic as he could, but his broker said he crossed the line into puffery.

" cul de sac

"A street that does not connect to any main roads Ex. James liked living on a cul de sac because he didn't have to deal with traffic cutting through his street to the main road.

" ridge beam

"A structural member used to support the ends of the rafters at the ridge of the roof; transfers loads to end walls Ex. If Superman were stradding the top of a house, he's be sitting directly on the ridge beam.

" security deposit

"A sum provided by a tenant to a landlord to ensure the landlord is not left with extraordinary expenses or unpaid rent when a tenant vacates Ex. Chip's landlord charged him a full month's rent as a security deposit. When Chip leaves, provided his rent is paid up and he leaves the apartment in reasonable condition, his landlord will refund this money to him.

" metes and bounds

"A survey system using points of reference and directional indicators to identify and locate a property for legal purposes Ex. Darla laughed when she saw the metes and bound description. Although it was a legal description, it contained terms like "west of the widow Fiona Smith's stone wall."

" multiple listing service (MLS)

"A system that pools the listings of all member companies Ex. Chad has a new listing for a property in his town. One way he markets this listing is through the multiple listing service (MLS). By promoting the property on the MLS, Chad is exposing the property to all MLS members, the general public (such as unlicensed assistants who have permission to access MLS, and any sites that pull from the MLS "feed."

" underground storage tanks

"A tank for storing liquids, such as chemicals or oil, below ground Ex. Because the underground storage tank holding the heating oil for his home was more than 20 years old, Chuck worried about it possibly leaking and contaminating the soil.

" transfer tax

"A tax applied upon the recordation of a transfer of ownership in real property. Ex. Transfer tax may also be tax stamps applied to a deed and paid for by the buyer or seller in a real estate transaction.

" bridge loan

"A temporary loan used to cover the interval between two transactions. Ex. The Clausens' sale of their current home would not go through until after the closing date on their dream home. They used a bridge loan to close the gap in financing.

" joint venture

"A temporary organization of two or more people to carry out a single project. Ex. Before Bijou agreed to sell a real estate joint venture involving investors who expected to benefit without active participation, she looked up the definition of "syndicate" and decided to pass.

" tenancy at sufferance

"A tenant continues to occupy a property after lawful authority has expired. The tenant is known as a holdover tenant. Ex. When Ben's lease expired, he didn't feel like going to the trouble of finding a new place to live, and he knew his elderly landlord didn't check the paperwork very often, so he kept living there as a holdover tenant.

" natural person

"A term differentiating an actual human being from a 'legal person' (which could be a private entity, such as a company or corporation). Ex. The deed stipulated that further conveyances of the property may only be between natural persons.

" trigger term

"A term that, if used in advertising a loan product, requires the disclosure of all other terms. Ex. Trigger terms require disclosure of all terms to include: the cash price of the home, the amount of the down payment required or that none is required, whatever is applicable, the number of payments necessary to repay the loan, the amount of the payments, due dates or period of payments scheduled to repay the debt, the APR of the finance charge.

" principle of contribution

"A term used in valuation that means that the value of a portion of the property is dependent on the value it brings to the entire property. Ex. Just because the garage cost $75,000, David learned, didn't mean that it increased the property's value by $75,000. He learned the hard way about the principle of contribution.

" principle of conformity

"A term used in valuation that says that property holds value when surrounding properties are similar. Ex. The principle of conformity says that you don't want to build a modern home in a neighborhood of Victorians.

" principle of anticipation

"A term used in valuing income property when using capitalization rate. Ex. The principle of anticipation says that the value of a property is determined in part by the current anticipation of future benefits.

" home inspection

"A thorough examination of a property conducted by a professional home inspector Ex. Becky and Jorge have made an offer on their first house. They hire a home inspector, who discovers that the foundation supports are rotting. They terminate their contract based on the inspection.

" insurable title

"A title against which there may be known defects (such as easements), but the title company has notified the parties of the defect and has agreed to insure against it (not list it as a policy exception) Ex. A key concern is that sellers who offer insurable title instead of marketable title may not have to clear up title problems that come up before closing.

" title search

"A title company's search to determine marketable title or to uncover any deficiencies in title Ex. ABC Title performed a title search on Karen's property and it turned up no known defects.

" lender's policy

"A title insurance policy that protects the lender's interest in the property for the amount of the loan Ex. The value of the policy decreases as the loan is paid down.

" marketable title

"A title that is reasonably free and clear of encumbrances so that the average buyer would not hesitate to consummate a sale Ex. Although Karen's title had a small lien on it for her outstanding mortgage, she would be paying that off at closing, so she had a marketable title.

" testamentary trust

"A trust established at the death of a will maker, by provisions made within the will. Often used to create a trust for minor children. Ex. Rob and David are a couple with a minor child, Bertram. When Rob and David make their wills, they leave everything to each other. They also name Bertram as an alternate, in case they die at the same time. However, because Bertram is a minor, they need to determine who would manage his property until he's old enough to do it himself. They include a child's trust in their will, naming Rob's sister Marigold as trustee. If Rob and David die, their property will pass into the Bertram's trust, and will be managed for Bertram by Marigold.

" land trust

"A trust holding real property Ex. Kermit wants to buy several pieces of land on the outskirts of town for development. He doesn't want anyone to know is plans, sso he purchases the land through a land trust.

" residential office

"A type of combination property that includes residential and office zoning in the same place. Ex. Because Tiffany lived and worked in a residential office building, she never had to worry about getting caught in the rain on the way to work; her office was just a short elevator ride from her apartment on the 7th floor.

" tenancy by the entirety

"A type of concurrent estate in real property in which the owners of property are married; each spouse has an equal and undivided interest in the property Ex. Often, the default estate when a married couple purchase a property is tenancy by the entirety.

" right of way

"A type of easement Ex. Daniel's driveway across Ben's property was a right of way that enabled Daniel to get to work every day.

" negative amortization

"A type of loan in which the payments do not cover the interest due, which increases the amount owed over time. Ex. Shelby's negative amortization loan allowed him to make smaller payments, but in three years, he actually owed more than when he started.

" estate at sufferance

"A type of possession in which a tenant stays after the right to possess has terminated Ex. Bradley's lease was terminated lawfully but Bradley refused to leave. He is not a trespasser, even though he is not there legally; he has an estate at sufferance.

" industrial property

"A type of real property used for industry Ex. Examples are warehouses and factories.

" vacation ownership

"A type of timeshare ownership that allows buyers to pay a one-time purchase price and and annual maintenance fee, in return for selecting a vacation time and place for a certain number of years. Ex. Heather has vacation ownership at an oceanside resort in Key West; she loves that after the initial purchase price, all she has to do is pay an annual maintenance fee in order to enjoy her Christmases in the sunshine!

" nonconforming use

"A use that no longer conforms with new or changed zoning; its use is allowed through the concept of grandfathering Ex. Jack had had a shoe shop on Kelly street for 10 years when the entire area was zoned residential. Luckily, his nonconforming use was still allowed, but if he sold his shop, the new owner would likely have to use the property as a residence.

" mortgage

"A voluntary lien placed on a property as collateral against a loan Ex. Scott's mortgage enabled him to have a house, so he didn't mind this voluntary lien on his property.

" tax shelter

"A way to protect income from taxes, such as depreciation. Ex. Because of his depreciation, which reduced his taxes, Scott was able to shelter some of his investment income and use that to make additional investments.

" dower

"A wife's interest in the real estate owned by her deceased husband; a form of legal life estate Ex. Millie's husband died without a will, and penniless, but at least she had a dower's interest in the property they owned.

" employee

"A worker whose employer controls the details of the worker's performance Ex. An employer will withhold taxes on behalf of an employee from the employee's paycheck.

" purchase agreement

"A written contract between a buyer and seller specifying the terms for the transfer of interest in real property Ex. Herb, a buyer, and Manny, a seller, entered into a purchase agreement for Manny to sell his townhome to Herb. The purchase agreement specified the price and terms, including contingencies that must be met.

" exclusive listing

"A written contract between a seller or building owner and a real estate licensee giving the licensee the exclusive right to sell or lease the property during the term of the listing agreement. Ex. Jack had an exclusive listing with Mark to sell his apartment building. When Janice brought Mark a buyer, and the transaction closed, Jack earned the listing commission.

" will

"A written document detailing the disposition of assets after death, and other wishes, signed by the testator. Ex. The last will and testament of Barnaby Collins stipulated the placement of his above-ground coffin away from sunlight.

" notice of default

"A written notice that a borrower has defaulted; lets borrower know that legal action, including possible foreclosure, is imminent. Ex. When Don forgot to pay his mortgage for two months, he received a notice of default. If he doesn't bring his past-due amount due (plus interest and late charges), he could face foreclosure..

" standards for acceptable designs (SAD)

"ADA regulations that apply to new construction or remodeling of public accommodations and commercial buildings Ex. The ADA periodically updates SAD, so builders and licensees working with new construction should check the ADA website for the latest guidelines.

" ratification

"Acceptance after the fact, sometimes in contrast to a prior agreement Ex. Even though the seller was supposed to leave behind the washer and dryer, they took them when they moved out. The buyer ratified their decision by moving in and getting a set of their own without making a fuss about it.

" Fair Housing Amendments Act of 1988

"Added familial status and disability to the protected classes list Ex. Families and persons with disabilities are now protected classes thanks to the Fair Housing Amendments Act of 1988

" Housing and Community Development Act of 1974

"Added sex to the list of protected classes Ex. Thanks to the Housing and Community Development Act of 1974, gender is now a protected class.

" Homeowner and Equity Protection Act (HOEPA)

"Addresses abusive practices in refinancing and home equity loans by requiring special disclosures and restrictions on loan terms; an amendment to the Truth in Lending Act Ex. HOEPA's high-cost tests require mortgage loans that fall into that category provide special disclosures and adhere to loan term restrictions.

" Coastal Zone Management Act

"Administered by the National Oceanic and Atmospheric Administration; designed to "preserve, protect, develop, and where possible, to restore or enhance the resources of the nation's coastal zone" Ex. The act encourages coastal states to develop and implement coastal zone management plans. This encompasses the 95,331 miles of the nation's ocean and Great Lakes coastlines.

" implied agency

"Agency that is created from the actions of the parties rather than express agreement; illegal in some states Ex. It is best to avoid implied agency; instead, get any agency agreements in writing so there is no confusion about representation.

" informed consent

"Agreement as to the agency relationship a consumer accepts after considering all options available Ex. Until a consumer understands the particulars of each agency agreement available, it is impossible to provide informed consent.

" individual development account (IDA) programs

"Aid low- and very low-income households in setting up savings accounts used to purchase a home Ex. Part of Claire's job at the housing agency was to research and identify the best IDAs for their clients.

" Federal Reserve System

"Aka ""The Fed""; a national banking system that helps to control inflation and deflation by regulating interest rates and reserve fund requirements of its member banks Ex. Because Amazing Loan Company was not part of the Federal Reserve System, it did not have to adhere to its reserve or interest rate requirements. Borrowers beware--this lender might charge usury rates!

" Internet Data Exchange (IDX)

"Aka Broker Reciprocity, created by the National Association of REALTORS to enable brokers to share listing information across MLSs Ex. Patel used an IDX plug-in on his website to import listings in from the state's MLS.

" Small Business Liability Relief and Brownfields Revitalization Act

"Aka Brownfields Law; protects future landowners of contaminated properties from liability under certain conditions Ex. The Brownfields Law protects buyers, lenders, and insurers from liability from clean-up costs of contaminated properties provided they were unaware of the issues, performed a Phase I environmental assessment prior to the purchase, and met other conditions.

" front foot

"Aka frontage; the linear measurement of a property that abuts a street, highway, waterway, etc. Ex. Seamus's property had 200 feet of river frontage, which made it more valuable than his neighbor's property, which only had 40 feet of river frontage.

" full covenant and warranty deed

"Aka general warranty deed; a deed that grants the most protection to the buyer because it carries all the possible covenants of the grantor Ex. Nellie was nervous about accepting a deed that was not a full covenant and warranty deed. She was worried that her title might be impacted by another's claim or an unknown encumbrance.

" installment sale

"Aka land contract; allows the seller to provide financing by providing credit to the buyer; buyer makes payments directly to seller Ex. When Ben bought Rachel's property, she used an installment sales contract to lend him some of the money for it, which Ben paid directly back to Rachel.

" special warranty deed

"Aka limited warranty deed or bargain and sale deed; a deed in which the grantor only guarantees the title against defects arising during the time the grantor owned the property but not against defects that may have been in existence before taking ownership of the property Ex. A special warranty deed often includes language such as """"by, through or under the grantor but not otherwise.""""

" periodic cap

"Aka subsequent cap or period cap; limits the amount an adjustable rate loan's interest rate can go up in subsequent adjustments (after the initial adjustment) Ex. At Sylvia's next loan adjustment, the index is at 8%, which would put her new rate at 10%. This is more than the periodic cap of 2%, so the adjustment is set at the capped rate of 2% more than the previous rate, making it 8%.

" option clause

"Allow a tenant to purchase the lease (at a predetermined price) or extend the term of the lease if desired. Ex. Bartholomew's lease included an option clause, so he extended the term of his lease so he didn't have to move. He loved this place!

" mortgage credit certificates

"Allow qualified buyers to claim some of the mortgage interest they paid as a credit on their tax returns Ex. Amanda made certain her buyer clients took advantage of all the resources available to them to help them buy their home, like mortgage credit certificates.

" power of sale

"Allows a lender to sell a property if the buyer defaults on payments without going through a formal court proceeding Ex. The bank was able to foreclose on Monica's home without taking the matter to court because Monica gave them power of sale in her security deed.

" special use permit

"Allows a property to be used in a way that isn't really in accordance with zoning regulations Ex. Although the 50-acre area was zoned for residential use, the demand for a new golf course was so great that the developer was able to obtain a special use permit to build it.

" Tax Relief Act of 1997

"Allows first-time homebuyers to use as much as $10,000 of their IRA funds to pay the down payment and closing costs of their new home without incurring an early distribution penalty Ex. Buyers still have to pay taxes on the distribution, and the distribution must be used within 120 days or else the penalty will be charged.

" sky lease

"Allows owners to lease the rights to the air above their property Ex. Instead of leasing, Donald Trump purchased outright the air rights above the historic Tiffany & Co. store on Fifth Avenue in New York City so he could build his famous Trump Tower next door.

" lease with option to buy

"Allows the lessee (renter) the option to purchase the property at the end of the lease term Ex. Sam's happy he has a lease with option to buy on his house because he definitely plans to buy it when his lease is up.

" subordination clause

"Allows the security instrument's lien position to be placed in a lower priority to a new loan using the same property as collateral Ex. When Amanda opened a home equity line of credit, the document inscluded a subordination clause, making the HELOC secondary to her senior mortgage.

" property insurance

"Also called hazard insurance, property insurance is a way of protecting a home or property against physical damage or loss of assets in the case of damage or theft. The policy holder pays a premium, and insurance pays the policy holder to recover losses when they occur. Ex. Lenders require homeowners to obtain property insurance to obtain a mortgage. The insurance protects the lender's collateral (the property) in the event of a loss.

