Superior Real Estate School

Bundle of Rights

All real property rights that are conferred with ownership, including right of possession, right of quiet enjoyment, right of disposition, right of exclusion, and right of control.

Reserves for Replacement

An amount of money, considered as an operating expense, set aside for future replacement of major items, such as the roof or heating system.

Tie-In Agreement

An antitrust violation in which one transaction or agreement is contingent on a second transaction or agreement.

Attorney-in-Fact

Any person authorized to act for another by a written, properly prepared, power of attorney (not necessarily a lawyer, who is an attorney at law).

Equitable Title

Any present right to acquire legal title to property.

Framing

The basic load-bearing skeleton of a structure to which the interior walls, exterior walls, and roof system are attached.

Conformity

The economic principle that reflects both the physical compatibility of a property and the economic state of the property.

Time is of the Essence

A clause added to a contract that voids the contract when the deadline passes. The party that fails to perform by the deadline is in material breach of the contract.

Words of Conveyance

A clause in a deed that states the grantor intends to convey title to the land.

Defeasance Clause

A clause used to defeat or cancel a certain right upon the occurrence of a specific event.

Undivided Interest

A co-tenant's interest, giving him the right to possession of the whole property, rather than a particular section of it.

Advertisement

A commercial message in any medium that promotes, directly or indirectly, a credit transaction.

First in Time, First in Right

A concept that refers to the prioritization of liens based on the timing of the lien attached to the property.

Boycott

A concerted refusal by two or more people to deal with a particular person or company.

Material Fact

A condition or occurrence that significantly impacts the value of real estate or is likely to influence a person's decisions; could pertain to property condition, facts affecting the property, or facts affecting the transaction.

Consent to Service of Process and Pleadings

A consent to service signed by nonresident licensees agreeing to allow legal action to be brought against them in the State of North Carolina.

Comparative Market Analysis (CMA)

A method of determining the approximate market value of a home by comparing the subject property to similar homes that have sold, are presently for sale, or did not sell in a given area

Voidable Contract

A contract that one of the parties can end without liability because of a lack of legal capacity or other factor such as fraud or duress.

Accretion

A gradual addition to dry land by the forces of nature, as when the tide deposits water-borne sediment on shoreline property.

Erosion

A gradual loss of soil due to the action of wind, water, or other forces.

Conditional Use

A land use that does not comply with the general zoning rules for the zone in which it is located, but is permitted because it benefits the public, for example, a hospital in a residential neighborhood.

Public Restriction

A law or regulation limiting or regulating the use of real property.

Statute of Limitations

A law requiring a particular type of lawsuit to be filed within a specified time after the event giving rise to the suit occurred.

Statute of Frauds

A law requiring that certain instruments be in writing to be enforceable.

Equal Credit Opportunity Act (ECOA)

A law that requires all lenders to make credit available with fairness and without discrimination based on race, color, religion, national origin, age, sex, marital status, or receipt of income from public assistance programs.

Foreclosure Action

A lawsuit filed by a creditor to begin foreclosure proceedings.

Judicial Foreclosure

A lawsuit filed by a lender or other creditor to foreclose on a mortgage or other lien; a court-ordered sheriff's sale of the property to repay the debt.

Sheathing

A layer of boards or other wood or fiber materials applied to the outer studs, joists, and rafters to strengthen the structure and serve as a base for exterior weatherproof covering.

Mediation

A method of settling a dispute in which a disinterested third party facilitates a discussion between the two parties and the parties come up with their own solution.

R-Value

A measurement of thermal (heat) resistance. A higher R-value of insulation indicates greater resistance to heat flow.

Arbitration

A method of settling a dispute in which an impartial third party hears the case and renders a binding decision.

International Building Code

A model developed by the International Code Council (ICC) that sets minimum standards, often used as a baseline for stricter codes at the local level.

Open-Ended Mortgage

A mortgage allowing the borrower to request more funds from the lender, up to a certain pre-defined limit, without having to renegotiate the loan.

Alienation Clause

A mortgage clause allowing the lender to demand the full and immediate payment of the mortgage because the owner transferred or pledged to transfer ownership of the property.

VA-Guaranteed Loan

A mortgage loan made by lenders to eligible veterans that is guaranteed by the Office of Veteran's Affairs, protecting the lender up to specified dollar amounts.

Adjustable-Rate Mortgage

A mortgage that permits the lender to periodically adjust the interest rate to reflect fluctuations in the cost of money.

Soft Money

A mortgage where the borrower receives credit instead of actual cash (e.g., a purchase money mortgage).

HO-1 Basic Form

A named peril form on both dwelling structures and contents. The HO-1 is very similar to the DP-1 basic dwelling policy except vandalism and theft are included.

HO-2 Broad Form

A named peril form on both dwelling structures and contents. The HO-2 is very similar to the DP-2 Broad Form dwelling fire policy, except theft is included.

Avulsion

A natural process in which land is removed from one person's property and deposited onto another's. Happens very suddenly, as in a flash flood.

Radon

A naturally occurring radioactive gas that emanates from the earth; it is odorless, colorless, and tasteless but may cause cancer if allowed to build up in high concentrations.

Receiver

A neutral person appointed by a judge to take charge of the property and business of one of the parties to a lawsuit.

Open Listing

A nonexclusive listing, given by a seller to as many brokers as he chooses. If the property sells, only the broker who is the procuring cause is entitled to a commission.

Tenancy at Sufferance

A nonfreehold estate which arises when a tenant occupies the real estate of a landlord in the absence of any agreement; possession of the property by a holdover tenant. Also called Estate at Sufferance.

Tenancy for Years

A nonfreehold estate with the tenant in lawful possession of the property under an agreement with the landlord (i.e., a leasehold interest) for a specified period. Also called Estate for Years or Tenancy for a Definite Term.

Tenancy at Will

A nonfreehold estate with the tenant in lawful possession of the property with the owner's permission, but with no definite lease term. Also called Estate at Will.

Easement

A nonpossessory interest and an encumbrance on property that grants the right to use another person's real property for a particular purpose.

Lien

A nonpossessory interest in property, giving a lienholder the right to foreclose if the owner does not pay a debt owed the lienholder.

Straight Note

A note that calls for payments of interest-only during the term of the note with a balloon payment at the end of the loan term to pay off the principal amount.

Unfair Business Practice

A practice that causes or is likely to cause substantial consumer injury that a consumer could not reasonably avoid and is not outweighed by the benefit to consumers.

Legal Description

A precise written description of a specific piece of property that identifies the subject piece of property as precisely as possible.

Americans with Disabilities Act (ADA)

A wide-ranging federal civil rights law, signed in 1990, that prohibits, under certain circumstances, discrimination based on disability.

Trigger Term

A word or phrase that describes a loan, including the down payment, terms, and monthly payment. If an ad uses a trigger term, disclosures are needed to tell everything about the loan.

Listing Agreement

A written agency contract between a seller and a broker, stating that the broker earns a commission for finding (or attempting to find) a buyer for the seller's real property.

Willful Omission

The intentional withholding of material facts or other required disclosures or the failure to speak with the intention of influencing someone to act or behave in a certain way.

Dower

The interest held by a married person in the real property owned by a spouse; generally refers to a wife's interest in her husband's property. Not recognized in all states including North Carolina.

Prime Rate

The interest rate a bank charges its most creditworthy customers.

Discount Rate

The interest rate charged by Federal Reserve Banks on loans to member commercial banks.

Common Areas

The land and improvements in a condominium or cooperative that all residents use and own as tenants in common, such as the parking lot, hallways, and recreational facilities.

Lessor

The landlord who leases property to a tenant.

Statutory Law

The laws adopted by a legislative body (Congress, state legislature, or a county or city council), as opposed to constitutional law, case law, or administrative regulations. In the State of North Carolina, these are consolidated into the North Carolina General Statutes (G.S.).

Contractual Capacity

The legal ability to enter into a contract.

Imputed Notice

The legal concept that notice to one person will be considered notice to another person when an agency relationship exists.

Setback

The legal distance that a building must be from a designated position such as a property line; determined by zoning requirements.

Qualifying Broker

The licensed broker who is responsible for a real estate firm. They maintain the company license, designates brokers-in-charge, and secures and preserves transaction records and trust account records of the firm; they may also be the broker-in-charge.

Selling Agent

The licensee who secures a buyer for a property.

Indirect Loss

The loss an insured suffers due to the physical loss of property; such as lost rent.

Laches

The loss of a right through undue delay or a failure to assert.

Package Policy

Two or more lines of coverage combined into one insurance policy. A homeowner's policy is a true package policy because it combines property insurance with liability insurance.

Independent Contractors

Under common law, a person who contracts to do a job for another but maintains control over how the task will be carried out, rather than following detailed instructions.

Independent Contractor

Under common law, a person who contracts to do a job for another, but who maintains control over how the task is carried out, rather than following detailed instructions.

Business Day

Under federal law for the purposes of the TRID rule, all calendar days except Sundays and these legal public federal holidays: New Year's Day; Martin Luther King Jr. Day; Washington's Birthday; Memorial Day; Independence Day; Labor Day; Columbus Day; Veterans Day; Thanksgiving Day; Christmas Day.

Assumption

When one party takes over the payments and primary liability for the loan of another party; usually lender approval is needed; also, a release is needed or the original party remains secondarily liable for the loan.

Secondary Financing

When a buyer borrows money from another source in addition to the primary lender to pay for part of the purchase price or closing costs.

Rescission

When a contract is terminated and each party gives anything acquired under the contract back to the other party

Redlining

When a lender refuses to make loans secured by property in a certain neighborhood because of the racial or ethnic composition of the neighborhood.

Acceptance

When a party agrees to the terms of an offer to enter into a contract.

Seller Financing

When a seller extends credit to a buyer to finance the purchase of the property; this can be instead of or in addition to the buyer obtaining a loan from a third party, such as an institutional lender.

Meeting of the Minds

When all parties involved agree to the terms of a contract. This is achieved through offer and acceptance. Also referenced as mutual agreement or mutual consent.

General Insurance Agent

When an exclusive agent has a group of agents working for him, he becomes a general agent.

Unimproved Property

Land without buildings or other improvements.

Cloud on the Title

A claim, encumbrance, or defect that could make the title to real property unmarketable.

Friable

A characteristic of asbestos in which it can crumble easily or become powdery when manipulated by hand, releasing particles into the air.

Heterogeneity

A characteristic of real property indicating its diversity or uniqueness

Right of Survivorship

A characteristic of statutory survivorship tenancy, joint tenancy, and tenancy by the entirety; surviving co-tenants automatically acquire a deceased co-tenant's interest in the property.

