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Real Estate Dictionary Terms - C
C.C. & R.
Abbreviation for covenants, conditions, and restrictions. Often used
synonymously with general plan restrictions on a subdivision
Call Option
Similar to the acceleration clause.
Cap
Adjustable Rate Mortgages have fluctuating interest rates, but those
fluctuations are usually limited to a certain amount. Those limitations
may apply to how much the loan may adjust over a six month period,
an annual period, and over the life of the loan, and are referred
to as "caps." Some ARMs, although they may have a life
cap, allow the interest rate to fluctuate freely, but require a certain
minimum payment which can change once a year. There is a limit on
how much that payment can change each year, and that limit is also
referred to as a cap.
Capital Assests
Assets of a permanent nature used in the production of income. Examples
would include land, buildings, and equipment.
Capital Gain
The gain recognized for federal and state income tax purposes when
a taxpayer disposes of a capital asset. Profit earned from the sale
of an asset.
Capitalization
In appraising, a method of determining value of property by considering
net income and a reasonable percentage of return on the investment.
Capitalization
A mathematical process for estimating the value of a property using
a proper rate of return on the investment and the annual net operating
income expected to be produced by the property.
Capitalization Rate
The percentage rate or rate of interest considered a reasonable return
on the investment. It is used in the capitalization method of determining
value based upon net return. Income -------- = Value Rate
Carpet Strip
(See Base Shoe.)
Casement Window
Windows set in frames of wood or metal that swing outward.
Cash Flow
The new amount of cash a property produces when all cash income and
other cash generated are added together and all cash expenses and
other cash payments are deducted. The net spendable income from an
investment, determined by deducting all operating and fixed expenses
from the gross income. When expenses exceed income, a negative cash
flow results
Cash Rent
In an agricultural lease, the amount of money given as rent to the
landowner at the outset of the lease, as opposed to sharecropping.
Cash-Out Refinance
When a borrower refinances his mortgage at a higher amount than the
current loan balance with the intention of pulling out money for
personal use, it is referred to as a "cash out refinance."
Cause Of Action
A legal right; facts giving rise to an enforceable claim.
Caveat Emptor
A Latin phrase meaning " let the buyer beware"; the legal
maxim stating that the buyer must examine the goods or property and
buy at his or her own risk. A Latin phrase meaning "Let the
buyer beware."
Certificate Of Deposit
A time deposit held in a bank which pays a certain amount of interest
to the depositor.
Certificate Of Deposit Index
One of the indexes used for determining interest rate changes on
some adjustable rate mortgages. It is an average of what banks are
paying on certificates of deposit.
Certificate Of Eligibility
A document issued by the Veterans Administration that certifies a
veteran’s eligibility for a VA loan.
Certificate Of Reasonable Value (CRV)
The Veterans Administrations's written appraisal of the value (CRV)
of a property. Once the appraisal has been performed on a property
being bought with a VA loan, the Veterans Administration issues a
CRV. A form indicating the appraised value of a property being financed
with a VA loan.
Certificate Of Sale Certificate Of Title
The document generally given to the purchaser at a tax foreclosure
sale. A certificate of sale does not convey title; normally it is
an instrument certifying that the holder received title to the property
after the redemption period passed and that the holder paid the property
taxes for that interim period.
Certificate of Title
A statement of opinion on the status of the title to a parcel of
real property based on an examination of specified public records.
Certified Property Manager (CPM)
Certified Property Manager; a member of the Institute of Real Estate
Property management of the National Association of Realtors.
Certiorari
The Supreme Court order indicating that the court has decided to
exercise its discretion and accept a case offerd on appeal. The court
reviews only those select cases that it deems worthy of review.
Chain Of Title
An analysis of the transfers of title to a piece of property over
the years. A series of conveyances, encumbrances, and other instruments
affecting the title from the time original patent was granted, or
as far back as records are available. A history of the recorded ownership
of real estate and claims against title to real estate. The succession
of conveyances, from some accepted starting point, whereby the present
holder of real property derives title.
