Backfill

The replacement of excavated earth in a hole or against the side of a structure.

Balance

The appraisal principle that states that the greatest value in a property will occur when the type and size of the improvements are proportional to each other as well as the land.

Balance Sheet

A financial statement showing a person's assets, liabilities, and net worth.

Balloon Mortgage

A mortgage loan that requires the remaining principal balance be paid at a specific point in time. For example, a loan may be amortized as if it would be paid over a thirty year period, but requires that at the end of the tenth year the entire remaining balance must be paid.

Balloon Payment

The final lump sum payment that is due at the termination of a balloon mortgage. When the final payment on a note is greater than the preceding normal installments, the final installment is termed a balloon payment. An installment promissory note providing for the last payment to be much larger than any previous payment. By statute, any payment more than twice the smallest payment is a balloon payment, although in practice generally the term refers only to the last payment. A final payment of a mortgage loan that is considerably larger than the required periodic payments because the loan amount was not fully amortized.

Bankruptcy

By filing in federal bankruptcy court, an individual or individuals can restructure or relieve themselves of debts and liabilities. Bankruptcies are of various types, but the most common for an individual seem to be a "Chapter 7 No Asset" bankruptcy which relieves the borrower of most types of debts. A borrower cannot usually qualify for an "A" paper loan for a period of two years after the bankruptcy has been discharged and requires the re-establishment of an ability to repay debt. Will not eliminate all loans secured by real property.

Bargain And Sale Deed

A deed that carries with it no warranties against liens or other encumbrances but that does imply that the grantor has the right to convey title. The grantor may add warranties to the deed at his or her discretion.

Base And Meridian
Imaginary lines used by surveyors from which they find, measure, and describe the location of lands.

Base Line

The main imaginary line running east and west and crossing a principal meridian at a definite point, used by surveyors for reference in locating and describing land under the rectangular (government) survey system of legal description.

Base Molding
Molding used at the top of the baseboard.

Base Show
Molding used at junction of baseboard and floor, sometimes called a carpet strip.

Baseboard
A board that goes around the room against the wall and next to the floor.

Basis
The financial interest that the Internal Revenue Service attributes to an owner of an investment property for the purpose of determining annual depreciation and gain or loss on the sale of the asset. If a property was acquired by purchase, the owner's basis is the cost of the property plus the value of any capital expenditures for improvements to the property, minus any depreciation allowable or actually taken. This new basis is called the adjusted basis.

Batten
Narrow strips of wood or metal used to cover joints on the interior or exterior of a building; they are also used for decorative effect.

Beam

A horizontal structural member supporting a load.

Bearing Wall Or Partition

A wall or partition that supports any vertical load, in addition to its own weight.

Bench Mark
A permanent reference mark or point established for use by surveyors in measuring differences in elevation.

Bench Marks
A location indicated on a permanent marker by surveyors.

Beneficiary
One entitled to benefit from a trust. The lender on the security of a note and deed of trust. The creditor (lender) under a deed of trust. The person for whom a trust operates or in whose behalf the income from a trust estate is drawn. A lender in a deed of trust loan transaction.

Beneficiary Statement

(See Offset Statement.)

Bequeath
To leave by will.

Bequest

Personal property that is given by the terms of a will. A gift of personal property by will.

Betterment
An improvement on real property that increases the value and is considered a capital asset.

Bilateral Contract
A contract in which the consideration given by each party is a promise: that is , a promise for a promise. See contract

Bill Of Sale
A written document that transfers title to personal property. For example, when selling an automobile to acquire funds which will be used as a source of down payment or for closing costs, the lender will usually require the bill of sale (in addition to other items) to help document this source of funds. A written instrument given by the seller to the buyer to pass title to personal property.

Binder
A written statement that binds the parties to an agreement until formal contracts can be drawn; an agreement to cover a down payment as evidence of good faith. An agreement that may accompany an earnest money deposit for the purchase of real property as evidence of the purchaser's good faith and intent to complete the transaction.

Biweekly Mortgage

A mortgage in which you make payments every two weeks instead of once a month. The basic result is that instead of making twelve monthly payments during the year, you make thirteen. The extra payment reduces the principal, substantially reducing the time it takes to pay off a thirty year mortgage. Note: there are independent companies that encourage you to set up bi-weekly payment schedules with them on your thirty year mortgage. They charge a set-up fee and a transfer fee for every payment. Your funds are deposited into a trust account from which your monthly payment is then made, and the excess funds then remain in the trust account until enough has accrued to make the additional payment which will then be paid to reduce your principle. You could save money by doing the same thing yourself, plus you have to have faith that once you transfer money to them that they will actually transfer your funds to your lender.

Blacktop

Asphalt paving used in streets and driveways.

Blanket Deed Of Trust
A deed of trust binding more than one parcel of property as security. It is frequently encountered in subdivisions, where every lot in the subdivision is bound by the same deed of trust. As the lots are sold, they are released from the deed of trust by a partial release provision.

Blanket Loan
A mortgage covering more than one parcel of real estate, providing for each parcel's partial release from the mortgage lien upon repayment of a definite portion of the debt. One mortgage or deed of trust that covers more than one piece?of real property.

Blighted Area

An area in which real property is declining in value because of destructive economic forces.

Blockbusting

The illegal practice of trying to lower property values. The illegal practice of inducing homeowners to sell their properties by making representations regarding the entry or prospective entry of persons of a particular race or national origin into the neighborhood.

