Real Estate Glossary
Put simply, staging means preparing the home for a potential buyer — or "setting the stage,". It might involve redecorating, rearranging furniture, cleaning and other aesthetic strategies to present the home in the best possible light. The goal is to make the home as appealing as possible to the most potential buyers.
"as is"
Words in a contract intended to signify that no guarantees, whatsoever, are given regarding the subject property and that it is being purchased exactly as it is found. An "as-is" indicator is intended to be a disclaimer of warranties or representations. The recent trend in the courts to favor consumers tends to prevent sellers from using "as-is" wording in a contract to shield themselves from possible fraud charges brought on by neglecting to disclose material defects in the property.
1040 form
The main tax form that all American's file each year and summarizes all of the income and expenses of an individual taxpayer. (See Schedule A form, Schedule E form, 1040 form line 17 - rental income and losses)
1040 form line 17 - rental income and losses
Rental property owners report their taxable income or losses from their Schedule E on 1040 form line 17.
1099c
A type of tax form that deals with any tax to be paid when a personal debt of any description has been canceled by the creditors. A 1099-C form is usually only used when a debt has gone unacknowledged for a period of time.
1099c
A type of tax form that deals with any tax to be paid when a personal debt of any description has been canceled by the creditors. A 1099-C form is usually only used when a debt has gone unacknowledged for a period of time.
A, B, C, D paper
Mortgage loans are rated as A, B, C, or D paper. "A" paper loans are the highest quality, lowest risk loans; "B" quality are loans where the borrower has minor credit problems; "C" quality are borrowers with marginal or poor credit; "D" quality indicates very high risk loans.
A.R.S. §32-2151.01.C
A.R.S. §32-2151.01.C states that every purchase contract must state the form of earnest money received.
A.R.S. §32-2151.A
A.R.S. §32-2151.A: Unless otherwise provided in writing by all parties to a transaction, any licensed real estate broker who does not immediately place all funds entrusted to the broker, in the broker's capacity as a real estate broker, in a neutral escrow depository in this state shall upon receipt place all such funds in a trust fund account in a federally insured or guaranteed account in a depository located in this state. The commissioner may adopt such rules as are necessary to provide for records to be maintained and the manner in which such trust fund account deposits may be made.
abandonment
Abandonment is a tenant's voluntary relinquishment of a premises without the landlord's express or implied consent and with no intention to perform future lease obligations.
abatement
1. A reduction or decrease. 2. The removal of a nuisance.
ability to pay standard
Ability to pay standard means lenders have to make a reasonable and good-faith determination of whether the borrower has the ability to repay the loan.
absorption analysis
A study of the number of units of residential or nonresidential property that can be sold or leased over a given period of time is a defined location.
absorption rate
The absorption rate is the total number of vacant square feet of office space divided by the square footage leased per year historically. Used to analyze demand of office space in a given market area.
abstract of judgment
A full written summary of a judgment produced by the court. It becomes a general lien on all of a debtor's property in the county where it is recorded. (See general lien, judgment)
abstract of title
A full summary of all consecutive grants, conveyances, wills, records and judicial proceedings affecting title to a specific parcel of real estate, together with a statement of all recorded liens and encumbrances affecting the property and their present status. The abstract of title does not guarantee or ensure the validity of the title of the property. Rather, it is a condensed history that merely discloses those items about the property that are of public record; thus, it does not reveal such things as encroachments and forgeries. (See abstracter, title insurance policy, certificate of title)
abstracter
The person preparing the abstract of title. The abstracter searches the title as recorded or registered with the county recorder, county registrar, circuit court and/or other official sources. He or she then summarizes the various instruments affecting the property and arranges them in the chronological order of recording, starting with the original grant of title.
abstraction method
Method of finding land value in which all improvement costs (less depreciation) are deducted from the sales price. Also called extraction method.
accelerated learning
A set of techniques that enables rapid and effective learning, such as mind-mapping, speed reading, increasing memory, and using the multi-intelligences to address people's varied intellectual strengths.
acceleration
An increase in speed or velocity. A change in velocity. The time rate of change in velocity.
acceleration clause
A provision in a mortgage, trust deed, promissory note or contract for deed (agreement of sale) that, upon the occurrence of a specified event, gives the lender (payee, obligee or mortgagee) the right to call all sums due and payable in advance of the fixed payment date. (See alienation clause)
acceleration clause
A provision in a promissory note that allows a lender to demand payment of the total outstanding balance. This is also called the "due on default" clause. Mostly, this clause is invoked only upon the promissor's default, such as failure to make payments, bankruptcy, nonpayment of taxes on mortgaged property, or the breaking of loan covenants.
acceleration of gravity
The acceleration of a falling body due to gravity which is little more than 32 feet per second, per second, at sea level and which varies with latitude and altitude; represented by the letter "g." (See gravity)
acceptance
An acceptance is a promise by the offeree to be bound by the exact terms proposed by the offeror. The acceptance must be communicated to the offeror. (See offeree, offeror)
access restriction
Problem solving, creative thinking through accelerated learning, adapting to changes in technology, the marketplace and the job.
accessibility
A term used to describe how easy it is for people to get to, to use, or to understand things. It is most often used to describe facilities or amenities to assist people with disabilities, such as "wheelchair accessiblity." In transportation, accessibility refers to the ease of reaching destinations.
accession
The process of improvement or addition to property through natural or manufactured means.
accessory dwelling unit
A secondary dwelling unit with complete independent living facilities for one or more persons and which generally takes three forms: (1) detached from the primary dwelling; (2) attached to the main dwelling unit or home; and (3) repurposed existing space, such as taking an existing room within the primary residence and converting it to independent living quarters/living unit. Also known as a granny flat, in-law unit, backyard cottage, or secondary residential unit.
accommodator
A third party used to execute the exchange of property under the guidelines of the IRS Code, Section 1031.
accord and satisfaction
The settlement of an obligation. An accord is an agreement by a creditor to accept less than bargained for from a debtor. The creditor's acceptance of the accord constitutes satisfaction of the debt.
account
A record of debit and credit entries chronologically posted to a ledger to cover actions involving a particular item, event, person, or concern.
accountability
Accountability is easy to handle when actions produce the desired results or exceed expectations. But accountability also means taking the blame for failing to act or for actions that went astray. A leader stands up and says, "it's my fault, I made a mistake," and doesn't blame other people, unrealistic policy, or flawed laws or procedures for undesirable outcomes.
accounting
The agent must be able to report the status of all funds received from or on behalf of the principal. Most state real estate license laws require a broker to give accurate copies of all documents to all parties affected by them and to keep copies on file for a specified period of time. Most license laws also require the broker to deposit immediately, or within 24 to 48 hours, all funds entrusted to the broker (such as earnest money deposits) in a special trust or escrow account. Commingling such monies with the broker's personal or general business funds is strictly illegal.
accounts payable
In the context of community associations (such as HOAs or COAs), accounts payable might include payments owed for landscaping services, property maintenance, legal fees, insurance premiums, utility bills, or contracted repairs.
accounts receivable
In the context of a homeowners' or condominium association, accounts receivable often includes unpaid assessments, dues, special assessments, late fees, fines, or other charges that members or property owners are obligated to pay. These receivables represent income that the association has earned or is legally entitled to but has not yet collected.
accredited residential manager
ARM is an Institute of Real Estate Management (IREM) certification program. An ARM certification is for residential real estate managers whose responsibility is primarily at the site level.
IREM Websiteaccretion
The increase or addition of land by the deposit of sand or soil washed up naturally from a river, lake or sea. The gradual and imperceptible addition of land by alluvial deposits of soil through natural causes, such as shoreline movement caused by streams or rivers. This added land upon a bank or stream, navigable or not, becomes the property of the riparian or littoral owner, and it also becomes subject to any existing mortgages. (See littoral rights, riparian rights)
accrual basis
In accounting, a system of allocating revenue and expense items on the basis of when the revenue is earned or the expense incurred, not on the basis of when the cash is received or paid out. (See cash basis)
accrual method
An accounting method that measures the performance of a company by recognizing economic events regardless of when cash transactions occur. Economic events are recognized by matching revenues to expenses at the time in which the transaction occurs rather than when payment is received. This method allows the current cash flow to be combined with future expected cash flow to give a more accurate picture of a company's current financial condition.
accrued depreciation
1. In accounting, a bookkeeping account that shows the total amount of depreciation taken on an asset since it was acquired; also called accumulated depreciation. (See depreciation) 2. For appraisal purposes, the difference between the cost to reproduce the property (as of the appraisal date) and the property's current value as judged by its "competitive condition." In this context, accrued depreciation is often called diminished utility.
accrued items
In a closing statement, items of expense that are incurred but not yet payable, such as interest on a real estate loan or taxes on real property.
accusation
The first step in a disciplinary action against a licensee.
acknowledgment
A formal declaration made before a duly authorized officer, usually a notary public, by a person who has signed a document; also, the document itself. An acknowledgment is designed to prevent forged and fraudulently induced documents from taking effect.
acquirer
A business organization, financial institution, or an agent of a business organization or financial institution that has authority from an organization that operates or licenses a credit card system to authorize merchants to accept, transmit, or process payment by credit card through the credit card system for money, goods or services, or anything else of value.
acquisition
The act of acquiring or gaining possession of an asset, like a business. Although a company could expand by opening a new office or starting a new division, acquiring another business could accomplish the same purpose more efficiently.
acquisition cost
The amount of money or other valuable consideration expended to obtain title to a property. It includes the purchase cost, plus such items as appraisal fees, closing costs, finance charges, mortgage loan origination fees and title insurance. (See title)
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.
acre foot of water
It is defined by the volume of water necessary to cover one acre of surface area to a depth of one foot. It is equal to exactly 43,560 cubic feet, or to 325,851 U.S. gallons,
act of God
Inevitable, unpredictable, and unreasonably severe event caused by natural forces without any human interference, and over which an insured party has no control, such as an earthquake, flood, hurricane, lightning, snowstorm. Acts of God are insurable accidents and valid excuses for non-performance of a contract.
action of declaratory relief
An action to have a court determine the rights of parties before a violation of rights has occurred.
active duty alert
A statement in a consumer credit report that notifies all prospective users of the report that the consumer may be "active duty military."
Active Management Area (AMA)
Groundwater Active Management Areas (AMAs) are areas where water pumping and usage is watched very closely. These are areas with moderate to extremely high population and very little groundwater supply, so there is a significant danger of overdraft from the groundwater supply for these areas. The five AMAs in Arizona are Phoenix, Pinal, Prescott, Santa Cruz, and Tucson.
actual authority
The authority an agent has because it is specified in the agency agreement, or that the agent believes he or she has because of an unintentional or a careless act on the part of the principal.
actual charge
The amount imposed upon the consumer for any settlement service shall not exceed the amount actually received by the settlement service provider for that service.
actual damages
Real, substantial and just damages, or the amount awarded to a complainant in compensation for his actual and real loss or injury.
actual eviction
The legal process that results in the tenant's being physically removed from the leased premises. (See eviction, constructive eviction, lease)
actual fraud
A deliberate misrepresentation or a representation made in reckless disregard of its truth or falsity; the suppression of truth; a promise made without the intention to perform it; or any other act intended to deceive.
actual notice
Express information or fact; that which is known; direct knowledge.
actual settlement costs
Actual settlement costs are reasonable sums paid for any insurance premiums approved by the insurance commissioner; title examination and search, and examination of public records; preparation and recording of any and all documents required by law or custom for settlement; appraisal and/or survey of property securing loan; a single service charge paid by the borrower for the services of the residential mortgage lender for a loan commitment, whether an actual loan follows the commitment. The service charge may not exceed 1 percent of the principal amount of the loan (or 2 percent if a new construction loan); and charges and fees necessary for, or related to, the transfer of property and the closing of the residential mortgage loan that are paid by the borrower to a third party and not the lender.
ad hoc
A Latin phrase meaning "for this". It generally signifies a solution designed for a specific problem or task, non-generalizable, and not intended to be able to be adapted to other purposes. Ad hoc can also mean makeshift solutions.
ad valorem
The Latin phrase for "according to value." (See value)
ad valorem tax
A tax levied according to value, generally used to refer to real estate tax. Also called the general tax.
IRS on Real Estate Taxesad valorem taxes
General real estate property taxes levied against every person who owns real property. Ad valorem real estate taxes are levied to fund the operations of the governmental agency that imposes the taxes, as well as many other sub agencies associated with the taxing agency. Ad valorem is Latin for "according to value".
adaptability skills
Problem solving, creative thinking through accelerated learning, adapting to changes in technology, the marketplace and the job.
add-on rate
Interest charged on a principal amount for specified term, regardless of any repayments of principal. The borrower is paying interest on the full principal sum for the entire loan period, even though the principal is being reduced each month.
addendum
Additional material attached to and made part of a document. If there is space insufficient to write all the details of a transaction on the sales contract form, the parties will attach an addendum or supplement to the document. The sales contract should incorporate the addendum by referring to it as part of the agreement. The addendum should refer to the sales contract and be dated and signed or initialed by all the parties.
ademption
Disposal by a testator in his or her lifetime of a specific property bequeathed in his or her will so the bequest is revoked. (See testator)
adjustable rate mortgage (ARM)
A broad term for a loan (mortgage or deed of trust) with rates and terms that can change. The adjustable rate loan has become commonplace, with allowable ranges as to time intervals, percentage of increase or decrease and total increases or decreases likely to change as market conditions change. (See caps, index rate, initial rate, rate cap, rate factor)
adjustable-rate note
Promissory note that serves as evidence of a debt that carries an interest rate that will vary according to the change in an identified index or rate, such as the 11th District Cost of Funds.
adjusted basis
The original cost basis of a property reduced by certain deductions and increased by certain improvement costs. The original basis determined at the time of acquisition is reduced by the amount of allowable depreciation or depletion allowances taken by the taxpayer, and by the amount of any uncompensated property losses suffered by the taxpayer. It then increases by the cost of capital improvements plus certain carrying costs and assessments. The amount of gain or loss recognized by the taxpayer upon sale of the property is determined by subtracting the adjusted basis on the date of sale from the adjusted sales price. (See basis, capital gain)
adjusted book basis
Often referred to as the "book value" of an asset, this figure is used in financial accounting for a company's internal record-keeping and financial reporting. The book value starts with the asset's original cost and is adjusted similarly to the tax basis, mainly for depreciation and improvements. However, it might also be adjusted for things like impairments or revaluations according to accounting standards. This value is crucial for a company’s financial statements and doesn't always correspond with the tax basis, primarily because tax and accounting rules differ.
adjusted cost basis
A figure, used for taxes, that shows if you make a profit when you sell your house. You can calculate the adjusted cost basis by adding the amount you paid for the house to how much you spent on capital improvements and subtracting any losses or depreciation. Capital improvements are any major renovation that increases a home's value, like enlarging a kitchen, installing a pool, or adding an extra bedroom.
adjusted gross income
Income from all sources less deductions for taxes, depreciation, and other allowable deductions.
adjusted origination charge
The cost for origination fees, including processing fees, underwriting fees, document preparation fees, or discount points that the mortgage loan originator will charge for negotiating the loan.
adjustment
Decrease or increase in the sales price of a comparable property to account for a feature that the property has or does not have in comparison with the subject property.
adjustment period
In an adjustable rate mortgage (ARM), the "adjustment period," is the period of time (i.e., one month, three months, six months, one year, etc.) between changes in one interest rate charged and the next interest rate to be charged. (See adjustable rate mortgage (ARM))
administered price system
Federal National Mortgage Association securities purchasing procedure where required yields are adjusted daily to reflect financial market factors. (See Federal National Mortgage Association)
administrative agency
A government agency that makes rules and regulations to carry out the law. A state's real estate commission develops regulations to complement license law.
administrative experience
Administrative experience means experience running a business or keeping an office organized under a budget, and experience dealing with personnel.
administrative law judge
An administrative law judge is an official who presides at an administrative trial-type hearing to resolve a dispute between the Department of Real Estate and someone affected by a decision of that of the Department of Real Estate. The ALJ is usually the initial trier of fact and decision maker. ALJs can administer oaths, take testimony, rule on questions of evidence, and make factual and legal determinations. ALJ-controlled proceedings are comparable to a bench trial.
administrative or clerical tasks/duties
Administrative or clerical tasks include the receipt, collection, and distribution of information common for the processing of a loan in the mortgage industry, and communication with a borrower to obtain information necessary for the processing of a loan. Persons who hold themselves out to the public as able to obtain a loan are not performing administrative or clerical tasks.
administrative order
A legal document signed by the EPA directing an individual, business, or other entity to take corrective action or refrain from an activity. The order describes the violations and action to be taken and can be enforced in court.
administrative penalties
Administrative penalties are sanctions or fines imposed by a regulatory authority, government agency, or administrative body for violations of laws, regulations, or rules within its jurisdiction. These penalties are typically non-criminal in nature and are designed to enforce compliance, correct behavior, and deter future violations.
