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ABANDONMENT
Voluntary relinquishment of possession or rights of ownership of real property.
ABSENTEE OWNER
A property owner who does not occupy or directly manage the property.
ABSTRACT OF TITLE
A summary of a property’s title including all conveyances, grants, records, wills and judicial proceedings, and a statement of all recorded liens and encumbrances on the property and their current status. Prepared by an abstractor from a search of the title as recorded with the county recorder or other official source.
ACCELERATION CLAUSE
Provision in a trust deed or mortgage by which the lender can require that the entire balance be immediately due and payable if a specific event occurs, such as the borrower’s failure to make installment payments by the due date.
ACCEPTANCE
Act to agreeing to be bound by the price and terms of an offer.
ACCESS RIGHT
Right of an owner to have ingress and egress to and from his property.
ACCRUED INTEREST
Interest that is owed (due) but not paid (received).
ACKNOWLEDGMENT
Written declaration by a party that a legal document was executed voluntarily. Made before an authorized person such as a notary public.
ACRE
Measure of land equal to approximately 43,560 square feet (4,840 square yards)
ACTUAL NOTICE
Prospective buyer’s direct knowledge of matters pertaining to the title, rights, liens or interests in property
AD VALOREM
Taxes based on value, such as property taxes.
ADDITION
Improvements to an existing building
ADJUSTABLE RATE MORTGAGE (ARM)
Mortgage agreement by which the lender may make predetermined changes in the interest rate at specified intervals. Usually changes in the interest rate are tied to an index outside the lender’s control, e.g., the interest rate on U.S. Treasury bills.
ADMINISTRATOR
Person appointed by a court to administer the estate of a deceased person. The administrator’s duties are to collect assets of the estate, pay its debts and distribute the residual to those entitled.
ADVERSE POSSESSION
Acquiring title to real estate by open, generally acknowledged, exclusive and continuous possession of a property for a statutory period of time.
AFFIDAVIT OF TITLE
Sworn written statement by the seller that there are no known defects in the title and he is in possession of the property.
AFFORDABILITY RATIOS
Ratios that establish the maximum permissible housing expense-to-income ratio and the maximum debt payment-to-income ratios at the time of mortgage application.
AGENCY
Legal relationship in which one party (agent) acts on the behalf of another party (principal) in business transactions.
AGREEMENT OF SALE
Written agreement or contract between the seller and purchaser stating the terms and conditions or the sale. Also referred to as a sales contract, purchase agreement, or sales deposit receipt.
ALIENATION
Act of transferring property ownership from one person to another.
ALIENATION CLAUSE
Clause in a mortgage that makes the entire debt due immediately upon the transfer of ownership.
AMENITIES
Features of a property that increase its desirability and value
AMORTIZATION
A term used to describe the process of paying off a loan over a predetermined period of time at a specific interest rate. The amortization of a loan includes payment of interest and a portion of the outstanding principal balance during each payment cycle.
ANNUAL PERCENTAGE RATE (APR)
Measure of the cost of credit as required by Truth-in Lending laws. The APR includes the stated interest rate and finance and other charges.
APARTMENT
Building that has separate living units that are not separately owned by are rented or leased. Usually includes common facilities such as parking garages and utilities.
APPORTIONMENT
Prorating of carrying charges between the buyer and seller.
APPRAISAL
Estimate of property value by a qualified person
APPRAISAL REPORT
Appraiser’s written opinion of a property’s value.
APPRAISED VALUE
Appraiser’s estimate of a property’s value.
APPRECIATION
An increase in the market value of a home due to changing market conditions and/or home improvements
APPURTENANCE
Anything incident to or attached to something else, such as a garage to a house. The appurtenance is part of the property.
ARBITRATION
Nonjudicial settlement of a dispute by a third party
ARREARS
Being delinquent in paying a debt.
ASBESTOS
A toxic material that was once used to make insulation and fireproofing material in houses. Because some forms of asbestos have been linked to certain lung diseases, it is no longer used in new homes. However, some older homes may still have asbestos in these materials.
ASSESSED VALUE
Value placed on real property for tax purposes
ASSIGNMENT
Transfer of title, interest, or right in a property from one person to another.
ASSISTED HOUSING
Housing that is financed, constructed, or purchased with government assistance.
ASSUMPTION AGREEMENT
Contract by which a buyer undertakes the obligations of an existing mortgage.
BAD TITLE
Title that is defective and unmarketable
BALLOON MORTGAGE
Mortgage that is only partially amortized and requires a lump sum (balloon) payment at maturity.
BANKRUPTCY
Insolvency of individual or organization; inability to pay debts.