Point

1% of the loan amount. A fee charged by a lender for making a loan, calculated based on the loan amount.

Tax Shelter

1) Any method used to reduce taxable income, thereby reducing the amount of tax paid to a government. 2) Property or other investments that give owners certain income tax advantages, such as deductions or property taxes, mortgage interest or depreiciation.

Improper Conduct

1. Conduct that is not in accordance with accepted rules or standards, especially of morality or honesty. 2. Failure to exercise the fiduciary duty of reasonable care in the performance of one's legal and ethical duties.

Interest

A charge a borrower pays to a lender for the use of the lender's money.

Legal Title

1. The interest in property held by the rightful owner. 2. The seller's interest in property under a land contract.

DD-214

A Certificate of Release or Discharge from Active Duty, issued by the Department of Defense. "This" identifies the character of service and reason for discharge (honorable, dishonorable, etc.).

Ad Valorem

A Latin phrase meaning "according to value"; used to refer to taxes assessed on the value of real property (real estate, such as land and buildings) or personal property (such as vehicles and boats).

Caveat Emptor

A Latin phrase meaning "let the buyer beware." The doctrine states that a buyer is expected to examine property carefully, instead of relying on the seller to point out problems.

Machinery Act

A North Carolina law providing for the listing, assessing, and appraisal of property (real estate and personal property, including motor vehicles).

Conner Act

A North Carolina law that addresses the recording of real estate documents, which protects against third-party claims regarding these documents.

Demand Deposit Account

A bank account for which the account holder has instant access to the funds in the account with no advance notice or penalties for withdrawal, such as a checking account.

Consent Decree

A binding agreement reached before judgment in a court case by which the accused party consents to change its behavior without admitting wrongdoing.

Valid Contract

A binding, legally enforceable contract. It meets all of the legal requirements for contract formation.

Lead

A bluish-white metal added to both exterior and interior paint as a drying agent and for pigmentation before 1978. Also, used for pipes in plumbing systems in homes and businesses; can cause health issues, especially for children.

Tort

A breach of the standards of reasonable conduct imposed by law (as opposed to a duty voluntarily taken on in a contract) that causes harm to another person, giving the injured person the right to sue the one who breached the duty.

Abstract of Title

A brief, chronological summary of the recorded documents affecting the title to a particular parcel of real property.

Working with Real Estate Agent Brochure

A brochure published by the North Carolina Real Estate Commission that brokers must present to and review with prospective buyers and sellers that discloses the services and limitations imposed by each type of agency relationship.

Sole Proprietorship

A business owned and managed by one person (or for tax purposes, legally married spouses) who is personally liable for all business debts. It could be organized under a fictitious or assumed name.

Cash Sale

A buyer gives the seller cash at closing in exchange for clear title to the home

Certificate of Reasonable Value

A certificate establishing the current market value of a property based on an approved VA appraisal. Issued by the VA, this certificate places a limit on the amount of a VA guaranteed loan.

Certificate of Eligibility (COE

A certificate issued by the Department of Veteran's Affairs to establish status and amount of a veteran's eligibility to qualify for loan guarantee.

Amendment

A change in the terms, conditions, or provisions of a contractual agreement previously entered into by the parties involved. This agreement must be signed by both partied to the contract

Opt Out

A consumer's right to terminate future electronic communication from business and commercial entities.

Exclusive Buyer Agency Agreement

A contract between a buyer and a broker that grants only one broker the right to represent the buyer in the purchase of property and entitles the broker to the negotiated fee even if the buyer purchases property through another broker; depending on the language of the contract, the broker may also be entitled to compensation if the buyer finds the property and purchases it directly from the owner.

Buyer Agency Agreement

A contract between a buyer and a broker that grants the broker the right to represent the buyer in the purchase of property and that makes the buyer responsible for paying commission to the broker.

Home Warranty

A contract between a homeowner and a home warranty company that provides coverage for the repair or replacement of named components of the home for a specified period of time, such as one year.

Prepayment Penalty Clause

A contract clause that gives a lender the right to charge the borrower a penalty for paying off a loan early.

Acceleration Clause

A contract clause that gives the lender the right to declare all outstanding payments immediately due upon a default by the borrower.

Time Is of the Essence

A contract clause that means failure to perform within the stated time limit is a breach of the contract.

Option to Purchase

A contract giving the optionee the right, but not the obligation, to buy property owned by the optionor at an agreed-upon price during a specified period.

Offer to Purchase and Contract

A contract in which a seller promises to convey title to real property to a buyer in exchange for the purchase price.

Executed Contract

A contract in which both parties have fully performed their contractual obligations.

Bilateral Contract

A contract in which both parties make a binding promise to the other.

Unilateral Contract

A contract in which only one party is legally bound.

Unenforceable Contract

A contract that a court would refuse to enforce. Some oral contracts or vaguely worded contracts could be deemed unenforceable.

Void Contract

A contract that isn't enforceable because it lacks one or more of the requirements for contract formation or is otherwise defective.

Enforceable Contract

A contract that would be upheld by the courts. The requirements for an enforceable contract are: capacity, mutual consent, lawful objective, and consideration. In addition, certain contracts must be in writing to be enforceable.

Limited-Service Listing

A contract under which a brokerage firm provides limited brokerage services, as agreed to by the client, rather than the full traditional brokerage services.

Full-Service Listing

A contract under which a brokerage firm provides the seller with a wide range of traditional brokerage services, including marketing the property, showing the property, presenting and reviewing offers, and handling earnest money.

Designated Dual Agency

A contractual relationship between a broker and a client in which one or more licensees associated with or employed by the broker are appointed to be the designated agent of the client.

Designated Agency

A contractual relationship between a broker and a client in which one or more licensees associated with the brokerage firm are appointed to represent the client in an in-house transaction, to the exclusion of all other affiliated licensees.

Lease

A contractual rental agreement that outlines and creates the relationship between a landlord and a tenant.

Gross Income Multiplier

A conversion factor derived from the sales price of a comparable rental property divided by its gross monthly rent and any other miscellaneous income. This factor is multiplied by the estimated gross rent of the subject to estimate its value.

Gross Rent Multiplier

A conversion factor derived from the sales price of a comparable rental property divided by its gross monthly rent. This factor is multiplied by the estimated gross rent of the subject to estimate its value.

Unit-in-Place Method

A cost approach appraisal method for determining the cost of a building that estimates the cost of reproducing a building by looking at the unit cost of each of the component parts of the structure, and adding all of these unit costs together.

Quantity Survey Method

A cost approach appraisal method where the appraiser counts the number and type of each part and material that were used to construct the building, and adds a cost for labor, profit, permits, etc.

Injunctive Relief

A court-ordered prohibition against a specific act or conduct, as opposed to a judgment for money.

Emblement

A crop that is planted and cultivated through someone's labor and industry. Emblements are considered to be personal property. Also called: Fructus Industriales.

CC&Rs

A declaration of covenants, conditions, and restrictions; usually recorded by a developer to create a general plan of private restrictions for a subdivision

Special Warranty Deed

A deed by which the grantor covenants or guarantees the title from the time the grantor received it until it is conveyed to the grantee.

General Warranty Deed

A deed in which the grantor warrants the title against any and all defects that might have arisen before or during his or her period of ownership.

Fee Simple Determinable

A defeasible fee that's terminated automatically if certain conditions occur. The grantor (or his or her heirs) has a possibility of reverter.

Blueprint

A detailed diagram, usually created by an architect, that is used to evaluate design, determine feasibility, and guide construction of a structure.

Plat

A detailed survey map of a subdivision, recorded in the county where the land is located. Subdivided property is often called platted property.

Bill of Sale

A document used to transfer ownership of personal property from one person to another.

Willful Misrepresentation

A false or misleading statement made by words or actions with the intention of influencing someone to act or behave in a certain way.

Negligent Misrepresentation

A false statement that is unintentional and as the result of carelessness or negligence, rather than intent to deceive.

Remainder

A future interest that becomes possessory when a life estate terminates, and that is held by someone other than the grantor of the life estate.

Administrative Agency

A government agency (federal, state, or local) that administers a complex area of law, adopting and enforcing detailed regulations that carry the force of law.

Wire Fraud

A federal crime that involves a scheme in which one person obtains money from another through deception; this criminal act is done using electronic communications of some type or an interstate communications facility.

Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA)

A federal law enacted by Congress in 1980 to create a tax on the chemical and petroleum industries and provided broad authority to respond directly to releases or threatened releases of hazardous substances that may endanger public health or the environment. Also known as the Superfund Act.

Residential Lead-Based Paint Hazard Reduction Act

A federal law that requires sellers and landlords to disclose known lead paint hazards for homes built before 1978.

Origination Fee

A fee charged by a lender to cover the administrative costs of making a loan, usually based on a percentage of the loan amount, where 1% equals one point.

Asbestos

A fibrous material that was once very common in many building materials because of its insulating and heat-resistant value; can cause breathing issues and illness.

Obedience

A fiduciary duty that requires an agent to follow the (legal) instructions of the principal, obey the parameters of the agency relationship, and not stray beyond the scope of authority.

Loyalty

A fiduciary duty that requires an agent to put the principal's interests above all others' interests, including the agent's own.

Balloon Payment

A final lump-sum payment at the end of a loan term to pay off the entire remaining balance of principal and interest not covered by payments during the loan term.

Secret Profit

A financial benefit an agent takes from a transaction without authority from the principal, nor informing the principal of the benefit retained.

Mortgage Banker

A financial institution that usually originates and funds its own loans, which may then be sold on the secondary market

Promissory Note

A financing instrument that evidences a promise to pay a specific amount of money to a specific person within a specific time frame.

Growth Equity Mortgage

A fixed-rate mortgage set up like a 30-year conventional loan, but payments increase regularly. Also called: Rapidly Amortizing Mortgage.

Leasehold Improvement

A fixture attached to real property by a landlord for the use of a tenant.

Strict Foreclosure

A foreclosure action where the court establishes a date by which the borrower must pay the balance in full; once the deadline passes, the lender is awarded title to the property. This type of foreclosure is uncommon.

Sheriff's Sale

A foreclosure sale held after a judicial foreclosure.

Rider

A form attached to a policy that expands or decreases its benefits or excludes certain conditions from coverage; also called endorsements.

Joint Tenancy

A form of co-ownership in which the co-owners have equal undivided interests and the right of survivorship. Requires the unities of time, title, interest, and possession.

Tenancy in Common

A form of co-ownership in which two or more persons each have an undivided interest in the entire property (unity of possession), but no right of survivorship.

Discount Point

A form of pre-paid interest that is charged by a lender to increase the yield on a lower-than-market interest rate loan; one point equals 1% of the loan amount.