Administrative Procedure Act (APA)
The Administrative Procedure Act (APA) established rulemaking procedures and standards for state agencies in California. The requirements set forth in the APA are designed to provide the public with a meaningful opportunity to participate in the adoption of state regulations and to ensure that regulations are clear, necessary and legally valid. The APA must be complied with prior to revocation, suspension, or denial of a real estate license.
administrator
A person appointed by the court to settle the estate of a person who has died intestate (leaving no will). Sometimes referred to as the personal representative. (See executor)
administratrix
A female person appointed by the court to settle the estate of a person who has died intestate (leaving no will). Sometimes referred to as the personal representative. (See executrix)
ADRE license
ADRE license means the whole or part of any agency permit, certificate, approval, registration, subdivision public report, charter or similar form of permission required by the ADRE. (A.R.S. §32-2101)
advance fee
A fee paid before any services are rendered. Specifically, it is a practice of some brokers to obtain a nonrefundable fee from the seller in advance to cover the advertising of properties or businesses for sale while giving no guarantee that a buyer will be found, which is often held to be improper conduct. Brokers must keep accurate records of expenditures.
advance fee addendum
An agreement specifying services for which an agent or broker will be compensated including a provision for payment of an advance fee. (See advance fee)
advance fees
An "advance fee" is any fee which is claimed, demanded, charged, received, collected or contracted for as consideration any of the following:
- a listing, advertisement, or offer to sell or lease property or a business opportunity (other than a newspaper advertisement);
- the referral to a real estate licensee;
- soliciting borrowers or lenders;
- negotiating a loan, regarding real estate or a business opportunity.
advance payment
Advance payments feature a payment schedule that consolidates more than two periodic payments and pays them in advance from the proceeds.
adverse action
A denial or revocation of credit, a change in the terms of an existing credit arrangement, or a refusal to grant credit either on the amount requested or on the terms requested.
adverse possession
A method of acquiring title to real property by occupying the property against the interests of the true owner and fulfilling other statutory requirements. The burden to prove title is on the possessor, who must show that four conditions were met: 1. He or she has been in possession under a claim of right. 2. He or she was in actual, open and notorious possession of the premises so as to constitute reasonable notice to the record owner. 3. Possession was both exclusive and hostile to the title of the owner (that is, without the owner's permission and evidencing an intention to maintain the claim of ownership against all who may contest it). 4. Possession was uninterrupted and continuous for at least the prescriptive period stipulated by state law.
aerobic
Living, acting, or occurring only in the presence of oxygen. (See anaerobic, oxygen)
aesthetic zoning
Zoning for beauty. May regulate architectural styles, colors or signage. (See zoning)
affidavit
A sworn written statement made under oath before a notary public or other official authorized by law to administer an oath. The term literally means "has pledged one's faith." The affiant (person making the oath, sometimes called the deponent") must swear before the notary that the facts contained in the affidavit are true and correct.
affidavit of affixture
An affidavit of affixture is a document that is used to change the status of a manufactured home from personal property to real property if the manufactured home is on deeded land. If the manufactured home is on leased land, the owner can file an affidavit of affixture, but the manufactured home is taxed as personal property. See Arizona laws about affidavit of affixture and Arizona laws about mobile homes in mobile home parks for further information.
affidavit of property value (AZ)
A form that is used to record the selling price, date of sale and other required information about the sale of property. It is primarily for use by the county assessor and the Arizona Department of Revenue to develop tables and schedules for the uniform valuation of properties based on fair market value.
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 1. identifies himself or herself and indicates marital status, 2. certifies that since the examination of the title on the date of the contracts no defects have occurred in the title and 3. certifies that he or she is in possession of the property (if applicable).
affiliate
1) An affiliate is any person or company that controls, is controlled by, or is under common control with another company, as set forth in the Bank Holding Company Act of 1956 (12 U.S.C. § 1841 et seq.). 2) An affiliate is a person who, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with another person. (See affiliated business arrangements)
affiliate
The term affiliate or person affiliated with means a person who controls, is controlled by, or is under common control with the person specified. Any beneficial owner of 10 percent or more of the securities of a person or any executive officer, director, trustee, joint venturer, or general partner of a person is an affiliate of the person unless the shareholder, executive officer, director, trustee, joint venturer, or general partner proves that he or she does not control, is not controlled by, or is not under common control with the person.
affiliate (Arizona definition)
An entity that, directly or indirectly, through intermediaries, controls, is controlled by, or is under common control with the entity specified.
affiliated business arrangement
An arrangement in which a person who refers business that is incident to or part of a real estate settlement service, has either an affiliate relationship with or ownership interest of more than 1 percent in, a provider of settlement services; and either of such persons directly or indirectly refers such business to that provider or affirmatively influences the selection of that provider.
affiliation
Partnerships, coalitions, unions, connections — a banding together, a sort of filial relationship — as in the same family or society.
Affinity bias
Humans' hardwired and unconscious preference to feel safe and comfortable around people who look, sound and act like us.
affirmation
A formal declaration that an affidavit is true.
affirmative easement
An affirmative easement is a legal right granted to a person or entity to use a portion of another person's property for a specific purpose. This type of easement grants the holder the ability to perform an action on the servient estate (the property subject to the easement), which is typically owned by someone else. The holder of the affirmative easement (the dominant estate) has the legal right to use the servient estate in a specified manner.(See dominant tenement, servient tenement)
affirmative fraud
A deliberate statement of a material fact that the speaker knows to be false and on which the speaker intends another person to rely to his or her detriment.
affordability index
A measure of a population's ability to afford to purchase an item, such as a house, indexed to the population's income. The index uses the value of 100 to represent the position of an individual earning the population's median income, with values above 100 indicating that an item is less likely to be affordable and values below 100 indicating that an item is more affordable.
after-acquired title
Title or interest acquired by the grantor after a property has been conveyed. (See grantor)
after-tax cash flow
The cash flow remaining after deduction of an allowance for taxes attributable to that income.
age-life method
A method of computing accrued depreciation in which the cost of a building is depreciated at a fixed annual percentage rate; also called the straight-line method.
agency
A relationship created when one person, the principal, delegates to another, the agent, the right to act on his or her behalf in business transactions and to exercise some degree of discretion while so acting. An agency gives rise to a fiduciary relationship and imposes on the agent, as the fiduciary of the principal, certain duties, obligations, and high standards of good faith and loyalty.
agency
The agency is the Pennsylvania Housing Finance Agency, the public body, corporate and politic, created by this act.
agency confirmation form
Written statement required for a residential transaction involving property of one to four residential units, in the wording required by the California Civil Code, and signed by the property seller as well as the listing agent and selling agent (if different from the listing agent), that indicates the seller's understanding of the relationship of the seller to the listing and selling agent in the transaction. (See agency)
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 disclosure
The purpose of agency disclosure is to clarify whether a broker represents the buyer, the seller, or both parties in a transaction. This helps the customer understand to whom the broker owes their loyalty.
agency disclosure form
Written statement required for a residential transaction involving property of one to four residential units, using the wording required by the California Civil Code, and signed by both buyer and seller in a transaction, that explains the various relationships of those involved in a residential property sale. (See agency disclosure)
agent
One authorized to represent and to act on behalf of another person (called the principal). Unlike an employee, who merely works for a principal, an agent works in the place of a principal. The main difference between an agent and an employee is that the agent may bind his or her principal by contract, if within the scope of authority, whereas an employee may not unless given express authorization.
agent property evaluation
A questionnaire filled out by real estate agents while reviewing a listed property. Often completed during the course of a caravan. (See caravan)
aggregate
In statistics, the sum of all individuals, called variates.
aggrieved party
One whose legal right is invaded by an act(s) of another. The word "aggrieved" refers to a substantial grievance, a denial of some personal or property right, or the imposition upon a party of a burden or obligation.
aggrieved person (Arizona Fair Housing Act):
Includes any person who either: (1) claims to have been injured by a discriminatory housing practice. (2) believes that he will be injured by a discriminatory housing practice that is about to occur.
agricultural lease
Agricultural landowners often lease their land to tenant farmers, who provide the labor to produce and bring in the crop. An owner can be paid by a tenant in one of two ways: an agreed cash in advance rental amount (cash rents) or as a percentage of the profits from the sale of the crop when it is sold (sharecropping). (See cash rents, sharecropping)
agriculture
The science and business of cultivating soil, producing crops, and raising livestock.
AIDA
Attention, Interest, Desire, Action. In real estate advertising, creating ads that get the Attention of prospects, stimulating their Interest in a property, generating a Desire to purchase, and motivating the prospect to take Action.
AIDS
Persons with acquired immunodeficiency syndrome are protected under most federal and state discrimination laws. If buyers ask the real estate agent whether a prior occupant had AIDS, most agents point out that the law prevents responding one way or the other. Many states have emended their licensing laws to include that someone who has AIDS is not deemed a material fact, and therefore, does not form the basis for a claim that a broker concealed a material fact. Also protected are persons with AIDS-related complex (ARC) or human immunodeficiency virus infection (HIV).
air lot
A designated airspace over a piece of land. An air lot, like surface property, may be transferred.
air quality standards
The level of selected pollutants set by law that may not be exceeded in outside air. Used to determine the amount of pollutants that may be emitted by industry.
air rights
Air rights are the rights to the use of the open space or the vertical plane above a property. Ownership of land includes the right to all air above the property. Until the advent of the airplane, this right was unlimited, but now the courts permit reasonable interference with one's air rights, such as is necessary for aircraft, so long as the owner's right to use and occupy the land is not lessened. Thus, low-flying aircraft might be unreasonably trespassing, and their owners would be liable for any damages. Governments and airport authorities often purchase air rights adjacent to an airport, called an aviation easement, to provide glide patterns for air traffic.
The air itself is not real property; however, air space is real property when described in three dimensions with reference to a specific parcel of land, as in a condominium unit. A Maryland case has decided that separate owners of the land and the air rights may be separately assessed for tax purposes. Air rights may be sold or leased and buildings constructed thereon, such as was done with the Pam Am Building constructed above Grand Central Station in New York City.
Air rights may also be transferred by way of easements, such as those used in constructing elevated highways or in acquiring scenic easements or easements of light and air. Because of the scarcity of land, many developers are examining the possibilities for developing properties in the airspace above prime properties owned by schools, churches, railways and cemeteries. (See surface rights, subsurface rights)
Alien Registration Receipt Card
The Alien Registration Receipt Card is the official name for a green card. The holder of a green card is allowed to live and work in the United States permanently and legally. The green card is also used as an entry document when returning to the country from abroad. Green card holders can eventually apply for US citizenship if they satisfy the requirements.
alienation
The act of transferring ownership, title, interest, or estate in real property from one person to another. Property is usually sold or conveyed by voluntary alienation, as with a deed or assignment of lease. Involuntary alienation takes place when property is sold against the owner's will, as in a foreclosure sale or a tax sale. (See alienation clause)
alienation clause
A provision sometimes found in a promissory note or mortgage that provides that the balance of the secured debt becomes immediately due and payable at the option of the mortgagee upon the alienation of the property by the mortgagor. Alienation is usually broadly defined to include any transfer of ownership, title, interest, or estate in real property, including a sale by way of a contract for deed. Also called a due-on-sale clause. (See alienation, acceleration clause)
all-inclusive encumbrance/trust deed
An All-Inclusive Deed of Trust (AITD) combines an existing mortgage and a new loan into a single, comprehensive mortgage, with the borrower making one payment to the lender/seller, who then pays the original mortgage. This arrangement allows buyers to finance a property without securing a new traditional loan, benefiting those with less-than-perfect credit, while enabling sellers to facilitate sales and potentially earn interest on the loan balance. However, it carries risks for sellers if the buyer defaults and may trigger a due-on-sale clause in the existing mortgage.
all-inclusive trust deed
See wraparound mortgage or trust deed.
allocation method
The allocation of the appraised total value of the property between land and building. The allocation may be accomplished either on a ratio basis or by subtracting a figure representing building value from the total appraised value of the property.
allocation of costs
The division of closings costs between a buyer and a seller in a real estate sale.
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
Alluvion is the buildup of new soil. Also known as alluvium.
alluvium
Alluvium is the buildup of new soil. Also known as alluvion.
Alquist-Priolo Special Study Zone
A California law requiring a real estate agent or owner to disclose to prospective buyers that a property is located within a special studies zone (geological hazard zone) and if the property contains or will contain a dwelling (a residentally zoned lot). "Special study zones" cover an area 660 feet on each side of fault lines and are indicated on maps prepared by the California Department of Mines and Geology.
alt-A mortgages
A classification of mortgages in which the risk profile falls between prime and subprime. Alt-A mortgages are generally considered higher risk than prime due to factors that may include higher loan-to-value and debt-to-income ratios or limited documentation of the borrower's income.
alternative minimum tax
This is a separate tax scheme that the U.S. Congress created in 1982 to stop wealthy people from avoiding paying any federal income taxes.
ambient
Any unconfined portion of the atmosphere; open air; outside surrounding air.
amendment to the escrow instructions
A change to escrow instructions requiring the agreement of both buyer and seller. (See escrow instructions)
amendments
An amendment is a change to the existing content of a contract. Any time words or provisions are added to or deleted from the body of the contract, the contract has been amended.
amenity or amenities
The qualities and state of being pleasant and agreeable. In residential appraising, those peculiar and intangible benefits of home ownership such as satisfaction of possession and use arising from architectural excellence, scenic beauty, and desirable social environment.
American Association of Residential Mortgage Regulators (AARMR)
The AARMR's mission statement: To promote the exchange of information and education concerning the licensing, supervision, and regulation of the residential mortgage industry, to ensure the ability of state mortgage regulators to provide effective mortgage supervision for a safe and sound industry meeting the needs of the local financial markets, and to protect the rights of consumers.
American Institute of Real Estate Appraisers (AIREA)
A professional organization formerly affiliated with the National Association of REALTORS. AIREA promoted professional practice and ethics in the real estate appraisal industry and identified experienced, competent, ethical appraisers by awarding the MAI (Member Appraisal Institute) and RM (Residential Member) designations. In 1991, AIREA was merged with the Society of Real Estate Appraisers into the Appraisal Institute. The only designations awarded now are the MAI and SRA (Senior Residential Appraiser)
Appraisal Institute HomepageAmerican Land Title Association (ALTA) policy
There are two primary types of ALTA policies:
ALTA Loan Policy (Lender's Policy): This protects the lender by ensuring that their mortgage is the first lien on the property, meaning they have the legal right to foreclose on the property if the borrower defaults. It typically includes coverage against defects in the title, unrecorded easements, or other issues that might affect the lender’s rights.
ALTA Owner's Policy: This can also be issued to protect the buyer (or owner) of the property. It ensures that the title to the property is clear and protects against claims from third parties that might arise after the property is purchased. Coverage includes things like forged documents, undisclosed heirs, or errors in public records.
American Recovery and Reinvestment Act of 2009 (ARRA)
Legislation passed by Congress that provided relief programs following the recession and housing downturn. It is the first of the government’s programs dedicated to restoring the American economy; also called the Stimulus Act.
American Society for Industrial Security (ASIS International)
The American Society for Industrial Security (ASIS International) is a global organization for security professionals, providing certifications, educational programs, and networking opportunities. Founded in 1955, ASIS focuses on physical security, cybersecurity, risk management, and crisis management.
American Society of Appraisers (ASA)
A professional organization of appraisers engaged in the appraisal of both real and personal property. It confers the designations ASA and FASA (Fellow).
American Society of Real Estate Counselors (ASREC)
A professional organization, affiliated with the National Association of REALTORS®, composed of individuals with proven success in real estate counseling who serve clients on a fee basis. The society offers its members exclusive use of the professional designation CRE (Counselor of Real Estate).
Americans with Disabilities Act (ADA)
On July 26, 1990, President Bush signed into law the Americans with Disabilities Act of 1990 ("ADA"), a federal law which prohibits discrimination against individuals with disabilities. The ADA addresses discrimination in four general areas:
- Employment (Title I);
- Public services (Title II);
- Public accommodations and commercial facilities (Title III); and,
- Telecommunications (Title lV).
amortization
The gradual repayment of a debt by means of systematic payments of principal and/or interest over a set period, so that at the end of the period there is a zero balance. The principal is thus directly reduced or amortized over the life of the loan. Some loans are not fully amortized, and require a balloon payment at the end of the term of the loan. (See balloon payment, fully amortized)
amortized loan
The payment of a financial obligation in installments; recovery over a period of time of cost or value. A loan has negative amortization when the loan payments do not cover all of the interest due, which then is added to the remaining loan balance.
amount financed
According to FDIC, Reg Z (Section 1026.18), the "Amount Financed" is calculated by: (1) Determining the principal loan amount. (2) Adding any other amounts that are financed by the creditor and are not part of the finance charge; and (3) Subtracting any prepaid finance charge.