Change
The appraisal principle that holds that no physical or economic condition
remains constant.
Chattel
The old name for personal property. See personal property. Personal
property. This term is sometimes used in a law to describe any interest
in real or personal property other than a freehold.
Chattel Mortgage
A personal-property mortgage. (See Security Agreement.)
Chattel Real
In real estate, an estate less than a freehold estate, such as a
lease.
Circuit Breaker
An electrical device that automatically interrupts an electrical
circuit when an overload occurs. Circuit breakers can be reset and
today are used instead of fuses.
Civil Code
One of the 25 California codes containing the statutes passed by
the state legislature. The most important code relating to contracts
and real estate, the Civil Code defines the nature and requirements
for contracts and real estate transactions, among its many other
provisions.
Civil Law
A system of jurisprudence, sometimes called Roman law, wherein all
the laws are set forth in advance to regulate conduct (as opposed
to common law, where the principles of law develop on a case-by-case
basis). In California the term also refers to the law relating to
and between individuals, as opposed to criminal law.
Civil Rights Act Of 1866
An act that prohibits racial discrimination in the sale and rental
of housing.
Clapboard
Boards that are used for siding and that are usually thicker at one
edge.
Clear Title
A title that is free of liens or legal questions as to ownership
of the property.
Client
A person represented by a broker or an attorney.
Closing
This has different meanings in different states. In some states a
real estate transaction is not consider "closed" until
the documents record at the local recorders office. In others, the "closing" is
a meeting where all of the documents are signed and money changes
hands.
Closing Costs
Closing costs are separated into what are called "non-recurring
closing costs" and "pre-paid items." Non-recurring
closing costs are any items which are paid just once as a result
of buying the property or obtaining a loan. "Pre-paids" are
items which recur over time, such as property taxes and homeowners
insurance. A lender makes an attempt to estimate the amount of non-recurring
closing costs and prepaid items on the Good Faith Estimate which
they must issue to the borrower within three days of receiving a
home loan application.
Closing Statement
A detailed cash accounting of a real estate transaction showing all
cash received, all charges and credits made and all cash paid out
in the transaction.
Cloud On Title
A claim or document that affects title to real estate. The actual
cloud may ultimately prove invalid, but its existence mars the title.
Any document, claim, unreleased lien or encumbrance that may impair
the title to real property or make the title doubtful; usually revealed
by a title search and removed by either a quitclaim deed or suit
to quiet title.
Clustering
The grouping of homesites within a subdivision on smaller lots than
normal, with the remaining land used as common areas.
Co-Borrower
An additional individual who is both obligated on the loan and is
on title to the property.
Code Of Civil Procedure
One of the 25 California codes that contain the statutes passed by
the state legislature. It contains most of the procedural requirements
for enforcing rights granted by other codes, including the procedures
for evictions, foreclosures, and lawsuits.
Code Of Ethics
A written system of standards for ethical conduct.
Codicil
An amendment to a will. A supplement or an addition to a will, executed
with the same formalities as a will, that normally does not revoke
the entire will.
Coinsurance Clause
A clause in insurance policies covering real property that requires
the policyholder to maintain fire insurance coverage generally equal
to at least 80 percent of the property's actual replacement cost.
Collar Beam
A beam that connects the pairs of opposite roof rafters above the
attic floor.
Collateral
In a home loan, the property is the collateral. The borrower risks
losing the property if the loan is not repaid according to the terms
of the mortgage or deed of trust.
Collateral
Property subject to a security interest; property used as security
for a debt. (See Security Agreement.)
Collateral Security
The transfer of property of other valuables to ensure the performance
of a principal agreement; an obligation attached to a contract to
guarantee its performance.
Collection
When a borrower falls behind, the lender contacts them in an effort
to bring the loan current. The loan goes to "collection." As
part of the collection effort, the lender must mail and record certain
documents in case they are eventually required to foreclose on the
property.