" frontage

"Also see front foot. The linear measurement of a property that abuts a street, highway, waterway, etc. Also called frontage. Ex. The houses along Elm street received a special assessment for street improvements based on the frontage measurement of their lots.

" severance

"Altering the characteristic of an item from real property to personal property by removing it from the land Ex. When Mrs. Goldman dug up her rose bushes, this was an act of severance. They were no longer part of the land, and were now personal property.

" Mortgage Disclosure Improvement Act (MDIA)

"Amends TILA to require specific timing related to disclosures that give consumers time to think about the loan they're about to obtain Ex. MDIA also stipulates that the only advance fee that a creditor can charge a borrower (before disclosing the terms of the loan) is a credit report fee.

" family

"Among other definitions, this includes one or more persons living as a single housekeeping unit Ex. A family as defined by the courts, does not necessarily have to be related by blood.

" owner participation

"Amount of cash a developer puts down that is not financed Ex. Lenders want to see owner participation because it means the developer has some """"skin in the game.""""

" hammer price

"Amount of the final, successful auction bid, signaled by a bang of the auctioneer's gavel Ex. Glen was excited that the hammer price for his foreclosed property was enough to give him a little money after the lender and other costs were paid.

" Sherman Act

"An 1890 act to protect the public from antitrust practices, such as monopolies or combinations that restrain trade Ex. The Sherman Act covers trade and commerce with foreign countries and between states (interstate) commerce.

" DUST

"An acronym used in valuation that stands for demand, utility, scarcity and transferability Ex. Vladimir the appraiser explained how the demand, utility, scarcity and transferability of the property each determined value.

" convertible ARM

"An adjustable rate mortgage that allows the borrower to convert the loan into a fixed-rate loan within a specified period of time. Ex. Calli wasn't sure what her finance situation would be. She preferred a fixed-rate mortgage, but liked the lower interest rate of an adjustable rate mortgage. She opted for a convertible ARM to give her the flexibility to convert to a fixed rate mortgage at a later date.

" seller's agent

"An agent who represents only the seller in the transaction Ex. Marissa was a seller's agent; she owed undivided loyalty to the seller.

" special agent

"An agent whose scope of authority is limited to a specific area Ex. Real estate agents usually act as special agents to their clients; they assist with the sale but cannot sign contracts for the client or make decisions regarding the property independent of the client.

" mutual rescission

"An agreement between the parties to cancel the contract Ex. Because his funding fell through and she had another buyer, both Scott and Nina agreed to mutually rescinde their contract.

" sublease

"An agreement for a new occupant to live in the premises and pay rent to the tenant, who pays the landlord. Requires written permission of the landlord. Ex. Randy is going on a European tour and decides to sublease his apartment, with his landlord's approval. He subleases to Lisa, who pays Randy; Randy remains responsible for paying rent to the landlord.

" list back

"An agreement in which a licensee reserves the right to list a property the licensee has helped the buyer secure or develop. Ex. Marvin worked with developers to help them find properties. He took a reduced fee as a buyer agent in return for a list back agreement. When the properties were developed and put up for sale, Marvin was the listing agent.

" valuable consideration

"An agreement to provide something of worth to another that is either a loss incurred by the person making the promise or a benefit received by the other person; it is an essential element of a binding contract Ex. When Biff promised to give Calli his jet ski in return for her horse trailer, the trailer and jet ski were valuable considerations in their agreement.

" subordination agreement

"An agreement to subordinate a senior to a junior lien Ex. Lenders will sometimes agree to subordinate their mortgage lien to another mortgage if they are certain the property value will pay off both mortgages if foreclosure becomes necessary.

" Superfund Amendments and Reauthorization Act (SARA)

"An amendment to CERCLA (the Comprehensive Environmental Response, Compensation, and Liability Act Ex. Passed in 1986, this expanded the definition of individuals liable for environmental cleanup costs. However an amendment was made to CERCLA at the same time for an "innocent landowner" defense.

" earnest money deposit

"An amount of money the buyer places in escrow or trust to show good faith in the buyer's intention to purchase the seller's property Ex. Candace cautioned her sellers not to accept an offer that did not come with earnest money. "If the buyers are sincere," she told her clients, "they will provide an earnest money deposit to demonstrate that sincerity."

" tie-in arrangement

"An antitrust violation in which the provider of a service requires the customer or client to purchase another service Ex. Fred told his client: """"If you want me, you've got to use my mortgage broker, Barry. He's the best in the business and makes problems go away. I won't work with anyone who doesn't use him."""" This is an illegal tie-in arrangement, and Fred is violating antitrust law.

" real estate appraiser

"An appraiser is someone who, for a fee, estimates the value of real property. If the property is in any way related to a federal transaction of $250,000 or more, the appraiser must be licensed or certified to perform the appraisal. Ex. In most real estate transactions, the buyer will hire an appraiser to provide a professional opinion of value. Often lenders will require an appraisal before lending money on a property, to protect the lender's interests by making sure the value is there.

" effective age

"An appraiser's estimate of the physical condition of a building (actual age may be shorter or longer). Ex. Because the owner of the Babson Village building performed regular maintenance, the appraiser determined its effective age to be 10 years younger than its actual age.

" income approach

"An approach to determining value used for investment properties based on the income it will produce Ex. Appraisers will use the income approach to value for commercial buildings and multifamily residential. It is seldom used for owner-occupied, single-family residential.

" sales comparison approach

"An approach to determining value using similar recent sales data Ex. Both licensees and appraisers use a sales comparison approach when arriving at an estimate of value.

" liquid asset

"An asset that's either cash, or that may easily be converted into cash. Ex. Lender's will look at a borrower's liquid assets to determine the borrower's ability to pay their mortgage in the event of a temporary loss of employment.

" collateral

"An asset used to secure a loan. With a home mortgage, the home itself acts as collateral. If the borrower defaults, the lender can foreclose and take the property. Ex. When Lance purchased a home using financing, he pledged his property as collateral. If he defaults on his loan, his lender can collect what it's owed by forcing a foreclosure sale on his home.

" pre-approval

"An assurance from the lender that the borrower appears to have the funds and creditworthiness to close; includes verifying the borrower's credit standing, available funds and employment history Ex. Although the Millers received a prequalification letter from the buyer for their home, they were relieved a few days later when they received a preapproval letter. They knew that the preapproval carried more weight, although it was still not a guarantee.

" index

"An economic indicator to which interest rates are applied. Ex. When the Consumer Price Index rose, all interest rates based on the CPI rose as well.

" mortgage banker

"An entity that makes and services mortgage loans Ex. Wells Fargo Mortgage is among the several large lenders who are mortgage bankers.

" mistake

"An error involving the parties to a contract that would affect their decision to enter into the contract had they known of the error. Ex. One of the ways in which a contract can be legally discharged is if it is entered into by mistake of the parties.

" trust

"An estate planning vehicle in which property is owned by an entity controlled by the trust maker. Ex. Lyle put all of his property into trust so that in the event of his demise, his assets could pass to his heirs outside of probate.

" homestead

"An estate which gives the owner special rights in property used as a family home. For instance, an approved assessing unit may opt to have different tax rates for homestead properties than for non-homestead properties. Ex. In some states, owners can protect a specific dollar value of their homes from creditor claims if the home is a family home. Categories of homestead properties include condominiums and vacant land not exceeding 10 acres zoned for one-, two- or three-family residential properties, and farm dwellings.

" defeasible fee estate

"An estate which transfers fee simple title, but subject to certain conditions (so inherently less than fee simple). Also called a qualified fee estate Ex. Jackie was granted a deed to her grandmother's house, provided that she didn't marry. If Jackie got married, she'd have to forfeit ownership of the home.

" valuation

"An estimate of value; an appraisal. Ex. Appraisers arrive at a valuation by applying a specified set of criteria.

" seller net sheet

"An estimate prepared by the seller's agent of what the seller's net proceeds will look like if the seller accepts the buyer's offer Ex. Mike's clients were considering accepting an offer on their home, but wanted to know how much money they'd be taking away, once their mortgage was paid off, the title company fees were paid, etc - so he prepared a seller net sheet for them.

" title examination

"An examination by a title company to determine marketable title or uncover any deficiencies in title Ex. ABC Title performed a title examination on Karen's property and it turned up no known defects.

" compaction

"An excessive decrease in soil volume Ex. Compaction inhibits plants from growing on the property and impedes proper drainage, which can wreak havoc on foundations, flood basements, and make buildings unstable and unsafe.

" group boycotting

"An illegal agreement between parties to not do business with a particular person or company Ex. The group boycott of the limited services firm was an antitrust violation.

" principal meridian

"An imaginary line that runs north and south and crosses a base line at a specific point, and used by surveyors of reference to locate and describe land using the rectangular survey system. Ex. A Principal Meridian is one of the prime meridians used in the government rectangular survey method of land description to locate range lines. It serves as the reference meridian in a land survey.

" kickback

"An improper payment of real estate compensation to an unlicensed individual who is not exempt from licensing laws Ex. Fred gives Ginger a 20 percent referral fee from his commission. The trouble is, Ginger is his neighbor, and not a real estate licensee. This kickback is illegal.

" Treasury index

"An index based on the yield from sales of Treasury bills and securities. Ex. Phil's adjustable rate mortgage was indexed by the Treasury bill yield. If the yield went up, his rates would rise at the next rate adjustment period.

" cost of funds index (COFI)

"An index used to determine interest rate changes for some adjustable rate mortgages. Ex. , and advances of financial cost of funds index (COFI) represents the weighted average cost of savings, borrowings of certain financial institutions.

" home inspector

"An individual who inspects homes on behalf of prospective buyers Ex. Ralph, a home inspector, charges $500 to inspect a single-family home. It takes in three to four hours, plus the time to write up a report, and travel time.

" credit history

"An individual's record of repayment of debt; reviewed when lenders determine whether a borrower is a good risk for financing Ex. Due to his abysmal credit history (Derek never met a bill he couldn't avoid), he didn't qualify for a home loan.

" freehold estate

"An inheritable estate with absolute ownership Ex. When Yvette was investigating condos in Hawaii, her friends told her, "Be sure to look for a freehold estate. You don't want a leasehold—you can't pass that on, and it's not worth as much."

" fee simple absolute

"An inheritable estate with absolute ownership; provides the most complete form of ownership and bundle of rights in real property Ex. When Yvette was investigating condos in Hawaii, her friends told her, "Be sure to look for a fee simple. You don't want a leasehold—you can't pass that on, and it's not worth as much."

" fee simple

"An inheritable estate with ownership Ex. When Yvette was investigating condos in Hawaii, her friends told her, "Be sure to look for a fee simple. You don't want a leasehold—you can't pass that on, and it's not worth as much."

" title insurance

"An insurance contract insuring the policy owner against financial loss if the title to real estate is defective Ex. Because title defects sometimes are not public record, and are not found in a title search, Vince purchased title insurance to protect his interests.

" homeowner's insurance

"An insurance policy that combines hazard insurance and liability insurance for a home and its contents Ex. When Jill's property was vandalized and several items stolen, her homeowner's insurance policy paid her claim promptly, and she was able to fix the damage and replace the stolen items.

" umbrella policy

"An insurance policy that covers additional risks beyond the underlying policies; doesn't apply until the primary insurance coverage is exhausted Ex. Abe's standard policy only covered $50,000 for medical expenses. When he was sued for $125,000 and lost in court, the additional $75,000 was picked up by his umbrella policy.

" security

"An intangible investment, such as stocks, bonds, or mutual funds Ex. Real estate investments are securities if they require an investment of money, are a group enterprise, and are intended to make a profit, if that profit is solely derived from the management effort of others.

" rafter

"An internal beam extending from the eaves to the peak of the roof Ex. The roof rafters constitute the framework for the roof.

" latent defect

"An issue with a property not immediately recognizable by a layperson; concealed, hidden, or requiring professional evaluation Ex. Barbara was able to get out of her contract to buy a rancher when the home was discovered to have a latent defect - the foundation was unsafely graded.

" fixture

"An item that is permanently attached to real property. Ex. The bookshelves in the dining room were built-in; they were a fixture and could not be removed by the seller.

" home equity line of credit (HELOC)

"An open line of credit based on the available equity in the borrower's home Ex. Dusty and Susan used funds from their HELOC in order to install a gourmet kitchen, complete with granite counters and two wall ovens.

" broker's price opinion (BPO)

"An opinion of value prepared by a real estate licensee; similar to a comparative market analysis, but not as detailed; a lender or relocation company generally orders the BPO Ex. Chico's broker's price opinion (BPO) was prepared for XYZ Lending company on a potential foreclosure property.

" undivided interest

"An ownership situation in which each person shares in the ownership of the entire property Ex. Tenants in common have an undivided interest in the property. Although one person may own one-half, and another a third, and another a fourth, etc., each shares in the property as a whole.

" timeshare interest

"Another term for owning a timeshare; also known as ""interval ownership,"" ""interval ownership interest,"" and ""vacation ownership interest"" Ex. Sam bought timeshare interest at a resort in Cancun so he could soak up some sun and avoid the cold for a couple of weeks every January.

" depreciable basis

"Basis used to calculate the tax deduction allowed for a property's depreciation each year Ex. The depreciable basis of an investment property excludes the value of the land it sits on

" ethics

"Beliefs and behaviors that are dependent on a person's conscience and values Ex. With certain exceptions, there is no external punishment for an ethical breach, as there is for breaking a law.

" municipal bonds

"Bonds issued by a city, county, or state to fund government projects Ex. Municipal bonds are considered a debt instrument, because when an investor purchases a bond, it's essentially a loan to the authority that issued the bond, for which the authority promises to pay interest.

" loan modification

"Borrowers work with lender to restructure or modify the terms of their mortgage so they can continue to make payments Ex. The lender will verify borrower's ability to meet any changes to the terms of the loan.

" qualifying ratio

"Calculations to determine whether a buyer qualifies for financing. The front-end ratio uses the borrower's monthly housing debt and compares it to the borrower's gross monthly income. The back-end ratio uses total monthly debt compared to gross monthly income. Ex. Maurice applied for a home loan. He had to qualify both under the front-end and back-end ratios. He qualified on the front-end ratio, but his car payment put him over the limit for the back-end ratio.

" grantor/grantee index

"Collective name of two lists that the county recorder updates when a property is transferred Ex. One list is an alphabetical list of all the grantees, and one is an alphabetical list of all the grantors. Together, these lists establish chain of title, beginning with the current owner

" infrastructure

"Community services such as water, sewer, utilities, schools, roadways, medical, fire and police support Ex. Because of inadequate infrastructure, a two-year moratorium on new developments was enacted by the planning board.

" policies and procedures manual

"Contains a brokerage firm's best practices, core business processes and procedures, and guidelines and standards by which the members of the firm perform their respective functions Ex. A good policies and procedures manual will also reinforce and define local, state, or federal laws and regulations applicable to daily real estate practice.