In other words: Loan Amount + Additional Financing - Prepaid Finance Charge = Amount Financed. amplitude
The measure of highness and lowness of comparative points in any cycle: the difference between a trough and a peak.
anabolism
The constructive aspect of metabolism which entails macro-molecular synthesis. (See catabolism)
anaerobic
Living, acting, or occurring in the absence of oxygen. (See aerobic)
anchor bolts
Bolts that fasten the sill plate of a wood-frame house to the house's foundation, required in California since 1931 for all new construction as an earthquake safety measure. (See foundation, sill)
anchor tenant
An anchor tenant is a major retail tenant, usually a well-known department store or large chain store, that attracts significant foot traffic to a shopping center or mall. Their presence benefits smaller retailers and businesses within the same complex by drawing in a steady stream of customers. Anchor tenants often secure favorable lease terms due to their importance in driving overall property value and traffic.
andragogy
Andragogy is the method and practice of teaching adult learners; adult education.
annexation
An addition to property by the act of joining or uniting one thing to another, as in attaching personal property to real property, thereby creating a fixture. For example, a sink becomes a fixture when it is annexed to the plumbing outlet.
annual debt service
Monthly loan payments (principal and interest, if any) times 12 months. The amount of the annual debt service depends upon the amount of cash down payment and the size and terms of the loan(s).
annual gross income
This is the dollar amount of all income if all rental units, but it factors in an occupancy rate: annual gross income = annual gross potential income × occupancy rate
annual gross potential income
This is the dollar amount of all income if all rental units are occupied for 100% of the year, and all tenants pay market rent: annual gross potential income = market rent × number of units × 12
annual income
Annual income is the total annual income of all members of a family, from whatever source derived, including pension, annuity, retirement, and social security benefits. Reasonable allowances for dependents, reasonable allowances for medical expenses, all or any proportionate part of the earnings of gainfully employed minors or family members other than the chief wage earner, and income that is not received regularly, as determined by agency rule or regulation my be excluded.
annual net income
This is the dollar amount of all income, factoring in the occupancy rate and the property's expenses: annual net income = annual gross income – expenses
annual operating expenses
The actual costs it takes to run the property, such as property tax, insurance, maintenance, repairs, management fees, utilities, and supplies.
annual percentage rate (APR)
An expression of the relationship of the total finance charge to the total amount to be financed as required under the federal Truth-in-Lending Act. Tables available from any Federal Reserve bank may be used to compute the rate, which must be calculated to the nearest one-eighth of 1 percent. Use of the APR permits a standard expression of credit costs, which facilitates easy comparison of lenders. (See interest, Truth-in-Lending Act)
annual rate of attrition
Annual rate of attrition is a statistic used by management to determine the number of people that have to be brought on board each year to maintain the sales staff.
annuity
A sum of money recieved by an annuitant in a series of fixed periodic payments.
annuity factors table
Provides a factor to be multiplied by the desired level of yearly income (based on the interest rate and length of time of the investment) to find the present worth of the investment.
annuity method
A method of capitalization that treats income from real property as a fixed, regular return on investment. For the annuity method to be applied, the lessee must be reliable and the lease must be long term.
anticipation
The appraisal principle which holds that value can increase or decrease based on the expectation of some future benefit or detriment produced by the property. (See appraisal)
anticipatory breach
Anticipatory breach, also known as anticipatory repudiation, occurs when one party to a contract clearly indicates, through words or actions, that they do not intend to fulfill their contractual obligations when the time for performance arrives. This indication may come before the performance is due. When this happens, the non-breaching party has several options. They can treat the contract as breached and seek remedies such as damages, or they can wait until the time for performance arrives to see if the breaching party fulfills their obligations. This concept allows the non-breaching party to take action before suffering the full consequences of a breach.
antimerger clause
A clause in a mortgage or deed of trust specifying that the senior lienholder will retain lien priority in the event of a merger. (See merger)
antitrust laws
State and federal laws designed to maintain and preserve business competition. The Sherman Antitrust Act (1890) is the principal federal statute covering competition, which is defined by most courts as "that economic condition in which prices are determined by market forces without interference from private concerns and there is reasonable freedom of entry into most businesses."
Certain real estate brokerage activities have come under public scrutiny by the Federal Trade Commission. These activities include the fixing of general commission rates by local boards or groups of brokers and the exclusion of brokers from membership in local boards or in multiple-listing arrangements due to unreasonable membership requirements. As a result of court cases, local real estate boards no longer directly or indirectly influence fixed commission rates or commission splits between cooperating brokers. Moreover, in some states, clients must be specifically informed that the commission rates are negotiable between client and broker.
apartment building
A building having separate units for permanent tenants who rent or lease them. The owner of the building provides common facilities, such as lights, heat, elevator and garbage disposal services, and maintains common entrances and hallways.
apparent authority
Authority to act as an agent that someone appears to have but does not actually have, which will place no obligation on the party the agent claims to represent if that party is in no way responsible for the representation.
appeal
An appeal is a formal request made to a higher authority, such as a court or regulatory body, to review and potentially change a decision or ruling made by a lower authority.
appealable agency action
An action that determines the legal rights, duties or privileges of a party and that is not a contested case. Appealable agency actions do not include interim orders by self-supporting regulatory boards or rules, orders, standards or statements of policy of general application issued by an administrative agency to implement, interpret or make specific the legislation enforced or administered by it, nor does it mean or include rules concerning the internal management of the agency that do not affect private rights or interests.
applicant
An applicant is any person who applies to a creditor directly for an extension, renewal, or continuation of credit or who applies to a creditor indirectly by use of an existing credit plan for an amount exceeding a previously established credit limit.
applicant
An applicant is any person who applies to a creditor directly for an extension, renewal, or continuation of credit or who applies to a creditor indirectly by use of an existing credit plan for an amount exceeding a previously established credit limit.
applicant (MA)
An applicant is any mortgage lender or mortgage broker who is required to be licensed, including partners or members, if the applicant is a partnership or association; and officers, directors, and principal employees, if the applicant is a corporation.
application
The submission of a borrower's financial information in anticipation of a credit decision relating to a federally related mortgage loan, which shall include the borrower's name, the borrower's monthly income, the borrower's social security number to obtain a credit report, the property address, an estimate of the value of the property, the mortgage loan amount sought, and any other information deemed necessary by the loan originator. An application may either be in writing or electronically submitted, including a written record of an oral application.
application
The first step in the official loan approval process; this form is used to record important information about the potential borrower necessary to the underwriting process.
Application Service Provider (ASP)
An ASP hosts and updates computer applications from a remote site via the Internet.
application software
A computer program that allows the user to perform a specific task, such as a building a spreadsheet or a database.
Apply for licensure (AZ)
A link to the application for licensure will be provided by the testing center to each student who passes the state-administered licensing exam. The candidate for licensure must include the completed form in the licensing application package. See application for licensure
appraisal
An estimate of the monetary value of a property on the open market; an estimate of a property's type and condition, its utility for a given purpose or its highest and best use. (See cost approach, income approach, index method, market-data approach, quantity survey method, sales comparison approach, square-foot method, unit-in-place method) Appraisal Foundation
Appraisal Foundation
A nonprofit corporation established in 1987 and appraisal-related professional and trade groups.
appraisal management company (AMCs)
Any corporation, partnership, sole proprietorship, subsidiary, unit or other business entity that administers networks of independent contract appraisers to perform real estate appraisal services to clients.
appraisal report
An appraiser's written opinion to a client of the value sought for the subject property as of the date of appraisal, giving all details of the appraisal process. Three appraisal reporting options are permitted by the Uniform Standards of Professional Appraisal Practice (USPSP).
Appraisal Standards Board (ASB)
Created by the Appraisal Foundation and responsible for establishing minimum standards of appraisal competence.
appraiser
An independent person trained to provide an unbiased estimate of value, such as a professional service performed for a fee. Appraisers are required to provide complete and accurate reports and to report neighborhood and property conditions in factual and specific terms; be impartial and specific in describing favorable or unfavorable factors; and avoid the use of subjective, racial, or stereotypical terms, phrases, or comments in the appraisal report.
Appraiser Independent Requirements
These Fannie Mae directives took effect on October 15, 2010, to help insure that appraisals are objective and not subject to any form of coercion.
Appraiser Qualifications Board (AQB)
Created by the Appraisal Foundation and responsible for establishing minimum requirements for licensed and certified appraisers and licensing and certifying examinations.
appreciation
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. (See depreciation)
appreciation in value
The simple method of buying property with the expectation that it will go up in value. The problem with this method is that no one can predict the future. It also totally misses the wealth building positive cash flows some properties generate, or alternatively misses the wealth diminishing negative cash flows some properties generate. Appreciation doesn't pay the bills either, and any value increase over time should be considered the icing on the cake. As a side note, remember that over time you will pay for new kitchens, roofing, exterior painting, driveways, mechanical equipment and all kinds of other capital improvements that effectively reduces you equity from appreciation in value.
appropriation
Appropriation is the way a taxing body authorizes the expenditure of funds and provides for the sources of funding. Appropriation generally involves the adoption of an ordinance or the passage of a law that states the specific terms of the proposed taxation.
appropriative water rights
A water right favored in some states where an owner has the exclusive rights to take all the water for specific beneficial uses. (See correlative water rights, riparian rights)
appurtenant
Appurtenant items belong to; or are adjunctive; appended or annexed to a property. For example, the garage is appurtenant to the house, and the common interest in the common elements of a condominium is appurtenant to each unit. Appurtenant items run with the land when the property is transferred.
appurtenant easement
An easement that is annexed to the ownership of one parcel and allows the owner the use of the neighbor's land. (See easement)
aquifer
An underground water-bearing layer of rock, including gravel and sand, that will yield water in usable quantity. Aquifers are sources of water for wells and springs.
arbiter
Supreme authority. (1)Someone with the power to settle matters at will. (2)Someone chosen to judge and decide a disputed issue. The arbitrator's authority is derived from the consent of the disputants.
arbitrage
Borrowing at one interest rate and investing at a higher rate.
arbitration
A nonjudicial method of resolving disputes by selecting a neutral party to make a final determination. This method was either previously agreed to by the disputing parties or stipulated by law. The decision made by the arbiter is binding.
architectural controls
Architectural controls are local ordinances or homeowner's association regulations that regulate the construction and design of buildings. These regulations deal with specific architectural features and sometimes encourage a certain architectural style.
area
The space inside a two-dimensional shape (i.e., one with length and width but not volume).
Arizona Conservation Easements
A.R.S. § 33-271 through A.R.S. § 33-276 specifies that conservation easements may be created, conveyed, recorded, assigned, released, modified, terminated or otherwise altered in the same manner as other easements. A conservation easement may be created to protect or preserve:
- historical, architectural, archeological, or cultural aspects of real property;
- land for the outdoor recreation or education of the general public;
- land as a natural habitat for fish, wildlife, and plants;
- open space, including farmland and forest land, for the public's enjoyment pursuant to a clearly delineated governmental conservation policy.
Arizona Continuing Education categories
Arizona law requires that all brokers and all salespeople take continuing education which includes three hours in each of the following categories:
* Agency
* Commissioner's Standards
* Contract Law
* Disclosure
* Fair Housing
* Real Estate Legal Issues
Brokers must complete an additional six hours in the Commissioner's Standards category, and six hours in any of the above categories or the General Education category. Salespersons must complete an addition six hours in any of the above categories or the General Education category.
Arizona Doctrine of Prior Appropriation
Early in its history, Arizona adopted the doctrine of prior appropriation to govern the use of surface water. This doctrine is based on the tenet of first in time, first in right which means that the person who first puts the water to a beneficial use acquires a right that is better than later appropriators of the water. Prior to June 12, 1919, a person could acquire a surface water right simply by applying the water to a beneficial use and posting a notice of the appropriation at the point of diversion. On June 12, 1919, the Arizona surface water code was enacted. Now known as the Public Water Code, this law provides that a person must apply for and obtain a permit in order to appropriate surface water. Some states allow owners of property adjacent to a stream or river to use the water from the stream or river without limitations. This is call "riparian" theory. Arizona does not recognize riparian rights.
Arizona recording acts
Under Arizona's race-notice statute, a later purchaser or lender must record their interest in the property first and be unaware of any prior unrecorded claims to protect their interest against earlier, unrecorded claims. This ensures that property buyers or lenders who act in good faith and record their interest properly are protected.
Arizona State Constitution - Article 26
Powers of real estate salespersons and brokers. Any real estate licensee, when acting in such capacity as broker or salesperson for the parties, or agent for one of the parties to a sale, exchange, or trade, or the renting and leasing of property, shall have the right to draft or fill out and complete, without charge, any and all instruments incident thereto.
Arizona's race-notice statute
The Arizona race-notice statute protects the first party to record their interest in a property, as long as they did so without knowledge of any prior unrecorded claims. This means that a buyer or lender who records their deed first and was unaware of any earlier, unrecorded claims will have priority in ownership or lien rights.
arm's-length transaction
An "arm's length transaction" is a transaction in which the parties involved are independent and unrelated, and they act in their own self-interest without any undue influence or pressure from one another. Both parties have equal bargaining power. The terms and conditions reflect what is typically expected in a competitive and open market.
arranger of credit
As defined under the federal Truth-in-Lending Law, a person who regularly arranges for the extension of consumer credit by another person if a finance charge will be imposed, if there are to be more than four installments, and if the person extending the credit is not a creditor. At present, the term does not include a real estate broker who arranges seller financing of a dwelling or real property. (See Truth-in-Lending Law)
array
An arrangement of statistical data according to numerical size.
arrears
1. The state of being delinquent in paying a debt. 2. At or after the end of the period for which expenses are due or levied; the opposite of in advance. Mortgage interest and real estate taxes are often paid in arrears.
Article 5
The part of the Business and Professions Code governing transactions in real property sale contracts and trust deeds.
Article 6
The part of the Business and Professions Code governing real property securities dealers.
Article 7
The part of the Business and Professions Code governing commissions, loan costs, and payment requirements in loan brokerage activities.
as is market value
The estimate of the market value of real property in its current physical condition, use, and zoning as of the appraisal's effective date.
asbestos
A mineral once used in insulation and other materials that can cause respiratory diseases. Asbestos has been classified as carcinogenic, meaning cancer causing. (See carcinogen and the Fact Sheet published by the National Safety Council on Asbestos
asbestos containing material (ACM)
The EPA defines asbestos containing material as any material or product that contains more than one percent asbestos. Some states regulate smaller percentages of asbestos containing material.
Asbestosis
A disease associated with inhalation of asbestos fibers. The disease makes breathing progressively more difficult and can be fatal. (See asbestos)
ASCII
ASCII stands for "American Standard Code for Information Interchange," which allows files to be shared and readable by different operating systems and software programs.
aspire
To seek to attain or accomplish a particular goal; to ascend, to soar.
assemblage
The combining of two or more adjoining lots into one larger tract to increase their total value.
assessed value
The dollar value of an asset assigned by a public tax assessor for the purposes of taxation.
assessment
A special assessment is a type of charge or levy that a local government or municipality imposes on property owners for specific projects that benefit their properties or neighborhood. These projects are typically aimed at improving local infrastructure, amenities, or services.
assessment funding and disclosure report
The disclosure report (required in California) covers issues related to a homeowners association's (HOA) financial position, potential special assessments, reserve amounts, deficits, percent funded.
assessor
The official responsible for determining assessed values.
asset
An asset is something of value, encumbered or not, owned by a person, corporation or other entity. Assets are financial (cash or bonds), tangible or intangible, or physical (real or personal property).
asset allocation
Asset allocation is deciding where to invest one's hard earned cash equity capital into different types of assets - stocks, bonds, mutual funds, real estate, 401(k) plan, IRA, etc. A financial adviser can help you, based on your age, risk tolerance, and financial position to properly allocate your retirement assets to hopefully help you grow your wealth over time.
asset management
Asset management involves the management of a client's real estate investments, often by a financial services company like a bank or investment firm.
assignee
Party to whom an assignment of rights is made. (See assignment, assignor)
assignment
The transfer of the right, title and interest in the property of one person (the assignor) to another (the assignee). There are assignments of, among other things, mortgages, sales contracts, contracts for deeds, leases and options. (See assignor, assignee)
assignments of benefits (AOB)
An Assignment of Benefits (AOB) is a legal arrangement in which a policyholder transfers their insurance claim rights or benefits to a third party, typically a service provider, such as a contractor, repair company, or healthcare provider. By signing an AOB, the policyholder authorizes the third party to directly communicate with the insurance company, submit claims, and receive payment for services rendered on behalf of the policyholder.
assignor
The party making an assignment of rights to someone else (the assignee). (See assignment, assignee)
associate broker
A real estate license classification used in some states to describe a person who has qualified as a real estate broker but still works for and is supervised by another broker; also called a broker-salesperson, broker-associate or affiliate broker. (See broker)
associate licensee
A broker or salesperson who is employed by or in an independent contractor relationship with a real estate broker.
assumable mortgage
When a home is sold, the seller may be able to transfer the mortgage to the new buyer. This means the mortgage is assumable. Lenders generally require a credit review of the new borrower and may charge a fee for the assumption. Some mortgages contain a due-on-sale clause, which means that the mortgage may not be transferable to a new buyer. Instead, the lender may make the seller pay the entire balance that is due when they sell the home. An assumable mortgage can help homeowners attract buyers if they sell their home.
assumption
The act of acquiring title to property that has an existing loan and security document (mortgage or deed of trust) and agreeing to be personally liable for the terms and conditions of the promissory note, including payments. (See acceleration clause, due-on-sale clause, novation, subrogation)
assumption clause
A provision in the terms of a loan that allows the buyer to take legal responsibility for the mortgage from the seller.
assumption of risk
When a person "assumes a risk", that person has either expressly or implicitly relieved the defendant of the duty to mitigate or relieve the risk causing the injury from which the cause of action arises. It operates as a complete bar to liability on the theory that upon assumption of the risk, there is no longer a duty of care running from the defendant to the plaintiff; without a duty owed by the defendant, there can be no negligence on his part.