Tenancy by Entirety

A form of property co-ownership by legally married spouses, in which each spouse has an undivided one-half interest without the other's consent.

Time-share

A form of property ownership in which several buyers purchase interests in real estate with each party having the right to use the property and facilities for a designated period of time.

Sublease

A lease agreement in which a tenant transfers only part of his right of possession or other interest in leased property to another person for part of the remaining lease term (as opposed to an assignment, where the tenant gives up possession for the entire remainder of the lease term).

Trust

A legal arrangement in which title to property (or funds) is vested in one or more trustees who manage the property (or invest the funds) on behalf of the trust's beneficiaries, per instructions outlined in the document establishing the trust.

Metes and Bounds System

A legal description that starts at an easily identifiable point of beginning (POB), then describes the property's boundaries in terms of courses (compass directions) and distances, ultimately returning to the point of beginning.

Estoppel

A legal doctrine that prevents a person from asserting rights or facts that are inconsistent with his or her earlier actions or statements, when he or she failed to object (or attempt to "stop") another person's actions.

Power of Attorney (POA)

A legal instrument that gives a person the authority to act for another as attorney-in-fact.

Back-Up Contract

A legally binding secondary contract that goes in effect if the primary offer is terminated.

Mortgagee

A lender who accepts a mortgage as security for the repayment of a loan.

Short Sale

A lender-approved sale from which the proceeds are not sufficient to cover the mortgage amount(s).

Less than Freehold Estate

A less than freehold estate is an estate held by one who rents or leases property. It is also known as a leasehold estate. The key element of a less than freehold estate is the limitation of time. As lease is a legal estate, leasehold estate can be bought and sold on the open market.

Limited Nonresidential Commercial Broker License

A license issued by the Real Estate Commission to out-of-state licensees for the purpose of a commercial real estate transaction. The out-of-state licensee must be associated with an active licensed North Carolina real estate broker through a written brokerage cooperation agreement and a written declaration of affiliation.

Buyer's Agent

A licensed agent representing the interests of the buyer of a property.

Agent

A licensed broker who, through their firm, represents another (the principal) in a real estate transaction; a person authorized to represent the principal in dealings with third parties (clients or customers).

Designated Agent

A licensee appointed by an employing broker as the legal agent of a client.

Seller's Agent

A licensee representing the interests of the seller of a property; could be a listing agent or a subagent under an offer of cooperation.

Facilitator

A licensee who assists in the successful completion of a real estate transaction but has no agency relationship with and, therefore, no fiduciary obligation to either party. Also called Transactional Broker.

Dual Agent

A licensee who represents both the buyer and the seller (or both landlord and tenant) in a single real estate transaction.

General Lien

A lien against all property of a debtor, instead of a particular piece of property.

Attachment Lien

A lien intended to prevent property transfer pending the outcome of the litigation.

Tax Lien

A lien on real property to secure the payment of taxes.

Voluntary Lien

A lien placed against property with the consent of the owner; a mortgage (or, in other states, a deed of trust).

Involuntary Lien

A lien that arises by operation of law, without the consent of the property owner.

Specific Lien

A lien that attaches only to a particular piece of property.

Junior Lien

A lien with a lower priority, which is paid after those with a higher priority.

Senior Lien

A lien with higher priority, which is paid before those with a lower priority.

Life Estate Pur Autre Vie

A life estate "for another's life," where the measuring life is someone other than the life tenant.

Estovers

A life tenant's right to cut a reasonable amount of timber from the land to repair buildings or use it for fuel, but does not allow the tenant to cut and sell the timber for profit.

Alienation

A life tenant's right transfers their title to another person or pledges the title as security for a debit.

Multiple Listing Service (MLS)

A listing service whereby local member brokers agree to share listings and agree to share commissions on properties sold jointly.

Conventional Loan

A loan made by an institutional lender or a private party with real estate as security for the loan. The government neither guarantees nor insures conventional loans.

Planning Board

A local entity consisting of appointed members who hold public hearings, investigate solutions for the planning issues in the community, and make long-term recommendations; a planning board is also responsible for approving development projects in the community.

Tax Assessor

A local government official who has either been elected or appointed to estimate the value of real property within the boundaries of a specific municipal entity that has the authority to tax real property.

Depreciation

A loss in value of a piece of property for any reason.

Fixture

A man-made attachment; an item of personal property that has been attached to or closely associated with real property in such a way that it has legally become part of the real property.

Homeowners Policy

A package property insurance policy that covers theft, personal liability, and medical payments to others.

Customer

A party to a transaction with whom a real estate licensee does not have a fiduciary duty or relationship, but with whom a licensee must be honest and fair.

Co-Insurance

A penalty clause in standard insurance policies requiring the insured to carry at least 80% of the value of the covered structure for the insurance carrier to cover the cost to repair/replace the structure. The policyholder is penalized proportionally for carrying less than the minimum required amount, which is usually 80% of the value but can be 90% or 100%, depending on the insurer.

Tax Ratio

A percentage of the market value of a property used to calculate ad valorem property taxes. Typically ranges between 10% and 100%, depending on the jurisdiction.

Variance

A permit obtained from the local zoning authority allowing the holder to use property or build a structure in a way that deviates from strict compliance with a zoning ordinance.

Administrator

A person appointed by the court to handle the estate of someone who died without a will, or with a will but no named executor.

Trustee

A person appointed to manage a trust on behalf of the beneficiaries; in a trust deed, an independent third party that holds the trust instrument.

General Agent

A person authorized to handle a principal's affairs in one area or in specified areas.

Client

A person being represented by a licensee. Also called Principal.

Auctioneer

A person licensed or authorized to conduct a public auction of item(s) belonging to someone else. In some states an auctioneer selling real property must be licensed as a real estate broker, whereas in others he or she must be a licensed auctioneer.

Consumer

A person or entity seeking or receiving licensed activities.

Attorney-In-Fact

A person specifically designated in an instrument (e.g., power of attorney) to do something legally for another in his stead. They have a fiduciary relationship with the principal.

Optionee

A person to whom an option is given.

Mortgagor

A person who borrows money and gives a mortgage to the lender as security for repayment.

Appraiser

A person who estimates the value of property, especially an expert qualified to do so by education and experience.

Optionor

A person who gives an option.

Offeror

A person who makes an offer.

Offeree

A person who receives an offer or to whom an offer is made

Mortgage Loan Originator

A person who solicits, negotiates, explains, or finalizes the terms of a mortgage loan for residential real estate.

Materialman

A person who supplies materials, equipment, or fuel for a construction project.

Mortgage Broker

A person who, for compensation, makes, negotiates, acquires, sells, or arranges for a mortgage loan.

Measuring Life

A person whose life determines the length of a life estate.

Dominant Tenant

A person with easement rights on another's property; someone who has an easement in gross.

Remainderman

A person, other than the grantor, who has a future interest in a life estate. A remainder interest is inheritable.

Immobility

A physical characteristic of real estate referring to the fact that real estate can't move from one place to another.

Scarcity

A physical characteristic of real property that says there is a limited supply of real estate, the perceived supply of a good or service relative to the demand for an item.

Encroachment

A physical object intruding onto neighboring property, often due to a mistake regarding the boundary. An illegal trespass by one property owner on the legal boundary of the land of another property owner due to a physical object intruding onto neighboring property, often due to a mistake regarding the boundary; examples include a wall, fence, driveway, and an overhanging balcony or eave.

Disability

A physical or mental impairment that substantially limits or curtails one or more major life activities.

Chattel

A piece of personal property.

Situs

A place where something exists

Freehold Estate

A possessory interest in real property of uncertain (and often unlimited) duration; an ownership estate in real property; either a fee simple or life estate. The holder has title.

Estate

A possessory interest in real property; either a freehold or a leasehold.

Effective Gross Income

Potential gross income, minus a figure for vacancy and collection losses.

Change

A principle affecting value in real estate that says all factors that influence real estate—physical, economic, governmental, and social—are constantly changing, and thus, property value itself is subject to constant change.

Substitution

A principle that says an informed buyer will not pay more for a property or a feature in a property than a comparable substitute.

Government-Sponsored Enterprise (GSE)

A privately held corporation with public purposes created by the U.S. Congress to reduce the cost of capital for certain borrowing sectors of the economy.

Horizontal Adjustment

A process through which a North Carolina taxing unit applies a uniform adjustment to the current value of all properties in a targeted area or of specific types of properties. Occurs every 4 years after the Octennial Reappraisal

Appraisal

A professional estimate or opinion of the value of a piece of property (parcel of land), as of a certain date, that's supported by objective data.

Condominium

A property developed for co-ownership, with each co-owner having a separate interest in an individual unit, combined with an undivided interest in the common areas of the property and air space consisting of the area between the walls, floor, and ceiling.

Stigmatized Property

A property that is undesirable to most people because of a past event, such as a crime or death. Such stigmas are not considered material facts that must be disclosed.

Familial Status

A protected group under the federal Fair Housing Act, making it illegal to discriminate against a person because he or she is the parent or guardian of a child under 18 years of age.

Exemption

A provision holding that a law or rule does not apply to a particular person, entity, or group (e.g., a company with a property tax exemption does not have to pay property taxes).

Direct Capitalization Rate

A rate of return, stated as a percent, used to derive a value opinion from the anticipated net operating income a property could generate. It is used for direct capitalization in the income approach.

Tax Rate

A rate used to calculate the property taxes based on the assessed value of a property.

Land Contract

A real estate installment agreement under which the buyer (vendee) makes payments to the seller (vendor) in exchange for the right to occupy and use the property. No deed or title is transferred until all, or a specified portion of, payments have been made.

Statutory Nonemployee

A real estate licensee who is treated as an independent contractor for tax purposes when specified conditions are met: Proper licensing, compensation based on sales, and services performed under a written contract.

Disclosure

A real estate licensee's fiduciary obligation to reveal material facts or defects.

Excise Tax

A real estate transfer tax levied on the property based on the property value.

Underground Storage Tank (UST)

A receptacle, at least 10% of which is underground, used to store a variety of substances such as heating oil, gasoline, chemicals, and hazardous waste; an environmental hazard due to corrosion, spills, leaks, and overfills. Regulated by the EPA.

Judgment Lien

A recorded claim against another for a wrongful act, as ordered by a court (often for money owed). The result can be the forced public sale of real estate.

Lis Pendens

A recorded notice stating that there is a lawsuit pending that may affect title to the defendant's real estate.

Agency

A relationship of trust created when one person (the principal) gives another person (the agent) the right to represent the principal in dealings with third parties.