BLANKET MORTGAGE
Single loan secured by more than one parcel of property.
BLOCKBUSTING
Illegal method of inducing property owners to sell by representing that a change in the ethnic or racial composition of a neighborhood will decrease property values.
BORROWER
One who borrows another’s money or property and is legally and morally obligated to repay the loan.
BROKER
Intermediary between lender and borrower or buyer and seller who, for a fee or commission, arranges loans or sales
BUILDING PERMIT
Permission granted by the local government to construct a building or to make property improvements.
BUNDLE OF RIGHTS
Exclusive right of a person to own, possess, use, enjoy, and dispose of real or personal property.
BUY-DOWN
Technique used to facilitate the sale of property. The buyer is offered a below-market interest rate on a mortgage loan for an initial number of years. The developer or other seller pays the lender the difference between the below-market rate and the market rate during the buy-down period, after which the borrower pays the full interest cost.
BUYER’S CLOSING COSTS
Escrow costs to the buyer that include his share of prorated interest, property insurance and title insurance
BUYER’S MARKET
Market in which supply exceeds demand and the buyer is able to acquire property at a lower price
CAVEAT EMPTOR
“Let the buyer beware.” The buyer purchases the product or service as is and at his own risk.
CC&R
Covenants, conditions and restrictions on the use of real property
CERTIFICATE OF TITLE
Statement prepared by a title company as to the status of the title to a property based upon a review of public records.
CHAIN OF TITLE
Recorded history of conveyances of a property’s title and encumbrances affecting title.
CLEAR TITLE
Marketable title; one free of clouds, liens, encumbrances, defects or disputed interests.
CLOSER
One responsible for final settlement of a property transaction and disbursement of loan proceeds
CLOSING
Legal transfer of title from the seller to the buyer
CLOSING COSTS
Costs to buyer and seller to close sale of a property. Such costs include title insurance, credit reports, recording fees and escrow fees.
CLOSING STATEMENT
Also called a settlement statement. Detailed cash accounting of a real estate transaction, usually prepared by an escrow officer, broker or attorney.
CLOUD ON TITLE
Any conditions revealed by a title search that impair title to a property. A cloud inhibits the owner’s selling the property.
COLLATERAL
Something of value pledged as security for a debt. In the case of a mortgage, the collateral would be the land, the house and other buildings and improvements.
COMMISSION
Money paid by a seller to a broker for the sale of a property. Usually the commission is a percentage of the sales price, but it may be negotiated
COMMUNITY PROPERTY
Law in some states, including California, that assets and income of a married couple are jointly owned by them.
COMPARABLES (COMPs)
Appraisal method for determining a property’s fair market value based on valuations of comparable property.
CONDEMNATION
Act of taking private property for public use through the power of eminent domain.
CONDOMINIUM
A unit in a multiunit building. The owner of a condominium units owns the unit itself and has the right, along eith other owners, to use the common areas but does not own the common elements such as the exterior walls, floors and ceilings or the structural systems outs side of the unit; these are owned by the comdominium association. There are usually condominium association fees for maintenance for building and property upkeep, taxes and insurance on common areas and reserves for improvements.
CONTRACT
Agreement between two or more persons that is enforceable by the courts.
CONTRACT OF SALE
Agreement between a buyer and a seller of real property to deliver good title in return for a consideration.
CONVENTIONAL LOAN
Mortgage loan, made by a private institution that is not government insured or guaranteed.
CONVEYANCE
Transfer of title to real property through a written instrument as a deed of trust.
COOLING-OFF PERIOD
Grace period, provided by law or contract, that allows parties to a contract a period of time in which to rescind the contract.
COOPERATIVE (CO-OP)
A form of leasehold interest ownership in which residents of a building hold shares in a corporation having ownership of the building. Ownership of cooperative shares allows a resident to occupy a housing unit exclusively into perpetuity. Shareholder residents usually pay a monthly fee to the cooperative covering operating and maintenance costs.
COSIGNER
Person or entity that signs a legal document on an equal basis with the signer. Cosigners are individually and jointly liable for repayment of the debt evidenced by a promissory note.
COST BASIS
For income tax purposes, their owner’s original cost to purchase a property plus any capital improvements, less depreciation.
CREATIVE FINANCING
Method of financing property through other than traditional real estate lending.
CREDIT
Exchange of goods or services on the promise of future payment
CREDIT REPORT
Report to a prospective lender on the credit standing of a prospective borrower.
CREDIT SCORE
A computer-generated number tha summarizes an individual’s credit profile and predicts the likelihood that a borrower will repay future obligations.