Assured Water Supply Certificate
An assured water supply is a certification from the Director or the Arizona Department of Water Resources (ADWR) that there will be a quality water supply for the next 100-years. The water supply must be physically, legally, and continuously available; and it must meet water quality standards or be of sufficient quality. The proposed water use must be consistent with the current water management plans and long-term goals of the active management area; and the developer who is applying for the certificate must demonstrate the financial capability to construct any necessary water storage, treatment, and delivery systems.
atmosphere
The whole mass of gasses surrounding the Earth; a unit of pressure equal to the pressure of air at sea level; approx. 14.7 pounds per square inch.
ATR
Ability to Repay
atrophy
The decrease in size or the wasting away of a body part or tissue; progressive decline; degeneration.
attachment
The legal process of seizing the real or personal property of a defendant in a lawsuit by levy or judicial order, and holding it in court custody as security for satisfaction of a judgment. The lien is thus created by operation of law, not by private agreement. The plaintiff may recover such property in any action upon a contract, express or implied.
Attorney General
The chief law officer of the federal or state government, who appears for the people in criminal court.
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. (See abstract of title)
attorney-in-fact
A competent and disinterested person who is authorized by another person to act in his or her place. In real estate conveyance transactions, an attorney-in-fact, who has a fiduciary relationship with his or her principal, should be so authorized by way of a written, notarized and recordable instrument called a power of attorney. (See power-of-attorney)
attractive nuisance doctrine
An owner has a duty to reasonably protect children from injury when his or her property is likely to attract children.
atypical financing
For example, if there is going to be seller-financing involved.
auction
Selling property to the highest bidder.
audiotape
Tape used to record sound for subsequent playback.
audit
An audit is a formal, systematic examination of an organization’s financial records, transactions, and accounting practices to ensure accuracy, compliance, and transparency. Audits are typically performed by an independent third party—such as a certified public accountant (CPA) or auditing firm—though internal audits may also be conducted by staff within the organization.
August 1, 2015
Effective date of Final Rule for required use of new forms.
authority
The legal power or right given by a principal and accepted by the agent to act on the principal's behalf in performing specific acts or negotiations.
autocratic leadership
A leadership style characterized by individual control over all decisions. Autocratic leaders typically make choices based on their own ideas with little input from followers.
automated underwriting
Computer systems that permit lenders to expedite the loan approval process and reduce lending costs.
automated valuation model
A computer program that estimates a property's market value based on market, economic, and demographic factors.
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.
average deviation
In statistics, the measure of how far the average individual, or variate, differs from the mean of all variates.
AVID
AVID (Agent's Visual Inspection Disclosure) form is the form developed and provided by the California Association of REALTORS® (CAR). The form is used to as a tool for agents to conduct their required visual inspection. The form provides more space for the agent to write comments than the statutory TDS form provides. The form also divides the property into various rooms (e.g., Living Room, Dining Room, Bedroom #__). Furthermore, the AVID clarifies the limitations of the agent's inspection (e.g., "Agent will not climb onto a roof or into an attic"). NOTE: However, this form is not required by law.
avulsion
The sudden tearing away of land, as by earthquake, flood, volcanic action or the sudden change in the course of a stream.
baby boomers
Persons born between 1946 and 1964. Baby boomers represent nearly 20 percent of the American population and have significant impact on the economy. Baby boomers are often the target of marketing and business plans.
back-end qualification
When qualifying a prospective buyer for financing, the ratio of the borrower's income to monthly debt obligation is a primary consideration. Based on "back-end qualification," the ratio of a prospect's income to their total housing expense plus their long-term debt obligation should not exceed 36%. (See front-end qualification, prequalify)
back-end ratio
The ratio of monthly housing costs (PITI) plus long-term debt service to total monthly income. (See front-end ratio, PITI)
backfill
Backfill is the dirt placed against the foundation of a structure after the concrete used to create the foundation wall has cured and the wood forms in which the concrete was poured have been removed. (See foundation)
backup offer
An offer to buy, submitted to a seller, with the understanding that the seller has already accepted a prior offer; a secondary offer. Sometimes the seller accepts the backup offer contingent on the failure of the sales transaction on the part of the first purchaser within a specified period of time. The seller must be careful how he or she proceeds, however, when the time for the buyer's performance, under the first contract, has expired.
bail bond lien
A real estate owner who is charged with a crime for which he or she must face trial, and may post bail in the form of real estate rather than cash. The execution and recording of such a bail bond creates a specific, statutory, voluntary lien against the owner's real estate. If the accused fails to appear in court, the lien may be enforced by the sheriff or another court officer. (See lien)
bait and switch
An illegal sales tactic whereby a seller advertises a product with a low price with the intention of persuading customers to purchase a more expensive product. When a seller uses this tactic, they frequently tell the customer the original product is sold out or no longer available and push the customer to purchase a costlier product. This tactic can be considered false advertising if the seller is not actually providing the original product. In general, no legal action can be taken if the item is available but the seller strongly encourages the customer to purchase the more expensive item.
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. (See appraisal)
balance of payments
A record of all transactions by the citizens of one country with another country or countries. (See balance of trade)
balance of payments
Also known as balance of international payments. Balance of payments summarizes a national economy's transactions with the rest of the world for a specified time period. It encompasses all transactions involving goods, services and income; financial claims on and liabilities to the rest of the world; and transfers such as gifts. The balance of payments classifies these transactions in two accounts: the current account and the capital account. The current account includes transactions in goods, services, investment income and current transfers, while the capital account mainly includes transactions in financial instruments. Balance of payments transactions and international investment position together constitute an economy's set of international accounts.
balance of trade
A record of the goods and services transferred between one country and another country or countries. An unfavorable balance of trade means imports exceed exports. A favorable balance of trade means exports exceed imports. (See balance of payments)
balance sheet
A summary of the assets, liabilities and ownership equity of a sole proprietorship, a business partnership or a company, as of a specific date.
balanced trust
A "combination trust" is referred to as a "balanced trust" in California. (See combination trust)
balloon frame
The balloon frame is a house built on a frame of light lumber, held together with nails. Heavy posts are not used. The wallboard sheathing on the frame provides strength. The term balloon frame derives from the fact that such light frame homes seem to be constructed overnight; inflated like balloons.
balloon note
A loan in which a borrower makes only interest payments for a set period of time. At the end of the term, the borrower repays the entire principal in one payment. A balloon loan may be useful when the borrower expects interest rates to be low at the end of the term, allowing him or her to refinance the loan. There is often a risk of default because not all borrowers have the cash to repay the loan in one payment.
balloon payment
Under an installment loan agreement, a final payment that is substantially larger than the previous installment payments and repays the debt in full; the remaining balance that is due at maturity (stop date) of a note or obligation. (See amortization, fully amortized, stop date)
balloon payment small lender
While a loan with a balloon payment generally cannot be a Qualified Mortgage, a small lender can make a loan with a balloon payment that is a Qualified Mortgage in certain circumstances. See Fannie Mae Small Lenders List
baluster
Any of the vertical supports for a stair, balcony or railing. (See construction terms)
band of investment method
A method of developing a discount rate based on (1) the rate of mortgage interest available, (2) the rate of return required on equity, and (3) the debt and equity share in the property. A variation of this method is used to compute an overall capitalization rate.
bank (MA)
Bank means any association or corporation chartered by the commonwealth under the provisions of M.G.L. c. 168, 170, 171, or 172, or any individuals, association, partnership, or corporation incorporated or doing a banking business in the commonwealth, subject to the supervision of the commissioner.
bank fraud
Bank fraud is the illegal practice of knowingly executing or attempting to execute a scheme to defraud a bank or other financial institution or to obtain property owned by or under the control of a bank or other financial institution by means of false or fraudulent pretenses, representations, or promises.
bank reconciliation
A scheduled task to balance the debits and credits of a recordkeeping system with figures shown on a back statement.
Bank Secrecy Act
The Bank Secrecy Act of 1970 (BSA), also known as the Currency and Foreign Transactions Reporting Act, is a U.S. law requiring financial institutions in the United States to assist U.S. government agencies to detect and prevent money laundering. (See Suspicious Activity Report)
bank-owned property
A bank asset property that has been taken back by a lender through the legal process of foreclosure detailed in a borrower's mortgage.
banker's rule
Using a 360-day year for prorations.
bankruptcy
A condition of financial insolvency in which a person's liabilities exceed assets and the person is unable to pay current debts.
bankruptcy score
A scoring system to indicate risk of borrower default. (See bankruptcy)
Bar Treaty
An agreement no longer in effect that established certain documents the escrow holder may prepare and those it may not as they relate to legal advice. The State Bar of California revoked the agreement in 1979.
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 flood elevation
Base Flood Elevation (BFE) is the height that floodwaters are expected to reach during a base flood, which is defined as a flood having a 1% chance of occurring in any given year (also called the 100-year flood). In simple terms, the BFE represents the estimated level floodwaters could rise to during a major flood event.
base rent
Base rent is the minimum fixed amount that a tenant agrees to pay a landlord for the use of a leased property, excluding any additional costs such as utilities, maintenance, or operating expenses. It is typically expressed as a monthly or annual rate and forms the primary financial obligation in a lease agreement. Base rent does not include variable expenses, which may be billed separately or incorporated into the lease as additional rent.
base value
For property tax assessment purposes, the full cash value of a parcel of real estate as of February 28, 1975, or the date of a subsequent sale or other reassessment event.
baseline
Baselines are one of a set of imaginary lines running east and west used by surveyors for reference in locating and describing land under the government survey method of property description. (See meridians, rectangular (government) survey system)
basic competency skills
Reading, writing, listening, speaking, mathematics.
basic form homeowner's policy
The most common homeowner's policy is called a basic form. It provides property coverage against fire and lightning; glass breakage; windstorm and hail; explosion; riot and civil commotion; damage by aircraft; damage from vehicles; damage from smoke; vandalism and malicious mischief; theft; and loss of property removed from the premises when it is endangered by fire or other perils. (See homeowner's insurance policy)
basis
The dollar amount that the Internal Revenue Service attributes to an asset for purposes of determining annual depreciation or cost recovery, and gain or loss in the sale of the asset. The determination of basis is of fundamental importance in tax aspects of real estate investment. All property has a basis. If 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, reduced by any cost recovery depreciation actually taken or allowable. The basis is also reduced by any untaxed gain "carried over" to the new property in cases where the new property is a replacement of a former residence or is acquired through a like-kind exchange or through an involuntary conversion. This new basis is called the property's adjusted basis. (See adjusted basis, depreciable basis, original basis)
basis point
One hundredth of a percentage point (0.01%). Basis points are often used to measure changes in or differences between yields on fixed income securities, since these often change by very small amounts.
bearing wall
A bearing wall is a main or supporting wall referred to as a load-bearing wall, usually supporting a roof above. It is usually of stronger construction than other members and is usually left alone when remodeling. It is possible for a bearing wall to be built in a variety of angles to a door. (See construction terms)
bedbug (AZ definition)
"Bedbugs" means any insect in the genus cimex and its eggs.
Before and after method
A method of determining just compensation when a portion of an owner's property is seized for public use. The value of the owner's remaining property after the taking is subtracted from the value of the whole parcel before the taking. The result is the total amount of compensation due to the owner.
before-tax cash flow
The result when the annual debt service is subtracted from the net operating income. (See annual debt service, net operating income)
behavior
The manner of conducting oneself; anything that an organism does involving action and response to stimulation; the response of individual, group, or species to its environment.
behavior-based questions
Questions that require you to describe a past experience in a work situation, e.g. in problem solving, decision making, communication etc. The reason employers prefer this questioning is that your past behavior is an indicator of future success.
bell curve
The shape of a graph line indicating the normal distribution of values; if the data are perfectly symmetrical, the mean, median, and mode are all equal and are shown at the highest point of the curve.
benchmark
1. A permanent reference mark or point established for use by surveyors in measuring differences in elevation. 2. A bench mark is an identification symbol on stone, metal, or other durable matter permanently fixed to the ground from which differences of elevation are measured, such as tidal observations or topographical surveys.
benchmark rate
Benchmark rate means the interest rate that the borrower can reduce by paying bona fide discount points. This rate may not exceed the weekly average yield of United States Treasury securities having a maturity of five years, on the 15th day of the month immediately preceding the month in which the loan was made, plus four percentage points.
beneficiary
A person who receives benefits from the gifts or acts of another. With a trust, the trustee holds some form of title (either naked title or actual title), but the beneficiary enjoys the benefits of ownership.
beneficiary
The person to whom the trust funds belong, such as the owner of rental property.
beneficiary statement
The escrow agent obtains a beneficiary statement when an existing loan is to be paid or assumed by a buyer. The statement includes the balance due on the loan so the buyer receives the proper amount of credit.
Beneficiary under a deed of trust
A Deed of Trust is a three party document prepared, signed and recorded to secure repayment of a loan. The Borrower (property owner) is named as Trustor, the Lender is called the Beneficiary, and a party that holds the power of sale contained in the deed of trust is the Trustee.
benefit assessment
Amount owed by owners of property that is enhanced by the construction or renovation of improvements.
bequest
A bequest is the transfer of property (particularly personal property) by will.
best-faith estimate
The acquisition cost is the purchase price plus a "best-faith estimate" of all settlement costs. (See acquisition cost)
BIF
Bank Insurance Fund
bilateral contract
A contract in which each party promises to perform an act in exchange for the other party's promise to perform. The usual real estate contract is an example of a bilateral contract in which the buyer and seller exchange reciprocal promises respectively to buy and sell the property. If one party refuses to honor his or her promise and the other party is ready to perform, the nonperforming party is said to be in default.
bilateral instructions
Escrow instructions prepared for both parties and under which both parties are bound. (See final escrow instructions, joint escrow instructions, lender's escrow instructions, escrow, supplemental instructions)
bill of sale
A written agreement by which one person sells, assigns or transfers to another his or her right to, or interest in, personal property. A bill of sale is sometimes used by a seller of real estate to evidence the transfer of personal property, such as when the owner of a store sells the building and includes the store equipment and trade fixtures.
billing information
Any data that enables any person to access a customer's or donor's account, such as a credit card, checking, savings, share or similar account, utility bill, mortgage loan account, or debit card.
bimetallism
A monetary system in which a government recognizes coins composed of gold or silver as legal tender. The bimetallism or the bimetallic standard backs a unit of currency to a fixed ratio of gold and/or silver.
binder
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. (See earnest money)
binder policy
A type of title insurance policy offered by some title companies which allows for a refund of the basic title insurance rate if the property is sold within a specified period of time. (See title insurance)
binding contract
Executed with proper legal authority, and contains the elements of a valid legal agreement; "a binding contract."
biography/professional brief (bio)
In a one page brief, the "bio" documents credentials and experience to support the applicant's expertise. In some instances, a paragraph is all that is needed for a bio.
bird dogs
See centers of influence.
bit
Short for "binary digit." (See bits per second [bps])
bits per second
A common measure of data speed for computer modems (See bit)
biweekly loan
A loan with twice-monthly payments to match a borrower's payroll schedule.
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.
blanket trust deed
A trust deed secured by several properties or a number of lots. A blanket mortgage is often used to secure construction financing for proposed subdivisions or condominium development projects. The developer normally seeks to have a "partial release" clause inserted in the mortgage so that he or she can obtain a release from the blanket loan for each lot as it is sold, according to a specified release schedule. (See trust deed)
blended delivery
A mixture of two or more delivery methods, such as online and workbook.
blended rate
An interest rate for a newly financed loan that is higher than the existing rate but lower than the current market rate.
blends
A blended loan is a type of loan that combines multiple loans into a single, new loan with a weighted average interest rate.
blind advertising
Failure by a licensee to indicate license status in any advertising of services for which a license is required. Licensees in California are prohibited from using blind ads.
blockbusting/panic selling
An illegal and discriminatory practice whereby one person induces another to enter into a real estate transaction from which the first person may benefit financially by representing that a change may occur in the neighborhood with respect to race, sex, religion, color, handicap famial status or ancestry of the occupants. A change possibly resulting in the lowering of the property values, a decline in the quality of schools or an increase in the crime rate. Also called panic selling or panic peddling.
blog
A web log (blog) is an easy to set up and use content management tool that is usually free. When you blog, you are instantly adding (publishing) new content, like your thoughts, ideas, links, or whatever to your site via a Web interface.
blog
A personal web page on which individuals record opinions, links to other sites, etc. on a regular basis.
blood
The fluid that circulates in the heart, arteries, and veins carrying nourishment and oxygen to and bringing waste products and carbon dioxide from all parts of the body. (See circulatory system)
blue-sky provision
Requiring full disclosure of all risks in a limited partnership solicitation under the Uniform Partnership Act. (See Uniform Partnership Act)
board
The board is the governing body of the Pennsylvania Housing Finance Agency.
board foot
A board foot is a measure of lumber one foot square by one inch thick: 12" x 1" x 12" = 144 cubic inches. There is no standard shape. For example, a piece of wood 6" x 6" x 4" contains one board foot.