" inspection contingency

"Contract clause that allows the buyer to terminate if an issue arises during the inspection that can't be successfully negotiated Ex. If a repair issue arises that's more than the buyer is willing to take on, the inspection contingency will allow the buyer to negotiate repairs, a sales price reduction, or terminate, receiving a refund of the earnest money. This must be accomplished during the inspection period.

" executor's deed

"Conveys real property from a decedent's estate to a buyer Ex. An executor can only convey an executor's deed if the will or court of law grants the executor the authority to do so.

" development cost

"Cost of developing a property Ex. Jerry's dad always considered development costs (acquiring the land and constructing the buildings) as part of his due diligence.

" International Codes® (I-Codes®)

"Created by the International Code Council to provide standards for residential construction across the country; aka I-Codes® Ex. As a custom home builder, Janice made certain she always complied with not only I-Codes®, but also her state and local building codes.

" Community Reinvestment Act (CRA)

"Created in response to the practice of redlining (lenders' refusal to finance housing in specific minority-based neighborhoods) Ex. CRA has been revised multiple times since its initial passage.

" property management agreement

"Creates an agency relationship between property managers and owners Ex. Property manager Duke was stoked when his first-ever client, Offices R Us, signed a property management agreement with him for one of their office parks.

" mapping requirements

"Criteria a developer must meet in order to obtain approval for a development project. Can include setting aside land for schools and parks. Ex. Sunny Side Development made sure to meet the mapping requirements of the area they were planning on developing before submitting their development plan to the city.

" revolving debt

"Debt that allows a consumer to borrow against a line of credit (e.g., a credit card, home equity line of credit). Ex. Marcus had a home equity line of credit for $20,000. However, he only borrowed $3,000, so he only had to pay interest on the $3,000 borrowed.

" tax depreciation

"Deductions in taxes taken against property depreciation over time Ex. Due to his tax depreciation schedule, Scott was able to deduct $7,000 per year on his investment property.

" covenant of seisin

"Deed warranty that the seller is the actual owner of the property being conveyed and has the right to convey it Ex. The covenant of seisin guaranteed that Mary was the rightful owner of the property and had the right to sell it to Sam.

" delivery and acceptance

"Delivery is the act of giving the deed to the grantee; acceptance is the grantee's receipt of the deed. Ex. After the buyer and seller closed on the transaction, the deed was delivered to the title company, who provided an acknowledged copy to the buyer. The recording of the deed presumed buyer's acceptance.

" bracketing

"Determines a probable range of property values by comparing a group of comparable sales to the subject Ex. The appraiser attempts to include both superior and inferior units of comparison such as age and transaction price.

" Loan Estimate

"Disclosure lender gives to the borrower within three days of the borrower applying for a loan; discloses loan terms, interest rate, and estimated payment Ex. Carla received the Loan Estimate from her lender two days after applying. She liked how obvious things like the interest rate and approximate payment amount were on the sheet - she really hated having to rifle through her purse for her reading glasses.

" homeowners association (HOA) fee

"Dues paid to the homeowners association in a common interest community (e.g., condominium property) to pay for the costs to use and maintain common area elements, such as landscaping, pools, etc. Ex. Brenda pays $1,200 on her mortgage, and another $235 each month in homeowners association fees. When she applied for her loan, her total household debt used to calculate her household debt ratio was the combination of her mortgage payment and her HOA dues.

" testate

"Dying with a will in place Ex. Because Rachel died testate, her last wishes were known by all.

" intestate

"Dying without a will Ex. When a person dies intestate, the laws of inheritance apply.

" unity of possession

"Each co-owner acquires an undivided interest in a property at the same time. Ex. No joint tenant can have exclusive right to possess the property.

" supply and demand

"Economic variables that are inversely proportionate to price Ex. When supply is low, demand is high and price is high. When supply is high, demand is low and price is low.

" drainfield

"Either a number of trenches or a space lined with gravel or sand that naturally filters septic system water and releases it back into the soil Ex. It's important that drainfields are kept clear of trees or shrubs so that their roots don't impede the filtered water from draining out of the septic tank.

" Gramm-Leach-Bliley Act

"Enacted to legislate reforms in the financial services industry and to address concerns relating to consumer financial privacy Ex. The act limits when a financial institution can disclose a consumer's non-public personal information to non-affiliated third parties. In addition, financial institutions are required to notify consumers about their information-sharing practices using a "clear and conspicuous" written privacy notice and must give consumers the right to opt out if they do not want their information shared with third parties.

" intentional misrepresentation

"Essentially the same as fraud; misrepresentation that occurs when the person knows better and intentionally remains silent or misstates the facts Ex. Debra was convicted of intentional misrepresentation for failing to disclose the snake infestation she knew to exist at her listing.

" chain of title

"Establishes the title history or the path and proof of property ownership through a public records search for successive conveyances of title and encumbrances; each owner is considered to be a "link" in the chain Ex. Karen's chain of title showed no gaps in ownership since the time it was built.

" zoning

"Establishing specific classifications to land that impacts how the land may be used Ex. Due to zoning restrictions, Amelia was unable to develop a multifamily housing project on her land.

" security instrument

"Evidence of a pledge of an asset, to be used as security for a loan Ex. A mortgage and a deed of trust are the two primary security instruments used when financing a home.

" operating expenses

"Expenses realized for the operation of an enterprise. Ex. Jan's operating expenses included maintenance and utilities for her fourplex.

" variable expenses

"Expenses that change, depending on occupancy level Ex. Water usage was a variable expense in the Pythian Apartments. The more tenants, the higher the bill.

" actual notice

"Express notice given directly to a person Ex. Karen told her neighbors she would be moving; this was actual notice.

" outlot

"Extra lots beyond those developed in a subdivision Ex. The outlots in the new subdivision were used for a convenience store and lending library

" Homebuyers Armed With Knowledge (HAWK)

"FHA program aimed at educating buyers in order to reduce defaults on FHA-insured loans; Buyers that complete the program receive reductions in their MIP and other benefits. Ex. After completing the HAWK program, Sinead's upfront MIP was reduced by 0.5%, and her annual MIP decreased 0.1%.

" Fannie Mae

"FNMA, the Federal National Mortgage Association; a private, for profit corporation that operates under a congressional charter that buys loans in the secondary mortgage market from lenders in the primary mortgage market Ex. FNMA creates the secondary mortgage market by purchasing and guaranteeing mortgages that meet its funding criteria.

" delinquency

"Failure to make a payment (e.g., a mortgage payment) when due. Even before a late fee applies, if it's past the due date to pay the loan, the payment is late and the loan is delinquent. A delinquency beyond 30 days prompts a report to the credit bureaus. Ex. Due to frequent delinquencies on her automobile loan, Ruby's credit score declined, and she was unable to qualify for a home loan.

" default

"Failure to pay on a loan. Ex. In recent years, many buyers strategically defaulted on their home loans when it became clear that the home was a bad investment.

" FICO score

"Fair Isaac Corporation score; the most widely used credit score, based off information in the credit reports produced by the three credit bureaus (TransUnion, Equifax, and Experian) Ex. FICO scores range from 300-850. The higher the score, the lower the credit risk.

" Environmental Protection Agency (EPA)

"Federal agency that aims to protect human health and the environment Ex. The EPA aims to, among other things, Ensure that all Americans are protected from significant health risks and environmental issues at their homes, schools, and workplaces; and decrease national environmental risks based on the best scientific information available.

" municipal fees

"Fees a developer pays to a municipality as part of the costs of development Ex. The municipal fees for the development cost the developer an extra $8,500.

" impact fees

"Fees charged to a developer by a local government to reimburse for costs of providing public services to the new development. Ex. The subdivision Cheri helped develop required her to pay impact fees to the city to help pay for the construction of offsite capital improvements.

" friable

"Flaky, crumbly Ex. Asbestos that has aged often becomes friable; touching it at all may release dangerous fibers into the air.

" judicial foreclosure

"Foreclosure process requiring court proceedings Ex. Georgia is not a judicial foreclosure state; the security deed, which is the most commonly used security instrument, provides for a non-judicial foreclosure in the event of buyer default.

" cooperative

"Form of real property ownership in which the owner is a member of an association that owns the building and shares stock in that association Ex. Jackson found himself drawn to the idea of residing in a cooperative that focused on sustainable living.

" dedication by deed

"Formally conveying a parcel of land to a municipality Ex. Developer Dan formalized the green space transfer. His dedication by deed was appreciated by the city.

" studs

"Framing members used vertically for wall construction Ex. When hanging heavy objects on a wall, it's wise to nail the hanger for the object into the stud for security.

" crowdfunding

"Funding a project by raising money from a large number of people, usually on the Internet Ex. Delia made arrangements to look seriously at crowdfunding for her next development project in the city center.

" good funds

"Funds that are immediately available to the closing company for deposit and disbursement Ex. The closing company required the buyer to pay with good funds to prevent delays due to funding. The buyer could use a cashier's check, certified check, or wire transfer.

" rate of return (ROR)

"Gain or loss on an investment over a period of time, expressed as a percentage of the investment's cost Ex. The rate of return, when expressed as a gain of an investment sold, is defined as income received plus capital gains realized on the sale of the investment.

" long-term capital gain

"Gain realized from an investment held for more than one year (receives favorable tax treatment, as compared to short-term capital gains) Ex. When Frankie and Dave sold their investment condo, they asked the buyer to postpone closing for two weeks, which would put them over the one-year mark, and allow them to pay long-term gains, rather than short-term gains, on the profits.

" short-term capital gain

"Gains realized from an investment held for less than one year (taxed as ordinary income) Ex. Randy was in the 39% tax bracket. Therefore, his short-term capital gains from selling his investment property after only 10 months of ownership, were taxed at this higher rate.

" Uniform Electronic Transaction Act (UETA)

"Gives electronic signatures and documents the same legal weight as paper writings and signatures Ex. As Flavia securely emailed her clients several documents needing their signatures and then received them back all signed within one hour, she thanked her lucky stars and UETA for making her job so much easier.

" Hart-Scott-Rodino Act

"Gives state attorneys the general the authority to sue on behalf of consumers in their states Ex. States may recover from violators up to three times the amount of damage suffered as a result of violations of the federal Sherman Act.

" Ginnie Mae

"Government National Mortgage Association (GNMA); a federal agency located within the Department of Housing and Urban Development (HUD) that establishes requirements for loans that can be accepted into its mortgage pool Ex. Ginnie Mae issues guarantee certificates, similar to a U.S. government bond and pays the certificate holder interest rates 1% to 1.5% higher than government bonds.

" emblements

"Growing crops, such as Christmas trees or corn, which are produced annually. These are usually not considered fixtures, but are the personal property of the person who planted them. Ex. The Swansons grew wine grapes on their property, and when it was time to sell their vineyard, their latest plantings were considered emblements and were not part of the property price; these were sold separately to the buyer.

" USDA Rural Housing Service (RHS)

"Helps low- and moderate-income individuals attain housing in rural areas through grants, loans, and loan guarantees Ex. The RHS exists to to build or improve housing and essential community facilities in rural areas of the U.S.

" down payment assistance programs

"Helps reduce the amount of money homebuyers need to have saved to put down on a home; program requirements apply; include grants and/or funds for closing costs, second mortgage grants and deferred loans, and mortgage credit certificates (MCCs) Ex. One of the most satisfying aspects of Bob's career was helping moderate-income families attain their goal of homeownership.

" Administrative Procedure Act

"Helps to ensure that no governmental entity acts without an opportunity for public input by requiring public disclosure and discourse before rulemaking Ex. The Administrative Procedure Act was partially enacted in response to FDR's New Deal, in an effort to prevent the federal government from having too much power.

" provenance

"History of ownership and conveyance that drives up the price of an auctioned item Ex. The guitar's provenance as once belonging to Chuck Berry drove up its price substantially at the charity auction.

" manufactured housing

"Housing that is built to HUD specifications; manufactured housing must be at least 320 square feet and built on a permanent chassis Ex. One hurdle that keeps many buyers from seeking manufactured housing is its classification as personal property, absent an affirmative action by the homeowner to change its designation.

" orientation

"How a house is built in relation to the direction of the sun Ex. In hot climates, it may be most important to block the sun, while in cold climates, it may be best to take advantage of as much sunlight as possible.

" Freon

"Hydrochlorofluorocarbons Ex. Freon is a non-toxic, extremely stable chemical substance used in most home air conditioning units.

" warranty

"In a deed, a guarantee that what is stated or promised is true Ex. The deed to Paul's new home included a warranty that there were no outstanding liens on the property.

" scope of work

"Includes house plans and specifications for new construction Ex. Jamie included high-end kitchen appliance in his new build's scope of work.

" net income

"Income after expenses have been deducted Ex. Barry's gross income was $50,000, but once he deducted for expenses, his net income was only $28,750.

" gross income

"Income before expenses are deducted Ex. When Cari computed her gross income it looked fantastic! But by the time she deducted her expenses and found her net income, she thought, "Now that's gross!"

" passive income

"Income earned without active participation, such as rental income Ex. When Bill's book "How to Make a Boatload of Bucks in Real Estate" started paying royalties, he enjoyed the passive income he received.

" net operating income (NOI)

"Income projected after deducting losses for vacancy, collection loss, and operating expenses Ex. Larry checked his net operating income. After deducting for vacancy loss, uncollected debt and operating expenses, he would make 15% this year!

" straight-line depreciation

"Income tax depreciation taken through regular deductions over time Ex. Residential properties have a 26.5-year straight-line depreciation schedule; commercial properties are on a 39-year straight-line depreciation schedule.

" earned increment

"Increase in property value as a result of an owner's actions (improvements, etc.) Ex. Ina added a two-bedroom addition to her home, which resulted in a hefty increase in her property's value.

" unearned increment

"Increase in property value as a result of inflation, change in neighborhood directional growth or other external factor Ex. Staying in her home for 30 years literally paid off for Tenley; property values had increased so much in her neighborhood over the past three decades that she made out like a bandit when she sold her house.

" qualified fee

"Inheritable freehold estate that's defeasible (the grantor can terminate the title; e.g., a parent might transfer property to a child as long as the child remained unmarried Ex. Zuzu's great aunt Olive gave her a qualified fee estate in the cottage as long as Zuzu continued to work toward and earn her PhD in Egyptology.

" hazard insurance

"Insurance that covers property damage due to fire, wind, vandalism, and other hazards (usually flood insurance is separate). Ex. When a tornado blew off the roof of her home, Ramona was able to replace it by filing a claim against her hazard insurance.

" passive fraud

"Intentional nondisclosure; when the law imposes a duty to disclose a known fact and someone intentionally remains silent Ex. When seller Jose failed to disclose the crack in the foundation of the house he was selling, he was sued for passive fraud.

" estate

"Interest in land; alternatively, assets owned by a deceased person Ex. Rights of ownership in land are determined primarily on the type of estate held. A leasehold estate, merely gives the right of possession, where a freehold estate involves ownership.