CREDIT UNION
Nonprofit financial cooperatives organized to meet the financial needs of members who share a common bond.
DEED
Instrument that conveys or transfers title to land or other real property.
DEED OF TRUST
Legal document used in some states by which title to real estate is conveyed to a disinterested third party, who hold title until the owner of the property has repaid the debt. Accomplishes essentially the same purpose as a regular mortgage.
DEFAULT
Failure to fulfill a duty or to discharge an obligation, such as the failure of a borrower to make timely principal and interest payments on a loan
DELINQUENT LOAN
Loan payment that is overdue but within the grace period before the loan is in default.
DEPRECIATION
(1) Appraisal term for loss of a property’s value from physical deterioration or functional and economic obsolescence. (2) Accounting term for amortizing the cost of an asset over its estimated useful life.
DEPT OF HOUSING AND URBAN DEVELOPMENT (HUD)
Federal agency responsible for implementing and administration of national housing and urban development programs.
DETACHED HOUSING
Residential building that is located on a separate lot and does not share a common wall with another building
DISPOSITION
Landowner’s right to sell, lease, give away, mortgage or otherwise dispose of his land.
DISTRESSED PROPERTY
Real or personal use property whose income is insufficient to service the mortgage debt on the property.
DOWN PAYMENT
Amount of cash paid by buyer at time of purchase
DUE-ON-SALE CLAUSE
Clause in a loan agreement that the loan is due in its entirety on sale or transfer of the secured property.
DUPLEX
Structure containing two separate living units that share a common wall and roof.
EARNEST MONEY
Money or something of value given by a prospective buyer or real property as evidence of good faith.
EASEMENT
Nonpossessory right, interest or privilege that one party has in another’s land; for example, a right of way.
EFFICIENCY UNIT
Apartment consisting of one room, sectioned into areas for a kitchen, bedroom, living room and bathroom. Also known as a studio.
EMINENT DOMAIN
Right of the government to acquire private property for public use through condemnation.
ENCROACHMENT
Physical intrusion onto the property of another
ENCUMBRANCE
Claim, lien or charge attached to and binding property, such as a mortgage.
EQUITY
Ownership interest in property over and above any liability.
ESCHEAT
Reversion of property to the state in the absence of legal heirs or claimants.
ESCROW
Deposit by a party to a transaction of documents, money or other things of value with a third party, usually known as the escrow agent. When specified conditions are met, the escrow agent will deliver the deposited funds to another party to the transaction. The escrow agent’s duties are set forth in an agreement between the agent and the parties to the transaction.
ESCROW FEES
Fees charged by an escrow agent for its services.
ESCROW FUNDS
Funds collected monthly by the lender to pay yearly taxes, hazard insurance premiums and monthly mortgage insurance premiums.
EVICTION
Legal process of removing one form possession of real property; usually refers to removal of a tenant
EXCLUSIONARY ZONING
Practice of excluding persons from a community based on race, income, or other discriminatory standards.
EXECUTE
Act of signing a legal instrument, usually witnessed or notarized.
FAIR CREDIT REPORTING ACT
Federal law that allows consumers to examine and correct information on their credit reports at credit-reporting bureaus
FAIR-MARKET VALUE
Property’s highest monetary price or its equivalent in a competitive market. Determined by negotiation between an informed, willing and capable buyer and an informed and willing seller.
FED. HOME LOAN MORTGAGE CORPORATION (Freddie MAC)
Semi-government buyer and seller of home mortgages. Its purpose is to provide greater liquidity to mortgage lenders.
FEDERAL FAIR HOUSING LAW
Federal law that forbids discrimination in the sale or rental of residential property because of race, color, sex, religion, or national origin.
FEDERAL HOUSING ADMINISTRATION (FHA)
Federal agency that primarily insures residential mortgage loans against default and sets construction and underwriting standards.
FEDERAL NATIONAL MORTGAGE ASSOCIATION (Fannie Mae)
Government-chartered corporation whose purpose is to support the secondary mortgage market by buying and selling FHA, VA and conventional loans.
FEE SIMPLE
Highest possible interest in real property; absolute and unencumbered title. A fee simple estate is of indefinite duration, freely transferable and inheritable.
FINANCE CHARGE
The total costs charged by a lender under the Truth in Lending Act.
FINANCING
Portion of the purchase price that is borrowed
FIRST MORTGAGE
Mortgage that has priority over all other claims against the property except taxes and bonded indebtedness.
FIRST REFUSAL
Right to have the first opportunity to buy property if the owner decides to sell. Usually given by an owner to a lessee. The owner must have a legitimate offer that the lessee can match or refuse. If the lessee refuses, the property can be sold to the offeror.