Established Business Relationship (EBR)

A relationship that may allow a telemarketer or seller to call a consumer for up to 18 months after the consumer's last purchase, delivery, or payment (even if the consumer's number is on the National Do Not Call Registry).

Constructive Eviction

A remedy a tenant can invoke to be relieved from a tenancy if the rental unit is unhabitable and the landlord is unwilling or unable to correct the problem.

Title Report

A report issued by a title company disclosing the condition of the title to a specific piece of property; evidence of marketable title.

Insurance Broker

A representative for the customer who provides insurance quotes and policies from agents or insurance companies on behalf of the customer.

Counteroffer

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

Private Restriction

A restriction imposed on property by a previous owner or the subdivision developer; a restrictive covenant or a condition in a deed.

Restrictive Covenant

A restriction on real property use imposed by a former owner; promise to do or not do an act relating to real property; usually an owner's promise to not use property in a particular way. May or may not run with the land.

Spot Zoning

A rezone, usually illegal, that favors (or restricts) a particular property owner (or a small group of owners) without justification.

Appurtenance

A right that goes along with ownership of real property; usually transferred with the property, but may be sold separately. This is a legal term referring to both physical and non-physical.

Pitch

A roof's vertical rise in inches, divided by its horizontal span in feet, indicating its slope.

Administrative Rules

A rule or regulation adopted by an administrative agency, such as the North Carolina Real Estate Commission. In the State of North Carolina, these are consolidated into the North Carolina Administrative Code (NCAC).

Deed of Trust

A security instrument placing into the hands of a disinterested third party a specific financial interest in the title to real property as security for the payment of a note.

Mortgage

A security instrument that creates a voluntary lien on real property to secure repayment of a debt

First Mortgage

A security instrument with a first lien position.

Trust Account

A separate demand deposit bank account used for the safekeeping of funds belonging to parties to a real estate transaction. Also called Escrow Account.

Seller's Market

A situation in the housing market when a large number of buyers are looking for housing in an area of limited availability.

Buyer's Market

A situation in the housing market when there are many homes available for sale, but few buyers.

In-House Transaction

A situation in which a single brokerage represents both the buyer and seller in the same real estate transaction.

Affiliated Business Arrangement (AfBA)

A situation where a person in a position to refer settlement services—or an associate of that person—has either an affiliate relationship with or a direct or beneficial ownership interest of more than 1% in a provider of settlement services and who then refers business to that provider or in some way influences the selection of that provider.

Undisclosed Dual Agency

A situation where one licensee represents both buyer and seller in a single transaction without the informed consent of both parties; very often may be practiced unintentionally, possibly by implying to one party that he is represented when, in fact, there is no agency agreement.

Monopoly

A situation where only one or very few companies dominate the market share of a particular product or service.

Rate Lock

A specific fixed interest rate for a specified amount of time that is guaranteed by the mortgage lender.

Mechanic's Lien

A specific lien claimed by someone who performed work on the property (construction, repairs, improvements, etc.) to secure the amount of the charges for services with interest and costs. This term is often used in a general sense, referring to the broker's liens or materialman's liens as well as actual mechanic's liens.

Uniform Residential Appraisal Report (URAR)

A standard appraisal report form used by lenders and appraisers because it has been developed and approved by secondary mortgage market players Fannie Mae and Freddie Mac.

Closing Disclosure

A standardized document that presents a final, detailed accounting for a real estate transaction, listing each party's debits and credits and the amount each will receive or be required to pay at closing; required for all RESPA-related transactions.

Closing Disclosure (CD)

A standardized document that presents a final, detailed accounting for a real estate transaction, listing each party's debits and credits and the amount each will receive or be required to pay at closing; required for all RESPA-related transactions.

Uniform Residential Loan Application

A standardized form from Fannie Mae or Freddie Mac that lenders require potential borrowers to complete with pertinent information about the borrower and the property

Lien Theory

A state in which real estate mortgages are regarded as liens; title remains with the mortgagor as long as no default occurs.

As-Is Clause

A statement in a contract that indicates the property is being sold without warranty in its present condition at the time of the contract.

Representation

A statement of fact that is made to influence a person's decision to enter into a contract.

Homestead

A statutory or legal life estate recognized in some states that protect the estate belonging to a deceased person for the use of a surviving spouse and minor children.

Unoccupied

A structure is considered unoccupied when the personal belongings remain in the house but the occupants no longer physically live there for a certain period.

Vacant

A structure is considered vacant when the occupants have moved out and have also moved their personal belongings, such as furniture and appliances.

Debit

A sum of money that is owed; a charge.

Credit

A sum of money that is to be received.

Liquidated Damages

A sum of money that the parties to a contract agree to in advance that will serve as compensation in the event of breach. Often, it's the forfeiture of the earnest money deposit in purchase contracts.

Amenity

A tangible or intangible feature that enhances or adds value to real estate.

Transfer Tax

A tax levied on the transfer of a piece of real property from one person to another; it could be levied by the state, the county, or the municipality; in North Carolina, called Excise Tax.

Real Estate Transfer Tax

A tax levied on the transfer of real property.

Special Assessment

A tax levied only against properties that benefit from a public improvement (e.g., a sewer or street light) to cover the cost of the improvement; creates an involuntary lien

Binder

A temporary insurance contract that forms an oral or written agreement between the insurance company and the customer.

Tenancy from Period-to-Period

A tenancy that last for an initial period and automatically continues to renew itself until the landlord gives proper termination. Also called Periodic Tenancy.

Protected Tenant

A tenant or household member who is the victim of domestic violence under Chapter 50B of the North Carolina General Statutes or sexual assault or stalking under Chapter 14 of the North Carolina General Statutes.

Section 8 Housing

A term that refers to government-subsidized housing.

Title Company

A title insurance company.

Title Examination

A title search of public records to determine ownership and the quality of the title before conveyance.

Marketable Title

A title that is free and clear from undisclosed encumbrances or other defects that would expose a purchaser to litigation or impede a purchaser's ability to enjoy the property or to later sell the property.

Yield Spread Premium (YSP)

A tool that mortgage brokers can use to lower the upfront closing costs for a borrower in exchange for a higher interest rate.

Yield Spread Premium

A tool that mortgage lenders can use to lower the upfront closing costs for a borrower.

Double-Entry

A transaction item affects both parties, always a debit to one party and a credit to the other party that appears on both sides of a ledger or settlement statement.

Single-Entry

A transaction item that affects only one party and so appears only one side of a ledger or settlement statement.

Arm's Length Transaction

A transaction that occurred under typical conditions in the marketplace, with each party acting in his or her own best interest.

Assignment

A transfer to another of rights, such as an assignment of the contract or an assignment of lease.

Land Trust

A trust in which real estate is the only asset. The beneficiary has the right to possess the property as well as receive income or proceeds from its sale. The trustee manages the real estate as directed by the beneficiary.

Defeasible Fee

A type of freehold estate conveying ownership interest that comes with a condition. Also called Qualified Fee.

Monoline Policy

A type of insurance policy designed to cover one specific area.

Government (Rectangular) Survey System

A type of legal description for land that divides land into a grid using a series of meridians and baselines.

Umbrella Liability Policy

A type of property insurance that provides a very high limit of liability and broad coverage.

Cooperative

A type of property ownership under which residents have the right to occupy a unit by purchasing stock shares in the corporation that owns the property.

Planned Unit Development (PUD)

A type of subdivision in which developers do not have to comply with all standard zoning and subdivision regulations such as setback and lot size requirements.

Owner's Policy

A type of title insurance issued in the name of the property owner.

Mortgagee's Policy

A type of title insurance that the lender may have drawn in its name to protect its interests in the property.

PITI

A typical mortgage payment that includes Principal, Interest, Taxes, and Insurance. It would also include any homeowners association fees required as a condition of ownership.

Unit Deed

A unique deed held by a unit owner of a condominium that documents the ownership of that specific unit.

Statutory Right of Reinstatement

A way for borrowers to cure the default by bringing the mortgage current—including all accumulated costs and fees—between the time they receive a notice of foreclosure and the time a foreclosure action is filed.

Mill

An amount equal to one-tenth of one cent or $1 per $1,000, used in expressing tax rates.

Vacation Rental Agreement

A written agreement between a landlord or the landlord's real estate broker and a tenant in which the tenant agrees to rent residential property belonging to the landlord for a vacation rental

Subordination Agreement

A written agreement between lienholders on a property that changes the priority of mortgages, judgments, and other liens.

Property Management Agreement

A written agreement that creates an agency relationship between the property owner/investor and the property manager.

Comprehensive Plan

A written document prepared by a local Planning Board that identifies the goals, objectives, principles, guidelines, policies, standards, and strategies for the growth and development of a community, including its housing needs.

Lock-In Agreement

A written or electronically transmitted agreement between a lender and an applicant for a mortgage loan which, subject to the terms set forth in the agreement, obligates the lender to make a mortgage loan at a specified rate and a specific time period.

Statutory Year

A year based on a monthly rate that considers each month to be 30 days. There are 360 days in a statutory year. Also called Banker's Year.

Basis

Accounting procedure used to determine the capital gain or loss after the sale of property. It is equal to purchase price, plus capital improvements, less depreciation.

Title

Actual lawful ownership of real property.

Improvements

Additions to real property that are man-made, substantial fixtures, such as buildings.

Express Authority

Agency relationship based on an expressed agreement, either written or oral.

Implied Agency

Agency relationship created through the behavior (actions or words) of one or both parties.

Installment Sales Contract

Agreement for which the buyer makes payments to the seller in exchange for the right to occupy and use the property, but no deed or title is transferred until all, or a specified portion of, payments have been made.

Junior Mortgage

Any mortgage with a lower lien position than another.

Statutory Right of Redemption

Allows a mortgagor (debtor) to redeem property for a set period of time after a foreclosure sale, regardless of the timing of other events. Time frames for statutory right of redemption vary by state. This is not used in all states.

Use Variance

Allows landowners to use their land in a way that is not permitted under current zoning laws, such as commercial use in a residential zone.

Summary Ejectment

Also called actual eviction, a statutory eviction procedure initiated in small claims court, usually by the landlord, to legally evict a tenant.

Escrow Reserves

An account maintained by a lender for the deposit of borrowers' extra 1/12 monthly deposits to cover next year's insurance and tax payments.

License Recognition

An acknowledgment of licensing privileges from one jurisdiction to another jurisdiction.

Superfund Amendments and Reauthorization Act (SARA)

An act that amended CERCLA, designated more money to the Superfund trust, and established new environmental laws and regulations.

Interpleader

An action in which property that is held by a third party (such as earnest money) is deposited with the court to resolve a dispute as to ownership.