" construction loan/mortgage

"Interim financing for developing land. The contract allows for disbursements of funds at specific stages of construction. Ex. Builder Barry took out a construction loan to build out his subdivision.

" heir

"Intestate successor Ex. Eldred died without leaving a will, and the search began for any heirs to inherit his estate.

" mortgage REIT

"Invests in real estate debt, including mortgage-backed securities Ex. Alistair invested in both mortgage REITs and equity REITs.

" watershed

"Land formations that direct the water "shed" from higher elevations to lakes, streams, and other bodies of water Ex. Coastal areas that have heavy clay soil, shallow bedrock, and steep changes in incline are particularly sensitive to changes caused by development or landscape shifts.

" unimproved land

"Land that has no structures built upon it, and no services. Ex. The vacant property had no structures, no water, and no utilities. It was unimproved.

" subdivision

"Land that's been or is being developed and is divided into lots. Ex. Grant Meadows was Mike Grant's subdivision. He was looking forward to not only developing but building out half of the lots.

" steep slope

"Land whose slope is 30-45% or steeper, or a % as determined by the local building department to be a """"steep slope."""" Ex. When building on steep slopes, flooding is often a consideration.

" real estate

"Land, plus all things permanently attached to it, naturally or artificially Ex. When you are a practicing licensee, we hope you sell a lot of real estate!

" common law

"Law established by court outcome or tradition rather than statute Ex. Another name for common law is case law.

" personal property law

"Law pertaining to personal property. Ex. Personal property law is addressed in the Uniform Commercial Code and covers items such as trade goods, minerals and timber.

" real property law

"Law pertaining to real property (e.g., real estate). Ex. Real property law pertains to the purchase, sale, transfer, possession of an interest in real estate and all accompanying rights.

" statutory laws

"Laws created by statute, as opposed to case law Ex. Posted speed limits are examples of statutory law.

" estate at will

"Leasehold estate in which the duration of the lease is unknown at the time it's created; may be terminated by either the lessor or lessee at any time Ex. Shelby's lease is month-to-month; she has an estate at will.

" torts

"Legal wrongs Ex. A tort is a wrongful act, and may be intentional or unintentional.

" Taxpayer Relief Act of 1997

"Legislation that allows first-time home buyers to use up to $10,000 of their IRA funds towards the down payment and closing costs of their new home without paying an early withdrawal penalty. Ex. Joanne didn't have to worry about paying an early withdrawal penalty when she took out $10,000 from her IRA as a down payment on her new home, since that use is exempt from the penalty.

" pre-qualification

"Less reliable than a pre-approval; buyer-reported information still needs to be verified Ex. Since it was such a hot market, Sally rejected offers that only came with pre-qualifications; she was looking for a more solid offer: One with a pre-approval.

" special assessment lien

"Levied against real property to help fund the cost of a specific improvement (e.g., putting in sidewalks) Ex. Owners can pay a special assessment in total, but paying in installments with interest is quite common. If an owner defaults on special assessment payments, the county treasurer has authority to sell the owner's property to pay the assessment

" principal (loans)

"Loan balance Ex. When paying off a home loan, the payment is applied toward interest on the loan and the principal, or amount borrowed.

" zoning ordinances

"Local laws or regulations that implement the comprehensive plan by regulating zoning and land use Ex. Zoning ordinances regulate things like lot size, building height, and permitted uses within each zoning classification on a zoning map.

" depreciation

"Loss in property value from any cause Ex. After factoring in the depreciation of the building, the appraised value was lower.

" preventive maintenance

"Maintenance that is done to prevent future damage or deterioration Ex. "A stitch in time saves nine" could be the slogan for preventative maintenance.

" Junk Fax Prevention Act

"Makes it unlawful to send an unsolicited commercial message via fax unless the sender has permission from the recipient or an established business relationship with the recipient Ex. Ben violated the Junk Fax Prevention Act by spamming area fax machines with his listings, even though he had no prior business relationship with the recipients.

" property management

"Managing a property or properties for another Ex. Ross performs property management services for his clients, like Marion Forks, and takes worries such as maintenance and tenant relations off her hands.

" foundation walls

"Masonry or concrete walls below ground level that serve as support for the structure. Ex. Foundation walls also form the sides of the basement area, and inspectors will usually investigate for significant cracking here.

" Consumer Price Index (CPI)

"Measures changes in the price level of consumer goods and services, drawing samples from various marketplaces Ex. The CPI showed that gas prices had risen 10 cents per gallon in the month leading up to Memorial Day.

" partial performance

"Meeting some, but not all terms of a contract Ex. Although he met all other terms of the contract, Jeffrey failed to meet his contractual deadline; the other party could rescind the contract based on his partial performance.

" flashing

"Metal or rubber strips installed at corners and edges of roofing, chimneys, etc., to prevent moisture penetration. Ex. Improper installation of flashing can allow water to seep into a house or under roof tiles, damaging the roof.

" risk management

"Minimizing risk through, for instance, appropriate insurance. Ex. It is impossible to eliminate risk, but there are many ways risk management can be employed; one of these is through proper insurance.

" commingling

"Mixing trust funds with business or personal funds Ex. Jack, a real estate broker, is in a hurry. He includes his client's earnest money check into a deposit into his general business fund. This is commingling, and is illegal.

" mortgage-backed security (MBS)

"Mortgages that are pooled together and sold to investors on the secondary mortgage market Ex. MBSs are considered more appealing on the secondary market if they conform to Fannie Mae/Freddie Mac guidelines.

" sale-and-leaseback/sale-leaseback

"Most often used in commercial transactions, a sale and lease back is where the building's owner will sell the building and rent or lease it back from the new owner. This frees up capital for the owner. Ex. XYZ Corporation needed capital for research and development. It entered into a sale and lease back agreement with a private investor, giving XYZ the funds it needed without necessitating a move from its headquarters.

" alluvion

"Newly formed land mass belonging to the property owner Ex. When a landslide occurred on Jillian's property that wiped out the adjacent creek, she was able to use the alluvion—the new land mass that formed—as her own property.

" non-possessory

"No right to occupy the property; easements are non-possessory rights Ex. Because Sheena had an easement to cross Barb's property, but no right to occupy the property, she had a nonpossessory right.

" recorder

"Often a county clerk, this is the public official who records transactions affecting real property. Ex. The registrar of deeds is the recorder of real property transfers.

" executor

"One named in a will to carry out the deceased wishes in regard to distribution of property. The female term is "executrix" but "executor" is becoming more commonly used for both genders. Ex. Don was named executor in his aunt's will. Don is charged with the responsibility to ensure that her last wishes are carried out.

" obedience

"One of the duties an agent owes to the client, obedience means carrying out all lawful instructions of the client. Ex. Because of his duty of obedience to his client, Sarah, Bill could not show her property on the weekend.

" undivided loyalty

"One of the duties an agent owes to the client, undivided loyalty means the agent puts the client's interests ahead of all others, including the agent's own. Ex. Chip is Angelina's agent. She is about to make a terrible purchasing decision. Chip's duty of undivided loyalty means that he must put Angelina's interests ahead of his own, and tell her about the potential problems, even if it means losing a commission.

" confidentiality

"One of the fiduciary duties, confidentiality means an agent must keep the client's information confidential, provided the agent is not legally required to disclose it. Confidentiality is one of the duties that survives agency termination. Ex. Sherman's client told him, confidentially, that he really had to move quickly, due to his relocation package ending soon. Because of the duty of confidentiality, Sherman cannot share this information with others.

" loyalty

"One of the fiduciary duties, loyalty means putting the client's interests ahead of all others, including your own Ex. Because of his duty of loyalty to his client, Brent showed him a For Sale By Owner property that met his needs, even though the commission rate was very low.

" estate in severalty

"One person owns the property, and all other interests are severed Ex. Break out the bubbly! First-time homeowner, Davaughn, was over the moon to sign the papers on his condo as an estate in severalty. It was his, and his alone!

" section

"One thirty-sixth of a township. In a government survey system, a township is divided into 36 sections. Ex. A section is a square with mile-long sides and an area of one square mile (640 acres).

" devisor

"One who devises (gives something, such as real property) in a will Ex. Marje, the devisor, willed her home to her favorite nephew after she passed.

" testator

"One who drafts a valid will. Ex. """"Being of sound mind, I do bequeathe ..."""" began the testator Cheyenne Smyth, as her attorney began to take dictation.

" lessee

"One who leases and is placed in possession (tenant) Ex. Jefferson, a tenant, is the lessee.

" lessor

"One who leases out, granting temporary possession to another (landlord) Ex. Lila, a landlord, is a lessor.

" appraiser

"One who performs an appraisal Ex. Vladimir the appraiser is certified to provide real estate appraisals for his clients.

" custodial maintenance

"Ordinary cleaning and maintenance, such as vacuuming, trash removal, and landscaping Ex. As part of her duties, Layla had to arrange and monitor custodial maintenance for the properties she managed.

" Federal Housing Finance Agency (FHFA)

"Oversees Fannie Mae and Freddie Mac and regulates the 12 Federal Home Loan Banks Ex. In addition to its oversight and cleanup responsibilities, FHFA sets limits for conforming loans and percentage targets for loans made to low- and moderate-income borrowers.

" remainder interests

"Ownership rights upon the death of the life tenant. Ex. Chad left his family home to his second wife for her lifetime with the provision that it pass, at her death, to the son of his first marriage.

" mold

"Part of the fungi kingdom that includes mildew; mold growth is encouraged by the presence of moisture and a lack of air circulation Ex. It is estimated that 70 percent of households have mold in their walls.

" refinancing, refinance

"Paying off a loan with the proceeds of a new loan, using the same property as collateral. Ex. When Avery refinanced his home, he paid off a higher interest rate loan with a lower interest rate loan, saving him several hundred dollars a month. However, the refinance also reset his loan term to 30 years.

" testers

"People hired to impersonate prospective buyers or prospective tenants to determine whether a landlord or seller is practicing discriminatory behavior. Ex. When Caucasian testers—who presented the same income level, employment history and credit rating—were treated differently by a landlord than their minority counterparts, this was an example of discrimination.

" reasonable time

"Period in which the parties must complete contract terms, if the date isn't specified Ex. Parties may interpret this time differently, which can create issues and a possible claim of breach of contract. In this case, a court may determine a "reasonable time," or it may consider the contract to be invalid because a specific time or date wasn't provided.

" use variance

"Permission to use the land for a purpose prohibited by current zoning restrictions. Ex. April was able to get a use variance for her property and build a duplex where the zoning ordinance had called for only single-family homes.

" discount points

"Points a lender charges at closing; buyers sometimes opt to pay points to get a lower rate or to buy down the interest rate Ex. Xavier decided to purchase 2 discount points to reduce the interest rate on his mortgage from 6% to 5.5%.

" savings and loan association (S&L)

"Popular from the 1930's to 1980's, these organizations would pool their savings, loan it to others, then create more loans off of the money that was paid back Ex. In 1955, Dr. Bennett took out a loan from his local S&L to buy a home for himself and his wife, Betty.

" tenancy

"Possession (rather than owernship) of property Ex. Addie didn't want the hassle of owning a home; she preferred tenancy.

" periodic estate

"Possessory interest that is automatically renewed at the end of each period specified in the lease Ex. Kathy is leasing a house from Wes. It's a six-month lease that will automatically renew for another six months unless either Kathy or Wes terminate prior to the automatic renewal.

" protection clause

"Prevents buyers from reaching an agreement with a seller on a property and then discarding their broker so that neither party has to pay a broker commission Ex. If the term of the agreement ended on January 31, and the buyer contacted a seller whom their broker had previously identified and then signed a purchase contract on February 1, the broker would still be owed a commission under the protection clause.

" government-sponsored enterprises (GSEs)

"Private companies such as Fannie Mae, Freddie Mac, and the Federal Home Loan Bank, created by the U.S. Congress to make borrowing easier and more cost effective Ex. GSEs are not government entities, but are backed by the U.S. government.

" Rivers and Harbors Act

"Prohibits discharging refuse into, altering the course of, or excavating, filling, or changing the condition or capacity of any port, harbor, or channel without a license or permit, or building any wharf, pier or other structure in any water outside established harbor lines without a permit Ex. The Rivers and Harbors Act is the oldest federal environmental law in the U.S.

" Federal Fair Housing Act of 1968

"Prohibits discrimination based on race, religion, color, and national origin in the sale or rental of residential real estate Ex. The Federal Fair Housing Act of 1968 also created the Office of Fair Housing and Equal Opportunity.

" restrictive covenant

"Promises between two parties that appear on a deed and prohibit or require specific use of the property Ex. The restrictive covenant placed on all lots in David's subdivision made him happy: no vinyl or chain link fences.

" joint tenancy

"Property is owned by a group of two or more persons; the death of one person simply raises the stake the others have in the property; called right of survivorship Ex. Nell became nervous when three of the joint tenants in the commercial building she owned with Victor died under suspicious circumstances. She and Victor now shared ownership. Was she next?

" income-producing property

"Property that is managed for cash flow and income. Ex. Commercial, industrial, or residential properties leased to tenants create income for the property owner.

" land

"Property which includes the surface of the earth, down to the center of the earth and upward infinitely into space; it also includes any items permanently attached to the land, such as trees and water Ex. Land may be improved (with buildings or other permanent structures) or unimproved (vacant).

" tax sale

"Property with unpaid taxes is sold at auction Ex. Licensee Kara helped her investor clients by searching tax sale properties that were going up for auction.

" nondisturbance clause

"Protects a valid lease from termination in the event of mortgage foreclosure Ex. When Elena received a foreclosure notice on the door of the house she was renting, she called her attorney to see if the mortgage in question contianed a nondisturbance clause, meaning her lease would be honored.

" Real Estate Settlement Procedures Act (RESPA)

"Protects borrowers from overcharges by requiring disclosure and prohibiting kickbacks Ex. RESPA requires borrowers to be provided with a good faith estimate within three business days of receiving a completed loan application.

" errors and omissions (E&O) insurance

"Protects licensees in the event of an inadvertent omission or error in real estate practice that causes financial harm to a consumer Ex. E&O can be purchased from a commercial insurance provider for a relatively small annual fee, and may be used to cover legal costs in the event of a lawsuit.

" right of first refusal

"Provides a prospective buyer with the right to purchase a property if the seller decides to sell, or if another buyer comes along Ex. Clarisse loves the Victorian house owned by her elderly neighbor, Grace. She knows that at some point, Grace will need to go into assisted living. Clarisse asks Grace for the right of first refusal, and Grace agrees. When it's time for Grace to sell, if Clarisse cannot buy her property, Grace may offer it to other purchasers.

" Uniform Residential Appraisal Report (URAR)

"Provides a standard method for reporting results when appraising single-family homes Ex. The URAR includes sections to report all data collected for the appraisal, and the method used to arrive at a final opinion of value. Lenders require the URAR any time a property is bought or refinanced.

" USDA Farm Service Agency (FSA)

"Provides both direct farm ownership loans and guaranteed loans to lenders Ex. Darla's job as an underwriter with the FSA helped her approve loans for new farms and farming ventures.