Blue-Sky Laws
Common name for those state and federal laws that regulate the registration and sale of investment securities.

Board Foot

A unit of measurement for lumber: one foot wide, one foot long, one inch thick (144 cubic inches).

Bona Fide

Good faith.

Bona Fide Purchaser (BFP)
A purchaser who pays fair value for property in good faith, and without notice of adverse claims.

Bond

An obligation under seal. Real estate bonds are isssued on the security of a mortgage or deed of trust. A certificate representing a contract for the payment of money, often used to repay certain loans or held as security to ensure the performance of a stated act.

Bond Market
Usually refers to the daily buying and selling of thirty year treasury bonds. Lenders follow this market intensely because as the yields of bonds go up and down, fixed rate mortgages do approximately the same thing. The same factors that affect the Treasury Bond market also affect mortgage rates at the same time. That is why rates change daily, and in a volatile market can and do change during the day as well.

Book Value
An accounting term which is the difference between cost and the total amount of depreciation that has been taken.

Boot

Money or property given to make up any difference in value or equity between two properties in an exchange.

Bracing

Frame lumber nailed at an angle in order to provide stability to the structure.

Branch Office

A secondary place of business apart from the principal or main office from which real estate business is conducted. A branch office usually must be run by a licensed real estate broker working on behalf of the broker.

Breach
The breaking of or failure of duty, either by an act or omission. The violation of or failure to perform an obligation.

Breach Of Contract

Violation of any terms or conditions in a contract without legal excuse; for example, failure to make a payment when it is due.

Breezeway

A covered porch or passage, open on two ends, that connects the house and garage, or two parts of the house.

Bridge Loan

Not used much anymore, bridge loans are obtained by those who have not yet sold their previous property, but must close on a purchase property. The bridge loan becomes the source of their funds for the down payment. One reason for their fall from favor is that there are more and more second mortgage lenders now that will lend at a high loan to value. In addition, sellers often prefer to accept offers from buyers who have already sold their property.

Bridging

Wood or metal pieces used to brace floor joists.

Broker

Broker has several meanings in different situations. Most Realtors are "agents" who work under a "broker." Some agents are brokers as well, either working form themselves or under another broker. In the mortgage industry, broker usually refers to a company or individual that does not lend the money for the loans themselves, but broker loans to larger lenders or investors. (See the Home Loan Library that discusses the different types of lenders). As a normal definition, a broker is anyone who acts as an agent, bringing two parties together for any type of transaction and earns a fee for doing so. An agent who earns income by arranging sales and other contracts. A real estate broker is an individual licensed by the state of California to arrange the sale or transfer of interests in real property for compensation. One who acts as an intermediary on behalf of others for a fee or commission.

Brokerage

The bringing together of parties interested in making a real estate transaction.

Broker's Trust Fund Account

Withdrawals from this account may be made only by the broker.

BTU

British Thermal Unit; the quantity of heat required to raise the temperature of one pound of water one degree Fahrenheit.

Buffer Zone

A strip of land, usually used as a park or designated for a similar use, separating land dedicated to one use from land dedicated to another use (e.g., residential from commercial).

Building Code

An ordinance that specifies minimum standards of construction for buildings to protect public safety and health.

Building Line

Often called a setback line, a building line is a line running a certain distance from the street, in front of which an owner cannot build. These lines are set by law.

Building Paper

A heavy waterproofed paper used as sheathing in exterior walls, or in roof construction as insulation and protection against moisture.

Building Permit

Written governmental permission for the construction, alteration or demolition of an improvement, showing compliance with building codes and zoning ordinances.

Built-Ins

Cabinets and other features built in as a part of the house.

Bulk Transfer

See Uniform Commercial Code

Bundle Of Legal Rights

The concept of land ownership that includes ownership of all legal rights to the land--for example, possession, control within the law and enjoyment.

Business And Professions Code

One of the 25 California codes containing the laws passed by the state legislature. It contains the statutes regulating the conduct of real estate brokers and establishes the Department of Real Estate.

Business Opportunity

A term used to describe a business including its stock-in-trade, fixtures, and goodwill.

Buydown

Usually refers to a fixed rate mortgage where the interest rate is "bought down" for a temporary period, usually one to three years. After that time and for the remainder of the term, the borrower’s payment is calculated at the note rate. In order to buy down the initial rate for the temporary payment, a lump sum is paid and held in an account used to supplement the borrower’s monthly payment. These funds usually come from the seller (or some other source) as a financial incentive to induce someone to buy their property. A "lender funded buydown" is when the lender pays the initial lump sum. They can accomplish this because the note rate on the loan (after the buydown adjustments) will be higher than the current market rate. One reason for doing this is because the borrower may get to "qualify" at the start rate and can qualify for a higher loan amount. Another reason is that a borrower may expect his earnings to go up substantially in the near future, but wants a lower payment right now. A financing technique used to reduce the monthly payments for the first few years of a loan. Funds in the form of discount points are given to the lender by the builder or seller to buy down or lower the effective interest rate paid by the buyer, thus reducing the monthly payments for a set time.

Buyer-Agency Agreement

A principal-agent relationship in which the broker is the agent for the buyer, with fiduciary responsibilities to the buyer. The broker represents the buyer under the law of agency.

Real Estate Dictionary Terms - B