FIXED-RATE MORTGAGE (FRM)
Mortgage loan made at a predetermined rate of interest that does not change over the life of the loan agreement
FIXTURES
Improvements or personal property attached to the land and legally treated as real property.
FLOOR PLAN
Architectural drawings of a building’s layout showing the size and purpose of the rooms.
FORBEARANCE
Temporary waiver of loan or interest payments to help a borrower meet financial obligations
FORECLOSURE
Proceeding in or out of court to extinguish an owner’s rights, title or interest in a property in order to sell the property to satisfy a lien against it.
FRAUD
Intentional misrepresentation of material facts to induce someone to part with something of value.
FREE AND CLEAR
Real property that has no liens against it
FULL DISCLOSURE
Complete, truthful and accurate revealing of material facts.
GARDEN APARTMENT
A multiple-unit dwelling in which some or all of the tenants have access to a lawn area
GENERAL CONTRACTOR
One who supervises the construction of an entire building or project under contract with the owner.
GENERAL LIEN
Lien against all property of a debtor rather than against a specific property.
GENTRIFICATION
Replacement of a neighborhood’s lower income residents with higher income residents because of rising property values
GIFT LETTER
A letter that a family member writes verifying that he/she has given you a certain amount of money as a gift and that you do not have to repay it. You can use this money towards a portion of your down payment through some mortgage products.
GRACE PERIOD
Specified period after the regular due date of a loan payment during which no late charge or other penalty is assessed. Payments made within the grace period generally do not adversely affect the borrower’s permanent credit history.
GRADUATED PAYMENT MORTGAGE LOAN (GAM)
A home mortgage loan on which the monthly payments start at a relatively low level and gradually rise at a predetermined rate on the assumption that the homeowner’s income will increase over time.
GROSS INCOME
Income before any allowances and deductions.
HIDDEN DEFECT
Title risk that cannot be detected from review of the public records.
HOME EQUITY LOAN
Form of secondary financing that allows a homeowner to borrow a percentage of the equity in his home.
HOME IMPROVEMENT LOAN
A loan to finance the repair, modernization or improvement of residential real estate
HOME INSPECTION
A professional inspection of a home to review the condition of the property. The inspection should include an evaluation of the plumbing, heating and cooling systems, roof, wiring, foundation and pest infestation
HOME LOAN
Mortgage loan secured by a one-to-four-family residential property or a condominium unit.
HOMEOWNER’S INSURANCE
A policy that protects you and the lender from fire or flood, which damages the structure of the house; a liability, such as an injury to a visitor at your home; or damage to your personal property, such as your furniture, clothes or appliances.
HOMEOWNERS’ ASSOCIATION
Organization of homeowners, whose purpose is to protect the covenants of the subdivision, condominium, or planned unit development, and to manage the common areas.
HYPOTHECATE
To pledge a property as security without giving up possession of it.
IMPOUND ACCOUNT
Money held by a lender for payment of taxes, insurance or other debts against real property
IN TESTATE
Term to describe an estate left by a decedent who did not draw up a will specifying how his estate should be distributed. State law provides for the passage of property when one dies in testate.
INCLUSIONARY ZONING
Zoning ordinance that requires new residential developments to include a certain number of dwelling units for low and moderate-income families.
INCURABLE TITLE
Title that cannot be conveyed due to a defect that cannot be corrected.
IN-FILL DEVELOPMENT
Development of vacant, scattered sites in a developed section of a city.
INGRESS AND EGRESS
Right to enter upon and pass through land
INSTITUTIONAL LENDER
Savings bank, savings and loan association, commercial bank, life insurance company, pension fund or other investor that provides financing for real estate (and other investments).
INTEREST
Amount paid for the use of money.
INTEREST RATE
A rate, usually expressed as an annual percentage, that is charged on money borrowed or money deposited
INTEREST-ONLY LOAN
Loan in which only interest is paid periodically with principal due at maturity.
INVOLUNTARY LIEN
Lien placed on a property without the owner’s consent; for example, a lien for unpaid taxes or a judgment lien.
JOINT TENANCY
Interest in real estate owned by tow or more persons with rights of survivorship. Title is held as if all the owners collectively are one person. On the death of one of the joint tenants, the surviving tenants receive the deceased tenant’s interest by the right of survivorship. Consequently, the decedent’s interest cannot be transferred by will or descent.
JUNIOR LIEN
Lien whose claim on a property will only be satisfied after all prior claims have been repaid.
JUST COMPENSATION
Fair and reasonable amount received by a property owner for property taken under eminent domain.