Endorsement

An addition or any other change to the policy coverage outlined in a document attached to the policy.

Cease and Desist Order

An administrative agency directive to stop an offending activity.

Exclusive Agency Listing

An agency contract between a seller and a broker that entitles the broker to a commission if anyone other than the seller finds a buyer for the property during the listing term.

Exclusive Right to Sell Listing

An agency contract between a seller and a broker that entitles the broker to a commission if anyone, including the seller, finds a buyer for the property during the listing term.

Dual Agency

An agency relationship in which a licensee represents both buyer and seller (or both landlord and tenant) in the same transaction. Requires the informed written consent from both parties.

Gratuitous Agency

An agency relationship where a real estate licensee is not compensated for his or her services, but still owes the principal all statutory obligations due every client.

Traditional Agency

An agency relationship where the seller is the only client and the buyer has no representation.

Universal Agent

An agent authorized to do everything that can be lawfully delegated to a representative.

Subagent

An agent who has been given authority by another agent to assist in carrying out the principal's orders.

Cooperating Agent

An agent who works with a listing agent to sell property in a real estate transaction; the selling agent who found a buyer for the listed property. The cooperating agent could be a buyer's agent or a subagent of the listing agent.

Special Agent

An agent with limited authority to do a specific thing or conduct a specific transaction.

Nonexclusive Buyer Agency Agreement

An agreement between a buyer and any number of brokers where a broker earns a commission only if he is the one who introduces the buyer to the property she purchases.

Contract

An agreement between two or more parties to do, or not do, something. Contracts are legally enforceable promises, with the law providing remedies for breach.

Sales Contract

An agreement in which a seller promises to convey title to real property to a buyer in exchange for the purchase price.

Co-Listing

An agreement in which two brokerage firms join forces to list the same property and mutually agree to share the commission.

Protection Agreement

An agreement that entitles the broker to compensation from the seller if the property is sold to a specific buyer; it is an agreement with the seller for a single transaction.

Implied Contract

An agreement that hasn't been put into words but is implied by actions of the parties.

Right of First Refusal

An agreement to be given the first chance to buy or lease property if the owner decides to sell or lease it after receiving a bona fide offer from a third party.

Right of First Opportunity to Purchase

An agreement to be given the right to have the first opportunity to buy a property if the owner decides to sell it in the future at a price to be determined at that time.

Price-Fixing

An antitrust violation that occurs when two or more competitors agree to fix the prices that they will charge. In real estate, it might occur when brokers agree with other brokers on commission rates; even the implication that brokers have discussed and/or reached agreement on fees could be illegal.

Market Allocation

An antitrust violation where competitors agree to not compete with each other in specific markets by dividing up geographic areas, types of products, or types of customers. Also called Territory Allocation.

Income Approach

An appraisal method that estimates the value of real estate by analyzing the amount of revenue, or income, the property currently generates, or could generate. Also called Capitalization Approach.

Cost Approach

An appraisal method that estimates the value of real estate by figuring the cost of building the house or other improvement on the land, minus depreciation, plus the value of the vacant land.

Sales Comparison Approach

An appraisal method that estimates the value of real property by performing a market analysis of the area where the subject property is located. Data are collected and adjustments are made for differences in the comparable properties.

Antitrust

An area of federal law concerned with maintaining competition in private markets by prohibiting unlawful restraint on trade.

Special Assessment District

An area or neighborhood that benefits from an improvement and is therefore taxed.

For Sale By Owner (FSBO)

An attempt to sell one's own property without listing it with a real estate broker.

Without Reserve

An auction where the property is sold to the highest qualified bidder; there is no minimum bid or reserve or right of confirmation

With Reserve Auction

An auction where the seller sets a minimum bid or where the seller has the option to confirm or reject the highest bid.

Easement by Prescription

An easement created by open and notorious, hostile and adverse use of another person's land for a specific period of time determined by state law. Does not have to be exclusive (the owner may be using the property, too), and the user does not acquire title to the property.

Right of Way (ROW)

An easement giving the holder the right to cross another person's land.

Easement in Gross

An easement that benefits a person or company, rather than benefiting another parcel of land.

Anticipation

An economic principle that implies value is created by the expectation of future benefits.

Contribution

An economic principle, which expresses that value is measured by the benefit of a property element to the whole property, or by how much value would be decreased if that element were not in place.

Nonfreehold Estate

An estate (interest in land) that is "less than freehold" (e.g., less than lifetime or ownership, such as in rental property. A lease agreement conveys a "blank" estate (leasehold interest) in the real property from the landowner/landlord to the tenant (possession, use, and control), while the landlord retains ownership or freehold interest in the property.

Net to Seller

An estimate of the money a seller should receive from a real estate transaction based on a certain selling price after all costs and expenses have been paid.

Addenda

An exhibit that may be attached to and made part of a contract to cover provisions that are not in the standard contract.

Addendum

An exhibit that may be attached to and made part of a contract to cover provisions that are not in the standard contract.

Self-help Eviction

An illegal method of eviction in which a landlord uses a variety of tactics to evict a tenant, such as unilaterally changing the locks on a rental unit, turning off utilities, or using force to remove a tenant from the unit like posting false legal signs on the door ordering the tenant to leave.

Consumer Financial Protection Bureau (CFPB)

An independent government agency within the Federal Reserve System with rule-making and enforcement authority over many consumer financial laws. Established under Title X of the Dodd-Frank Act.

Tenant

An individual who leases real property from the owner/landlord.

Title Search

An inspection of the public record to determine all rights and encumbrances affecting title to a property.

Power of Attorney

An instrument authorizing one person (called an attorney-in-fact) to act as another's agent, to the extent stated in the instrument.

Loose-Fill Insulation

An insulation product made of fiber pellets or loose fibers that can be blown into small, tight-fitting areas.

Foamed-In Insulation

An insulation product that is sprayed into irregularly shaped spaces as a liquid and expands into a plastic solid.

Exclusive Agent

An insurance agent who represents only one insurance company and is compensated by salary or commission. Also called a captive agent.

Direct Writing Companies

An insurance company that sells its policies through salaried employees.

Dwelling Policy

An insurance policy that covers direct and indirect losses, but provides no theft or liability coverage. This coverage may be added by a separate endorsement. The customer can specify what and how much they wish to be insured.

Curtesy

An interest held by a married person in the real property owned by a spouse; refers to a husband's interest in his wife's property. Not recognized in all states.

Possessory Interest

An interest in property that entitles the holder to possess and occupy the property, now or in the future; an estate, which may be either a freehold or leasehold.

Leasehold Estate

An interest in real property that is not an ownership interest. A tenant has a leasehold interest (nonfreehold interest) in the property being leased with the right of possession, use, and control in exchange for paying rent to the landlord, who retains ownership or freehold estate.

Life Estate

An interest in real property, the duration of which is limited by the life of its owner or another designated person

Rejection

An irreversible refusal of an offer by an offeree

Agriculture Fixture

An item placed on real property for the purposes of agriculture use; in North Carolina these fixtures become a part of the real property once attached and cannot be removed without written agreement from landlord.

Offer of Cooperation

An open invitation to other brokers to sell property listed by another broker.

Broker Protection Clause

An optional clause that brokers may include in a listing agreement that obligates the seller to compensate the broker even if the property is sold after the listing agreement expires under certain circumstances.

Equity

An owner's unencumbered interest in his or her property.

Home Inspection

An unbiased, systematic, noninvasive, visual inspection of the physical structure and systems of a home.

Procuring Cause

An uninterrupted series of events leading to the creation of a contract; the party whose efforts resulted in the creation of a binding contract for sale; for example, a broker whose efforts resulted in an executed contract, thus entitling her to a commission.

Improvement

Any addition to or change in a condition of real property to increase its value or utility.

Blind Advertisement

Any advertisement for the sale, purchase, exchange, rent, or lease of any real estate for others that does not indicate that it is from a broker or brokerage firm.

Encumbrance

Any claim, lien, charge, or liability that affects or limits the fee simple title to real property.

Paid Outside of Closing (P.O.C.)

Any expenses associated with a real estate transaction that are paid outside of closing or before closing. Such payments may be noted on a settlement statement as such but are not reconciled as credits.

Concurrent Ownership

Any form of ownership in which two or more people share title to a piece of property, holding undivided interests.

Trust Money

Any money that a licensee holds for the benefit of a principal or any third party to the transaction.

Personal Property

Any property that is not real property. It is movable; thus not fixed to land, includes tangible items that are not permanently fixed/attached to or part of real estate and any other property that is not real property.

Non-marital Property

Any property that was owned prior to the marriage or civil union or that was given or devised by will only to one spouse or legal partner during the term of the marriage or civil union.

Settlement Services

Any service provided in connection with a prospective or actual settlement of a real estate transaction, including, but not limited to, those provided by lenders, title companies, real estate brokers, property inspectors, attorneys, appraisers, etc.

Consideration

Anything of value such as money, services, goods, or promises that is given to induce another to enter into a contract.

Peril

Anything that can cause a loss of property such as fire, wind, hail, etc.

Annexation

Attaching personal property to land so that the law views it as part of the real property.

Cost Manuals

Books, electronic media, and online sources that give estimated construction costs for various types of buildings in different areas of the country.

Unity of Person

Both co-owners considered being a single legal entity. Applies only to married couples and is necessary for tenancy by the entirety.

Reproduction

Building an exact duplicate of the original building, giving the new structure the exact same look and feel as the original.

Replacement

Building the functional equivalent of the original building, using modern materials, usually with one that is the same size, layout, quality, and utility as the original.

Reserves

Cash on deposit or other highly liquid assets a borrower must have in order to cover two months of PITI mortgage payments after they make the cash down payment and pay all closing costs.

Privity of Contract

Duties that arise because of the contract itself; the express contractual promises of the lease.

Privity of Estate

Duties that arise because of traditional (common law) property laws and rules.

Steering

Channeling prospective buyers or tenants to particular neighborhoods based on their race or membership in another protected class.

Residential Rental Agreement Act

Chapter 42 of the North Carolina General Statutes which is the primary state legislation enacted for the protection of residential tenants.

North Carolina Real Estate License Law

Chapter 93A of the North Carolina General Statutes, containing the laws that address requirements for licensing, duties of licensees, brokerage requirements, prohibited acts, and other topics relevant to real estate licensees.

Uniqueness (non-homogeneity or heterogeneity)

Characteristics of real property that says that every piece of land, every building, and every house is said to be a different piece of real estate.

Recording Fees

Charges for filing documents at the county recorder's office so that they become part of the public record.

Usury

Charging a higher interest rate than the law allows.