Collusion
A secret agreement between two or more persons wishing to defraud
another for a wrongful purpose or to obtain an object forbidden by
law.
Color Or Title
That which appears to be a good title but, in fact, is not; for?example,
a forged deed. A document that appears to convey title, but in fact
is ineffective, conveying no title at all. It is one of the requirements
for adverse possession and easement by prescription.
Combed Playwood
A grooved building material used primarily for interior finish.
Commercial Acre
A term applied to the remainder of an acre of land after the area
devoted to streets, sidewalks, curbs, and so on has been deducted
from the acre.
Commercial Paper
Negotiable instruments used in business.
Commingling
The mixing of different funds so that they can no longer be distinguished.
In domestic law it refers to the combination of separate property
and community property, so that the separate property and community
funds can no longer be distinguished; in such cases all property
is considered community property. For brokers it refers to the mixing
o clients' money with the broker's separate bank accounts. The illegal
act by a real estate broker of placing client or customer funds with
personal funds. By law brokers are required to maintain a separate
trust or escrow account for other parties' funds held temporarily
by the broker.
Commission
Most salespeople earn commissions for the work that they do and there
are many sales professionals involved in each transaction, including
Realtors, loan officers, title representatives, attorneys, escrow
representative, and representatives for pest companies, home warranty
companies, home inspection companies, insurance agents, and more.
The commissions are paid out of the charges paid by the seller or
buyer in the purchase transaction. Realtors generally earn the largest
commissions, followed by lenders, then the others.An agent's compensation
for performing the duties of his or her agency agreement. In the
real estate business, it is usually a percentage of the selling price
or a percentage of the lease or rents, for example. Reduction of
a real estate commission for a listing contract is considered to
be unethical. Payment to a broker for services rendered, such as
in the sale or purchase of real property; usually a percentage of
the selling price of the property. A real estate broker may receive
a commission from both parties.
Commitment
A pledge or a promise; a firm agreement.
Common Area Assessments
In some areas they are called Homeowners Association Fees. They are
charges paid to the Homeowners Association by the owners of the individual
units in a condominium or planned unit development (PUD) and are
generally used to maintain the property and common areas.
Common Areas
Those portions of a building, land, and amenities owned (or managed)
by a planned unit development (PUD) or condominium project's homeowners'
association (or a cooperative project's cooperative corporation)
that are used by all of the unit owners, who share in the common
expenses of their operation and maintenance. Common areas include
swimming pools, tennis courts, and other recreational facilities,
as well as common corridors of buildings, parking areas, means of
ingress and egress, etc.
Common Elements
Parts of a property that are necessary or convenient to the existence,
maintenance and safety of a condominium or are normally in common
use by all of the condominium residents. Each condominium owner has
an undivided ownership interest in the common elements.
Common Law
An unwritten body of law based on general custom in England and used
to an extent in some states. The body of law that grew from customs
and practices developed and used in England. A body of unwritten
law that developed in England from the general customs and usage.
It was adopted in the United States and exercised by court decisions
following the ancient English principles and the recodified law of
a state. The body of law based on custom, usage and court decisions.
Community Property
In some states, especially the southwest, property acquired by a
married couple during their marriage is considered to be owned jointly,
except under special circumstances. This is an outgrowth of the Spanish
and Mexican heritage of the area.
Community Property
All property acquired by a husband and wife living together, except
separate property. (See Separate Property.) Property owned in common
by a husband and wife as a kind of marital partnership.
Community Property
A system of property ownership based on the theory that each spouse
has an equal interest in the property acquired by the efforts of
either spouse during marriage. A holdover of Spanish law found predominantly
in western states; the system was unknown under English common law.
Compaction
Packing or consolidation of soil. When soil is added to a lot to
fill in low places or to raise the level of the lot, it is often
too loose to sustain the weight of buildings. Therefore, it is necessary
to compact the added soil so that it will carry the weight of the
building without danger of settling or cracking.