KEOGH ACCOUNT
A trust-type savings account for self-employed individuals and their employees.
LATE CHARGE
Lender’s penalty for a borrower’s delinquent repayments, as specified in the debt instrument.
LATENT DEFECT
Hidden structural defect due to faulty construction
LEASE
Contract between the lessor (owner) and the lessee (tenant) that sets forth conditions by which the tenant may possess and use property for a specified period of time.
LEASE OPTION
Clause in a lease that gives the tenant the right to buy property under specific conditions.
LEVEL PAYMENT MORTGAGE
Mortgage loan repaid in equal installments.
LIABILITY
Legal responsibility for an act
LIEN
Claim against a property for payment of a debt or obligation
LIQUIDATE
Selling assets for cash to discharge liabilities.
LIQUIDITY
Ability to convert an asset into cash easily and quickly.
LIS PENDENS
Legal notice of pending lawsuit that my affect title of a property.
LOAN
Granting of use of money in return for payment of interest
LOAN ASSUMPTION
Process by with buyer purchases real estate by assuming an existing mortgage and agrees to personally repay the debt.
LOAN CLOSING
Acceptance of an adequate conveyance of lien under a mortgage or deed of trust with supporting documents and disbursement of loan proceeds.
LOAN COMMITMENT
Written agreement by a lender to loan a certain amount of money at a specified rate of interest for a certain period of time.
LOAN ORIGINATION FEES
Lender’s charge for services in originating a mortgage – such fees typically are 1 to 2 percent of the loan.
LOAN PACKAGE
Package of documents including a loan application, appraisal, financial statement, credit reports, and other information that the lender will review to determine whether to make a mortgage loan.
LOAN SERVICING
Services performed by mortgage bankers for permanent lenders including the collection of principal and interest payments and the collection and timely payment of real estate taxes and hazard insurance premiums.
LOCAL HOUSING AUTHORITY
The local government organization responsible for public housing programs.
LUMP SUM PAYMENT
Repayment of debt in a single payment including principal and accrued interest.
MAINTENANCE
General repair and upkeep of a property
MARKET DATA APPROACH
Appraisal approach in which a property’s value is estimated by analyzing the sales prices of comparable properties recently sold.
MARKET VALUE
Most probable price at which a willing and informed seller would sell, and a willing and informed buyer would buy, neither being under any undue pressure to act.
MECHANICS LIEN
Lien given as security for payment of labor and materials
MOBILE HOME
Prefabricated dwelling unit that is semi-permanently attached to land. Usually affixed to concrete foundation and connected to utilities.
MODULAR HOMES
Housing units prefabricated in a factory, moved to a permanent site and assembled on a foundation.
MORTGAGE
An instrument that pledges real estate as security for a loan.
MORTGAGE ASSIGNMENT
Right of the lender to transfer the mortgage to others without the borrower’s consent.
MORTGAGE BANKER
Individual or firm who, with his own funds, originates, sells and services mortgage loans.
MORTGAGE BROKER
One who, for a fee, brings borrower and lender together so the borrower can obtain a loan secured by real property. Also called a loan broker.
MORTGAGE INSURANCE
Private insurance protecting a mortgage lender against loss in the event of a mortgage default.
MORTGAGE LOAN
Money loaned to a borrower and secured by a pledge of real estate; the pledge ends when the debt is discharged
MORTGAGE REVENUE BOND
Bonds issued by a public entity to finance mortgage loans. The bonds are paid from the repayment of the mortgage loans.
MORTGAGE SERVICING
Administration of a mortgage including collection of monthly interest and principal payments, and acting as escrow agent for funds to cover taxes and insurance.
MORTGAGE UNDERWRITING
Process of evaluating loan terms against the probability of repayment and the value of real property collateralizing the loan.
MORTGAGEE
One who lends money and receives a mortgage as security.
MORTGAGOR
One who pledges property as security for a debt; the borrower
MULTIFAMILY HOUSING
Residential structure containing five or more dwelling units.
MULTIPLE LISTING
Sharing of listings among brokers. Sales commissions are split between the listing and selling broker
NEGATIVE AMORTIZATION
Gradual increase in total mortgage debt that occurs when interest accrues on a mortgage at a faster rate than it is paid.
NOMINAL INTEREST RATE
Stated interest rate in a contract
NONASSUMPTION CLAUSE
Clause in a mortgage that prohibits the assumption of the loan without the lender’s consent.
NONCONFORMING USE
Use that violates zoning regulation, but is permitted because it existed prior to the enactment of the regulations
NONJUDICIAL FORECLOSURE SALE
Sale of property at public auction because of default on a mortgage secured by the property. The sale does not require a court order and may be made after a specific time.