" Environmental Quality Incentives Program (EQIP)

"Provides financial and technical assistance to landowners who put conservation practices into place on their agricultural and non-industrial private forestland Ex. EQIP practices focus on natural resource concerns, working to improve soil, plant, animal, water, air and other resources, and are financed through contracts of up to 10 years.

" disclosure

"Providing information to the principal, or any party to a transaction, that is required to be provided by law. Disclosure is one of the duties required of an agent. Ex. Agents have the duty of disclosure of whom they represent, and all material facts relating to the property in a transaction.

" recording/recordation

"Public filing of a document Ex. Ownership cannot be established until the deed is recorded.

" housing ratio

"Qualifying ratio mortgage lenders use to determine the percentage of a borrower's gross monthly income that will be used for housing expenses Ex. Because Leonard's housing ratio was too high, he had to shop in a lower price range, which would result in a lower priced mortgage.

" debt-to-income ratio

"Qualifying ratio used by mortgage lenders, calculated by dividing the borrower's recurring monthly debt by the borrower's total monthly income Ex. Because Janice's debt-to-income ratio was too high, she didn't qualify for a mortgage.

" R-factor

"R-factor or R-value is a term used in insulation and means the degree of resistance to the heat transfer of the walls (how much heat is kept in or out). Ex. The larger the R-factor, the greater the degree of insulation.

" REO

"Real estate owned property; when foreclosed homes don't sell at auction, they become a real estate owned (bank-owned) property Ex. Ella loved the challenge of working with investors interested in REOs.

" real property

"Real estate, plus the interest, benefits and rights included with ownership Ex. Real property can be segmented into a bundle of rights, with each right sold separately, to different owners.

" index lease

"Rent either increases or decreases depending on some economic indicator, such as an inflation index Ex. When Samantha saw the rising gas prices, she knew her rent would go up, too. Inflation meant an inflated rent payment!

" TRID/TILA-RESPA Integrated Disclosures

"Replaced the HUD-1, Good Faith Estimate, and Truth in Lending disclosures with the Loan Estimate and Closing Disclosure Ex. Lenders and brokers alike need to play by the rules of TRID, especially concerning the three day window for consumer review of the documents; any changes means that three day timeframe starts over again.

" undisclosed dual agency

"Representing more than one party in a transaction without fully disclosing the agency relationships to all parties Ex. Several states allow dual agency (representing more than one party in a transaction), but undisclosed dual agency is illegal in all 50 states.

" Secure and Fair Enforcement Act (SAFE)

"Requires every mortgage loan originator to be fully licensed and carry a mortgage surety bond Ex. The purpose of the SAFE Act is to provide additional protection for customers and provide anti-fraud measures.

" littoral rights

"Rights of the owners of a bordering property to the use of a stationary body of water, such as a lake or sea Ex. Cal's property was next to a small lake, and he built a dock where he tied up a canoe in order to take advantage of his littoral rights.

" riparian rights

"Rights of the owners of a bordering property to use a flowing body of water, such as a river or creek Ex. Keri's property bordered Tickle Creek. Keri fishes and wades in Tickle Creek, fully enjoying her riparian rights.

" subdivision regulations

"Rules for a subdivision that ensure compliance with zoning and public safety and preserve real property value Ex. Tiny Town's subdivision regulations required that homes be built from 1,000 to 2,000 square feet—no more, no less.

" building code

"Rules to ensure a safe, properly functioning environment for occupants of a building Ex. The building code specified plumbing, electrical and structural specifications for builders.

" auction

"Sale in which highest bidder buys the property Ex. After the Millers' house was foreclosed on, the lender auctioned it off.

" lock in

"Secure a given interest rate for a specified period of time (between a borrower and a lender). The term is called the lock-in period, and it's often for 30 or 45 days. Ex. Jerome was concerned when closing was delayed. His rate lock in was only good for another two weeks. What if rates rose? He might not be able to qualify for the loan!

" mortgage insurance

"See MIP/mortgage insurance premium and PMI/private mortgage insurance Ex. See MIP/mortgage insurance premium and PMI/private mortgage insurance

" VA mortgage

"See VA loan Ex. See VA loan

" call option

"See acceleration clause Ex. See acceleration clause

" homeowner's warranty

"See home warranty Ex. See home warranty

" common area assessment

"See homeowner association (HOA) fees Ex. See homeowner association (HOA) fees

" lease option

"See lease with option to buy Ex. See lease with option to buy

" multidwelling units

"See multi-family Ex. See multi-family

" home equity conversion mortgage (HECM)

"See reverse annuity mortgage Ex. See reverse annuity mortgage

" owner financing

"See seller financing Ex. See seller financing

" Section 8

"Series of HUD-funded housing assistance programs that are administered on the state level Ex. The Housing Choice Voucher program helps voucher recipients get assistance paying their monthly rent costs.

" ministerial acts

"Services performed that are routine and do not involve judgment, advocacy, or negotiation Ex. Keira helped a buyer fill in some of the blanks in their contract offer for her seller's house, but did not advocate for or advise them in any way.

" deed of trust

"Similar to a mortgage, in this document, the borrower conveys title for the property to a trust, which holds it as security for the lender Ex. Some states use deeds of trust; others use mortgages. Often """"mortgage"""" is used even when a person means deed of trust.

" thrift

"Smaller lenders, such as savings and loan associations, credit unions, and mutual savings banks Ex. Freddie Mac concentrates its secondary mortgage purchases in this area, while Fannie Mae purchases mostly from larger commercial banks.

" no-cost loan

"Some lenders offer no-cost loans; it's important to determine what this means, exactly - are these lender costs only or other costs, such as escrow fees, title insurance, appraisal, etc? Ex. Ruby found that her no-cost loan actually involves several thousand dollars in closing costs!

" equilibrium

"Stage in neighborhood life cycle characterized by stability and steady property values Ex. A neighborhood will likely stay in this stage for several years until time begins to take a toll on homes, and the inevitable deterioration becomes evident.

" growth

"Stage in neighborhood life cycle during which the neighborhood is under development and property values will steadily increase Ex. This stage is usually evident until most of the building sites in the area are developed, at which point it will enter the equilibrium stage.

" decline

"Stage in neighborhood life cycle in which the area declines in desirability and value Ex. Homes in a declining neighborhood are more likely to be rented rather than owner-occupied, and the overall level of maintenance is lower.

" liability insurance

"Standard package homeowner's insurance policy coverage for personal injuries to others resulting from the insured's acts or negligence; may include medical payments for accidents sustained by guests visiting the property and physical damage to others' property Ex. Keri's liability insurance covered her when an open house visitor tripped and fell down the stairs, breaking his arm. The liability insurance paid for the visitor's medical expenses.

" Housing for Older Persons Act of 1995

"States that communities and facilities that meet certain criteria for providing housing to older persons are legally exempt from the familial status discrimination Ex. """"55+"""" communities are exempt from familial status discrimination as long as at least 80% of their occupied units have at least one person aged 55 or older residing in them.

" completion bond

"Subdivision bond; a developer's guarantee that off-site improvements will be made upon completion of the project. The municipality is named as beneficiary for the bond. Ex. When Mike Grant developed Grant Meadows, he provided the city with a completion bond, naming the City as beneficiary. The bond guaranteed that he would install parking medians on the adjacent street.

" chlorofluorocarbons (CFCs)

"Synthetic chemical substances used in cooling products whose release into the atmosphere is blamed for ozone layer depletion Ex. Jane was surprised to learn that Styrofoam was a CFC product, and also that CFC is used in most car air conditioners.

" poly-chlorinated byphenols (PCBs)

"Synthetic liquid compounds used as a cooling and insulating medium in electrical transformers until they were banned Ex. PCBs are a suspected carcinogen that can accumulate in human fatty tissue. The Toxic Substances Control Act banned all PCB production in 1976.

" Truth in Lending Act

"TILA requires disclosure of all financing terms when specific trigger terms are used in advertising. Ex. Due to the Truth in Lending Act, it's illegal for a lender to state """"0% financing!"""" in a financing ad if the remaining terms aren't disclosed.

" moratorium

"Temporary halt on development Ex. The city of Zippyville decided to put a moratorium on all future building until they could beef up their infrastructure to support a larger population.

" triggering term

"Term that, when used in advertising, requires disclosure of other terms so as not to mislead consumers Ex. When creating the advertising pieces for the new subdivision, Astrid intentionally omitted triggering terms such as ""only 3% down.""

" wood-destroying insects

"Termites, wood-boring beetles, carpenter ants, and other insects that damage a property's wooden structural components Ex. Termites are often referred to as "silent destroyers" because they can munch their way through the cellulose found in anything made of wood—flooring, wallpaper, etc.—without the homeowner noticing.

" legatee

"Testate successor who benefits from the deceased's will Ex. When great-uncle Mauritius finally died, his legatees gathered in great anticipation to hear the reading of the will.

" framing

"The ""wooden skeleton"" of a home to which interior and exterior walls are attached Ex. Once the framing was in place, Martina could actually walk through her new house-to-be and get a good feel for what the finished product would be like.

" Farmer Mac

"The Federal Agricultural Mortgage Corporation, created by Congress, provides a secondary market for agricultural mortgage and rural utilities loans. Ex. Farmer Mac is not a direct lender,b ut instead works with lenders to increase availability of long-term credit at stable interest rates to rural America.

" Freddie Mac

"The Federal Home Loan Mortgage Corporation (FHLMC) which increases the availability of financing for conventional mortgages insured by the federal government by purchasing them from lenders in the primary market. Ex. Because Fannie Mae and Freddie Mac guarantee payments int he event of buyer default (for a fee), investors don't have to worry about credit risk. However, participating lenders must adhere to FNMA and FMAC financing guidelines.

" Federal Housing Administration (FHA)

"The Federal Housing Administration (FHA) is an agency of the U.S. Department of Housing and Urban Development. It sets underwriting standards for loans it insures, but it doesn't make loans. Ex. Rita obtained an FHA loan, allowing her to put just 3.5% down, and she also appreciated that her loan's credit score requirements weren't as strict as for conventional loans.

" Home Mortgage Disclosure Act

"The Home Mortgage Disclosure Act (HMDA), enacted by Congress in 1975; requires financial institutions to make mortgage data available to the public Ex. Congress believed that blighted areas were caused in part because financial institutions failed to provide adequate home financing to qualified applicants at reasonable terms and conditions. HMDA requires financial institutions to provide the public with information that demonstrates its actions in serving the housing credit needs of their communities.

" legal capacity

"The ability to enter into legal contracts Ex. A person who is not mentally competent or who has not yet reached the age of majority is not of legal capacity.

" percolation rate

"The absorption rate of soil for a septic drain field; determined through a percolation test (aka perc test) Ex. Septic system designers use the results of a percolation test to properly construct septic systems. The uniform slowest rate of drop of the water level over a measured time interval is converted to minutes per inch ad used as a basis of design in determining the size of the septic system.

" spot zoning

"The act of allowing a specific property to be zoned differently from adjacent properties Ex. Arty had friends on the zoning board of appeals and was able to muscle in a spot zoning change to commercial for his property so he could run a restaurant in his neighborhood.

" reciprocity

"The agreement between states to allow licensed individuals to do business in both states Ex. Due to reciprocity, Cindy, who was a broker in Connecticut, was able to perform real estate activities in New York.

" margin

"The amount a lender charges (expressed in points or percentages) above a variable index, as in an adjustable rate mortgage Ex. The lender's margin is constant; the interest rate changes when the index to which the margin is added varies.

" down payment

"The amount of cash a buyer contributes to the purchase price (as opposed to borrowed funds) Ex. The Kimballs' loan requires them to put at least 20% down. This down payment will go toward the purchase price, and they will obtain financing for the other 80 percent. When they make their offer, the Kimballs include earnest money--a down payment of 10% to the seller's attorney. At closing, this amount will be deducted from the cash they need to bring to fund the purchase.

" return on investment (ROI)

"The amount of income an investor's financial investment is producing; expressed as a ratio: (investment gain - investment cost) ÷ investment cost Ex. Corinne's commercial clients were strongly interested in their potential ROIs.

" equity

"The amount of value in a property after debts associated with financing have been paid Ex. After one year, Cameron's property had increased in value by 20%, and his equity went from $10,000 (his down payment) to $40,000 (the value after his loan balance).

" millage rate

"The amount per $1,000 used to calculate property taxes; one mill represents $1 in tax per $1,000 of assessed value. Ex. Beverly's tax rate is 150 mills and her property's assessed value is $25,000. Her property tax calculation, then, is: $25,000 x .150 = $3,750.

" initial cap

"The amount the interest rate may adjust up upon the first rate adjustment in an adjustable rate loan Ex. A loan has a margin of 2% and is based on an index, which is at 3%. The loan's initial interest rate is 5%. The loan's cap structure is 2/2/5. At the first adjustment, the index is at 4%, so the new interest rate is 6%. This is a 1% adjustment, below the initial cap of 2%.

" fascia

"The area of material facing the outer edge of the soffit. Ex. The fascia is a board, either 1"x6" or 1"x8" that is perpendicular to the soffit. Gutters are attached to the fascia.

" soffit

"The area under the roof extension. Ex. The soffit can be the underside of any construction element, although it is commonly used to mean the area under the roof extension.

" police power

"The authority of all levels of government to act on behalf of the health, safety, and welfare of its citizens Ex. Exercise of police power must be in the public's best interests, such as when a city imposes zoning restrictions, building codes, or a curfew.

" easement

"The authorized use of another's property for a specific purpose; runs with the land Ex. Easement is a non-possessory right to use another's property. It does not involve ownership.

" full-service lease

"The base rent, the nets, utilities, and janitorial services are included in one lease rate, based on price per square foot Ex. Don't confuse this with a NNN lease, where the tenant pays these charges separately. By including charges for these in the base rent, the base rent remains stable over time.

" mortgagor

"The borrower in a mortgage, usually the homeowner. Ex. John took out a mortgage with ABC Bank. ABC was the mortgagee; John was the mortgagor.

" sill plates

"The bottom (or first) horizontal member of a wall or building. Ex. Think of the sill as the base, or support for the vertical members that will be attached to it.

" progression

"The bump in value that a lower-valued property receives when an adjacent property's value increases Ex. David's neighbor put in new siding, new windows and a new walkway. Although David didn't like the noise from the construction project, he loved the increase in his value. """"Progression is a beautiful thing,"""" he told his spouse.

" title company

"The business used to determine clear ownership and possibly to facilitate the closing Ex. XYZ Title Company examined the title for the property Bill was purchasing. When it was satisfied as to the condition of title, it agreed to insure the title, for which Bill paid the premium.

" insurance estimation

"The combined value of a homeowner's belongings and the home replacement costs, should the dwelling be destroyed Ex. To make sure she purchased the correct amount of insurance for her new condo, Darlene worked up an insurance estimation.

