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Real Estate Dictionary Terms - A
401(K)/403(B)
An employer-sponsored investment plan that allows individuals to
set aside tax-deferred income for retirement or emergency purposes.
401(k) plans are provided by employers that are private corporations.
403(b) plans are provided by employers that are not for profit organizations.
401(K)/403(B) Loan
Some administrators of 401(k)/403(b) plans allow for loans against
the monies you have accumulated in these plans. Loans against 401K
plans are an acceptable source of down payment for most types of
loans.
Abatement Of Judgment
A document containing a condensation of the essential provisions
of a court judgment.
Abatement Of Nuisance
The act of ending or teminating a nuisance; a type of legal action
brought to end a nuisance.
Abstract Of Judgment
A summary of money judgment. The summary is usually prepared so that
it may be recorded, thereby creating a (judgement) lien on real estate
owned by the judgment debtor.
Abstract Of Title
A summary of the instruments affecting title to a parcel of real
property as shown by the public records. The condensed history of
a title to a particular parcel of real estate, consisting of a summary
of the original grant and all subsequent conveyances and encumbrances
affecting the property and a certification by the abstractor that
the history is complete and accurate.
Accelerate
To make a note all due and payable at one time.
Acceleration Clause
A clause in your mortgage which allows the lender to demand payment
of the outstanding loan balance for various reasons. The most common
reasons for accelerating a loan are if the borrower defaults on the
loan or transfers title to another individual without informing the
lender.
Acceleration Clause
A clause in a deed of trust or mortgage giving the lender the right
to call all sums owing him or her to be immediately due and payable
upon the occurrence of a certain event. It is also a clause that
permits a debtor to pay off a loan before the due date. The clause
in a mortgage or deed of trust that can be enforced to make the entire
debt due immediately if the borrower defaults on an installment payment
or other covenant. A clause in a promissory note, deed of trust,
or mortgage that provides that upon default of a payment or some
other stated event, the entire unpaid balance becomes immediately
due and payable.
Acceptance
An essential element of every contract, it is the consent to be bound
by the offer. In deeds, it is the consent to accept a grant of real
property.
Access Right
The right of an owner to go into and out of his or her property.
Accession
Acquiring title to additions or improvements to real property as
a result of the annexation of fixtures or the accretion of alluvial
deposits along the banks of streams.
Accommodation Party
A person who, without receiving value, signs a promissory note to
help another person borrow money or get credit.
Accord And Satisfaction
The discharge of an existing contract by accepting the performance
under a substitute contract. Generally, consideration under the new
contract is different from and of lesser value than under the original
contract, and satisfaction is the performance of that contract; the
combinationn discharges the original contract.
Accretion
A gradual addition to land from natural causes; for example, from
gradual action of ocean or river waters. The increase or addition
of land by the deposit of sand or soil washed up naturally from a
river, lake or sea.
Accrued Depreciation
The difference between the cost of replacement new as of the date
of the appraisal and the present appraised value. The accumulated
losss in value that has affected the improvements on real property.
Accrued Items
On a closing statement, items of expense that are incurred but not
yet payable, such as interest on a mortgage loan or taxes on real
property.
Acknowledgement
A formal declaration made before a duly authorized officer, usually
a notary public, by a person who has signed a document. A formal
declaration before an officer duly authorized as a notary public
by a person who has executed an instrument,?stating that the execution
is his or her act and deed. A formal statement (usually before a
notary public) by the person signing a deed or document that the
instrument was actually and freely signed.
Acoustical Tile
Blocks of fiber, mineral, or metal with small holes or a rough-textured
surface to absorb sound, used as covering for interior walls and
ceilings.
Acquisition
The act or process by which a person procures property. ACRE A measure
of land equaling 160 square rods, 4840 square yards, 43,560 square
feet, or a tract about 208.71 feet square.
Acre
A measure of land equal to 43,560 square feet, 4,840 square yards,
4,047 square meters, 160 square rods or 0.4047 hectares.
Actual Eviction
The legal process that results in the tenant's being physically removed
from the leased premises.
Actual Notice
Express information or fact; that which is known; direct knowledge.
Ad Valorem
According to value.
Ad Valorem Tax
A tax levied according to value, generally used to refer to real
estate tax. Also called the general tax.
ADA
Refers to the Americans With Disabilities Act. The ADA applies to
equal access to employment, public services, public accomodations,
public transportation and telecommunications. ADA Refers to the Americans
With Disabilities Act. The ADA applies to equal access to employment,
public services, public accomodations, public transportation and
telecommunications.