Mortgage Clause

Clause that states to get a mortgage loan, property insurance must be obtained before closing. The mortgage clause covers the lender's interest in the preservation and reconstruction of the property after a loss.

Fair Housing Act

Common name for Title VIII of the Civil Rights Act of 1968 and its amendments.

Genuine Assent

Consent given freely to create a binding contract. If offer or acceptance is given as a result of fraud, undue influence, duress, or mistake, then the contract is voidable by the victimized party.

Adequate Consideration

Consideration that is comparable in value to the consideration the other party to the contract is giving.

Substantial Contact

Contact between a broker and a consumer where the consumer or broker begins to act as though an agency relationship exists and the consumer begins to disclose to the broker personal or confidential information.

Indirect Cost

Costs associated with a construction project, other than labor and materials.

All-risk Policy

Covers all direct risk of physical loss; therefore, everything is covered unless the peril is specifically excluded.

Fructus Industriales

Crops that are planted and harvested each year.

Compensatory Damages

Damages award intended to compensate a plaintiff for harm caused by the defendant's act or failure to act, including personal injuries, property damage, and financial loss.

Public Offering Statement

Disclosure of the material characteristics and circumstances affecting a time share project that must be given to each prospective purchaser.

Unity of Time

Each co-owner acquiring title at the same time.

Unity of Title

Each co-owner acquiring title through the same instrument (deed, will, or court order).

Unity of Possession

Each co-owner being equally entitled to possession of the entire property, because the ownership interests are undivided.

Unity of Interest

Each co-owner having an equal interest (equal share of ownership) in a piece of property.

Named Peril Policy

Each peril is listed and named in the policy. If a property is damaged and the peril that caused it is not listed and named, then there is no coverage.

Area Variance

Entitle landowners to use land in a way that is typically not allowed by the dimensional or physical requirements of the zoning law.

Tenements

Everything of a permanent nature associated with land and ordinarily transferred with the land. They are both tangible (buildings) and intangible (air rights)

Parol Evidence

Evidence concerning negotiations or oral agreements that were not included in a written contract, altering or contradicting the terms of the written contract.

Prepaid Expenses

Expense items on a settlement statement the seller has already paid in advance, usually at the beginning of a month for the rest of the month, or at the beginning of the year for the rest of the year or longer.

Executory Contract

Express Contract

Default

Failure to fulfill an obligation, duty, or promise.

Real Estate Settlement Procedures Act (RESPA)

Federal law dealing with real estate closings that provides specific procedures and guidelines for the disclosure of settlement costs. Implemented by Regulation X, which is under the oversight of the Consumer Financial Protection Bureau.

Truth in Lending Act (TILA)

Federal law that requires disclosure of the terms of credit by a creditor to a prospective borrower. Implemented by Regulation Z, which is under the oversight of the Consumer Financial Protection Bureau.

Truth-in-Lending Act (TILA)

Federal law that requires disclosure of the terms of credit by a creditor to a prospective debtor.

Kickback

Fee or other compensation given as undisclosed commission for business referrals. Are prohibited by RESPA.

Kickbacks

Fees or other compensation given for services not performed, but as a means of undisclosed commission for business referrals. (These are prohibited by RESPA.)

Portfolio Lenders

Financial institutions that make real estate loans that they keep and service in house instead of selling them on the secondary markets.

Direct Loss

Financial loss as a result of a direct loss to property.

Referral

For the purposes of RESPA, any oral or written action directed to a person that has the effect of affirmatively influencing the selection of a provider of a settlement service or business.

Non-Judicial Foreclosure

Foreclosure by a trustee under the power of sale clause in a deed of trust, without the involvement of a court. (Not used in some states.)

Building Inspection

Formal process through which government authorities, usually local, are charged with ensuring compliance with prevailing building codes.

Vacation Rental Act

Found in Chapter 42A of the North Carolina General Statutes, this Act provides rental legislation to address the unique needs of the residential vacation rental market.

Purchase Money Mortgage

Generally describes a mortgage used to finance the purchase of property; may specifically refer to a situation where the seller finances all or part of the sale price of a piece of property for the buyer.

Negligence

Generally, any conduct that falls below the standard of care a reasonable person would exercise under the circumstances; an unintentional breach of a legal duty resulting from carelessness, recklessness, or incompetence.

Zoning

Government regulation of the uses of property within specified areas.

Confidential Information

Information that is provided to a licensee agent by a client that describes or affects the provider's negotiations, bargaining position, or motivation, and that is neither required by law nor constitutes fraud or dishonest dealing if not disclosed.

Private Mortgage Insurance (PMI)

Insurance offered by private companies to insure a lender against a borrower's default on a loan.

Manufactured Housing

Houses built to HUD building codes in a factory, titled and regulated by the North Carolina Department of Motor Vehicles (DMV), and is considered personal property until required steps are taken by the owner to convert to real property.

Modular Housing

Houses built to state building codes in a factory (personal property), transported to the landowner's site, and assembled by a builder onsite on a permanent foundation, which at that point becomes real property.

Commingling

Illegally mixing personal funds with money held in trust on behalf of a client

Title Insurance

Insurance policy that protects lenders and homeowners against losses resulting from undiscovered title defects and encumbrances.

Errors and Omissions Insurance (E&O)

Insurance that protects real estate licensees from liability due to mistakes or negligence. It does not cover claims related to fraud or discrimination.

Project Broker

In North Carolina, a natural person licensed as a real estate broker and designated by a time share developer to supervise brokers at the time share project.

Time Share Registrar

In North Carolina, a natural person who is designated by the developer to record or cause time share instruments and lien releases to be recorded and to fulfill the other duties imposed under Article 4 of the Real Estate License Law.

Homestead Exclusion

In North Carolina, a partial exclusion of the assessed value of an owner-occupied property for qualified residents.

Writ of Attachment

In North Carolina, it is a pre-judgment right of a creditor that ensures creditors that the debtor's property will be available to satisfy the debt once the judgment is finalized; A levy on property under a "this" creates an attachment lien on the subject property.

Comparative Market Analysis (CMA) / Broker Price Opinion (BPO)

In North Carolina, these are identical activities and are defined as the analysis of sales of similar recently sold properties in order to derive an indication of the probable sales price of a particular property by a licensed real estate broker.

Accounting

In an agency relationship, the agent's fiduciary duty to account to the principal, related both to financial accounting and responsiveness.

Debt Service

The amount of money paid in regular intervals toward reducing the principal and interest owed on a debt.

"Walls In"

In the HO-6 Condominium Unit Owners Form, it covers provides contents, liability, and loss of use coverage for the insured but also includes a small amount of coverage for the interior space only of the dwelling unit.

IRV Formula

Income (NOI) = Rate * Value

Stable Monthly Income

Income that can reasonably be expected to continue in the future

Underwriter

Individual who evaluates a loan application to determine its risk level for a lender or investor; final decision maker on a loan application.

Affiliated Licensee

Individuals licensed as brokers who are associated with the same brokerage firm.

Liability Insurance

Insures the individual for financial losses that may arise out of the person's responsibilities to others imposed by law or contract.

Certificate of Occupancy

Issued to builders after all inspections have been made and the property is deemed fit for occupancy by meeting the appropriate standards for health and safety.

Accrued Expense

Item on a settlement statement for which the cost has been incurred, but the expense has not yet been paid. Such expenses are considered to be paid in arrears.

Trade Fixtures

Items of personal property that are annexed to leased property, are necessary to a trade or business, and are removable by the tenant prior to expiration of the lease.

Specific Performance

Legal remedy in which a court orders someone who has breached a contract to perform as agreed, rather than paying monetary damages.

Building Code

Legal requirements designed to protect the public by providing guidelines for structural, electrical, plumbing, and mechanical areas of a structure.

Primary Market

Lenders, such as banks and other financial institutions, that make mortgage loans directly to borrowers.

Statutory Redemption

Lets a mortgagor redeem property for a set period of time after a foreclosure sale, regardless of the timing of other events. Time frames for statutory right of redemption vary by state. This is not used in all states.

Vicarious Liability

Liability that is created because of the relationship between someone and the actions of the person who is actually liable, such as a broker who may have vicarious liability for the actions of her affiliated agents even though the broker may have done nothing wrong.

Deed Restriction

Limitations placed in a deed by a grantor that restrict the way in which the land may be used, improved, or maintained.

FHA-Insured Loans

Loans insured by the Federal Housing Administration.

Zoning Ordinance

Local laws that divide a city or county into different areas or zones. These zones determine how land can be used, subdivided, or improved along with the specific requirements for compliance.

Comparative Unit Method

Method for determining the replacement cost of a building that relies on cost manuals showing the construction costs of recently built comparable buildings. Also called: Square Foot Method.

Capital Loss

Monetary loss resulting from an investment's decrease in value.

Earnest Money

Money offered as an indication of good faith regarding the future performance of a purchase agreement.

Acquisition Indebtedness

Mortgage debt incurred to acquire, construct, or substantially improve a principal or secondary residence.

National Do Not Call Registry

National registry managed by the Federal Trade Commission that limits commercial telemarketers from phoning consumers who place their telephone numbers on a list.

Fructus Naturales (Natural Attachments)

Naturally occurring plants ("fruits of nature"), generally considered part of real property.

Net Operating Income (NOI)

Net income after all operating expenses have been deducted.

Appraisal Foundation

Non-profit organization recognized as the authority for professional appraisal standards.

Apparent Authority

Occurs when someone who has not been authorized to represent another, acts as if he or she is that person's agent.

Building Permits

Official documents from a local government or other authority that allow the beginning of a construction or remodeling project.

Building Permit

Official government document obtained from the appropriate authority acknowledging the proposed construction meets the department's standards and granting permission for the work to be performed.

Fixed Expenses

Ongoing operating expenses that do not vary based on occupancy levels of the property (e.g., taxes, insurance).

Variable Expense

Operating expense necessary to the property, but dependent on the property's occupancy level.

Adjusted Basis

Original cost of property, plus gains and minus losses.

Ownership in Severalty

Ownership by a single person or legal entity, as opposed to co-ownership.

Amortization

Payment of debt in regular, periodic installments of principal and interest over a defined period of time.

Graduated Payment Mortgage

Payment structure that allows the borrower to make smaller payments in early years of the mortgage, with payments increasing on a scheduled basis at a predetermined point until they are sufficient to fully amortize the loan over the remainder of its term.

Fiduciary

Person in a position of trust, held by law to high standards of good faith and loyalty

Annexor

Person who owns an item as personal property and attaches it onto real property, making it a part of the real property.