NOTICE OF DEFAULT
Notice to the defaulting party of the default and the time in which to cure the default.
NOTICE TO QUIT
Notice from the landlord to the tenant to vacate the premises.
OFFERING SHEET
Summary that describes the important features of a real estate asset to the lender or investor.
OPEN LISTING
Listing given to any number of brokers without the seller’s having to compensate any broker except the one who first secures a buyer ready, willing and able to meet the terms of the listing.
OPTION
Agreement that gives one the right to purchase or lease real property on specific terms within a set period of time.
OR MORE CLAUSE
Provision in a mortgage that allows a larger payment without a prepayment penalty.
ORIGINATION FEE
Fee charged by the lender to cover expenses incurred in making a new loan, such as credit evaluations, title checks, and property valuations.
ORIGINATOR
Person who solicits builders, brokers and other to obtain applications for mortgage loans.
OWNER/OCCUPANT
Property owner who physically occupies the premises.
PARTIALLY AMORTIZING LOAN
Loan in which periodic payments cover the interest due but only part of the principal, so that a substantial balance (balloon payment) is due when the loan matures.
PASSIVE INCOME
Under the 1986 Tax Reform Act, passive income in income for an activity in which a taxpayer does not materially participate. Investments that produce passive income are known as Passive Income Generators. Most real estate rental activities are automatically classified as passive.
PAYOUT
Disbursement of loan funds to a borrower
PERIOD OF REDEMPTION
Length of time in which a mortgagor in default may reclaim title and possession of his property by paying the debt secured by the property.
PITI
Components of a mortgage payment: principal, interest, taxes, and insurance.
POINT
Fee charged by a lender. A one percent fee is equal to one point.
PRECLOSING
Preliminary meeting preceding the formal closing in which documents are reviewed, prepared and signed.
PREDATORY LENDING
Abusive lending practices that include making a mortgage loan to an individual who does not have the income to repay it or repeatedly refinancing a loan, charging high points and fees each time and “packing” credit insurance on a loan.
PRELIMINARY TITLE REPORT
Title report made before title insurance is issued.
PREPAYMENT PENALTY
Fee charged a borrower for paying off a loan prior to the due date.
PREPAYMENT PRIVILEGE
Right to prepay a mortgage before the date that the mortgage matures.
PREVAILING RATE
The average interest rate presently charged on mortgage loans by banks and other lending institutions
PRIMARY MORTGAGE INSURANCE (PMI)
Insurance offered by a private company that protects a lender against loss on a defaulted mortgage loan up to policy limits or protects owners of mortgage-backed securities against losses on the underlying loans up to policy limits.
PRINCIPAL
Amount of debt, not including interest; the face value of a note, mortgage, etc.
PROBATE
Process of admitting a will to record, resolving questions that arise in estate administration and approving the accounts of an executor or of an administrator.
PROMISSORY NOTE
Borrower’s personal promise to repay a debt
PROPERTY
Rights or interest of ownership that include the right to possess, use, encumber, transfer and exclude
PROPERTY TAXES
Tax levied by government on real property.
PUBLIC HOUSING
Under the United States Housing Act of 1937, local governments established housing authorities to build, purchase, or lease housing for those persons who could otherwise not afford to obtain housing. As a rule, public housing is owned by these authorities and is for very low-income tenants, in contrast with subsidized housing, which is owned privately and is designed for somewhat more financially capable tenants.
PURCHASE MONEY MORTGAGE
Mortgage accepted by a seller in lieu of cash so that the seller helps finance the property.
QUALIFICATION
Process of reviewing a prospective borrower’s qualifications prior to approving a loan.
QUIET ENJOYMENT
The legal right of an owner in possession to use the property without interference.
QUIET TITLE ACTION
Court action brought to establish title; to remove a cloud on a title.
QUIT-CLAIM DEED
Deed of reconveyance in which the grantor transfers all his interests in the property without making any guarantees. Used to release property from claims to facilitate the transfer of title.
R-1 ZONE
A residential zone permitting only single-family housing units
R-2 ZONE
A residential zone permitting duplexes
REAL ESTATE INVESTMENT TRUST (REIT)
Financial intermediary that raises funds for investment in mortgages and income-producing properties. Funds are obtained through borrowing and the issuance of shares or other financial instruments. Qualified REITs are accorded conduit tax treatment. In return for specializing in real estate investment and passing most of their income to shareholders, they are not taxed at the corporate (trust) level. However, their losses cannot be passed to shareholders.
REAL ESTATE OWNED (REO)
Real property owned by a mortgage lender, usually as the result of a borrower’s defaulting on a loan.