Adjacent
Located next to or near an object or parcel of property.
Adjoining
Located so as to touch an object or share a common property line.
Adjustable-Rate Mortgage (ARM)
A mortgage in which the interest changes periodically, according
to corresponding fluctuations in an index. All ARMs are tied to indexes.
A loan characterized by a fluctuating interest rate, usually one
tied to a bank or savings and loan association cost-of-funds index.
Adjusted Basis
See basis
Adjusted Cost Basis
For tax purposes it is the cost of the property plus improvements
and minus depreciation, amortization, and depletion.
Adjustment Date
The date the interest rate changes on an adjustable-rate mortgage.
Administrator
A person appointed by the probate court to administer the estate
of a deceased person. His or her duties include making an inventory
of the assets, managing the property, paying the debts and expenses,
filing necessary reports and tax returns, and distributing the assests
as ordered by the probate court.
Adult
Any person 18 years of age and older.
Adverse Possession
A method of acquiring property based on open and notorious possession,
under a claim of right, color of title, continuous use for five years,
and the payment of taxes. A method of acquiring property through
continuous use of that property while paying taxes on it. The actual,
open, notorious, hostile and continuous possession of another's land
under a claim of title. Possession for a statutory period may be
a means of acquiring title.
Affidavit
A statement or declaration reduced to writing, sworn to or affirmed
before some officer who has authority to administer an oath or affirmation,
such as a notary public or a commanding officer in the service.
Affidavit Of Title
A written statement, made under oath by a seller or grantor of real
property and acknowledged by a notary public, in which the grantor.
Affirm
To confirm, swear, ratifying, verity.
Agency
The relationship between a principal and an agent wherein the agent
is authorized to represent the principal in certain transactions.
Agency Coupled With An Interest
An agency relationship in which the agent is given an estate or interest
in the subject of the agency (the property).
Agency Relationship
A special relationship of trust by which one person (agent) is authorized
to conduct business, sign papers, or otherwise act?on behalf of another
person (principal). This relatoinship may be created by expressed
agreement, ratification, or estoppel.
Agent
One who represents another called a principal and has authority to
act for the principal in dealing with third parties. The relationship
is referred to as an agency. Someone authorized to act for another
(called the principal) in business matters. One who acts or has the
power to act for another. A fiduciary relationship is created under
the law of agency when a property owner, as the principal, executes
a listing agreement or management contract authorizing a licensed
real estate broker to be his or her agent.
Agreement
A mutual understanding or compact between parties. Althought often
used a synonymous with contract, technically it denotes mutual promises
that fail as a contract for lack of consideration.
Agreement Of Sale
A written contract between a buyer and seller setting out the terms
of sale. An installment sales contract covering real property, especially
a long-term contract.
AIDS
The seller of real property, his agents or his sub agents do not
have to disclose that somebody died of AIDS or had AIDS in said property.
Air Lot
A designated airspace over a piece of land. An air lot, like surface
property, may be transferred.
Air Rights
The right to use the open space above a property, usually allowing
the surface to be used for another purpose.
Alienation
The transferring of property to another. Conveyance or transfer of
title to real estate from one person to another person. The act of
transferring property to another. Alienation may be voluntary, such
as by gift or sale, or involuntary, as through eminent domain or
adverse possession.
Alienation Clause
In a deed of trust or mortgage, a provision that if the secured property
is sold or transferred, the lender has the option of accelerating
the loan and declaring the entire unpaid balance immediately due
and payable. Also called a "due-on-sale" clause. The clause
in a mortgage or deed of trust that states that the balance of the
secured debt becomes immediately due and payable at the lender's
option if the property is sold by the borrower. In effect this clause
prevents the borrower from assigning the debt without the lender's
approval.
Alligator
Purchasing lower priced properties will limit the appetite of the
alligator. The alligator is an expensive piece of property that gobbles
up all the profits. Negative cash flow on a keeper property is referred
to as an alligator.
All-Inclusive Deed Of Trust
A financing device whereby a lender makes payments on the existing
trust deeds of a borrower and takes from the borrower a junior trust
deed with a face value in an amount equal to the amount outstanding
on the old trust deeds and the additional amount of money borrowed.
Allodial System
A system of land ownership in which land is held free and clear of
any rent or service due to the government; commonly contrasted to
the feudal system. Land is held under the allodial system in the
United States.