Board of Mortgage Loan Originators
The Board of Mortgage Loan Originators oversees mortgage loan originators, independent contractor loan processors and underwriters, and mortgage companies.
BOD meeting minutes and notes
Boards of directors (BODs) generally keep notes of what is discussed at their regular meetings. These notes can be reviewed by any unit owner and should be reviewed extensively by any potential unit buyer.
boilerplate loan contract
A boilerplate loan contract, often referred to as a "standard" or "template" loan agreement, is a pre-written, standardized contract used by financial institutions and lenders to outline the terms and conditions of a loan. It's called "boilerplate" because many of its provisions are generic and not customized to the specific borrower or loan transaction. These agreements provide a consistent framework for various types of loans and can help streamline the lending process.
BOMA building class definitions
The Building Owners and Managers Association (BOMA) building class definitions categorize office buildings into three classes: Class A, Class B, and Class C. Class A buildings represent the highest quality in terms of construction, location, and amenities, often commanding the highest rents and attracting premium tenants. Class B buildings are slightly older with good quality and management, while Class C buildings are older, located in less desirable areas, and offer fewer amenities and lower rents.
bona fide
In good faith, honestly, openly, and sincerely and without deceit or fraud. In an attitude of trust and confidence, without notice of fraud.
Bona fide loan discount points
Bona fide loan discount points are loan discount points knowingly paid by the borrower funded through any source, for the purpose of reducing, and which in fact result in a bona fide reduction of, the interest rate or time-price differential applicable to the loan, provided that the amount of the interest rate reduction purchased by the discount points is reasonably consistent with established industry norms and practices for secondary mortgage market transactions.
bona fide purchaser or encumbrancer for value
A bona fide purchaser or encumbrancer for value is anyone acting in good faith who purchases the residential real property from the equity purchaser for valuable consideration or provides the equity purchaser with a mortgage or provides a subsequent bona fide purchaser with a mortgage, provided that they had no notice of the equity seller's continuing right to, or equity in, the property prior to the acquisition of title or encumbrance, or of any violation of this section by the equity purchaser as related to the subject property.
bona fide tenant
A lease or tenancy is bona fide if the tenant is not the mortgagor or the parent, spouse, or child of the mortgagor, the lease or tenancy is the result of an arms-length transaction, and the lease or tenancy requires rent that is not substantially lower than fair market rent or that is reduced or subsidized due to a Federal, State, or local subsidy.
bond
1. A debt instrument; an obligation to pay; a security issued by a corporation. 2. A written promise that accopmpanies a mortgage and is evidence of the debt secured by the mortgage. 3. An interest-bearing certificate issued by a government to finance public projects. (See security)
bonds and notes
Bonds and notes are the bonds and notes that the agency is authorized to issue.
bookmarks/favorites
A feature of web browsers that when activated from the browser controls will save and display favorite websites for future reference. (See browser)
boot
Money or other property that is not like-kind, which is given to make up any difference in value or equity between exchanged properties. Boot may be in the form of cash, notes, gems, the market value of an asset such as a mortgage, land contract, personal property, goodwill, a service or a patent offered in an exchange. The taxable gain in the like-kind exchange is recognized immediately to the extent of boot, whereas, other gain from the exchange may be deferred until subsequent transfer. (See exchange, like-kind)
booting
Starting a computer.
borrower
A borrower is a person obligated to repay a mortgage loan, including a coborrower, cosignor, or guarantor.
boycott
Individuals or businesses acting as a group withdraw from commercial relations with another organization, as a punishment or protest.
bracing
Use of one or more construction methods, such as plywood wall sheathing, to enable a structure to withstand the pressures caused by high winds and earth movement. Information on bracing systems can be found at the Web site of the Engineered Wood Association.
www.wallbracing.orgbrainstorming
Brainstorming is a way of solving a problem by holding a spontaneous group discussion.
branch manager
A branch manager is the licensed loan originator in charge of, and responsible for, the operation of the branch office of a mortgage broker or mortgage lender.
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.
branch office
A branch office is a location other than a mortgage broker's or mortgage lender's principal place of business where the office's address appears on business cards, stationery, or advertising used by the licensee in connection with mortgage-related business; the licensee's name, advertising or promotional materials, or signage suggests that mortgage loans are originated, negotiated, funded, or serviced; or mortgage loans are originated, negotiated, funded, or serviced by a licensee.
brand
A brand is a type of product manufactured by a particular company under a particular name.
breach letter
A breach letter is a formal letter sent by a lender to a borrower in an attempt to avoid foreclosure action. The lender hopes the letter will encourage the borrower to contact them to work out a loan modification.
breach of contract
Violation of any of the terms or conditions of a contract without legal excuse; default; nonperformance. The nonbreaching party can usually seek one of three alternative remedies upon a material breach of the contract: rescission of the contract, action for money damages or an action for specific performance.
break-even analysis
A break-even analysis in the context of rental property is a financial calculation used to determine the point at which the property begins to generate profit, covering all associated costs. This analysis is crucial for real estate investors as it helps them understand the financial viability of a rental property.
break-even point
In income property, the figure at which rental income is equal to expenses and debt service.
breaker
A switch-like device in electrical panel boxes used to keep the electrical current from exceeding the recommended load for the wire size connected to the breaker.
breaker panel
A large rectangular shaped electrical box used to distribute electricity throughout a house after passing through protective breakers located within the box. (See breaker)
breakeven ratio
The ratio of operating expenses plus the property's annual debt service to potential gross income.
bridge loan
A short-term loan made to cover the period between the termination of one loan, such as an interim construction loan, and the beginning of another loan, such as a perminent takeout loan. (See interim financing, swing loan, takeout)
British Thermal Unit (B.T.U.)
One British Thermal Unit (B.T.U.) is the amount of heat required to raise one pound of water one degree Fahrenheit in temperature.
broad-form homeowner's policy
Covers falling objects; damage due to the weight of ice, snow or sleet; collapse of all or part of the building; bursting, cracking, burning or bulging of a steam or hot water heating system or of appliances used to heat water; accidental discharge, leakage or overflow of water or steam from within a plumbing, a heating or an air-conditioning system; freezing of plumbing, heating and air-conditioning systems and domestic appliances; and injury to electrical appliances, devices, fixtures and wiring from short circuits or other accidentally generated currents.
broker
Broker means any person who, for compensation, solicits, processes, places, or negotiates home mortgage loans for others or who closes home mortgage loans that may be in the person's own name with the funds provided by others, and which loans are thereafter assigned to the person providing the funding of the loans. Broker may not include a person who is an attorney providing legal services in association with the closing of a home mortgage loan who is not also funding the home loan and is not an affiliate of the lender.
broker cooperation
Working with outside licensed real estate brokers who have prospective tenants in exchange for a finder's fee or commission split.
broker of record
The licensed real estate broker whose license is connected with the brokerage to be responsible and liable for all licensees within the brokerage.
broker protection clause
A broker protection clause provides that a broker is still entitled to a commission for a set period of time after the listing has expired if the property is sold to a prospect, who was introduced to the property by the broker, during the period of the listing.
broker's price opinion (BPO)
A broker's price opinion (BPO) is an estimate of property value that is not an appraisal but is developed by a real estate broker based on comparable sales in the area.
broker-officer
A licensed broker who is an officer of a brokerage that is set up as a corporation and who is designated as the broker responsible for supervision of licensed employees of the brokerage.
brokerage
The bringing together of parties interested in making a real estate transaction. The business of a broker is acting as a third party agent to a transaction. (See broker)
brownfields
Economically depressed urban areas suffering from real or perceived hazardous material contamination.
browser
A software program that displays web pages. Examples of web browsers are Internet Explorer, Netscape, Firefox, Safari.
budget loan
A loan with payments set up to cover taxes and insurance in addition to interest and principal reductions.
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).
build-out
A tenant build-out, also known as tenant improvement (TI), refers to the customization or renovation of a commercial space to meet the specific needs and preferences of a new tenant. This process involves modifying the interior of the leased space, which may include changes to walls, floors, ceilings, lighting, and HVAC systems. The buildout is typically negotiated between the landlord and tenant, with costs and responsibilities outlined in the lease agreement.
build-up rate
The discount or interest rate used in the selection of the capitalization rate for an investment property. (See capitalization rate)
building code
An ordinance that specifies minimum standards of construction for buildings to protect public health and safety. (See construction terms, Uniform Building Code)
building inspection
An overall inspection of a home or building performed by a qualified contractor or inspector. The inspection usually covers all major systems including foundation, plumbing, electrical, roof, heating and air conditioning.
Building Owners and Managers Association (BOMA)
A national organization of more than 4,000 professionals in the highrise/office building industry, with 80 local BOMA associations. The Building Owners and Managers Institute (BOMI) is the related educational institute that provides professional training in all aspects of building management and operations via courses in individual study leading to professional certification as a Real Property Administrator (RPA). The seven required courses are Engineering and Building Structures, Real Property Maintenance, Risk Management and Insurance, Accounting and Financial Concepts, Law, Finance and Management Concepts.
Building Owners and Managers Association Websitebuilding permit
Written governmental permission for the construction, alteration or demolition of an improvement, showing compliance with building codes and zoning ordinances. (See construction terms)
building residual technique
A method of capitalization using net income remaining to a building after interest on the land value has been deducted.
building wealth
The process of increasing over time one's net holdings of all assets, real estate, cash, stocks, bonds, over and above any additional debt one incurs in the process of building net asset holdings. Many times real estate does not build wealth, it can decrease wealth too, and often does diminish one's wealth. In most cases it takes decades to build one's wealth, particularly on real estate investments.
building-employment density
Building-employment density refers to the number of employees working within a given amount of building space, typically measured in employees per square foot or per square meter. This metric helps assess how efficiently a building's space is being utilized for workforce accommodation. High building-employment density indicates a greater number of employees in a smaller space, which can impact factors such as productivity, comfort, and the need for supporting infrastructure and services.
Building-related illness (BRI)
Building-related illness (BRI) refers to diagnosable diseases or conditions directly linked to environmental issues within a building. Unlike sick building syndrome, which involves nonspecific symptoms without a clear cause, BRI includes identifiable illnesses such as Legionnaires' disease, hypersensitivity pneumonitis, and asthma. These illnesses often result from exposure to contaminants like mold, bacteria, or chemicals present in the indoor environment and typically require medical intervention for diagnosis and treatment.
built-up rate
The built-up rate is a term used to describe the ratio of the total built-up area of a building to the total area of the plot on which it stands. This rate is important for understanding how much of a plot of land is occupied by buildings, including all covered areas like the main building, accessory buildings, and any extensions. In real estate, the built-up rate helps determine the density of development on a property. The built-up rate is similar but not identical to terms like Floor Area Ratio (FAR) or Floor Space Index (FSI), which relate to the ratio of the total floor area of buildings on a certain location to the size of the land of that location. These metrics are used by urban planners and developers to shape the character and use of spaces in urban environments.
bulk sale
Any sale of a large quantity of materials, merchandise, supplies, or other inventory that is not in the seller's ordinary course of business. Also called bulk transfer. Regulated by the Uniform Commercial Code that is designed to prevent a seller from making such a sale, and then spending or disappearing with the proceeds without first paying his creditors.
Bulk Sales Act
An act that requires the recording and publication of a sale that is not in the normal course of business. The act is intended to give notice to the creditors of the seller so they can protect their interests.
bulk sales transfer
Any transfer in bulk (and not a transfer in the ordinary course of the seller's business) of a major part of the materials, inventory or supplies of an enterprise. The Uniform Commercial Code (UCC) regulates bulk transfers to deal with such commercial frauds as a merchant selling out stock, pocketing the proceeds and leaving creditors unpaid. The UCC requires the buyer of the goods to demand that the seller provide a schedule of all the property and a list of all creditors and that the buyer give notice to creditors of the pending sale. Failure to comply with UCC means that the transfer or sale is ineffective in respect to the claims of any creditor of the seller. Bulk transfers usually become relevant upon the liquidation or sale of a business.
Under state law, a bulk sale must be reported by the seller to the state tax authorities, and the purchaser must withhold payment until the seller's tax clearance is received. If the tax clearance is not made, the purchaser may become liable for any unpaid taxes that are a lien against the items sold. (See Uniform Commercial Code)
bulk transfer of goods
Bulk transfer of goods is any transfer in bulk of a substantial part of the materials, supplies, merchandise, equipment or other inventory of an applicable enterprise that is not in the ordinary course of the transferor's business.
bulk zoning
Zoning for density. Regulates height restrictions, open-space requirements, parking and setback. (See zoning)
bullet loan
A loan that includes a call date earlier than its normal amortization period; also called a renegotiable rate loan or a rollover loan.
bundle of 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.
burden of proof
The obligation to prove the truth or falsity of a fact.
Business and Professions Code
What is commonly referred to as Real Estate Law is actually Division 4 of the California Business and Professions Code.
State of CA Legal Information Website
business cycle
The wavelike movement of increasing and decreasing economic prosperity consisting of four phases: expansion, recession, contraction and revival. (See expansion, peak, recession, trough)
business day
A business day is any calendar day except Sunday or the public holidays.
business interruption insurance
A form of insurance that provides protection from the loss of business income resulting from an interruption of business operations due to fire, natural disaster or other covered event. Business interruption insurance is not sold as a separate policy, but added to a property/casualty or comprehensive policy.
business opportunity
Any type of business that is for sale (also called business brokerage). The sale or lease of the business and goodwill of an existing business, enterprise or opportunity, including a sale of all or substantially all of the assets or stock of a corporation, or assets of partnership or sole proprietorship.
business plan
A business plan is a written document describing the nature of a business, the sales and marketing strategy, financing, and projected profit and loss statement. The time spent making a business plan thorough and accurate, and keeping it up-to-date, is an investment that pays big dividends in the long term.
buydown
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
A broker who represents the buyer in a fiduciary capacity. Some buyer's brokers practice single agency, in which they represent either buyers or sellers, but never both in the same transaction. Some buyer's brokers represent only buyers and refer prospective sellers to other brokers. The broker is paid by the buyer, or through the seller or listing broker at closing, provided all parties consent.
Buyer Inspection Notice and Seller
The Buyer Inspection Notice and Seller's response is not a part of the purchase contract. It is simply a notice given from the Buyer to the Seller that there are items disapproved. The items disapproved are simply listed. The Seller is not obligated to remedy the items, but if the Seller does not agree to remedy the items disapproved, the Buyer has a right to rescind the purchase contract.
buyer listing
An agreement where a buyer agrees to pay a commission if a broker locates a property that the buyer purchases.
buyer representation
Buyer representation describes the relationship between the real estate sales professional performing services for a buyer. The sales professional places the interests of the buyer above all others in the transaction.
buyer's agent
A residential real estate broker or salesperson who represents the prospective purchaser in a transaction. The buyer's agent owes the buyer/principal the common-law or statutory agency duties. (See seller's agent)
Real Estate Buyer's Agent Council OnlineNational Association of Exclusive Buyer Agentsbuyer's market
A real estate marketplace where there are more sellers than buyers.
buyer's remorse
Buyers of expensive items, like a home or automobile, sometimes regret their decision. They wonder if they paid too much or made the wrong selection. This fear of having made a serious mistake is referred to as "buyer's remorse."
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. (See fiduciary)
buying motives
Ownership of real estate satisfies certain basic human needs. These needs are what motivate a person to purchase real property. They include: comfort and convenience, desire for profit, pride of ownership, and security.
buying on contract
A type of contract used in connection with the sale of real property where the seller retains legal title to the property until some future date, usually when the full purchase price has been paid. Referred to as one of four terms, all meaning much the same thing: agreement to convey, contract for deed, contract of sale, orinstallment sales contract.
buying signals
Words, actions or facial expressions that signal a prospect's readiness to buy.
bylaws/CC&Rs
These are the rules that govern a homeowners association (HOA). They cover everything from parking issues to when financials need to be prepared. They can be amended over time subject to the BOD and community members. All community members must live within these rules and the BOD interprets and enforces them.
byte
8 bits (See bit, megabyte)
CAL-FIRPTA
California's version of the federal FIRPTA. It is a tax act which became effective in 1988 and was subsequently amended in September, 2002 to become a withholding tax for residents and non-residents who sell California real estate. Assembly Bill 2065 requires that all sales closing after December 31, 2002 in California withhold 3 1/3% of the sales price for certain California real property transactions. (See FIRPTA)
Cal-Vet
A program to help eligible California Veterans finance the purchase of farms and ranches within the state. Information can be found at CA Department of Veterans Affairs and Cal-Vet Loan Programs
CalHFA loan program
The California Housing Finance Agency provides low down payment fixed-rate financing at below-market interest rates.