REAL PROPERTY
(1) The land and all appurtenances to the land including buildings, fixtures and improvements erected upon or affixed to the land. (2) The interests, rights and benefits inherent in the ownership of real estate.
REALTOR
Designation granted by National Association of Realtor to qualified professional members.
RECONVEYANCE
Transfer of title from the trustee to the owner once the debt has been satisfied.
RECORDING FEE
Fee charged to enter on the public record the transfer of title from the seller to the buyer.
REDEVELOPMENT AGENCY
Local governmental agency whose primary responsibilities include elimination of slums and blight, revitalization of older neighborhoods, facilitation of additional housing and encouragement of economic development.
REDLINING
Practice of some lending institutions effectively not to loan in certain neighborhoods, usually racially mixed neighborhoods. Redlining is prohibited under the federal Civil Rights Act and anti-redlining regulations of the Federal Home Loan Bank Board.
REFINANCE
To obtain a new loan to pay off an existing loan. Typically done when a loan can be replaced by a new loan at a lower interest rate.
REGULATION Z
Truth-in-Lending Laws that require creditors to provide full disclosure of the cost of credit
RENOVATION
Restoration of property to good condition
RENT
Charge paid by the tenant for the right to possession and use of the property.
RENT CONTROLS
Limits imposed by governmental agencies on the rent that landlords can charge tenants.
RESCISSION
Cancellation of an agreement by consent of the parties or judgment of a court.
RESERVE FUND
Amount set aside to make payment of principal and interest on a bond or mortgage to the extent that cash is not otherwise available.
RESTRICTION
Limitation on use of a property as contained in a deed, lease, or local ordinance.
RIGHT OF ACCELERATION
Right of a lender to demand full payment of the remaining mortgage balance.
RIGHT OF FIRST REFUSAL
Right of a person to have the opportunity to match the terms of a proposed contract before the contract is executed.
RIGHT OF RESCISSION
Right of consumers to cancel credit transactions in which the collateral used to secure the transaction is their principal place of residence.
SALES COMMISSION
Compensation paid to a salesperson or a broker for his services.
SECONDARY FINANCING
Loan secured by a second mortgage or trust deed on real property.
SECONDARY MORTGAGE MARKET
Buying and selling of existing mortgage loans among lenders and investors.
SECOND-MORTGAGE
Junior mortgage that usually is for a smaller amount than and is subordinated to the first mortgage.
SECURITY DEPOSIT
Amount that the tenant gives the landlord when the premises are rented to cover damages to the rented space, default on payments, and any cleaning required once the tenant permanently vacates the premises
SELLER’S MARKET
Market in which demand exceeds supply and the seller is able to obtain a higher price for his property.
SELLING EXPENSES
Costs incurred for the sale of a residential or commercial property.
SENIOR LIEN
Lien that has a priority of claim. In the event of default, it will be satisfied before other liens.
SEPTIC TANK
Underground tank in which sewage is reduced to liquid by bacterial action and drained off.
SERVICING FEE
Fee typically charged by a mortgage company for (1) the collection of mortgage payments, (2) payment of property taxes and insurance from escrowed funds, and (3) remitting principal and interest payments to the lender.
SHARED APPRECIATION MORTGAGE (SAM)
Type of mortgage financing in which the lender provides a loan at a below-market interest rate. When the property financed by the loan is sold, the lender receives a share of the gain from the property’s appreciation.
SINGLE-FAMILY HOUSING
House designed for use by one family
SPECIAL ASSESSMENT
Tax levied on real estate by a public authority to pay for public improvements such as streetlights, sidewalks and street improvements.
STATUTE OF FRAUDS
State laws that require that certain contracts, in order to be enforceable, must be in writing and signed by the parties to be charged or held. Statue of frauds generally require that all contracts or deeds in real estate be written.
STATUTORY RIGHT OF REDEMPTION
Right given by some states to the owner/borrower enabling him to rectify a breach within a period of time after the property has been sold in a public auction. Therefore, the owner can recover title and possession of the property.
STRAIGHT-LINE DEPRECIATION
Method or depreciation computed by dividing the adjusted basis of a property, less the estimated salvage value, by the number of years of estimated remaining useful life.
SUBCONTRACTOR
Individual or firm who performs services such as electrical and plumbing work for the general contractor
SUBORDINATION CLAUSE
Agreement by which a person with a claim against property agrees to subordinate the claim to another claim against the same property.
SUBSIDY
Grant to facilitate any endeavor or enterprise, e.g., federal housing subsidies for low-income families.