Comparable Sales
Recent sales of similar properties in nearby areas and used to help
determine the market value of a property. Also referred to as "comps."
Comparables
Properties used in an appraisal report that are substantially equivalent
to the subject property.
Comparative Market Analysis (CMA)
One of three methods in the appraisal process. A means of comparing
similar type properties, which have recently sold, to the subject
property. A comparison of the prices of recently sold homes that
are similar to a listing seller's home in terms of location, style
and amenities.
Competent
Legally qualified or capable.
Competition
The appraisal principle that states that excess profits generate
competition.
Compound Interest
Interest paid on the original principal and also on the accrued and
unpaid interest that has accumulated as the debt matures.
Comprehensive Plan
See master plan
Conclusive Presumption
A legal assumption that cannot be rebutted, and is therefore accepted
as true and binding on the courts.
Condemnation
The act of taking private property for public use by a political
subdivision. A declaration by proper governmental authorities that
a structure is unfit for use. The taking of private property for
public use through th exercise of the power of eminent domain. A
judicial or administrative proceeding to exercise the power of eminent
domain, through which a government agency takes private property
for public use and compensates the owner.
Condition
A provision in a contract stating that the contract will not go into
effect or that it will terminate upon the occurrence of some specified
future event.1. A restriction added to a conveyance that, upon the
occurrence or nonocurrence of a some act or event, causes the estate
to be defeated.2. A contractual provision that upon the occurrence
or nonoccurrence of a stated act or event, an obligation is created
, destroyed, or defeated.
Condition Precedent
A condition that must occur before an estate is created or enlarged,
or before some other right or obligation occurs.
Condition Subsequent
A condition that, upon its failure or nonperformance, causes the
defeat or extinguishment of an estate, right, or obligation.
Conditional Commitment
A loan commitment for a definite amount under certain terms and conditions.
It is subject to an unknown purchaser's satisfactory credit rating.
Conditional Sale Contract
A contract for the sale of property whereby the seller retains legal
title until the conditions of the contract have been fulfilled. The
buyer has an equitable interest in the property. (See Security Agreement.)
A contract for the sale of property by which possession is delivered
to the buyer, but title remains with the seller until full payment
or the satisfaction of other stated conditions.
Conditional Use Permit
An exception to or relief from the application of a zoning ordinance,
because of special authorization granted by the zoning authorities.
The issuance rests on public policy benefits and prior authorization
in the zoning ordinance.
Conditional-Use Permit
Written governmental permission allowing a use inconsistent with
zoning but necessary for the common good, such as locating an emergency
medical facility in a predominantly residential area.
Condominium
A type of ownership in real property where all of the owners own
the property, common areas and buildings together, with the exception
of the interior of the unit to which they have title. Often mistakenly
referred to as a type of construction or development, it actually
refers to the type of ownership.
Condominium
The absolute ownership of a unit in a multi-unit building based on
a legal description of the airspace the unit actually occupies, plus
an undivided interest in the ownership of the com- mon elements,
which are owned jointly with the other condominium unit owners. A
system of individual ownership of units in a multifamily structure,
combined with joint ownership of common areas of the structure and
the land. The ownership of an individual unit in a multi-unit structure,
combined with joint ownership of common walkways, land, and other
portions of the property.
Condominium Conversion
Changing the ownership of an existing building (usually a rental
project) to the condominium form of ownership.
Condominium Hotel
A condominium project that has rental or registration desks, short-term
occupancy, food and telephone services, and daily cleaning services
and that is operated as a commercial hotel even though the units
are individually owned. These are often found in resort areas like
Hawaii.
Conduit
Usually a metal pipe in which electrical wiring is installled.
Confession Of Judgement Clause
Permits judgment to be entered against a debtor without the creditor's
having to institute legal proceedings.