Alluvion
Soil that has been deposited by accretion on the shore of a river
or body of water and that increases the real property.
ALTA Policy (American Land Title Association)
A title insurance policy issued by title insurance companies that
expands the risks insured against under the standard type of policy
to include unrecorded physical easements, facts a physical survey
would show, water and mineral rights, and rights of parties in possession
(such as tenants and buyers under unrecorded instruments). The title
insurance policy issued to institutional lenders. The initials stand
for American Land Title Association, an organization that regulates
and standardizes the provisions within title policies. A title insurance
policy that protects the interest in a collateral property of a mortgage
lender who originates a new real estate loan.
Alter Ego
A doctrine which holds that a corporation is really owned by shareholders
as their own property, and therefore it should not be considered
as a separate entity. Usually used to try to hold shareholders liable
for corporate debts.
Ambulatory
Capable of being changed or revoked. In wills, it refers to the concept
that a will may be revoked or modified at any time up to the testator's
death.
Ameliorating Waste
Improvements to property that, while not damaging the value of the
property, technically qualify as waste. For example, an apartment
building constructed on property designated only for single-family
structures is considered ameliorating waste.
Amenities
As used in the real estate business, the features that make a piece
of real property, especially a home, enjoyable.
Amortization
The loan payment consists of a portion which will be applied to pay
the accruing interest on a loan, with the remainder being applied
to the principal. Over time, the interest portion decreases as the
loan balance decreases, and the amount applied to principal increases
so that the loan is paid off (amortized) in the specified time.
Amortization
The liquidation of a financial obligation on an installment basis,
which includes both principal and interest. Recovery of cost or value
over a period of time. The method or plan for the payment of a debt,
bond, deed of trust, etc., by installments or sinking fund.
Amortization Schedule
A table which shows how much of each payment will be applied toward
principal and how much toward interest over the life of the loan.
It also shows the gradual decrease of the loan balance until it reaches
zero.
Amortized Loan
A loan in which the principal as well as the interest is payable
in monthly or other periodic installments over the term of the loan.
Annual Percentage Rate (APR)
This is not the note rate on your loan. It is a value created according
to a government formula intended to reflect the true annual cost
of borrowing, expressed as a percentage. It works sort of like this,
but not exactly, so only use this as a guideline: deduct the closing
costs from your loan amount, then using your actual loan payment,
calculate what the interest rate would be on this amount instead
of your actual loan amount. You will come up with a number close
to the APR. Because you are using the same payment on a smaller amount,
the APR is always higher than the actual not rate on your loan. The
relationship of the total finance charges associated with a loan.
This must be disclosed to borrowers by lenders under the Truth-in-Lending
Act.
Annual Percentagerate
The cost of credit as determined in accordance with Regulation Z
of the Board of Governors of the Federal Reserve System for implementing
the Federal Truth in Lending Act.
Annuity
A sum of money received or paid yearly or at other fixed periods.
Anticipation
Affirms that value is created by the anticipated benefits to be derived
in the future.
Anticipation
The appraisal principle that holds that value can increase or decrease
based on the expectation of some future benefit or detriment produced
by the property.
Anticipatory Breach
Advance notice of intention to violate the terms of a contract.
Antitrust Laws
Laws designed to preserve the free enterprise of the open marketplace
by making illegal certain private conspiracies and combinations formed
to minimize competition. Most violations of antitrust laws in the
real estate business involve either price-fixing (brokers conspiring
to set fixed compensation rates) or allocation of customers or markets
(brokers agreeing to limit their areas of trade or dealing to certain
areas or properties).
Appeal
The review or rehearing by a higher court of a low (inferior) court's
decision.
Appellant
The party appealing a court decision. Either party may appeal; hence,
the appellant could have been either the plaintiff or the defendant
in the trial court.
Application
The form used to apply for a mortgage loan, containing information
about a borrower’s income, savings, assets, debts, and more.
Appraisal
A written justification of the price paid for a property, primarily
based on an analysis of comparable sales of similar homes nearby.
An estimate and opinion of value. An opinion or estimate of the fair
market value of a property. An estimate of the quantity, quality
or value of something. The process through which conclusions of property
value are obtained; also refers to the report that sets forth the
process of estimation and conclusion of value.
Appraised Value
An opinion of a property's fair market value, based on an appraiser's
knowledge, experience, and analysis of the property. Since an appraisal
is based primarily on comparable sales, and the most recent sale
is the one on the property in question, the appraisal usually comes
out at the purchase price.