" replacement cost/replacement cost new

"The construction costs at current prices to replace a property. It won't be an exact duplicate, but serves the same purpose or function as the original. Ex. Jason, whose mid-century Modern home was destroyed by fire, wished his insurance covered replacement cost. Unfortunately it only paid out the actual cash value, which wasn't enough for him to rebuild a similar structure.

" reproduction cost

"The construction costs at the current price to exactly reproduce the property Ex. When evaluating insurance, be sure to check if you're covered for replacement cost or reproduction cost, particularly if the property is of historic value.

" underwriting

"The detailed analysis of a loan application, evaluating the borrower's ability to repay the loan and conformance to the lender's qualification standards Ex. Brent was excited when his loan went to underwriting. Although he was asked for more information and documentation, this meant that his loan was underway!

" performance of a contract

"The discharging (ending) of a contract through the full completion of all terms Ex. Without full performance of the contract, Bill's house wouldn't sell.

" Foreign Investment in Real Property Tax Act of 1980 (FIRPTA)

"The disposition of a U.S. real property interest by a foreign person (the transferor) is subject to the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA) income tax withholding. Ex. Because the seller was from Canada, FIRPTA applied, and the buyer of the property was required to withhold a percentage of the sales price to ensure payment of taxes owed.

" price

"The dollar amount agreed upon for the sale of a property Ex. If the list price for a property is set beyond what the market will bear, buyers will not buy.

" assessed value

"The dollar amount to which the local tax rate is multiplied to determine property tax owed Ex. Although the appraised value of Myra's bed and breakfast was $600,000, her tax assessed value was only $475,000.

" adjustment

"The dollar value or percentage added to or subtracted from the sales price of a comparable to arrive at an indicated value for the subject Ex. Whether the adjustment is made for a "good" or a "bad" feature, it is made to the comparable, not to the subject.

" fiduciary duties

"The duties of obedience, loyalty, disclosure, confidentiality, accounting and reasonable skill and care comprise the list of fiduciary duties an agent owes the principal. Ex. Fiduciary duties can best remembered by the acronym, OLD CAR.

" voltage

"The electrical pressure that pushes through electrical wires. Ex. Power surges, which increase the voltage in your electricity lines, can be caused by lightning striking nearby, increasing the electric pressure by millions of volts (even a surge protector won't be able to save your computer in this case)

" community property

"The equal ownership of property in a marriage; nine states recognize community property: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin Ex. Under the community property law, each spouse owns equal interest in shared property.

" servient estate

"The estate that gives the easement. Ex. Because Daniel had the right to cross his property, Ben's property had the servient estate.

" servient tenement

"The estate that gives the easement. Ex. Because Daniel had the right to cross his property, Ben's property had the servient tenement.

" siding

"The exterior covering of the walls of a house that goes over the sheathing. It may be metal, wood, vinyl, or a combination of fieldstone, brick, or other materials. Ex. Brick is often used in place of siding in areas where it is more abundantly available.

" adjusted basis

"The final basis for taxing purposes computed by taking acquisition costs plus capital improvements and subtracting depreciation taken Ex. When Mark computed the adjusted basis in his property, he had to subtract $10,000 in depreciation he had taken over the years.

" directional growth

"The general trend toward which a neighborhood appears to be headed Ex. Directional growth is considered by appraisers because it plays a part in determining various principles of value, such as supply and demand and highest and best use. So a property located within an "up and coming" neighborhood might be valued higher than a similar home in a neighborhood that seems to be in decline.

" consideration

"The giving of something of value, which can include the agreement to not do something. Consideration is a required element of a binding contract. Ex. Carly is a buyer and Wade is a seller. Carly gives Wade earnest money and a promise to purchase his property. This is her consideration. Wade's consideration to Carly is his agreement to sell his property.

" grantor/grantee

"The grantee is the recipient of the deed (usually the new buyer); the grantor is the giver of the deed (usually the seller) Ex. When Carol bought Todd's property, she was given a deed by Todd. Todd was the grantor, and Carol was the grantee.

" price fixing

"The illegal agreement between competitors to fix services or products at a specific price Ex. An agreement to charge a """"standard"""" brokerage fee is price fixing and is an violation of antitrust law.

" encroachment

"The illegal intrusion of some structure or object across a property boundary line Ex. Jimmy hadn't realized that the 3-bay garage he built was an encroachment on his neighbor's property of two feet. He would either have to move it or compensate his neighbors.

" redlining

"The illegal practice of a lender to refusing to lend in a specific area, often based on the minority makeup of the area Ex. Redlining is illegal under the Fair Housing Act; lenders must make loans based on the creditworthiness of the individual, and not the characteristics of property owners in a given geographical area.

" steering

"The illegal practice of nudging buyers away or toward a specific area based on the presence or absence of protected class members in the area relative to the buyers Ex. When Jillian told her Asian buyers that they wouldn't be happy in the Irvington neighborhood because of its nearly all-white population, she was illegally steering them away from the neighborhood.

" market allocation

"The illegal process of dividing up a market by geography, price point, etc., to limit competition Ex. When the two competing real estate firms agreed to divvy up the market into east and west regions, and stay out of one another's area, this was an antitrust violation called market allocation.

" equity buildup

"The increase in equity due to increase in value in a property. Ex. After one year, Cameron's property had increased in value by 20%, and his equity went from $10,000 (his down payment) to $40,000 (the value after his loan balance). His equity buildup was $30,000.

" plottage

"The increase or decrease in land value that occurs when several parcels are combined into one large plot, as that value compares to their combined total value if sold individually Ex. Plottage frequently results in an increase in value over what the individual parcels could sell for on their own.

" trustor

"The individual creating the trust Ex. Lisa's parents, as trustors, decided to make Lisa the trustee as she has always been the sensible one of their children.

" procuring cause

"The initiator in a chain of events that leads to a real estate sale Ex. Because Liza originally showed Dewey the property, she was owed a commission through the concept of procuring cause, even though it was Billy who wrote the offer.

" prime rate

"The interest rates that lenders offer to preferred customers. Ex. Renaldo had worked on his credit for years and when he applied for a home loan, he qualified for his lender's prime rate. His friend, Susan, who had a less stellar credit, also applied with his lender, and was offered the prime rate plus another .75%.

" reconciliation (appraisals)

"The last step in the appraisal process, when the appraiser weighs the estimates of value from the three approaches to value (market, cost, income) and arrives at a final number Ex. Because the fourplex was a rental property, Vladimir weighed the number derived from the income approach to value heaviest when he completed the reconciliation for the appraisal.

" highest and best use

"The legal and feasible use of a property that would return its highest value Ex. When Shane bought the farm property he knew its highest and best use would be realized by partioning it; that, however was not his dream.

" title

"The legal concept of property ownership and the rights that go with it Ex. When the transaction between Karen and Vince is closed, Vince will have title to Karen's property.

" conveyance

"The legal transfer of property ownership to another Ex. In feudal times, the conveyance of property was conducted on the property itself when the former landowner handed the future landowner a symbol of the transfer, such as a stone, twig or bit of soil.

" mortgagee

"The lender in a mortgage Ex. ABC Bank was John's mortgagee; they held the mortgage on his property.

" option period

"The length of time in an option contract in which the optionee may act Ex. When Zara and Clyde signed an option contract for Zara to purchase Clyde's vacant lot, they set the option period at six months.

" reversion

"The lessor's right to reclaim possession of the property at the end of the lease term Ex. Ahmed claimed the right of reversion when the lease was up on his rental house.

" vicarious liability

"The liability of a person for the actions of another when the other person is acting on his or her behalf Ex. Even though Stew did not ask his agent to lie for him, the fact that his agent did put Stew at risk of being vicariously liable for his agent's actions.

" lienor/lienee

"The lienor is the party holding the lien, such as a lender. The lienee is the person who needs to pay up! Ex. ABC Bank was the lienor who placed a lien on Jamie's property. Jamie was the lienee.

" situs

"The location of a property Ex. Often the situs of a parcel will determine its value.

" voluntary alienation

"The loss of real property ownership with the owner's consent (e.g., traditional sale) Ex. When Craig sold his property to Yvette, this was an example of voluntary alienation.

" regression

"The loss of value of a property when an adjacent property depreciates Ex. Mark was pretty unhappy about the regression that occurred when his neighor left the property vacant for years. He finally called the city, """"Do something about it! My property is declining in value!"""" he said.

" loan origination

"The making of a loan Ex. Often, lenders will charge consumers a loan origination fee to cover the costs of making the loan.

" secondary mortgage market

"The market for loans sold by the primary market; a secondary lender will service the loan for the consumer Ex. MegaBillions Bank was a member of the primary mortgage market. It packaged its loans and sold them to the secondary mortgage market. ABC Bank is part of the secondary mortgage market. It buys loans from MegaBillions and services them for the consumer.

" HUD median income

"The median family income for a statistical area as determined by the Department of Housing and Urban Development (HUD). Ex. Certain loan products are designed for those who live below the HUD median income of their area.

" originate, hold, and service

"The original lender holds and services the loan for the length of the loan term. Ex. Margaret appreciate that the lender she initially borrowed with was the same lender that she sent her payments to every month and eventually released the title to her once the loan was paid off.

" originate, sell, and service release

"The original lender sells the loan on the secondary mortgage market and someone else services it. Ex. Big Time Bank routinely originated loans, then immediately dumped them into the secondary market, letting someone else worry about collecting payments every month.

" originate, sell, and service

"The original lender sells the loan on the secondary mortgage market, but continues to service it. Ex. Even though Joe's mortgage loan was sold to an investor on the secondary market, he still sent his payments to his original lender every month.

" amortization

"The paying off of a debt with regular installments over a fixed repayment schedule Ex. A 30-year fixed rate loan provides amortization for the debt—in 30 years it is fully paid off.

" revocation

"The permanent removal of a license. If a real estate licensee has a license revoked, it may not be re-enacted before one year has passed. Ex. Ernie violated license law, and his license was revoked. He may not apply for a new license for at least one year.

" trustee

"The person in charge of carrying out the terms of the trust Ex. Lisa was the trustee for her parents' estate, and acted on behalf of herself and her siblings, as beneficiaries.

" remainderman

"The person receiving title upon the death of the life tenant Ex. When his step-mother followed his father in death, the life estate she had in the family home ended, and it passed to Chad, as a remainderman.

" principal (agency)

"The person represented by an agent in a real estate transaction Ex. Mary is selling her house and is using Kamal as her listing agent. Mary is the principal in the transaction.

" payee

"The person to whom a negotiable instrument is intended to pay. Ex. When Rita wrote a check to her sister, her sister was the payee.

" plaintiff

"The person who files a lawsuit in a civil matter. Ex. Connie sued Darius for divorce. Connie is the plaintiff and Darius is the defendent.

" topography

"The physical features and contours of the land Ex. Mike Grant included topography in the site plan he submitted to the planning board for approval. It showed trees, boulders, and the location of wetlands and streams.

" levy

"The placement of tax that creates a lien. Ex. The municipality's tax levy created a $2,000 lien on individual property owners.

" straight-line loan

"The portion of the payment applied to the principal remains the same with each payment, and the interest amount varies according to the outstanding loan balance Ex. With a straight-line loan, the amount of each payment changes, and the borrower makes higher installment payments at the beginning of the loan when the loan balance is higher and more interest is due. Over time, the amount of each installment payment lowers the outstanding balance.

" common areas

"The portions of a property shared by common interest owners (e.g., in a condominium property, this would include the pool) Ex. Homeowners pay dues to maintain the common areas of the association.

" eminent domain

"The power of the government to take private property for public use Ex. The new highway was going to cut right through a neighborhood; the government took the property for the highway, compensating the property owners at fair market value.

" sales price

"The price at which a property actually sells; also known as "market price" Ex. While the market value of Sylvia's property was $265,000, because of some structural issues discovered during the home inspection, the sales price ended up being a bit less.

" market price

"The price at which a property can be bought or sold Ex. Market price is influenced by buyer demand and seller supply.

" fair market value

"The price that a willing buyer and seller would agree to, given market conditions and absence of duress. Ex. When a bidding war ensued, the fair market value of all properties in the city shot up.

" primary market

"The primary market is where loans are originated; the secondary market is where they are sold Ex. Most home loans originated in the primary market end up as part of package of mortgages that are sold on the secondary market.

" probate

"The process by which the court determines how a deceased person's estate should be distributed Ex. To avoid probate, many people put all of their property in a trust.

" tacking

"The process of adding one adverse possessor's possessory time to the subsequent owner's adverse possession time to meet the statutory requirements Ex. Although Andy had only been using Jacques' property for 5 years, when his daughter, Amy, inherited the property, she continued the adverse use and eventually met the statutory requirement by tacking her time on to her dad's.

" assemblage

"The process of combining separate adjacent parcels of land into one piece Ex. Through the princple of assemblage, by purchasing several adjoining parcels, the combined parcel was worth far more.

" gross domestic product (GDP)

"The quantity of goods and services our country produces, which influences demand for commercial properties Ex. Business in Pottersville was booming, thanks to the upswing in the GDP.

" loan-to-value ratio (LTVR)

"The ratio of a loan amount to the value of the property being purchased Ex. If a loan to value ratio exceeds 80%, the borrower will likely have to purchase private mortgage insurance for the lender.

" revitalization

"The rehabilitation or renewal stage of the neighborhood life cycle Ex. The neighborhood gains a renewed appeal for some reason, such as access to jobs or amenities, and the affordable prices allow people to purchase and renovate the homes.

" market rent

"The rent a leased space would likely get in the current market Ex. Since the market rents downtown had skyrocketed, Ansley decided to look for her new rental space in the suburbs.

" setback

"The required distance between the property line and the building line Ex. Cameron was happy that the setback requirement was 12 feet in his neighborhood, especially when he saw the horrible color his neighbor painted his house.

" reconveyance

"The returning of a deed to the borrower once their debt is pain in full Ex. Once Albert had made his final loan payment, the lender reconveyed his deed back to him - Albert owed his home free and clear!

" option to renew

"The right of a tenant to renew a lease upon the expiration of a lease period. Seen frequently in commercial leases. Ex. Brenda owns a boutique and is signing a lease in a building for her shop. Because she knows it can take several years to create loyal followers in a given market, she asks for an option to renew in her lease so she is not forced to find a new location just when her business is taking off.

" right of ingress or egress

"The right to enter (ingress) or leave (egress) a property. Ex. Lila's easement on her neighbor's property gave her the rights of ingress and egress.

" possession

"The right to live or work on a property Ex. When Sally signed the lease on space for her new candy shop, she immediately took possession.

" profit (land)

"The right to take products out of the soil Ex. Profit in land can actually be more valuable than owning the land itself. The right to drill for oil, for instance, could easily outvalue the land.

" bundle of rights

"The rights of ownership that come with owning real property; includes both tangible and intangible rights; may be sold separately from the land itself Ex. A property may have many owners; the sticks in its bundle of rights may be sold individually. One may own air rights, another mineral, another water, etc.