California Attorney General
The Attorney General represents the people of California in civil and criminal matters before trial courts, appellate courts and the supreme courts of California and the United States. The Attorney General also serves as legal counsel to state officers and, with few exceptions, to state agencies, boards and commissions.
The Attorney General assists district attorneys, local law enforcement, and federal and international criminal justice agencies in the administration of justice. To support California's law enforcement community, the Attorney General coordinates statewide narcotics enforcement, participates in criminal investigations and provides forensic science services, identification and information services and telecommunication support.
Under the state Constitution, the Attorney General is elected to a four-year term in the same statewide election as the Governor, Lieutenant Governor, Controller, Secretary of State, Treasurer, Superintendent of Public Instruction and Insurance Commissioner. In 1990, voters imposed a two-term limit on these statewide offices. Information can be found at CAG Homepage.
California Bureau of Real Estate Appraisers (BREA)
California office, part of the California State Transportation Agency, that licenses and regulates Real Estate Appraisers. Information can be found at www.brea.ca.gov.
California Department of Fair Employment and Housing
California agency that enforces anti-discrimination laws. Information can be found at www.dfeh.ca.gov
California Department of Financial Protection & Innovation
California agency that regulates licensees and industries formerly under the control of the Department of Corporations and Department of Financial Institutions. More information is available at dfpi.ca.gov/.
California Department of Insurance
The California agency that regulates insurers. Information can be found at www.insurance.ca.gov
California Department of Public Health
California agency that regulates construction activities affecting the water supply and other public health issues; formerly part of the California Department of Health Services. The California agency that regulates insurers. Information can be found at www.cdph.ca.gov
California Department of Real Estate (DRE)
California agency that administers the Real Estate Law, including the licensing of real estate brokers and salespeople.
California Department of Veterans Affairs
Provides California veterans and their families with aid and assistance in presenting their claims for veterans' benefits under the laws of the United States; to provide them with beneficial opportunities through direct low-cost loans to acquire farms and homes; and to provide the state's aged or disabled veterans with rehabilitative, residential, and medical care and services in a home-like environment at the California Veterans Homes. Information can be found at CA Department of Veterans Affairs
California Environmental Quality Act
The Act allows local governments to require environmental impact reports for private or government projects that may have a significant impact on the environment. (See environmental impact report, National Environmental Policy Act)
California finance lender
Licensee under the California Finance Lenders Law who is in the business of making consumer loans or commercial loans in which personal property may be used as collateral. Information can be found at dfpi.ca.gov/california-financing-law/
California Finance Lenders Law
Allows licensed California lenders to make consumer or commercial loans in which personal property may be used as collateral.
California Foreclosure Reduction Act
Effective January 1, 2013, revised procedure for non-judicial foreclosures; also known as the California Homeowner Bill of Rights.
California Franchise Tax Board
California department that collects state personal income taxes and bank and corporation taxes. (See franchise tax)
California good funds law
The California state law that specifies when funds deposited into escrow may be disbursed. (See escrow holder)
California Health and Safety Code
California Health and Safety Code (HSC) Section 18035(a) requires that an escrow account be opened for dealer sales and leases of new or used manufactured homes subject to registration by HCD.
California Homeowner Bill of Rights
(See California Foreclosure Reduction Act)
California Housing Financial Discrimination Act of 1977
Also known as the Holden Act. A California act prohibiting discrimination by a lender for any reason unrelated to the creditworthiness of the loan applicant.
California property tax chart
The chart used by escrow holders which shows the property taxes due from the buyer and seller respectively based on the escrow closing month.
California Residential Mortgage Lending Act
An act administered by the Commissioner of Corporations which provides licensing authorizing mortgage lending and brokering. Information can be found at dfpi.ca.gov/california-residential-mortgage-lending/
California Solar Initiative (CSI)
California Solar Initiative State law effective January 1, 2008, that requires municipal utilities to offer a solar incentive program to customers.
California withholding
California withholding requires real estate transferees (buyers) to withhold a certain portion of the sales price paid for specified California real property from funds that would otherwise be paid to sellers. According to the law, the amount withheld must be held in trust for the State of California. Originally implemented in 1988, California tax withholding was amended in 2002 with provisions that became effective for real property transfers that occurred on or after January 1, 2003.
callable debt
A debt security whose issuer has the right to redeem the security at a specified price on or after a specified date, but prior to its stated final maturity.
caller identification service
A service that allows a telephone subscriber to have the telephone number, and, where available, name of the calling party transmitted contemporaneously with the telephone call, and displayed on a device in or connected to the subscriber's telephone.
canceling escrow
Providing written notification that an escrow is to be terminated; must be done by mutual consent of all parties to the escrow and in accordance with governing agreements. (See escrow)
candidate profile
A candidate profile defines the essential or minimum qualifications (knowledge and skill sets) to perform a job, and secondary qualifications that would be helpful. The more thought given to whom the company needs to hire, the more efficiently management can screen candidates. Developing a candidate profile is a way to convert desired qualifications to a hiring guide.
canons of business ethics
Common law rules that govern the practice of business.
capacity
The amount of data that can be stored on a computer disk.
capacity of parties
The legal ability of people or organizations to enter into a valid contract. A person entering into a contract will have full, limited or no capacity to contract.
No capacity to contract: The inability of a person to enter into a valid contract under any circumstances. Such inability can arise when a person has been adjudicated insane or is an officer of a corporation who is not authorized to execute a contract in behalf of a corporation.
Cape Cod
One-and-a-half story house with sufficient head room in the second floor to provide livable space.
capital
Capital is defined as the amount of common stock outstanding and unimpaired, plus the amount of perpetual preferred stock outstanding and unimpaired.
capital asset
A long-term asset that is not bought or sold in the regular course of business.
capital expenditure
Capital expenditure, often referred to as CapEx, is money spent by a business or organization to acquire, upgrade, and maintain physical assets such as property, buildings, technology, or equipment. This type of expenditure is typically intended for investment in assets that will have long-term benefits and are not consumed or fully used up within a single accounting year.
capital gain
Profit earned from the sale of an asset, where the sales price was greater than the adjusted basis. (See adjusted basis, deferred capital gain, excluded capital gain, realized capital gain (loss), recognized capital gain)
capital gains exemption
The capital gains exemption applies when a primary residence is sold. Married people can make up to $500,000 in profit, and not pay capital gains. Individuals can realize up to $250,000 in profit and not pay capital gains. The property owner must have lived in the property for two of the last five years.
capital improvement
A structure or other addition to property or an addition or alteration to an existing improvement that adds value to the property, substantially increases its useful life, or makes the property suitable for a new use.
capital improvements
The addition of a permanent structural improvement or the restoration of some aspect of a property that will either enhance the property's overall value or increases its useful life. Capital improvements can be made by both individual homeowners and large-scale property owners (such as cities, counties, states or land developers).
capital loss
Loss sustained from the sale of an asset, where the sales price is less than the adjusted book basis. (See adjusted basis)
capital market
The market for securities, including stocks and bonds, that allows companies and governments to raise funds.
capital recapture
The return of an investment; the right of the investor to get back the amount invested at the end of the term of ownership or over the productive life of the improvements.
capitalism
An economic system where private individuals and/or organizations make the majority of decisions about the production and distribution of goods and services. Also called a 'market economy.'
capitalization
A mathematical process for converting net income into an indication of value, commonly used in the income approach to value. The net income of the property is divided by an appropriate (capitalization) rate of return to give the indicated value. (Income ÷ Rate = Value)
capitalization rate
The rate of return a property will produce on the owner's investment.
capitalized value method
A method of computing depreciation by determining loss in rental value attributable to a depreciated item and applying a gross rent multiplier to that figure. (See gross rent multiplier)
capping
The process at of laying two to four feet of soil over the top of a landfill site and then planting vegetation to prevent erosion and enhance the landfill's aesthetic value. (See landfill)
caps
Yearly and/or life-of-loan limitations on the amount of variation allowed when adjusting interest on variable-rate loans. (See adjustable rate mortgage (ARM), rate cap)
caravan
A group tour by a real estate office's sales agents to view listed properties. (See agent property evaluation)
carbohydrate
Any of various neutral compounds of carbon, hydrogen, and oxygen (as sugars, starches, celluloses) most of which are formed by green plants and which constitute a major class of animal foods. Carbohydrates, along with proteins and lipids constitute the principal structural components of living cells. (See lipids, protein)
carbon monoxide (CO)
A colorless, odorless gas that occurs as a byproduct of burning such fuels as wood, oil and natural gas due to incomplete combustion. For further information, see the Fact Sheet on Carbon Monoxide published by the National Safety Council on Carbon Monoxide.
carbon monoxide device
A device that is designed to detect carbon monoxide and produce a distinct, audible alarm. It can be a battery-powered device, a plug-in device with battery backup, or a device installed as recommended by Standard 720 of the National Fire Protection Association that is either wired into the alternating current power line of the dwelling unit with a secondary battery backup or connected to a system via a panel. For Further Information, see: Carbon Monoxide Poisoning Prevention Act
carcinogen
A cancer producing substance. (See asbestos, radon)
care
The agent must exercise a reasonable degree of care while transacting the business entrusted to him or her by the principal. The principal expects the agent's skill and expertise in real estate matters to be superior to that of the average person. The most fundamental way in which the agent exercises care is to use that skill and knowledge on the principal's behalf. The agent should know all facts pertinent to the principal's affairs, such as the physical characteristics of the property being transferred and the type of financing being used. (See agent, law of agency, principal)
career assessment instruments
Tests and inventories that help clients learn more about their interests, values, and skills so that they can make well-informed decisions about their future.
career coaches
Career coaches provide an interactive process of exploring work-related issues-leading to effective action. The coach acts as both a catalyst and facilitator of individual and, in turn, organizational development and transformation. It is an ongoing partnership that does not focus on the past's impact on the present or directly on relieving psychological pain or treating cognitive or emotional disorders.
career counselors
Professional career counselors are academically trained to help people make and carry out decisions and plans related to career/life issues. They tailor their services to the specific needs of the person seeking help. For more information on the services that career counselors provide, view www.ncda.org. Link to Consumer Guidelines to Selecting a Career Counselor.
career development facilitators
The CDF credential was developed to provide standards, training specifications and credentialing for career providers who are currently providing career assistance, such as career group facilitator, job search trainer, career resource center coordinator, career coach, career development case manager, intake interviewer, occupational and labor market information resource person, human resource career development coordinator, employment/placement specialist, or workforce development staff person.
career planning
General information about the process of career development.
carry-back
Financing where the seller takes back a note for part of the purchase price secured by a junior mortgage, wraparound mortgage or contract for deed. (See wraparound, junior mortgage)
case law
Case law is law that is based on judicial decisions rather than law based on constitutions, statutes, or regulations. Case law concerns unique disputes resolved by courts using the concrete facts of a case. By contrast, statutes and regulations are written abstractly. The term "case law" is also used interchangeably with common law, which refers to the collection of precedents and authority set by previous judicial decisions on a particular issue or topic. In that sense, case law differs from one jurisdiction to another.
cash basis
In accounting, a system of recognizing revenue and expense items only at the time cash is received or paid out. (See accrual basis)
cash equivalency technique
A method of adjusting a sales price downward to reflect the increase in value due to assumption or procurement by a buyer of a loan at an interest rate lower than the prevailing market rate.
cash flow
Cash flow refers to the movement of money into and out of a rental property over a specific period. Cash flow is typically measured and reported using a financial statement called the "cash flow statement".
cash flow analysis
A cash flow analysis shows the effect an investment property has on an owner's income in terms of tax benefits. Analyzes the return on investment after taxes on an income producing property. Measures the property manager's performance from period to period by comparing income and expenses for a given property.
cash flow report
A cash flow report is a financial document that tracks the amount of cash generated and spent by a business during a specific period. It provides a detailed breakdown of various cash inflows, from operations, investments, and financing activities, and cash outflows to these same categories. This report helps stakeholders understand the liquidity position of the business, showing how well it manages its cash to fund operations, pay debts, and invest in growth.
cash flow statement
A cash flow statement is one of the quarterly financial reports any publicly traded company is required to disclose to the SEC and the public. The document provides aggregate data regarding all cash inflows a company receives from both its ongoing operations and external investment sources, as well as all cash outflows that pay for business activities and investments during a given quarter.
cash for keys
Often, when a home is undergoing foreclosure, or has already been foreclosed, the new owner will send a representative to to the home to discuss incentives for the former owner to move out. A smart owner will offer the former owner the necessary cash to move out right away or within a short period of time. Its common for a representative of the new owner to offer $5000 to move out in 30 days or $3000 to move out in 60 days.
cash management plan
The cyclical nature of the real estate business and the time lag between signatures on the contracts and settlement makes cash flow erratic. The objective of a cash management plan is to provision a company with the right amount of cash at the right time and make the best use of cash until it is needed to meet the company obligations.
cash method
The cash method is an accounting method where receipts are recorded during the period they are received, and the expenses in the period in which they are actually paid.
cash now
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 on cash return
Cash on cash return is a calculation for measuring the potential performance of a property targeted for investment. An investor estimates the monthly rental income the property can generate, subtracts a vacancy percentage, then subtracts all the conservatively researched monthly expenses, then subtracts the mortgage payment to get a monthly cash flow. Multiply that monthly cash flow by 12 months and divide it by the hard earned cash equity the buyer invested. The percentage calculated is the Cash on Cash Return.
cash out scheme
Where a buyer offers a large cash downpayment and asks the seller to carry-back the balance as a subordinate trust deed. (See carry-back, subordination clause)
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 share cropping.
cash-out
When a seller of a property wants to receive the entire sales price in cash with no carry-back financing. (See carry-back)
casita
A small house.
casualty
Casualty insurance policies include coverage against theft, burglary, vandalism and machinery damage as well as health and accident insurance. Casualty policies are usually written on specific risks, such as theft, rather than being all-inclusive.
catabolism
The destructive aspect of metabolism involving the release of energy through the breaking down of complex materials within the organism. (See metabolism)
cause
Something that precedes and usually induces an effect or result. (See effect)
caveat emptor
A Latin phrase meaning "let the buyer beware." A buyer should inspect the goods or realty before purchase.
CC&Rs
Covenants, conditions and restrictions are limitations on land use, which are imposed by deeds, usually when land is subdivided. CC&Rs are a means of regulating building construction, density and use. May be referred to simply as restrictions. (See covenant, condition, restriction, deed restrictions, restrictive covenants)
CD
Compact disk (See CD-R, CD-ROM, CD-RW)
CD-R
Recordable Compact Disk. A disk that can be written to by using the proper kind of CD-drive. It can only be written to one time. (See CD-ROM, CD-R, CD-RW)
CD-ROM
Compact Disk-Read Only Memory. The most commom CD format. Data can only be read from the disck, not written to the disk. (See CD-R, CD-RW)
CD-RW
Rewritable Compact Disk. Users can save, erase and write new data to the same disk. Made from difference materials than CD-ROM and CD-R disks. (See CD-ROM, CD-R)
cease and desist order
A cease and desist (also called C & D) is an order or request to halt an activity (cease) and not to take it up again later (desist); or else face legal action. The recipient of the cease-and-desist may be an individual or an organization.
census bureau
The Census Bureau's mission is to serve as a source of quality data about the United States population and economy. The Bureau makes every effort to honor privacy, protect confidentiality, and conduct their work openly. The Census Bureau operates under Title 13 and Title 26 of the U.S. Code.
centers of influence
Influential people in a community. Real estate agents cultivate relationships with these "centers of influence" as a method of locating prospects in the community where the person has influence. Also known as "bird dogs," indicating that these people "point the way" to new prospects.
central bank
A Central Bank is a governmental institution responsible for issuing currency and regulating monetary policy, which involves the overall growth of money and credit and the level of short-term interest rates. The Federal Reserve is the central bank of the United States. (See Federal Reserve, monetary policy)
Central Processing Unit (CPU)
A CPU is the brain of a computer. The CPU processes all the basic and expert instructions that run a copmuter. (See microchip, microprocessor, RAM, ROM, SDRAM)
certificate of discharge
Document that is recorded by a mortgagee as evidence of the release of the mortgagee's lien rights.
certificate of eligibility
A certificate issued by a Veterans Administration regional office to veterans who qualify for a VA loan. The Veteran Housing Act permits regional administrators to restore a veteran's entitlement to loan-guarantee benefits after his or her property purchased with an existing VA-guaranteed loan has been disposed of and 1. this loan has been paid in full; 2. the administrator is released from liability under the guarantee or 3. any loss suffered by the administrator has been repaid in full. It is no longer required that property ownership was transferred for a compelling reason.
The act also authorizes regional administrators to restore a veteran/seller's entitlement to loan-guarantee benefits and release the veteran from liability to the VA when another veteran has agreed to assume the outstanding balance on the veteran/seller's existing VA-guaranteed loan and consented to the use of his or her entitlement to the same extent that the veteran/transferor had used the original entitlement. This is not a release from the lender, however. The veteran/transferee and the property must otherwise meet the requirements of the law. Reinstatement of eligibility is never automatic but must always be applied for, preferably at the time of the sale of property purchased with an existing VA-guaranteed loan.