SUBURBS
Areas close to an urban or metropolitan area; residential areas near or within commuting distance of a city.
SWEAT EQUITY
Equity created in a property by the work or labor performed by the purchaser. Increases the value of the property
TAX CREDIT
Direct reduction of tax liability
TAX EVASION
Willful concealment or misrepresentation of facts in order to avoid the payment of tax.
TAX INCREMENT FINANCING
Financing urban renewal or redevelopment by a bond issue that will be serviced from the taxes on the additional revenues generated by the redevelopment or renewal process.
TAX LIEN
Statutory lien against real property for nonpayment of taxes.
TAX SALE
Sale of property by a taxing authority to satisfy the payment of delinquent taxes.
TAX SHELTER
Any tax deduction or credit, such as depreciation and interest, that results in an increased cash flow to the taxpayer by lowering tax liability.
TENANT IMPROVEMENTS
Improvements to land or buildings to meet the needs of tenant’s requirements.
TERM MORTGAGE
Mortgage in which only interest is paid during the term of the loan and principal is paid at maturity.
THIN MARKET
Market with few buyers and sellers
TIMESHARE
Exclusive right to occupy a unit in a real estate development for a specified period of time each year.
TIMESHARE OWNERSHIP
Form of communal ownership and use of real estate in which multiple owners each have the right to the property for a specified period of time.
TITLE
right to ownership of land
TITLE COMPANY
Company that provides title insurance for real property
TITLE INSURANCE
Comprehensive indemnity contract under which a title insurance company warrants to make good a loss arising through defects in title to real estate or any encumbrances or liens thereon.
TITLE REPORT
Preliminary report of the current record title to a property. In contrast with an abstract of title, the title report shows only the current state of the title and recorded objections to clear title such as unpaid mortgages.
TITLE SEARCH
Examination of the public records to determine if there are any defects in the chain of title.
TOWNHOUSE
Type of dwelling unit normally having tow floors, with the living area and kitchen on the base floor and the bedrooms on the second floor. Usually employs the use of party walls and shared common grounds.
TRACT HOUSE
Mass-produced housing similar in style, materials and price.
TRANSFER
Act by which title to property is conveyed to one person to another
TRIPLEX
A building comprised of three dwelling units, each having a front and rear door and yard.
TRUST DEEDS
Written instruments in which a borrower transfers a real estate title to a trustee who holds title in trust for a lender as security for a loan.
TRUSTEE
(1) Borrower under a deed of trust. (2) Grantor of a trust.
TRUSTOR
(1) Borrower under a deed of trust. (2) Grantor of a trust
TRUTH-IN-LENDING ACT
Law that requires lenders to disclose all pertinent terms of the loan.
TURNOVER
Average time in which property in an area is sold or occupied by tenants.
UNDERWRITING
Analyzing the risk of a loan by assessing the creditworthiness of the borrower and the strength of the collateral
UNENCUMBERED PROPERTY
Property that is free and clear of any liens and encumbrances.
UNIFORM SETTLEMENT STATEMENT
Statement required in a transaction covered by the Real Estate Settlement Procedures Act. Requires disclosure to borrowers, lenders and sellers of settlement costs and disbursement of closing and selling costs.
URBAN RENEWAL
Process of improving deteriorated areas through rehabilitation, redevelopment, and clearance.
USURY
Charging interest in excess of that permitted by law
UTILITIES
Services such as telephone, electricity, water, sewer, and gas that are necessary to operate a property.
VARIABLE INTEREST RATE
Interest on a loan that may change during the loan term in accordance with a predetermined schedule or with change in an independent standard such as the prime rate.
VARIANCE
Permission granted by the zoning authorities allowing a use that is prohibited by current zoning laws.
VETERANS ADMINISTRATION (VA)
Government agency that guarantees home-mortgage loans made by private lenders to qualified veterans, thus allowing for more favorable terms.
VOLUNTARY LIEN
Lien placed on property with consent of, or a result of, the voluntary actions of the property owner.
WARRANT
To legally assure that title conveyed is good
WARRANTY DEED
Deed in which the grantor warrants clean title to the property.
WEAR AND TEAR
Gradual physical deterioration of property due to normal use, passage of time and weather.
WORKOUT
Mutual effort by a lender and a borrower to agree on a payment plan in order to avoid foreclosure. Workout efforts could include extending the loan term, accruing interest or reducing the interest rate.
WRITE-OFF
A debt no longer collectable.
ZONE
Area in which specific land uses are permitted
ZONING ORDINANCE
Regulations of local governments that specify the type of use allowed in a specific area. Zoning laws cover the type of use, lot size, building height, setback and density.
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