Confession Of Judgment
Any entry of judgment upon the debtor's voluntary admission or confession.
Confirmation Of Sale
A court approval of the sale of property by an executor, administrator,
guardian, or conservator.
Conformity
The appraisal principle that holds that the greater the similarity
among properties in an area, the better they will hold their value.
Consideration
Anything of value, or that is legally sufficient, given to induce
someone to enter into a contract. The inducement for entering into
a contract; usually money, services, or a promise, although it may
consist of a legal benefit to the promisor or any legal detriment
to the promisee. That received by the grantor in exchange for his
or her deed. Something of value that induces a person to enter into
a contract.
Construction
The interpretation of an ambiguous term or provision in a statute
or agreement.
Construction Loan
A short-term, interim loan for financing the cost of construction.
The lender makes payments to the builder at periodic intervals as
the work progresses. See interim financing.
Constructive
A fiction imputed by law
Constructive Eviction
A breach of the landlord's warranty of quiet enjoyment. Any acts
by the landlord that substantially interfere with the tenant's use
and enjoyment of the premises. Actions of a landlord that so materially
disturb or impair a tenant's enjoyment of the leased premises that
the tenant is effectively forced to move out and terminate the lease
without liability for any further rent.
Constructive Notice
Notice given by the public records; that which is considered equivalent
to acutal notice even though there is not actual notice.1. Notice
given by a recorded document.2. Notice imputed by a law because a
person could have discovered certain facts upon reasonable investigation,
and a "reasonable man" in the same situation would have
conducted such an investigation. Notice given to the world by recorded
documents. All people are charged with knowledge of such documents
and their contents, whether or not they have actually examined them.
Possession of property is also considered constructive notice that
the person in possession has an interest in the property.
Consumer Credit Protection Act
A federal law that includes the truth-in-Leading Law.
Consumer Goods
Goods sold or purchased primarily for personal, family, or household
purposes.
Contingency
A condition that must be met before a contract is legally binding.
For example, home purchasers often include a contingency that specifies
that the contract is not binding until the purchaser obtains a satisfactory
home inspection report from a qualified home inspector. A provision
in a contract that requires a certain act to be done or a certain
event to occur before the contract becomes binding.
Contingent
Conditional, uncertain, conditioned upon the occurrence or nonoccurrence
of some uncertain future event.
Continuation Statement
A statement filed to extend the time limit on a financing statement
that had been filed earlier.
Contract
An oral or written agreement to do or not to do a certain thing.
A legally enforceable promise or set of promises that must be performed
and for which, if a breach of the promise occurs, the law provides
a remedy. A contract may be either unilateral, by which only one
party is bound to act, or bilateral, by which all parties to the
instrument are legally bound to act as prescribed.
Contract Of Sale
(See Conditional Sale Contract.)
Contribution
The appraisal principle that states that the value of any component
of a property is what it gives to the value of the whole or what
its absence detracts from that value.
Convenant
An agreement or a promise to do or not to do a particular act. Convenant:
A contractual agreement whereby one of the parties promises to perform
or to refrain from doing certain acts.
Conventional Loan
A loan that is made that is not federally insured or guaranteed.
Conventional Loan
A loan that requires no insurance or guarantee.
Conventional Mortgage
Refers to home loans other than government loans (VA and FHA).
Conversion
Is the misappropriation or misuse of trust funds. The wrongful appropriation
of another's goods to one's own use; to change from one character
or use to another. In tort, an unauthorized claim of ownership over
another's personal property. In property, the change of character
of property from real to personal , or vice versa.
Convertible Adjustable Rate
Allows the borrower to adjust to a fixed intrest rate.
Convertible ARM
An adjustable-rate mortgage that allows the borrower to change the
ARM to a fixed-rate mortgage within a specific time.
Conveyance
A term used to refer to any document that transfers title to real
property. The term is also used in describing the act of transferring.