" conditions, covenants, and restrictions (CC&Rs)

"The rules of an association, such as a homeowners association or cooperative Ex. Robby made sure to check the CC&Rs before purchasing his condo. He wanted to make sure his pet iguana, Elvis, would be welcome.

" rate lock

"The securing of a given interest rate for a specified period of time between a borrower and a lender. Ex. Jerome was concerned when closing was delayed. His rate lock was only good for another two weeks. What if rates rose? He might not be able to qualify for the loan!

" pitch

"The slope of a roof. Ex. The pitch of a Tudor style home is quite steep, and means reroofing can cost quite a bit more than a flatter roof.

" escrow disbursement

"The spending of escrow funds to pay property taxes, hazard insurance, mortgage insurance, etc., when due. Ex. Michelle's lender made an escrow disbursement of $547 to pay her annual hazard insurance.

" escheat

"The state's power to claim the estate of a deceased person who left no wills, heirs, or creditors Ex. When Rhonda passed away, she had no will, no heirs and no creditors. The state took possession of her mobile home and collection of Elvis paintings through the power of escheat.

" marital status

"The status of being married or divorced Ex. Marital status is a protected class in some localities.

" assignment (rentals)

"The substitution of tenants, putting the responsibility for the lease contract in the new tenant's hands. Requires written permission of landlord. Ex. Daniel is moving out of state, and assigns his lease to Benjamin. Benjamin becomes responsible for the lease.

" tax assessor

"The tax assessor is a local government official who estimates the value of real property within a city, town or village. The assessor may be elected or appointed, and serves for six years. In addition to placing value on all taxable property, and listing it on the assessment roll, the assessor maintains tax maps, assists taxpayers with certain exemptions, and maintains property tax records for the municipality. Ex. Once Mary's property is sold, the sales price and permit status will be reviewed by the tax assessor, who will likely update the tax value at the next assessment period.

" license

"The temporary right to use another person's property Ex. Gabby got a temporary license to install a political billboard on a farmer's property.

" percentage lease

"The tenant pays a base rent, plus an additional charge based on a percentage of the tenant's gross sales or income (usually in retail property rentals, like shopping centers and malls) Ex. Angelina's Pizzeria gave a percentage of their profit to their landlord as a part of their percentage lease.

" gross lease

"The tenant pays a fixed rent and the landlord pays all operating expenses; most common type of lease used in residential rentals Ex. Matilda made sure her lease would be a gross lease; she wanted a fixed rent and didn't want any part in sharing the operating expenses of the home.

" net lease

"The tenant pays on top of the rent one or more of the following expenses: property taxes, property insurance premiums, or maintenance costs Ex. The Peach Tree Office Park issued net leases to their tenants, so they would share in the cost of property taxes and utilities. The landlord didn't want to have to do all of that herself!

" loan servicing

"The term for the lender processing payments, sending statements, and managing the escrow/impound account for a loan Ex. Although ABC Bank originated loans, it didn't service loans, and instead turned that responsibility over to City Lender.

" title theory

"The theory that a lender owns the property until the underlying loan is paid off Ex. Whether a state is a title theory state or a lien theory state (in which the lender is considered to have a lien but not ownership of the property while the loan is unpaid) impacts the foreclosure process.

" examination of title

"The title report derived from public records or an abstract of title. Ex. A preliminary examination of title turned up another owner with a claim to the property.

" assignment (mortgages)

"The transfer of a mortgage from the original lender to another Ex. Sima must not have been paying attention to her disclosures because she was surprised with EZ Well Bank assigned her mortgage to another lender.

" condominium conversion

"The transformation of a building into condominiums (usually with an apartment building). Ex. Ken had been renting an apartment at Brighton Arms for 10 years when the new owner decided to convert the building to condominiums. As a tenant, Ken was given the option to purchase his own unit in the condominium conversion.

" timeshare estate

"The type of timeshare ownership that is a fee simple ownership Ex. Max planned on using his timeshare estate in Hawaii for a number of years, then selling it once the property appreciated enough for him to make a decent profit.

" prohibition of waste

"The understanding that a life tenant or other possessor of a property will maintain it, pay taxes, and do other things to keep up the property Ex. Max, the life tenant in his son's property, made sure to keep the home in good repair and pay the property taxes on time during his possession, so as to prevent waste of the property.

" HUD-1

"The unofficial name for a now outdated settlement statement that was provided to borrowers prior to closing Ex. The HUD-1 form has been replaced by the Closing Disclosure for most residential transactions.

" maintenance

"The upkeep of a property Ex. Cooperative shareholders pay a maintenance fee to pay for trash removal, landscaping and sidewalk cleaning.

" investment value

"The value to an investor of an investment property Ex. Investors often weigh potential investments to determine which will provide the best investment value.

" erosion

"The wearing away of land by wind, water, and other natural disturbances Ex. Kalmut decided to landscaping to help prevent erosion of the soil on the sloped property.

" correlation process

"The weighing of the value factors in an appraisal, with the appropriateness of the various comparable sales in relation to the subject considered Ex. Through a correlation process, the most weight may be given to one or two of the sales that are presented, or equal weight may be given to all.

" value in use

"The worth of a property as the owner is currently using it Ex. Value-in-use may include cash flow and other benefits that a property generates for its owner under a specific use.

" leasehold estate

"This defines the legal relationship between the parties who sign the lease. It grants possession, but not title, to the tenant, and is for a limited period of time. Ex. Janice signed a lease with Carolyn, to rent her house. As Carolyn's tenant, Janice now has a leasehold estate on Carolyn's house. She has the right to possess, but she does have ownership.

" quiet enjoyment

"This is a right of a tenant to enjoy the property without being dispossessed or trespassed upon, even by the landlord Ex. Leigh discovered that her landlord had been entering her apartment while she was at work. This is a violation of her right to quiet enjoyment.

" reference to a plat

"This is used in legal descriptions on documents such as deeds. The reference is to a subdivision plat map. The page number and subdivision name are provided, the lot and block as well, and the recording authority. Ex. The legal description of Hank's new property was included on his deed by reference to a plat.

" post and beam construction

"This type of framing uses wood members that are much larger than ordinary studs, and are spaced farther apart. Ex. Although rarely used in residential housing because of the expense, post and beam construction allows large expanses between supports, allowing larger window spaces and high vaulted ceilings.

" timeshare use

"This type of timeshare ownership does not convey ownership, just the right to occupy the property for the period of time set forth in the timeshare contract. Ex. Since Monica's timeshare interest was taken as """"timeshare use,"""" she could enjoy the property as much as her contract allowed, but wouldn't be able to sell it herself eventually.

" menace

"Threat of violence Ex. Marsha's threat to cut down the seller's peach tree unless they agreed to trim it before settlement constituted menace, and invalidated the contract.

" floor area ratio (FAR)

"Total net floor area divided by the total lot area Ex. The floor area ratio can be used in zoning to limit the amount of construction in a certain area. For example, if construction must adhere to a 0.10 FAR, then the total area of all floors in all buildings constructed on the parcel must be no more than one-tenth the area of the parcel itself.

" tax-deferred exchange

"Trading of business properties or investment properties in order to defer paying taxes on gains from a sale of the property. Ex. If Jerome doesn't identify a property with which to do a tax-deferred exchange, he will have to pay capital gains on the sale of his triplex.

" fraud

"Trickery or deceit to induce someone to do something, especially in a real estate contract; may involve concealment of material facts, providing false information, or using trickery Ex. Fraud can involve concealment or omission of material facts in order to induce a party to do or not do something.

" fee on condition

"Type of defeasible estate recognized by the words """"but if."""" The estate continues unless a specific event occurs, in which case it terminates Ex. Agatha didn't care that her marriage to Gustave made her lose her fee on condition estate in her parents' old house. She'd lived under their thumbs long enough.

" home warranty

"Typically covers items from workmanship and materials to systems and structural issues Ex. Barb asked her sellers to consider including a home warranty for the buyers.

" corporate bonds

"Typically issued when a business needs ready cash for capital improvements, development, or expansion Ex. Similar to municipal bonds, the bonds are issued at face value and earn interest over the holding period, after which the investor receives the face value of the bond.

" nonhomogeneity

"Uniqueness, the inability to exactly replicate something. Ex. Even if two houses were identical, because no two parcels of land are interchangeable, real estate is said to have the characteristic of nonhomogeneity.

" take-out loan

"Used to convert a short-term construction loan to more traditional, long-term financing; aka end loan Ex. Once the Millers received their certificate of occupancy on their new vacation (and one day retirement) home, they converted their construction loan to a take-out loan, a more traditional 30-year mortgage.

" undue influence

"Using a position of trust or power to bend them to your will Ex. As Nevin's guardian, Thomas was in a position to use undue influence over him in legal matters.

" mortgage fraud

"Using deceptive means to obtain financing or make a loan that would otherwise not be possible were the facts known Ex. When Valerie misstated her income on her loan application, and her employer went along with the deceit, they were both guilty of mortgage fraud.

" conversion

"Using escrow funds for personal or business purposes Ex. Joanne engaged in conversion when she borrowed money from her brokerage's escrow account to pay her rent.

" single-family home

"Usually a detached residence designed for one family Ex. Julia loved living in a condo. She missed her single-family home because of its yard, and privacy, but she didn't miss the upkeep at all!

" volatile organic compounds

"VOCs; When they break down, they release toxins into the air/atmosphere, endangering health and the environment Ex. Concerned for her family's health, Heather made sure to purchase low-VOC paints and solvents when she repainted the family home.

" VOCs

"Volatile organic compounds; emitted as gases from certain solids or liquids Ex. Concentrations of many VOCs are consistently higher indoors (up to 10 times higher) than outdoors.

" groundwater

"Water found beneath the earth's surface that collects in aquifers Ex. When oil tanks leak, their chemicals can contaminate groundwater.

" surface water

"Water that's above the ground in the form of rivers, streams, lakes, ponds, seas, and oceans. Includes storm runoff. Ex. Surface water is owned by the public.

" reasonably foreseeable

"What buyers can sue sellers for when sellers breach the contract; covers buyer expenses such as inspections, surveys, and other buyer costs Ex. When Saffron broke her contract with Bob on the sale of her house, he'd already paid for reasonably foreseeable costs, such as the inspection, the appraisal, and the survey. So she had to reimburse him for these costs.

" principal balance

"What's left to be repaid on the principal of a loan (doesn't include interest and other charges). Ex. The remaining balance on her loan was $22,100, but Juanita also needed to factor in other charges for her total payoff, not simply her principal balance.

" subrogation (insurance)

"When a covered party grants permission to the title company to pursue a party that caused a claim or loss Ex. When the title company is forced to pay a claim against the policy, the covered parties give the title company permission to pursue the party who caused the loss. The covered parties are said to "subrogate" their rights to the title company.

" retaliatory eviction

"When a landlord evicts or threatens to evict a tenant because of a complaint the tenant made; illegal in many states Ex. When Mark complained to the health department about the roaches his landlord wouldn't get rid of, the landlord threatened to evict him.

" taking

"When a private property is regulated by a government authority to the economic detriment of the owner. Ex. The new setback requirements meant that Gerald could no longer build on the property he had purchased. This constituted a taking as it made his property unusable, and made it impossible to resell it and realize any return on his investment.

" reverse exchange

"When an investor finds and closes on an investment property and then decides to sell another property, he or she can do a tax deferral "backward."" Ex. Margo couldn't pass up on the amazinf deal she found on a condo downtown, so she closed on it quickly and then sold another property she owned in the suburbs so she could do a reverse exchange.

" mutual mistake

"When both parties to a contract have an incorrect belief about an important fact Ex. Elizabeth and Joe, the seller and buyer of a property, didn't realize that the home Elizabeth was selling was subject to ground rent.

" interpleader action

"When brokers deposit disputed escrow funds with the court and then obtain a discharge and release from any liability regarding the escrow account and the disputing parties Ex. When the dispute over the escrow funds in a failed transaction rose to a head, broker Christine decided it would be best to turn the funds over the court and file an interpleader action to extricate the brokerage from the situation.

" co-ownership

"When more than one person owns the same piece of real estate Ex. There are two common types of co-ownership: joint tenancy with rights of survivorship and tenancy in common.

" unilateral rescission

"When one party cancels the contract Ex. When Dave breached his contract with Joe, Joe had the power to unilaterally rescind their agreement.

" online rental scam

"Where a con artist use real estate listing information to fraudulently rent out a property Ex. Keira created a Google Alert for the address of her new listing, so she'd be sure to see any fraudulent rental ads for it on the internet.

" incentive zoning

"Where a municipality will allow an otherwise prohibited type of construction if the developer will give the municipality something back Ex. In exchange for being granted the right to construct a building with more stories than customarily allowed, the developer promised to build a community park next door.

" primary mortgage market

"Where loans are originated; they are sold on the secondary mortgage market Ex. Most home loans originated in the primary mortgage market end up as part of package of mortgages that are sold on the secondary mortgage market.

" reverse annuity mortgage

"With a reverse mortgage, the lender makes payments to the homeowner for a specified period of time, and gains corresponding ownership. Ex. Thelma wanted to remain in her home, but she was on a fixed income and needed more funds. She agreed to a reverse mortgage in which a bank made monthly payments to her in return for ownership of her home.

" specifications

"Written narratives explaining a building plan. Ex. Building specifications often include the materials used, design features, and an explanation of systems used.

" blueprint

"A building plan with an architect's or engineer's stamp that includes the layout of the rooms and their measurements, and indicates location of windows, doors, fixtures, and major appliances Ex. Bradley looked up from the blueprint of his proposed house and told his architect, "I can't visualize it in 2-D. Can you build me a model in 3-D?"

" asbestosis

"A chronic lung disease caused by breathing asbestos fibers Ex. Asbestosis makes breathing difficult and can lead to death.

" clear title

"A marketable title (free and clear of liens or question of ownership). Ex. Because the seller was unable to provide the buyer with a clear title, the buyer backed out of the sale, and received his earnest money back.

" balloon mortgage

"A mortgage that has lower initial payments that do not amortize and provide for a "catch up" lump sum to be paid at a specific time Ex. Jeb agreed to a balloon mortgage because he knew that in 5 years, when the balloon payment was due, he would have money available from his trust fund to pay it off.

" acknowledgment

"A requirement for deed transfer; a public official must acknowledge the grantor's signature Ex. Gary purchased a duplex. The grantor signed the deed; a notary public acknowledged his signature.

" amperage

"Amount of current or electricity flowing through electrical wires Ex. The pulses were of high voltage but low amperage, which makes them, like static electricity, safe but an unpleasant experience.

" accessory use

"An incidental or subordinate use to the primary use of the property Ex. Andy's military bunker in his back yard constituted an accessory use of the property.

" assessment

"Charge against a property; for instance, condominiums will have periodic assessments for maintenance and repairs of common areas Ex. Before a condominium owner can close on a sale of the condo, the owner must bring all assessments up to date so the buyer is not left paying for assessments owed from the time the seller was in possession.