Appraiser
An individual qualified by education, training, and experience to
estimate the value of real property and personal property. Although
some appraisers work directly for mortgage lenders, most are independent.
One qualified by education, training, and experience, who is hired
to estimate the value of real and personal property on the basis
of experience, judgment, facts, and use of formal appraisal processes.
Appreciation
The increase in the value of a property due to changes in market
conditions, inflation, or other causes. An increase in the worth
or value of a property due to economic or related causes, which may
prove to be either temporary or permanent; opposite of depreciation.
Appurtenance
A right, privilege or improvement belonging to, and passing with,
the land.
Appurtenant
Attached to or considered part of land, because of being considered
necessary and incidental to the use of that land. Commonly applied
to easements that are considered part of property.
Appurtenant Easement
An easement that is annexed to the ownership of one parcel and allows
the owner the use of the neighbor's land.
Assemblage
The combining of two or more adjoining lots into one larger tract
to increase their total value.
Assessed Value
The valuation placed on property by a public tax assessor for purposes
of taxation. Value placed on property as a basis for taxation. A
value used by the tax assessor before July 1978. It represented 25
percent of the assessor's fair market value. After deducting any
exemptions from assessed value, one applied the tax rate to the net
figure to determine annual property taxes.
Assessment
The placing of a value on property for the purpose of taxation. The
valuation of property for the purpose of levying a tax, or the amount
of tax levied. The imposition of a tax, charge or levy, usually according
to established rates.
Assessor
A public official who establishes the value of a property for taxation
purposes. The official who has the responsibility of determining
the assessed values.
Asset
Items of value owned by an individual. Assets that can be quickly
converted into cash are considered "liquid assets." These
include bank accounts, stocks, bonds, mutual funds, and so on. Other
assets include real estate, personal property, and debts owed to
an individual by others.
Assignee
One to whom property is assigned or transferred.
Assignment
When ownership of your mortgage is transferred from one company or
individual to another, it is called an assignment. A transfer to
another of any property or right. The transfer of one's entire interest
in property. Generally, the term is limited to intangible personal
property (that is, stocks, bonds, promissory notes) and to leasehold
estates. The transfer in writing of interest in a bond, mortgage,
lease or other instrument.
Assignment of Rents
An assignment of future rents form property as security for a debt.
Assignment Of Rents Clause
A clause in a deed of trust or mortgage, providing that in the event
of default, all rents and income from the secured property will be
paid to the lender to help reduce the outstanding loan balance.
Assignor
One who assigns or transfers property.
Assumable Mortgage
A mortgage that can be assumed by the buyer when a home is sold.
Usually, the borrower must "qualify" in order to assume
the loan.
Assumption
The term applied when a buyer assumes the seller’s mortgage.
Acceptance of personal liability for another's debt or obligation.
In the case of the sale of real estate, the buyer personally accepts
and promises to pay off the existing deed of trust.
Assumption Of Agreement
A contract by which a person agrees to pay a debt or obligation owed
by someone else.
Assumption Of Mortgage or Deed Of Trust
Acquiring title to property on which there is an existing mortgage
and agreeing to be personally liable for the terms and conditions
of the mortgage, including payments. The taking of title to property
by a grantee in which he or she assumes liability for payment of
existing note secured by a mortgage or deed of trust against the
property.
Attachment
Seizure of property by court order before judgment, usually done
to have it available in the event a judgment is obtained in a pending
law suit. The actual or constructive seizure of property by court
order during a lawsuit. The usual purpose is to hold the assests
as security for the satisfaction of a judgment. The act of taking
a person's property into legal custody by writ or other judicial
order to hold it available for application to that person's debt
to a creditor.
Attachment Lien
A lien on property arising because of an attachment of that property.
Attest
To affirm to be true or genuine. An official act establishing authenticity.
Attorney-In-Fact
An agent authorized to perform certain acts for another under a power
of attorney. (See Power of Attorney.)
Attorney's Opinion Of Title
An abstract of title that an attorney has examined and has certified
to be, in his or her opinion, an accurate statement of the facts
concerning the property ownership.
Automatic Extension
A clause in a listing agreement that states that the agreement will
continue automatically for a certain period of time after its expiration
date. In many states, use of this clause is discouraged or prohibited.
Avulsion
The sudden tearing away or removal of land by the action of water
flowing over or through it. The sudden tearing away of land, as by
earthquake, flood, volcanic action or the sudden change in the course
of a stream.
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