Cooperating Broker
See listing broker
Cooperative
A residential multi-unit building whose title is held by a trust
or corporation that is owned by and operated for the benefit of persons
living within the building, who are the beneficial owners of the
trust or stockholders of the corporation, each possessing a proprietary
lease.
Cooperative (Co-Op)
A type of multiple ownership in which the residents of a multiunit
housing complex own shares in the cooperative corporation that owns
the property, giving each resident the right to occupy a specific
apartment or unit.
Cooperative Apartment
A form of ownership in which each individual apartment owner shares
in a cooperative venture that entitles the owner to use, rent, or
sell a specific apartment unit.
Co-Ownership
Title ownership held by two or more persons.
Corporation
A group or a body of persons recognized by law as an individual person
with rights and liabilities distinct from those of the persons comprising
it. Since the corporation is created by law, it may continue for
any length of time that the law prescribes. An artificial entity
given authority to conduct business and possess many of the rights
of natural persons. One of the key characteristics is that of perpetual
existence. An entity or organization, created by operation of law,
whose rights of doing business are essentially the same as those
of an individual. The entity has continuous existence until it is
dissolved according to legal procedures.
Correction Lines
Provisions in the rectangular survey (government survey) system made
to compensate for the curvature of the earth's surface. Every fourth
township line (at 24-mile intervals) is used as a correction line
on which the intervals between the north and south range lines are
remeasured and corrected to a full six miles.
Cost Approach
The process of estimating the value of a property by adding to the
estimated land value the appraiser's estimate of the reproduction
or replacement cost of the building, less depreciation.
Cost Basis
See Adjusted Cost Basis.
Cost Of Funds Index (COFI)
One of the indexes that is used to determine interest rate changes
for certain adjustable-rate mortgages. It represents the weighted-average
cost of savings, borrowings, and advances of the financial institutions
such as banks and savings & loans, in the 11th District of the
Federal Home Loan Bank.
Cost Recovery
An Internal Revenue Service term for depreciation.
Co-Tenancy
Any form of joint ownership
Counterflashing
Flashing used on chimneys at roof-line to cover shingle flashing
and prevent moisture entry.
Counter-Offer
The rejection of an offer by the submission of another offer, different
in terms from the original offer. Any purported acceptance of an
offer that introduces new terms is a rejection of that offer, and
amounts to a counter-offer. A new offer made in response to an offer
received. It has the effect of rejecting the original offer, which
cannot be accepted thereafter unless revived by the offeror.
Covenant
A written agreement between two or more parties in which a party
or parties pledge to perform or not perform specified acts with regard
to property; usually found in such real estate documents as deeds,
mortgages, leases and contracts for deed.
Covenant Of Quiet Enjoyment
The covenant implied by law by which a landlord guarantees that a
tenant may take possession of leased premises and that the landlord
will not interfere in the tenant's possession or use of the property.
Crawlhole
Exterior or interior opening permitting access underneath a building,
as building codes may require.
Credit
An agreement in which a borrower receives something of value in exchange
for a promise to repay the lender at a later date. On a closing statement,
an amount entered in a person's favor--either an amount the party
has paid or an amount for which the party must be reimbursed.
Credit History
A record of an individual's repayment of debt. Credit histories are
reviewed my mortgage lenders as one of the underwriting criteria
in determining credit risk.
Credit Report
A report of an individual's credit history prepared by a credit bureau
and used by a lender in determining a loan applicant's creditworthiness.
Credit Repository
An organization that gathers, records, updates, and stores financial
and public records information about the payment records of individuals
who are being considered for credit.
Credit Unions
A growing source of funds for real estate loans.
Creditor
A person to whom money is owed.
CRV
These intials mean Certificate of Reasonable Value.
Curtail Schedule
A list of the due dates and amounts by which the principal sum of
an obligation will be reduced by partial payments.
Curtest
A life estate, usually a fractional interest, given by some states
to the surviving husband in real estate owned by his deceased wife.
Most states have abolished curtesy.
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