Many veteran/sellers presume that they are eligible for a new VA loan after selling their property by way of a loan assumption. In a loan assumption, the broker should point out that for the seller to have complete VA entitlement restored, the buyer must be a veteran and must agree in the sales contract to substitute his or her entitlement for the seller's. (See VA loan)
certificate of occupancy (CO)
A certificate issued by a governmental authority indicating that a building is ready and fit for occupancy and that there are no building code violations. Some condominium developers insert language into the sales contract to the effect that upon notification that the units are ready for occupancy, the buyer must accept the unit despite any construction defects that may exist, although acceptance will not bar the buyer from obtaining redress for such defects. Once the building has been certified for occupancy the developer can then close the individual sales, transfer title to the buyers and, most important, begin to pay off the construction loan and eliminate the interest payments.
certificate of reasonable value (CRV)
A certificate insured by the Veterans Administration setting forth a property's current market value estimate, based on a VA-approved appraisal. The CRV places a ceiling on the amount of a VA-guaranteed loan allowed for a particular property. (See VA loan)
certificate of redemption
Issued by the county tax collector when all past due amounts have been paid.
certificate of sale
Document received by the bidder at a tax sale or judicial foreclosure sale; replaced by a deed if the debtor fails to redeem the property during the statutory redemption period.
certificate of status
Document issued by the California secretary of state showing a corporation's place of domicile, date of incorporation, corporate number, name and address of agent for service of process, and other information about the corporation.
certificate of title
A statement of opinion prepared by a title company, licensed abstracter or an attorney on the status of a title to a parcel of real property, based on an examination of specified public records. This certificate of title should not be confused with the certificate of title that is issued to a titleholder of land registered under the Toreens system, or with a title insurance policy.
A certificate of title does not guarantee title, but it does certify the condition of title as of the date the certificate is issued, on the basis of an examination of the public records maintained by the recorder of deeds, the county clerk, the county treasurer, the city clerk and collector and clerks of various courts of record. The certificate also may include records involving taxes, special assessments, ordinances, zoning and building codes.
Note that a certificate of title does not offer protection against "off -the-record" matters such as undisclosed liens, rights of parties in possession and matters of survey and location. Nor does it protect against "hidden defects" in the records themselves, such as fraud, forgery, lack of competency or lack of delivery. A title insurance policy, not a certificate of title, protects against certain off-the-record and hidden defects risks.
Certified Apartment Manager
An individual who has completed professional Apartment Association training on tenant credit, maintenance, legal forms and other topics relating to on-site property management.
Certified Commercial Investment Member
A Certified Commercial Investment Member (CCIM) is a recognized expert in the disciplines of commercial and investment real estate. Only 6 percent of the estimated 125,000 commercial real estate practitioners nationwide hold the CCIM designation.
CCIM HomepageCertified Property Manager
Professional certification given by the Institute of Real Estate Management (IREM).
IREM Homepagecessation of work
In California legal terms, "cessation of work" refers to the stopping or halting of work or employment, either temporarily or permanently. In California construction law, cessation of work is defined as a period of 60 continuous days without any work being conducted on a construction project. (See notice of cessation)
CFPB
The Bureau has issued the Final Rule that will simplify and improve disclosure forms for mortgage transactions.
chain of command
A system where authority passes from the top down through a series of executive positions in which each is accountable to the one directly superior.
chain of title
The history of conveyances and encumbrances affecting the present owner's title to property, as far back as records are available. (See conveyance)
change
The appraisal principle that holds that no physical, economic, social, or political condition remains constant. (See appraisal)
change
To make or become different; to undergo a modification.
change in ownership
For property tax purposes, a change in ownership in real property is the transfer of a present interest in real property, including the transfer of the rights to the beneficial use thereof, the value of which is substantially equal to the value of the fee interest. All three factors must be present in order for a change in ownership to occur. Often a change in, or transfer of, title may indicate a change in ownership, which generally occurs upon the purchase, sale, gift, or inheritance of real property.
changed circumstances
Changed circumstances are 1) Acts of God, war, disaster, or other emergency; 2) Information particular to the borrower or transaction that was relied on in providing the Good Faith Estimate (GFE) and that changes or is found to be inaccurate after the GFE is provided, which may include information about the credit quality of the borrower, the amount of the loan, the estimated value of the property, or any other information that was used in providing the GFE; 3) New information particular to the borrower or transaction that was not relied on in providing the GFE; or 4) Other circumstances that are particular to the borrower or transaction, including boundary disputes, the need for flood insurance, or environmental problems.
chapter 13 bankruptcy
Chapter 13 bankruptcy sets a payment plan between the borrower and the creditor monitored by the court. The homeowner can keep the property, but must make payments according to the court's terms within a 3 to 5 year period.
chapter 7 bankruptcy
Chapter 7 bankruptcy requires assets be liquidated in exchange for the cancellation of debt.
charge-off
The portion of principal and interest due on a loan that is written off when deemed to be uncollectible.
chattel
The word chattel evolved from the word cattle, one of the early important possessions. Chattels real are annexed to real estate, whereas, chattels personal are movable. A lease is an example of a chattel real. (See personal property)
chlorofluorocarbons
Nontoxic, nonflammable chemicals containing atoms of carbon, chlorine, and fluorine, such as air conditioners and refrigerators. CFCs are safe in application but cause ozone depletion.
choose
To freely select.
chronological log or systematic manner
The phrase "chronological log or systematic manner" simply means that if the folder is maintained in hardcopy form, the hard copies of documents should be in transaction folders, and the folders should be systematically arranged in the file drawer. If the folder is maintained in electronic form, then all transaction records must be also organized systematically. The arrangement can be either chronological or in some other systematic manner, such as in alphabetical order.
chronological resume
Resume format that is organized by date and job title. It emphasizes whom you worked for, what you did, and when you did it.
chunking
A fraudster promises to show investors how to get rich buying investments. They submit multiple loan applications to various lenders without disclosing the intent to purchase other properties. Sometimes, the fraudster promises to handle the transactions, including leasing the properties, and takes a cut of the profit without ever leasing the property.
churning
Excessive selling or lending activity for the purpose of generating fees and commissions. In some cases, the lender steps the rate down through multiple refinances. Each refinance is only to a slightly lower rate until the pre-arranged rate is reached.
cimex
Cimex species are ectoparasites that typically feed on the blood of birds and mammals. Two species, Cimex lectularius and Cimex hemipterus, are known as bed bugs and frequently feed on humans.
circulation
Flow; orderly movement through a circuit; the movement of fluids through the vessels of the body.
circulatory system
The system of blood, lymph, blood vessels, lymph vessels, and heart muscle concerned with the circulation of body fluids. (See blood, lymph)
citation
A citation is a formal notice issued to an individual or entity for violating laws, regulations, or rules. It typically outlines the offense and may impose a penalty, such as a fine, or require corrective action.
City Beautiful movement
Emphasizing design and aesthetics, the City Beautiful movement emerged from the 1893 Columbian Exposition in Chicago. The Exposition provided a prominent American example of a great group of buildings designed in relation to each other and in relation to open spaces.
City Efficient movement
The City Efficient Movement saw the passage of new laws and court cases relative to land use, zoning, subdivision control, and administrative planning regulation. Civil engineers, attorneys, and public administrators began to play a larger role in city planning with an increase in demand for public services and facilities such as highways and sanitary sewers.
City Functional movement
This movement emphasized functionalism and administrative efficiency, and contributed to the federal government's increased involvement in local planning and the passage of Section 701 of the Housing Act in 1954. The 701 program subsidized thousands of general plans and special projects for cities, counties, regional councils of government, and states until 1981.
City Humane movement
This movement concentrated on social and economic issues and ways of alleviating the problems of unemployment, poverty, and urban plight.
city planning
Land-use recommendations adopted by local jurisdiction, determined by use of demographic, geographic, economic, and other data.
civil action
An action where an issue, formed by some kind of complaint, is presented for trial. Proceedings are for declaration, enforcement, protection of a right, redress, or prevention of a wrong.
civil law
A system of law codified by statutes. (See common law, constitutional law, Roman Civil Law, statutory law)
civil lawsuit verification
Checking a prospective resident/tenant's past civil lawsuit history. It can usually be reviewed by checking the owner/landlord's local county court database and any other areas where the prospective resident/tenant may have lived, or businesses they own or owned.
Civil Rights Act of 1866
The Civil Rights Act of 1866 prohibits racial discrimination in the sale and rental of housing.
Civil Rights Act of 1870
The Voting Rights Act of 1870 (aka, Civil Rights Act of 1870) includes a clause reaffirming the remedies of the Civil Rights Act of 1866.
Civil Rights Act of 1964
The first modern civil rights act made into law by President John F. Kennedy's Executive Order 11063 prohibiting discrimination in housing where federal funds were involved. (See Federal Fair Housing Law)
Civil Rights Act of 1968
In 1968, Congress enacted Title VIII of the Civil Rights Act, called the federal Fair Housing Act, which declared a national policy of providing fair housing throughout the United States (Reference Sections 3601-3631 of Title 42, United States Code). This law makes discrimination based on race, color, sex, familial status, handicap, religion or national origin illegal in connection with the sale or rental of most dwellings and any vacant land offered for residential construction or use.
Civil Rights Housing Act of 2006
California's Civil Rights Housing Act of 2006 provides that, as of January 1, 2007, all of the protected classifications of FEHA are extended automatically to all other nondiscrimination laws; this includes the Unruh Civil Rights Act.
class 6 felony (AZ)
A class 6 felony is the least serious of the six felony classifications (classes 1-6, class 1 being the most serious). In Arizona, the minimum penalty for a class 6 felony is .33 years imprisonment. However, in Arizona, if a court is of the opinion that it would be unduly harsh to issue a sentence for a felony, the court may enter judgment of conviction for a class 1 misdemeanor; or place the defendant on probation and refrain from designating the offense as a felony or misdemeanor until the probation is terminated.
classified ads
Advertisements purchased by the line and placed in the classified ad section of newspapers or real estate magazines. Used primarily for advertising residential properties and rentals. (See display ads)
classified ads
The want ads in your local newspaper.
Clayton Act
The Clayton Antitrust Act of 1914 is a U.S. federal law that strengthens antitrust regulations by prohibiting anti-competitive practices such as price discrimination, exclusive dealing, tying agreements, and mergers that substantially reduce market competition.
clear title
A property title that has no defects. Properties with clear titles are marketable for sale.
clerical or support duties
Clerical or support duties may include, subsequent to the receipt of an application, the receipt, collection, distribution, and analysis of information common for the processing or underwriting of a residential mortgage loan. Communicating with a consumer to obtain the information necessary for the loan processing to the extent that such communication does not include offering or negotiating loan rates or terms or counseling consumers about residential mortgage loan rates or terms.
client
The person who employs an agent to perform a service for a fee. In traditional real estate brokerage, the client is the seller, and the buyer is the prospect or customer. In modern practice, more and more buyers are seeking representation as a client. Dual agency occurs when a broker represents the seller and the buyer as clients.
client server
A computer (server) located in a remote location that processes a request for data and returns the results of the request to the requesting (client) computer.
CLIMB job interview process
A process that you can follow to prepare for the job interview.
clipboard
A section of computer memory used to temporarily hold data that has been cut or copied for transfer to another document or location within a document. The clipboard can hold only one thing at a time.
clock hour
According to Arizona Real Estate Department regulations, one clock hour is equal to 50 minutes.
close-of-escrow/closing
The consummation of a real estate transaction, when the seller delivers title to the buyer in exchange for payment by the buyer of the purchase price. Closing in some areas may not occur until the documents are recorded; however, under general rules of real estate law, transfer of title takes place upon delivery of the deed to the grantee. (See escrow)
closed-record state
A closed-record state typically refers to a legal framework in which certain government records or documents are restricted from public access or disclosure. In these states, laws are in place to limit public access to certain types of government records, often for reasons such as privacy protection, national security, or to maintain the integrity of ongoing investigations.
closing
An event where promises made in a sales contract are fulfilled and real estate loan funds (if any) are distributed to the buyer.
closing agent
A closing agent is a person, including a title insurance agent or a title insurance company, that acts in the normal course of business in a fiduciary capacity as a disinterested third party for the seller and buyer of real property for the purpose of consummating a sale of real property, including the preparation of deeds, mortgages, promissory notes, deeds of trust, real estate contracts, assignments, or other documents incidental to the sale as permitted by law; calculations and disbursements of prorated taxes, insurance premiums, utility bills, and other charges incidental to the sale; preparation of sellers' and buyers' closing statements; supervision of signing of documents; collection and disbursement of down payments, commissions of real estate licensees, fees, and other charges pursuant to a sales agreement and recordation of documents.
closing costs
Expenses of the sale (or loan refinancing) that must be paid in addition to the purchase price (in the case of the buyer's expenses) or be deducted from the proceeds of the sale (in the case of the seller's expenses). Some closing costs result from legal requirements; others are a matter of local custom and practice. Typical closing costs include charges for the mortgage loan such as origination fees, discount points, appraisal fee, survey, title insurance, legal fees, real estate professional fees, prepayment of taxes and insurance, and real estate transfer taxes. A common estimate of a buyer's closing costs is 2 to 4 percent of the purchase price of the home. A common estimate for seller's closing costs is 3 to 9 percent.
closing disclosure
The name of the redesigned form to provide disclosures that will be helpful to consumers in understanding all of the costs of the transaction. Replaces existing HUD-1 Settlement Statement and TILA Disclosure.
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
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.
CLTA policy
A standard coverage title insurance policy protects real estate buyers in matters of record and specific risk. (See standard coverage policy, title insurance)
clustering
The grouping of homesites within a subdivision on smaller lots than normal, with the remaining land used as common areas.
CMO
Securities (a series of bonds) issued backed by mortgages.
co-ownership
Title ownership held by two or more persons.
coastal zone
An area of about 1,800 square miles that runs the length of the state from the sea inland about 1,000 yards, with wider spots in coastal estuarine, habitat, and recreational areas; any development or improvement of land within the coastal zone must meet local requirements for coastal conservation and preservation of resources, as authorized by the California Coastal Act and subsequent legislation.
code of ethics
A written system of standards of ethical conduct. Because of the nature of the relationship between a broker and a client or other persons in a real estate transaction, a high standard of ethics is needed to ensure that the broker acts in the best interests of both his or her principal and any third parties.
codes
Bound volumes of laws and regulations.
codicil
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.
coinsured
Requiring the lender to be named as a coinsured would mean that the lender is also protected under the insurance policy. This ensures that the lender's interest in the property is protected in the event of damage or loss covered by the insurance policy. If the borrower fails to maintain adequate insurance coverage, it could potentially put the lender at risk, which is why lenders often require borrowers to name them as coinsured on the insurance policy.
COLAs
An adjustment made to Social Security or other supplemental security income in order to adjust for the effects of inflation. COLAs are generally equal to the percentage increase in the consumer price index (CPI) for a specific period. (See consumer price index, inflation)
collateral
Something of value given or pledged as security for a debt or obligation. The collateral for a real estate mortgage loan is the hypothecated mortgaged property itself.
collusion
An agreement, usually secretive, which occurs between two or more persons to deceive, mislead, or defraud others of their legal rights, or to obtain an objective forbidden by law, typically involving fraud or gaining an unfair advantage.
color of title
Color of title is the possession of a document that erroneously appears to convey title to an occupant of a real property.
Colorado Board of Real Estate Appraisers
The Colorado Board of Real Estate Appraisers oversees real estate appraisers.
Colorado Division of Real Estate
The Colorado Division of Real Estate houses five regulatory programs, including real estate brokers, real estate appraisers, mortgage loan originators, conservation easement trusts, and homeowners' associations.
Colorado Real Estate Commission
The Colorado Real Estate Commission oversees real estate brokers and subdivision developers.
combination resume
Resume format that brings together the best of the chronological and functional styles. It highlights both accomplishments and history.
combination trust
A trust that participates in real estate investments as both financier and investor.
combined loan to value
A ratio used by lenders to determine the risk of default by prospective homebuyers when more than one loan is used. In general, lenders are willing to lend at CLTV ratios of 80% and above to borrowers with a high credit rating. The combined loan to value ratio is determined with a mathematical equation: Amount of 1st loan + amount of 2nd loan ÷ the appraised value of the home.
combined loan-to-value (CLTV) ratio
A ratio that is used for a mortgage loan that is subject to subordinate financing. CLTV ratio is calculated by dividing the sum of the original loan amount of the first mortgage, the drawn portion (outstanding principal balance) of any home equity line of credit from which the borrower has withdrawn funds, and the unpaid principal balance of all other subordinate financing, by the lower of the property's sales price or appraised value.
combustion gases
The gasses that are emitted from a flame upon the combustion of a flammable material.
command economy
If the government makes most of the economic decisions in a society, it is called a 'command economy.'
command language interpreter
A program that translates the user's keystrokes into 0's and 1's that the computer's central processing unit (cpu) understands.
commercial acre
A commercial acre is that portion of an acre of newly subdivided land remaining after dedication for streets, sidewalks, parks and so on. (See acre)
commercial bank
A financial institution designed to act as a safe depository and lender for many commercial activities (usually short-term loans or lines of credit). Commercial banks rely heavily on demand deposits—checking accounts—for their basic supply of loanable funds, although they also receive capital from savings accounts, loans from other banks, short-term loan interest and the equity invested by their owners. (See line of credit)
commercial frustration
Excuse for failure to perform contract obligation because of changed circumstances that make a purchase uneconomic; also called impracticability of performance.