Fructus Industriales

Plants planted and cultivated by people ("fruits of industry"), generally considered personal property. Also called: Emblements

Capital Gain

Proceeds from the sale of an investment greater than the acquisition cost of the investment.

Pre-Approval

Process by which a lender determines if potential borrowers can be financed through the lender, and for what amount of money.

Deed in Lieu of Foreclosure

Process by which the deed to a property is given by a borrower to the lender to avoid foreclosure.

Matched Pair Analysis

Process of determining the value of specific property characteristics or features by comparing pairs of similar properties.

Uniform Standards of Professional Appraisal Practice (USPAP)

Professional appraisal standards developed by The Appraisal Foundation, and now recognized throughout the United States as accepted standards of appraisal practice.

As of Right Zoning

Prohibits discrimination among landowners in a particular zone.

Covenants

Promises or guarantees in a deed or other document.

Marital Property

Property acquired by either a spouse or a legal partner during the course of a marriage or civil union.

Octennial Reappraisal

Property assessment performed every eight (8) years, such as in North Carolina.

Servient Tenement

Property burdened by an easement; the owner is required to allow someone who has an easement to use his property.

Townhome

Property developed for co-ownership where each co-owner has a separate fee simple interest in an individual unit, including its roof and basement, as well as the land directly beneath the unit, and an undivided interest in the common areas of the property.

Dominant Tenement

Property that receives the benefit of an appurtenant easement.

Nonconforming Use

Property use that doesn't conform to current zoning laws but is allowed because the property was being used that way before the new zoning law was passed. Also referred to as being "grandfathered in."

Specific Property Insurance

Provides a specific amount of insurance for specific types of property at a specific location.

HO-5 Comprehensive Form

Provides all risk coverage on both the structures and contents.

HO-3 Special Form

Provides the best coverage for the money. It is the most popular HO coverage form, and is all risk on the dwelling and other structures, and contents are still named peril.

Conditions

Provisions in a deed or other document that make the parties' rights and obligations dependent on the occurrence or non-occurrence of some event.

Land Use Controls

Public or private restrictions on how land may be used (e.g., zoning).

Comparables

Recently sold properties with similar characteristics (size, room count, design, utility, etc.,) that are in close proximity to the property being appraised.

Emblements

Refers to crops which require annual planting.

Indestructibility

Refers to the fact that real estate cannot be destroyed

Agency Relationship

Relationship between a broker and a seller or a broker and a buyer that imposes certain duties, obligations, and high standards of good faith and loyalty on the agent, as the representative of the principal.

Annual Percentage Rate (APR)

Relationship between the cost of borrowing and the total amount financed, represented as a percentage.

License

Revocable, non-assignable permission to enter another person's land for a particular purpose.

Mineral Rights

Rights to the minerals located beneath the surface of the land.

Runs with the Land

Rights, conditions, or restrictions that are associated with the property as opposed to the individual who owns the property. They pass from owner to owner when the land is conveyed; an Appurtenance.

Case Law

Rules of law developed in court decisions, as opposed to constitutional law, statutory law, or administrative regulations.

Tenant Security Deposit Act

Section 42-50 of the North Carolina General Statutes, this Act regulates and sets limitations on how landlords may hold the security deposit of residential tenants.

Residential Real Estate

Single-family homes, individual condominiums, townhouses, and the like, and buildings with up to four dwelling units.

Adjusted Sales Price

The amount of money received from the sale of property minus the selling expenses; such as broker fees, attorney fees, etc.

Reconciliation

The appraisal process of analyzing the values derived from the different appraisal approaches to arrive at a final value estimate or opinion.

Nonresident Licensee

Someone who is licensed to practice real estate in the State of North Carolina but who does not live in the state.

Life Tenant

Someone who owns a life estate; the person entitled to possession of the property during the measuring life.

Illegal Per Se

Something that is unlawful in and of itself without considering context or intent; generally made so because of statute, constitution, or case law.

Title Theory

State in which a mortgagee holds actual title to property until the loan is repaid.

Mrs. Murphy Exemption

States that the rental of a unit or a room in an owner-occupied dwelling with four units or less is exempt from the federal Fair Housing Act. This exemption is provided only when rental advertising is not discriminatory, a real estate agent is not involved, and there is no discrimination based on race or color.

Judicial Eviction

Terminates a lease when the tenant fails to adhere to the conditions of the lease and the landlord resorts to legal action to evict the tenant. Also called Summary Ejectment or Actual Eviction.

Post-licensing Education

The 90 hours of North Carolina Real Estate Commission-approved education required within 18 months of receiving or activating an initial broker license with provisional designation; successful completion removes the provisional designation.

HO-6 Condominium Unit Owners Form

The HO-6 is very similar to the HO-4, except it includes a small amount of coverage for the dwelling unit, which is the interior space owned by the insured.

Like-Kind Exchange

The Internal Revenue Code Section that allows a taxpayer to sell an investment property and purchase another investment property in its place without paying capital gains on the proceeds from the sale. Also called 1031 Exchange or Tax-Deferred Exchange.

TRID Rule

The TILA-RESPA Integrated Disclosure rule, issued by the Consumer Financial Protection Bureau to create standardized, consumer-friendly disclosure documents, including the Loan Estimate (which integrates the initial Truth in Lending Statement and the Good Faith Estimate) and the Closing Disclosure (which integrates the final Truth in Lending Statement and the HUD-1 Settlement Statement).

Tax Deductibility

The ability to write-off a portion of interest from a loan on the amount of taxes owed to the government.

Escrow Account

The account a lender maintains to hold a borrower's monthly payments for property insurance and property tax until those bills are due.

Accession

The acquisition of title to land by its addition to real estate already owned, through human actions or natural processes

Remediation

The act of stopping or reversing something specific, often environmental damage.

Appropriation

The actual act of taking the property

Real Estate

The actual physical land and everything, both natural and man-made, which is attached (or appurtenant) to it.

Effective Age

The age of a structure based on the actual wear and tear that the building shows from physical, functional or external obsolescence; not necessarily the structure's actual age.

Proration

The allocation of expenses between buyer and seller in proportion to their actual usage of the item or service.

Residual Income

The amount of a borrower's income remaining after subtracting taxes, housing expenses, and all recurring debts and obligations; a factor when qualifying prospective borrowers for VA-guaranteed loans.

Principal

The amount of a debt, excluding interest due.

Cash to Close

The amount of money a buyer must bring to settlement to close the transaction after all credits and debits have been reconciled.

Down Payment

The amount of money a buyer pays to obtain a property, in addition to the money that the buyer borrows.

Loan-to-Value Ratio (LTV)

The amount of money borrowed, compared to the value (or price) of the property.

Debt

The amount of money owed on a note or other promise to pay.

Vendee

The buyer in a land contract.

Due Diligence

The buyer's opportunity to investigate and inspect the property and the transaction.

Tortious Interference

The causing of harm by disrupting another's relationship, for example, interfering with a contractual relationship so that one party fails to execute her promise.

Closing

The completion of the legal steps necessary to transfer title to property from the seller to the buyer, and includes settlement and recordation of the deed.

Self-Dealing

The conduct of a fiduciary that consists of taking advantage of his or her position in a transaction and acting in his or her own interests rather than in the interests of his or her clients.

Servicing

The continued maintenance of a mortgage loan, including collecting loan payments, keeping records, accepting escrow payments and paying these charges when due, and handling defaults.

Effective Date

The date that: (1) the last one of Buyer and Seller has signed or initialed this offer or the final counteroffer, if any, and (2) such signing or initialing is communicated to the party making the offer or counteroffer, as the case may be.

Consummation

The date when the consumer becomes contractually obligated to the creditor on a loan.

Deficiency Judgment

The debt that remains due and payable by the borrower after a sheriff's sale of property.

Loan Estimate

The disclosure of loan terms, annual percentage rate and other credit costs, and estimated settlement costs that must be given to borrowers within three business days of a completed loan application in order to satisfy provisions of the Truth in Lending Act and the Real Estate Settlement Procedures Act.

Loan Estimate (LE)

The disclosure of loan terms, annual percentage rate and other credit costs, and estimated settlement costs that must be given to borrowers within three business days of a completed loan application in order to satisfy provisions of the Truth in Lending Act and the Real Estate Settlement Procedures Act.

Condominium Declaration

The document that must be filed in the public record when the property is developed as, or converted to, a condominium.

Leverage

The effect borrowed funds have on investment returns.

Settlement

The execution and delivery to the closing attorney of all documents necessary to complete the transaction and the closing attorney's receipt of all funds.

Jurisdiction

The extent of the authority of a particular court, generally based on either the amount of money at issue in a case, geographical boundaries, or the subject matter of the case.

Negligent Omission

The failure to disclose that is unintentional and as the result of carelessness or negligence, rather than intent to deceive.

Mortgage Insurance Premium (MIP)

The fee charged for FHA mortgage insurance coverage. Initial premium can be financed, and there is a monthly premium.

Offer

The first step in forming a contract when one party makes an offer to another party. An offer requires intent to contract and definite terms.

Intermediation

The flow of funds through financial intermediaries (such as banks and thrifts) on its way to borrowers. Money deposited at financial institutions that make the money available to corporate borrowers is an example of intermediation.

Fee Simple Absolute

The greatest estate (ownership) one can have in real property because it is freely transferable and inheritable, and of indefinite duration, with no conditions on the title.

Retaliatory Eviction

The illegal eviction of a tenant by a landlord in response to the tenant making complaints about the condition of the rental unit or participating in tenants' right organizations or similar activities in good faith.

Blockbusting

The illegal practice of inducing owners to sell their homes (often at a deflated price) by suggesting the ethnic or racial composition of the neighborhood is changing, with the implication that property values will decline as a result. Also called Panic Selling or Panic Peddling.

Subsurface Rights

The implication that an owner of land has rights to the land below the surface to the center of the earth, even though this part is not documented.

North Carolina Real Estate Commission (NCREC)

The independent administrative agency that issues real estate licenses and has regulatory oversight of the state's real estate licensees.

Entitlement

The maximum dollar amount of loan guarantee to which an eligible veteran is entitled.

Cash Flow

The measure of cash inflow and outflow from an investment. Positive cash flow means more money is coming into the business than is leaving it. Negative cash flow is the converse.

Highest and Best Use

The most profitable, legally permitted, feasible, and physically possible use of a piece of property.

Disintermediation

The movement of money out of savings accounts and into higher yield investments, such as corporate securities or government instruments.

Cash to Seller

The net amount of money a seller receives from a real estate transaction at settlement after all costs and expenses have been paid.

Due Diligence Fee

The non-refundable agreed-upon amount that the buyer pays the seller for the right to terminate the contract for any reason or for no reason during the due diligence period; this is not the same as earnest money.