" appraisal contingency

"Contract clause that, if the property doesn't appraise at or above the sales price, the buyer is allowed to terminate Ex. If the appraised value is close to the sales price, often the parties can reach agreement. If not, and an appraisal contingency is in place, the buyer can use the fact that the property didn't appraise to terminate and receive a refund of earnest money deposited.

" Clean Water Act

"Established quality standards for surface waters and added a structure to regulate pollutants (e.g., oil) discharged into U.S. waters Ex. Real estate transactions are impacted by this act when the property includes water features protected by the CWA (e.g., a buyer wants to build a guest cottage, but wetlands on the site prevent the plan from being implemented).

" breach of contract

"One or more parties fail to meet the terms of their agreement Ex. When Caleb failed to turn over the keys to his house to Susan after the transaction closed, she sued him for breach of contract.

" cap

"See rate cap Ex. See rate cap

" aesthetic zoning

"Specifies style or architecture of buildings in an area in order to preserve charm, feel, etc. Ex. Zoning required that all homes in Ocean City be either Victorian or Tudor in design, and no taller than three stories.

" basement

"Square footage below ground Ex. Basements are an area that home inspectors tend to spend a lot of time in due to the mechanical and electrical and drainage issues often found there.

" accession

"The addition of value to property through labor or the addition of new materials, including an increase in land through natural processes Ex. Jonathan's property borders a bay. The bay receded, and Jonathan gained an extra 10 feet of property to his land through accession.

" addendum

"An addition to a real estate contract that's added before contract acceptance Ex. Steve decided to ask for the washer and dryer after all, so he asked his broker to write up an addendum to the sales contract.

" certified general real estate appraiser

"An appraiser certified to perform appraisals for any time and value of property for federally related real estate transactions. Ex. Because the property was valued at over $1 million and was part of a federally related transaction, only a certified general real estate appraiser could be used to perform the appraisal.

" certified residential real estate appraiser

"An appraiser certified to perform appraisals for one- to four-unit dwellings for federally related real estate transactions. Ex. Because the transaction was federally related, a certified residential real estate appraiser must be used. If it had been a commercial property, only a certified general real estate appraiser could be used.

" appraisal

"An estimate of value as of a specific date and for a specific use Ex. The appraisal on Myra's property was for its use as a bed-and-breakfast today.

" appraised value

"An estimate of value as of a specific date, and for a specific use Ex. Barbara refinanced her property two years ago. At that time, the appraised value was $450,000. If she puts it on the market today, she can't use the appraised value as list price, because it's no longer valid.

" base line

"An imaginary line that runs east and west and crosses the principal meridian at a specified point; it is used by surveyors as a reference point to locate and describe land under the rectangular survey system. Ex. Beginning at the initial point and the number 1 on a rectangular system grid, each township is designated as being a number of six-mile units (""""Townships"""") north or south of the baseline, and so many six-mile units (""""Ranges"""") east or west of the meridian.

" building permit

"Authority to construct a building or residential property by the local government Ex. Builder Barry was issued a building permit to build a home on the empty lot next to his mother's house.

" appurtenances

"Automatic rights inherent in property ownership Ex. Jason loved being a property owner. He decided not to sell off any of his appurtenances to others. He kept all of his bundle of sticks together.

" CAN-SPAM Act

"Controlling the Assault of Non-Solicited Pornography and Marketing Act; protects consumers against unwanted email solicitations Ex. Thanks to the CAN-SPAM Act, Cecily's email inbox was fairly uncluttered (except from all those jokes her brother-in-law sent her).

" appreciation

"Increase in property value Ex. Due to appreciation, Kerry's investment property had doubled in value over the eight years she had held it.

" active fraud

"Intentional misstatement of a material fact Ex. ""Sure, the foundation is perfectly safe!"" Lisa said, even though she knew full well that there was a crack the size if Toledo in it.

" asset

"Items of value owned by an individual; often used when qualifying for financing Ex. Liquid assets include checking and savings accounts. Other assets include real property, automobiles, and accounts receivable.

" cease-and-desist order (advertising)

"Requires you to stop running a deceptive ad or engaging in a deceptive practice; effective immediately upon issuance Ex. Future actions after issuance of a cease-and-desist order may result in fines of up to $16,000 per ad per day.

" air rights

"Rights to use the airspace above the land may be sold or leased independently of the land itself Ex. In Burlesque, "Ali" saved the day when she told the club's owner (played by Cher) that she could sell her air rights to the luxury condominium developer across the street.

" adjustment date

"The date on which the interest rate changes on an adjustable rate mortgage. Ex. Karey made sure to refinance before her adjustment rate. Rates had dropped and she could get a better rate than the one she'd face once her ARM adjusted.

" acceleration clause

"Allows a lender to demand immediate and full payment of all debt owed if a buyer defaults Ex. When Wendy stopped making home loan payments, her lender told her she must pay off her entire balance or risk foreclosure.

" brownfield

"An abandoned commercial or industrial site that is believed to contain toxic waste Ex. The former site of a petroleum company became a brownfield eyesore until it was rehabilitated and turned into a community garden.

" assumption

"A buyer agrees, in writing, to take over the sellers' loan payments Ex. Nicole assumed Matt's loan payments when she bought his house.

" amendment

"A change to an existing contract Ex. Bill decided not to include the washer and dryer since the buyers were asking for the moon in the inspection. He wrote up an amendment to their original agreement, which they reluctantly signed.

" carbon monoxide (CO)

"A colorless, odorless gas that results as a byproduct of combustion of wood, gas, and other heated materials; poses a health hazard when released into the atmosphere and breathed in Ex. Homes with gas appliances and gas heat should be equipped with carbon monoxide detectors which can warn the occupants to get out before escaping fumes result in serious health issues or death.

" bargain and sale deed

"A deed where there is at most one warranty: that the current owner has not encumbered it Ex. Clancy purchased a property from his aunt that had been unused for a long period of time. Because his aunt knew nothing about the property, the deed he received was a bargain and sale deed.

" certificate of eligibility (COE)

"A document issued by the U.S. Department of Veterans Affairs that certifies a veteran's eligibility for a VA loan Ex. Renita had served in the Air Force and decided to apply for a VA loan to purchase a home once she got out. She applied for and received a certificate of eligibility for the loan.

" certificate of reasonable value (CRV)

"A document used with a VA loan that indicates its appraised value Ex. Because his certificate of reasonable value came in above the sales price, the VA was willing to guarantee the full sales price of George's home.

" adverse material fact

"A fact that might cause the buyer to change his mind about purchasing the property Ex. When Chet learned that a railway was being built behind the property, he withdrew his offerr. That was an adverse material fact he couldn't live with.

" Americans with Disabilities Act of 1990

"A federal anti-discrimination law to protect persons with disabilities from discrimination in public accommodations and commercial facilities; also mandates easy access in new multi-family housing with four or more units Ex. The Americans with Disabilities Act requires landlords of properties covered under the Act to allow disabled tenants to make reasonable accommodations at their expense.

" asbestos

"A fibrous mineral found in rocks and soil, previously used in construction materials for its insulating and fire-retardant strength Ex. Many homes built before 1973 likely contain asbestos products. These might be in insulation, ceiling or floor tiles, or in exterior shingles.

" buydown

"A financing technique in which the buyer obtains a lower interest rate by buying down the interest rate at the time the loan is made Ex. Alec decided to buy down the interest rate on his loan to make his payments more affordable.

" anchor store/anchor tenant

"A large commercial tenant that draws in traffic to a mall or shopping center Ex. Janice was excited to place her boutique in the same shopping center as Bloomingdales. Having such a great anchor store nearby was good for business.

" balloon payment

"A lump sum payment, usually at the end of a loan period Ex. Trinity's loan had low monthly payments, but a large balloon payment at the end of the loan term.

" BTU (British Thermal Unit)

"A measure of heat energy (the amount of heat required to raise the temperature of one pound of water by one degree Fahrenheit. Ex. It takes 40 BTUs to cool one cubic foot of space.

" British Thermal Unit (BTU)

"A measure of heat energy (the amount of heat required to raise the temperature of one pound of water by one degree Fahrenheit. Ex. It takes 40 BTUs to cool one cubic foot of space.

" budget mortgage

"A mortgage in which taxes and insurance are added to the payment for principal and interest. Ex. Gabrielle hated paying bills, so she was glad her lender had set her up with a budget mortgage where her PITI was handled in one payment each month.

" biweekly mortgage

"A mortgage in which the borrower makes payments every two weeks, resulting in 13 payments a year instead of 12. Some borrowers use this strategy to pay off their loan earlier. Ex. Charlene made biweekly payments on her mortgage .She avoided the often expensive independent companies who offer to set up such payment plans for borrowers, and did it herself. She was able to pay off her 30-year mortgage several years early.

" assumable mortgage

"A mortgage that can be assumed when property transfers ownership (requires borrower to qualify for the loan). Ex. When interest rates rise, buyers often prefer assumable mortgages at more favorable rates.

" adjustable rate mortgage (ARM)

"A mortgage with a rate that adjusts based on changes in a market index Ex. Caleb had a 5/1 ARM. His loan had a fixed interest rate for the first five years, and after 5 years, it could change annually depending changes to the market index.

" benchmark

"A permanent affixed brass plaque that is numbered and is used as a point of reference by surveyors when measuring elevation Ex. When the surveyor referenced the benchmark he noted that its numbers had worn off over time. Now he would have to use different criteria as a point of reference.

" annual percentage rate (APR)

"A rate derived according to a government formula that's intended to reflect the true cost of financing that allows consumers to compare loan products; includes financing fees, so it will always be higher than the actual interest rate on a loan Ex. An interest rate of 6% may sound better than one of 6.25%, but it's important to also compare annual percentage rate (APR) figures to see the true cost of financing.

" cash-out refinance

"A refinance in which the borrower assumes a loan balance higher than the current one to pull out money for other use. Ex. Interest rates had dropped, and Avril decided to refinance his home, which had a loan balance of $200,000 but an appraised value of $260,000, at $240,000. He used the $40,000 to pay off his car and credit cards, and ended up saving several hundred dollars each month. However, his new loan balance was now higher, and his payback term reset at 30 years.

" Closing Disclosure

"A statement of final loan terms and closing costs, provided to the borrower three days prior to closing Ex. Wendy's lender sent her a closing disclosure three days before she closed on her purchase of a delightfully renovated plantation manor.

" amortization schedule/chart

"A table that shows how much of each payment will apply toward principal and how much toward interest for the loan term; also shows decrease in loan balance until paid off Ex. If borrowers want to see how much of their payment is going toward principal, they can check their mortgage statement, or an amortization schedule.

" act of waste

"Abuse of a property by a person who holds possession through a life estate Ex. When Minerva inherited the historic mansion and turned it into an illegal video gaming parlor, this was an act of waste that caused her to lose title to the property.

" cloud on title

"Aka title defect; any encumbrance, such as a lien or inheritance claim, that impedes the conveyance of a property; may be removed with a quitclaim deed Ex. Erica was in the process of buying a foreclosure property, when an unknown lien cropped up, creating a cloud on the title. The lien had to be removed before Erica could buy the property.

" blockbusting

"An illegal practice in which licensees or others encourage homeowners to sell because of an influx or expected influx of minorities into the area Ex. Sharon lost her license when it was discovered that she had told homeowners in the Birdseye neighborhood that they should sell because the neighborhood was "turning Asian." This is blockbusting and it is illegal.

" accrued items

"Expenses that are accruing but are not yet payable (e.g., property taxes) Ex. At closing, accrued items must be accounted for on the settlement statement. If the seller has accrued expenses not yet payable, the amount accrued will be a seller debit and buyer credit.

" accretion

"Land build up over water by sand, silt, or gravel Ex. Jillian's property grew through accretion when a landslide wiped out an adjacent creek.

" abutting

"Land sharing a common border Ex. Many neighbors find that fences make abutting properties more tolerable.

" closing agent

"Manages the closing process, presents and explains all of the closing documents to the parties, and obtains signatures; may be an attorney, broker, or a title company representative Ex. Sandra was glad to learn that the closing agent for her sellers' closing was going to be Anders Hayes. He always had everything in order for a smooth closing, just as it should be.

" bond market

"Market for buying and selling of (frequently) 30-year treasury bonds. Yield on bonds often rises and falls as fixed rate mortgages do. Ex. ABC Lending watched the bond market. When yields rose, it knew interest rates would soon do the same.

" accounting

"One of the fiduciary duties, accounting means an agent is accountable for any funds or properties entrusted to the agent. This is a duty that survives termination of an agency agreement. Ex. Cameron accepted an earnest money deposit from his buyer. His duty of accounting means that he must safeguard the funds and handle them according to the agreement with his client and the policies of his firm.

" buyer presentation

"Opportunity to build trust with a potential client, showcase your expertise, and learn more about the buyer's needs Ex. Chet always prepared for buyer presentations as carefully as he would have prepared for a job interview--because that's exactly what the buyer presentation is.

" capital improvements

"Permanent structural changes, remodels, or restorations that increase a property's value or use Ex. Capital improvements can be deducted from capital gains when a property is sold.

1031 tax-deferred exchange

"Section 1031 of the Internal Revenue Code allows the owner of real property to sell that property and then reinvest the proceeds in a "like-kind" property and defer paying any capital gains taxes. Ex. Real estate investors can take advantage of the 1031 tax-deferred exchange to defer capital gains taxes when selling a property provided the money is rolled into another """"like"""" purchase

" Civil Rights Act of 1866

"The first statute affecting equal housing opportunity largely interpreted to prohibit racial discrimination Ex. Although the Civil Rights Act of 1866 was enacted more than a century ago, it still has relevance and impacts discrimination laws today.

" bankruptcy

"The legal process of discharging or restructuring a borrower's debts Ex. Individuals most commonly file Chapter 7 or Chapter 13 bankruptcy.

" beneficiary

"The person entitled to the benefit of a trust arrangement Ex. Mr. and Mrs. Thomas created a shared living trust. Each put co-owned and separately owned property into the trust. When Mr. Thomas dies, Mrs. Thomas takes over as trustee and distributes her husband's trust property to the beneficiaries he named in the trust document. Her property stays in the living trust.

" bylaws

"The rules of an association, such as a homeowner's association or cooperative. Ex. The Greener Grass Cooperative included in its bylaws the process for resolving shareholder disputes.

" closing

"The settlement of a real estate transaction in which a property transfer occurs Ex. At closing, buyer and seller reconcile expenses, prepaids and prorations; buyer provides seller with sales price and seller transfers ownership to buyer.

" assignment (contracts)

"When a new party to a contract agrees to satisfy the former party's obligations. Unless there is a novation (a new contract) the original parties remain liable for the contract terms. Ex. Ty decided to take an African Safari in the middle of his transaction. His brother agreed to have the contract assigned to him. However, Ty remains responsible unless a new contract is drawn up, naming his brother as the contracted party.

" building specifications

"Written narrative of the building plan; describes major systems, construction details, landscaping, and design features not captured in the building plan Ex. While his wife pored over the blueprints for their new house, Bill preferred reading the building specifications, since they included his plans for an antique rose garden.