Notice of Foreclosure

The notification given by a lender to a borrower who has failed to repay a debt according to the terms of the loan, accelerating the due date of the debt to the present and requiring the borrower to repay the entire outstanding balance of the loan at once.

Lien Position

The order in which liens are paid off out of the proceeds of a foreclosure sale.

Siding

The outer covering for a building's exterior walls, designed to shed water and protect the building from the elements.

Reserve Requirement

The percentage of customers' deposits that commercial banks are required to keep on deposit, either on hand at the bank or in the bank's own accounts; in other words, money the bank cannot lend to other people.

Premium

The periodic payment for the cost of insurance.

Settlement Agent

The person or persons responsible for conducting the settlement and disbursement of the settlement proceeds, and includes any individual, corporation, partnership, or other entity conducting the settlement and disbursement of the closing funds

Real Property (realty)

The physical land and everything attached to it, and the rights of ownership (bundle of rights) in the real estate.

Market Position

The position of an agent's listing property compared to similar homes in the same neighborhood at a similar price.

Implied Authority

The power or permission to do everything reasonably necessary to carry out the principal's express orders.

Unauthorized Practice of Law

The practice of law by a person who is not licensed to practice law in a specific jurisdiction.

Underwriting

The process of a lender analyzing the security and a borrower to determine the risk of a loan.

Origination

The process of making or initiating a new loan.

Pre-Qualification

The process of pre-determining how much a potential homebuyer might be eligible to borrow.

Foreclosure

The process used by a lien-holder to force a property to be sold so that the proceeds of the sale can be applied toward debt satisfaction.

Survey

The professional measurement of a tract of land with its boundaries, contents, and location relative to other property.

Subject Property

The property for which an estimate of value is sought.

Trustor

The property owner who grants a trust to a third party for the benefit of someone else.

Confidentiality

The protection of the client's confidential information, including facts that could affect their negotiating position.

Practice of Law

The provision of legal services for any other person or entity with or without compensation.

Cash-on-Cash Return

The ratio of income generated by the property to the cash investment (down payment and settlement costs) in the property.

Combined Loan-to-Value

The relationship between the unpaid principal balances of ALL mortgage loans and the appraised value (or sales price if it is lower) of the property.

Total Debt-to-Income Ratio

The relationship of a borrower's total monthly debt to gross monthly income, expressed as a percentage (Total Debt / Income = Ratio %). Debt obligations include housing and long-term debts with more than 10 payments remaining. Also called Total Debt Service Ratio or Back End Ratio.

Housing Expense Ratio

The relationship of a borrower's total monthly housing expense to gross monthly income, expressed as a percentage (Total Housing Expense / Income = Ratio%). Also called Income-to-Payment Ratio or Front End Ratio.

Vacation Rental

The rental of residential property for vacation, leisure, or recreation purposes for fewer than 90 days by a person who has a place of permanent residence to which he or she intends to return

Restitution

The return of consideration by both parties when a contract is rescinded.

Easement Appurtenant

The right acquired by the owner of one parcel of land to use another's adjacent land for a specific purpose. There must be two tracts of land; one becomes the dominant tenement (it benefits from the easement), and the other becomes the servient tenement.

Equitable Right of Redemption

The right of a debtor to redeem property from foreclosure proceedings prior to confirmation of sale.

Right of Rescission

The right of a purchaser of a North Carolina time share to void the purchase contract within five days of signing without penalty.

Preemptive Right

The right to buy or lease property before others.

Air Rights

The right to undisturbed use and control of airspace over a parcel of land (within reasonable limits for air travel); may be transferred separately from the land.

Discrimination

Treating people unequally because of their race, religion, sex, national origin, age, or some other characteristic of a protected class, in violation of civil rights laws.

Exclusion

The section of the insurance policy that lists all excluded (not covered) perils, property, persons, etc. A loss or risk that a policy does not cover.

Vendor

The seller in a land contract.

Alluvion (Alluvium)

The solid material deposited along a shore by accretion.

Section 203(b) FHA Loan

The standard FHA-insured loan program. There are no income limits on this type of loan. The borrower must meet all FHA qualifying standards and the property cost must not exceed the maximum FHA mortgage amounts.

Novation

The substitution of a new contract for the original contract. Both parties must give their consent.

Foundation

The support for a building that can be constructed of stone, poured concrete, pre-engineered concrete walls, concrete block, or even wood.

Footer

The support for the foundation of a building. Footers are installed below the frost line and are wider than the foundations that they support.

Land

The surface of the earth; actual dirt on the ground, part of a waterway that is owned, or even a swampy marsh. From a legal standpoint, it also refers to everything under the ground to the center of the earth, and everything over the land into the air (within limits to allow for air traffic).

Lessee

The tenant who leases property from a landlord.

Market Value

The theoretical price that a piece of property would bring if placed on the open market for a reasonable time, with a buyer willing (but not forced) to buy, and a seller willing (but not forced) to sell, if both buyer and seller were fully informed as to possible use of the land.

DOM (Days on Market)

The time between listing a property and either selling or removing it from the market.

Economic Life

The time during which a building can be used for its intended purpose and generate more income than operating expenses cost. Also called Useful Life.

Lot and Block System

The type of legal description used for platted property.

Non-homogeneity or heterogeneity

The uniqueness of land

Spam

The use of any electronic messaging system to send unsolicited bulk messages indiscriminately.

Assessment

The valuation of real property that is used as a basis for calculating the amount of real estate tax to be levied. Also, the levy or rate to be paid to the government for services provided or constructed by it (e.g., curbs, sewers, sidewalks)

Site Valuation

The value of land with the enhancements necessary to make it ready for building, such as water, sewer, electricity, etc.

Assessed Value

The value placed on a property by a taxing authority for the purpose of taxation. With real estate, this value is usually a fraction of true value.

Section 502 Loan

This USDA loan program either guarantees loans made by approved private lenders or makes direct loans if no local lender is available.

Competition

This principle states that in a free marketplace, if excess profits are being generated by a particular product or service, then additional competition will develop (supply and demand).

Levy

To collect, impose, or tax; in some situations, such as those related to collections, it means to seize.

Conversion

To use trust funds for a purpose other than the purpose for which they are held. Conversion is a breach of trust and is a crime as provided by North Carolina law. ("stealing")

Operating Statement

Used by the current owner and illustrates total revenues generated for a given period based on rent rolls and management style.

Deductible

Usually a dollar amount the insured must pay on each loss to which the deductible applies. The insurance company pays the remainder of each covered loss up to the policy limits.

Breach

Violation of an obligation, duty, or law.

Appropriative Rights

Water rights allocated by government permit, according to an appropriation system. It is not necessary to own property beside the body of water to apply for an appropriation permit.

Littoral Rights

Water rights of landowners whose land touches a commercial lake, sea, or ocean.

Riparian Rights

Water rights of landowners whose land touches a natural body of water, such as a stream, a river, or an inland lake

Market Rent

What the property could rent for in the open market if unencumbered by any lease and available.

Reliction

When a body of water gradually recedes, exposing land that was previously underwater.

Functional Obsolescence

When a building is less desirable because of something inherent in the design of the structure.

Subject To Existing

When property is transferred to a buyer along with an existing mortgage or lien, but without the buyer accepting personal responsibility for the debt. The buyer must make the payments to keep the property, but only loses his equity in the event of default.

Revocation

When someone who granted or offered something withdraws it; as when a principal withdraws the authority granted to an agent or an offeror withdraws the offer.

Renunciation

When someone who has been granted something or has accepted something later gives it up or rejects it; as when an employing broker withdraws from an agency relationship with a client.

External Obsolescence

When something outside of a property and outside of the control of a property owner makes it less desirable.

Open Market Operations

When the Federal Reserve Board sells or buys government securities (or U.S. dollars) as a means of controlling supply and demand and confidence in those items.

Settlement Meeting

When the parties to the transactions meet to review, execute, and exchange the required legal documents.

Building Codes

Written criteria, typically adopted and enforced at the local level, intended to protect the public by imposing minimum construction standards related to methods and materials, sanitary equipment, electrical wiring, fire prevention, etc.

Informed Consent

Written evidence that a client is aware of and has given permission to an agent to perform a specific action or take on a specific role in the client-agent relationship.

Right of Possession

gives the owner the right to physically occupy the land and to use the land and make it productive. Owners can use the land in any way they want, as long as it is legal and does not interfere with other people's rights.

Police power

a government's authority to regulate the health, safety, welfare, and morals of its citizens.

Cluster Zoning

allows developers to provide a varied selection of lot sizes and housing choices within a single area

Right of Control

allows the owner to physically alter or change the property.

Right of Exclusion

allows the owner to stop others from using the property or even from entering the property.

Right of Disposition

allows the owner to transfer all or some of the rights to other people.

Chattel or Personalty

also known as Personal Property

Supply and Demand

an economic concept that says that for all products, goods and services when supply exceeds demand prices will fall; When demand exceeds supply, prices will rise.

Independent Agent

an insurance agent who may place coverage with any company with which he or she has an agency relationship, as long as the insured meets that company's underwriting standards

Borrower

called the grantor or trustor.

Right of Quiet Enjoyment

gives the owner the freedom to possess and use the land without interference from other people or society. However, this also includes a responsibility to make sure that their neighbors' enjoyment is not hindered or adversely affected.

License Renewal Cycle

he period during which a real estate licensee must renew his license. In North Carolina, real estate licenses must be renewed annually by June 30.

Property Insurance

indemnifies property owners against the loss or damage of real or personal property

Restrictive (protective) covenants

private deed restrictions that limit how land may be used often defined by a developer in the declarations of restrictions master deed.

HO-8 Modified Form

is specially designed for older homes for which the replacement cost of the dwelling exceeds market value.

Price

is the amount of money paid for a property; sometimes called market price, it is the amount for which a property is listed, agreed upon, or sold.

Cost

is the amount required to develop, produce, or build something in the past, including labor and material

Lender

is the beneficiary who retains both the note and the deed of trust.

Value

is the present worth of the future benefits of ownership of a commodity such as real property; it is rendered as an opinion.

Regression

occurs when the value of a particular property is affected negatively due to being affiliated with inferior properties.

Progression

occurs when the value of inferior properties is affected positively by other properties around it.

Escheat

the process by which private property reverts to the government when the owner dies without heirs and without a will (intestate).

Eminent domain

the right of the government to take the property and condemnation, sometimes called appropriation, is the legal proceeding by which that right to take land is exercised.

Taxation

the right of the government to tax the owners of private property to raise revenue for both general purposes and special assessments.