Commercial Investment Real Estate Institute (CIREI)
A professional organization of real estate practitioners specializing in commercial real estate. CIREI, affiliated with the National Association of REALTORS®, confers the designation CCIM (Certified Commercial Investment Member).
CCIM Commercial Real Estate Networkcommercial leasehold insurance
Insurance that covers payment of rent in the event the insured (tenant) cannot pay it.
commercial mortgage banker (Arizona definition)
A person who originates, services, makes, negotiates, or offers to make or negotiate commercial mortgage loans.
commercial mortgage broker (Arizona definition)
A person who, for compensation or in the expectation of compensation, makes, negotiates, or offers to make or negotiate a commercial mortgage loan.
commercial property (Arizona definition)
Real estate that is located in Arizona and that is not used for a one- to four-family residence.
commercial real estate/property
A classification of real estate that includes income-producing property such as office buildings, gasoline stations, restaurants, shopping centers, hotels and motels, parking lots and stores. Public accommodations.
commercial waste
All solid waste from businesses. This category includes but is not limited to, solid waste originating in stores, markets. office buildings, restaurants, shopping centers, and theaters.
commingling
The illegal act of mixing deposits or monies belonging to a client (trust funds) with one's personal money. By law brokers are required to maintain a separate trust or escrow account for other parties' funds held temporarily by the broker. (See trust funds)
commission
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.
commission
The commission is the Financial Services Commission. The purpose of the Financial Services Commission is to safeguard the public by regulating the banking, securities, and insurance industries in Florida. The commission includes the Governor and Cabinet, which appoints the officials who oversee the Office of Financial Regulation and the Office of Insurance Regulation. These two offices are administratively housed in the Department of Financial Services but report directly to the commission.
commissioner
The commissioner is the Commissioner of Banks.
commissioner
The commissioner is the commissioner of the Department of Banking and Finance.
Commissioner's Rule for Placing Signs
Before placing or erecting a sign giving notice that specific property is being offered for sale, lease, rent, or exchange, a salesperson or broker shall secure the written consent of the property owner, and the sign shall be promptly removed upon request of the property owner.
commitment
A pledge to do a certain act, such as a promise by a lender to loan a certain amount of money at a specific rate of interest to a qualified borrower, provided the loan is made by a certain date.
commitment for title insurance
A title report that is made before a title insurance policy is issued or when escrow is opened. A commitment for title insurance reports only on those documents having an affect on the title and should not be relied on as being an guarantee of marketable title.
commitment or commitment agreement
A commitment or a commitment agreement is a statement by a lender, who is required to be licensed or registered, that sets forth the terms and conditions upon which the lender is willing to make a particular mortgage loan to a particular borrower.
common areas
Land or improvements in a condominium development designated for the use and benefit of all residents, property owners and tenants. Common areas frequently include such amenities as corridor or hall areas, elevators, parks, playgrounds and barbecue areas, which are sometimes called green belts. In shopping centers, the common areas are parking lots, malls and traffic lanes.
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. (See condominium ownership)
common interest
The percentage of undivided ownership in the common elements belonging to each condominium apartment, as established in the condominium declaration.
common interest development
A property where many units have a common ownership interest, like on the same parcel of land, and/or share ownership of common facilities like clubhouses or pools, or a multi-unit multiple story property. (See common interest)
common interest subdivision
A subdivision in which the owners own or lease a separate lot or unit together with an undivided interest in the common areas of the subdivision. (See common areas, subdivision)
common law
The body of law based on custom, usage and court decisions. (See civil law, constitutional law, stare decisis, statutory law)
common law duties of agency
The common law duties of agency are: Care, Obedience, Loyalty, Disclosure, Accounting, and Confidentiality.
common law independent contractor
In determining if an individual is an independent contractor under common-law rules, an employer must have no control over the details of a worker's performance, including his or her methods. Independent contractors are more likely to have unreimbursed expenses; often have a significant investment in the facilities he or she uses in performing services for someone else; is generally free to seek out business opportunities; is usually paid by a flat fee for the job; and can make a profit or loss.
common promotional plan (AZ Defintion)
A common promotional plan is a plan, undertaken by a person or a group of persons acting in concert, to offer lots for sale or lease. If the land is offered for sale by a person or group of persons acting in concert, and the land is contiguous or is known, designated or advertised as a common unit or by a common name, the land is presumed, without regard to the number of lots covered by each individual offering, as being offered for sale or lease as part of a common promotional plan.
common-law dedication
Transfer of private land to public use or ownership, such as a roadway through a subdivision, by permitting such use or referencing the use in deeds to adjoining parcels.
communication skills
Connection between people that includes speaking and listening, writing and reading, and non-verbal interaction.
communism
Communism is a stage of economic development said to occur when all classes in society have been absorbed into the proletariat. In this society, the state (government) would have withered away and each person would contribute according to ability and receive according to needs. This utopia envisioned by Karl Marx was seen to be the stage of economic development that follows capitalism and socialism.
community apartment project
A form of subdivision in which the owner has an individual interest in the land and exclusive right of occupancy of an apartment on the land.
community facilities district
Community Facilities Districts (CFDs), more commonly known as Mello-Roos, are special districts established by local governments in California as a means of obtaining additional public funding. A CFD is a geographic area where a special property tax on real estate situated within the geographic area (in addition to the regular property tax subject to Proposition 13) is imposed on taxable real property. These districts seek public financing through the sale of bonds for the purpose of financing public improvements and some public services, such as streets, water, sewage and drainage, electricity, infrastructure, schools, parks and police protection to newly developing areas. The tax paid is used to make the payments of principal and interest on the bonds.
community property
Community property is 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. This system stemmed from Germanic tribes and, through Spain, came to the Spanish colonies of North and South America.
In states that maintain a community property system, such as California and other states with laws of Spanish origin, there are two classifications of property - separate property and community property. Separate property is property that either the husband or wife owned at the time of marriage or that was acquired by one spouse during marriage by inheritance, will or gift. Separate property is entirely free from all interest or claim on the part of the other spouse. All other property is community property and is automatically owned equally by each spouse regardless of whose name record title is held under.
There are nine community property states - Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. In addition, Puerto Rico is a community property jurisdiction.
These states generally regard as community property all property that has been acquired during the marriage, other than a gift or inheritance. Even if one spouse earns all the money to acquire the property, all the property acquired is considered to be community property. While there are a number of differences in each state, all states have special laws that operate on the theory that both spouses contribute equally to the marriage; thus all property acquired during the marriage is the result of the combined efforts of both spouses. In community property jurisdictions, spouses equally own all community property (fifty percent owned by the husband and fifty percent owned by the wife).
community property states
Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. In addition, Puerto Rico is a community property jurisdiction.
These states generally regard as community property all property that has been acquired during the marriage, other than a gift or inheritance. Even if one spouse earns all the money to acquire the property, all the property acquired is considered to be community property. While there are a number of differences in each state, all states have special laws that operate on the theory that both spouses contribute equally to the marriage; thus all property acquired during the marriage is the result of the combined efforts of both spouses. In community property jurisdictions, spouses equally own all community property (fifty percent owned by the husband and fifty percent owned by the wife).
community property with right of survivorship
Method of property ownership by a married couple that specifically provides for transfer of the interest of the first to die to the spouse, instead of the interest being willed or passed by intestate succession. (See intestate succession, right of survivorship)
community redevelopment agency (CRA)
An agency authorized by state law but formed by a local governing body to provide low- and moderate-income housing and employ low-income persons by rehabilitating existing structures and/or bringing new development. All CRAs have been dissolved as of February 1, 2012.
Community Reinvestment Act of 1977 (CRA)
Community reinvestment refers to the responsibility of financial institutions to help meet their communities' needs for low- and moderate-income housing. In 1977, Congress passed the Community Reinvestment Act of 1977 (CRA). Under the CRA, financial institutions are expected to meet the deposit and credit needs of their communities, participate and invest in local community development and rehabilitation projects, and participate in loan programs for housing, small businesses and small farms.
Community Reinvestment Act of 1977community renewal
Community renewal includes all of the programs geared toward community and economic development, job creation, and downtown revitalization in New York.
compact disk (CD)
Disk on which data such as music, text, or graphic images is digitally encoded.
company dollar
The term "company dollar" is the amount left over after all commissions have been paid out.
company signature
A company signature is the imagery and/or sound bite that creates brand recognition. A signature makes a short but powerful statement with words, music, colors, and graphics that stick in people's minds.
comparable periods of maturity
The phrase comparable periods of maturity refers to the treasury constant maturities published in the Federal Reserve selected interest rates. When calculating the interest rate for adjustable-rate loans, the creditor may not use any introductory rate. The interest rate will be based on the loan's disclosed index plus the margin, which is the fully indexed rate, at the time the loan is made. For example, if the index is 2 percent and the margin is 3 percent for a first lien mortgage, the interest rate is 5 percent (fully indexed rate).
comparables
Comparable properties that are used in an appraisal to determine the value of the property that is the subject of the appraisal. It refers to properties with characteristics that are similar to a subject property whose value is being sought.
comparative income and expense analysis
A comparative income and expense analysis is a financial tool used to evaluate the performance of a business or property by comparing income and expenses across different periods. This analysis helps identify trends and efficiencies by breaking down and comparing various revenue streams and costs such as rent income, operating expenses, and capital expenditures. The process involves collecting financial data, categorizing and calculating key financial metrics, and interpreting these to assess the financial health and operational effectiveness of the entity.
comparative market analysis (CMA)
This is a term often used by real estate brokers in preparing a report for prospective sellers and buyers, indicating market trends in various neighborhoods, based on computer statistics generated from multiple-listing service data. Generally, these analyses are used for clients to determine a listing price for the sale of a home or for buyers to determine if a list price is reasonable for a given location.
comparative unit method
A method used to estimate the cost of a structure based on the value of comparable structures that were recently constructed and adjusted for time and physical differences.
comparitive advantage
An economic principle that states that the standard of living for the entire world would increase if each nation specialized in the production of goods and/or services for which it has the lowest unit cost.
compelling government interest
With fundamental Constitutional rights (those rights that are specifically mentioned by name in the Constitution), any state regulation of that right must be something necessary or crucial, as opposed to something merely preferred. Examples include national security, preserving the lives of multiple individuals, and discriminatory publications with regard to housing. The laws or policies must be narrowly tailored, and be the least restrictive means possible to achieve the government interest.
compelling need
A need that is necessary to avert a clear and imminent danger to the health and safety of the public.
compensating factors
Positive factors in an individual's credit history which offset negative factors. "Compensating factors" increase the possiblity that a borrower's loan application will be approved. (See credit score)
compensation
Compensation means any fee, commission, salary, money or other valuable consideration for services rendered or to be rendered as well as the promise of consideration whether contingent or not. The source of compensation does not determine agency. An agent does not necessarily represent the person who pays his or her commission. In fact, agency can exist even if no fee is involved (called a gratuitous agency). Buyers and sellers can agree, whichever way they choose, to compensate the broker, regardless of which is the agent's principal. For instance, a seller could agree to pay a commission to the buyer's agent. The written agency agreement should state how the agent is being compensated and explain all the alternatives available.
compensation (Arizona definition)
Anything of value or any benefit, including points, commissions, bonuses, referral fees, loan origination fees, and other similar fees, but excluding periodic interest resulting from time to time. Arizona Administrative rules specifically exclude the following from the statutory definition:
* Charges or fees customarily received after a loan's closing, including prepayment penalties, termination fees, reinvestment fees, late fees, default interest, transfer fees, impound account interest and fees, extension fees, and modification fees. However, extension fees and modification fees are compensation if the lender advances additional funds or increases the credit limit on an open-end mortgage as part of the extension or modification.
* Out-of-pocket expenses paid to independent third parties, including appraisal fees, credit report fees, legal fees, document preparation fees, title insurance premiums, recording, filing, and statutory fees, collection fees, servicing fees, escrow fees, and trustee's fees
* Insurance commissions
* Contingent or additional interest, including interest based on net operating income
* Equity participation
compensatory damages
Monetary damages paid to compensate an injured party for a loss. (See exemplary damages, nominal damages)
competition
The appraisal principle that states that excess profits generate competition. (See appraisal)
competitive market analysis (CMA)
This is a term often used by real estate brokers in preparing a report for prospective sellers and buyers, indicating market trends in various neighborhoods, based on computer statistics generated from multiple-listing service data. Generally, these analyses are used for clients to determine a listing price for the sale of a home or for buyers to determine if a list price is reasonable for a given location.
complaint
The initial pleading that starts a civil action and states:
- the basis for the court's jurisdiction;
- the basis for the plaintiff's claim
- the demand for relief.
complaint
A complaint is a formal allegation or report submitted by an individual or entity claiming that a person, organization, or business has violated laws, regulations, or ethical standards under the regulatory agency's jurisdiction. The complaint typically triggers an investigation or review process to determine if disciplinary action or other enforcement measures are warranted.
completion bond
A surety bond posted by a landowner or developer that guarantees a proposed development will be completed according to specifications and free of mechanics' liens.
complexity
Complexity is generally used to characterize something with many parts where those parts interact with each other in multiple ways. The study of these complex linkages at various scales is the main goal of complex systems theory.
compliance audit
A compliance audit is a systematic review conducted to ensure that an organization, individual, or process adheres to applicable laws, regulations, standards, or internal policies. Its purpose is to identify areas of non-compliance, mitigate risks, and verify that all required guidelines are being followed effectively.
compound interest
Interest computed on the principal sum plus accrued interest. At the beginning of the new interest period, all interest is added to the principal, forming a new principal figure on which interest is then calculated. This process repeats itself each interest period interest may be compounded daily, monthly, semiannually or annually. (See simple interest)
Comprehensive Environmental Response, Compensation and Liability Act (CERCLA)
A federal law administered by the Environmental Protection Agency that establishes a process for identifying parties responsible for creating hazardous waste sites, forcing liable parties to cleanup toxic sites, bringing legal action against responsible parties and funding the abatement of toxic sites. (See Superfund) EPA CERCLA Overview
comprehensive planning
The board of supervisors of a county, in order to conserve and promote the public health, safety, convenience and general welfare...[have statutory authority to] plan and provide for the future growth and improvement of its area of jurisdiction, and coordinate all public improvements in accordance therewith. A.R.S. 11-821 provides that a county planning commission and board of supervisors are responsible for formulating and adopting a long term, comprehensive plan.
comprehensive zoning
A broad zoning plan over a large area. (See general plan, zoning)
computer-assisted mass appraisal (CAMA)
Use of computerized databases and techniques in valuing commercial and residential properties for tax assessment purposes.
computerized loan origination system
An electronic network for handling loan applications through remote computer terminals linked to various lenders' computers.
concealment
obscuring something from view or rendering it inconspicuous, the opposite of exposure.
concession
Discount given to prospective tenants by landlords to induce them to sign a lease. Concessions are frequently encountered in commercial leases, where landlords may give the first two months' rent free or provide an allowance to the tenant for renovating or customizing the demised space. A purchaser of a commercial or income-producing property should check all existing leases to see if there are any lease concessions that would reduce the amount of rent receivable in the future (such as free cable TV or one month's free rent per year for the term of the lease). If so, the value of these concessions should be computed to reduce the amount of contract rent specified. An estoppel certificate should also be obtained from the tenant. Some state laws require concessions to be noted on a lease by special wording. Concessions are negotiable points in a lease that are resolved in favor of the prospective tenant. Another example in leasing a new office building is the owner's assumption of the lessee's remaining obligation under the lessee's existing lease in another building.
Conciliation agreement
A written agreement setting forth the resolution of the issues in conciliation. Conciliation is the resolution of a complaint by obtaining assurances that the person against whom the complaint was made will remedy any violation that may have occurred. Conciliation agreements are enforced through civil actions.
concurrent ownership
Ownership by two or more persons at the same time, such as joint tenants, tenants by the entirety, tenants in common or community property owners. (See joint tenancy, tenants in common)
concurrent performance
Occurring simultaneously; real estate exchanges often must be recorded concurrently.
condemnation
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. (See eminent domain).
condition
A qualification of an estate granted that can be imposed only in a conveyance; it can be a condition precedent or a condition subsequent. (See CC&R)
condition precedent
A condition that requires a certain action or a specified event to take place before an estate granted can take effect. For example, most installment real estate sales contracts require all payments to be made by the time specified before the buyer can demand transfer of title.
condition subsequent
A fee simple estate, may be qualified by a condition subsequent. This means that the new owner must not perform some action or activity. The former owner retains a right of reentry so that if the condition is broken, the former owner can retake possession of the property through legal action. Conditions in a deed are different from restrictions or covenants because of the grantor's right to reclaim ownership, a right that does not exist under private restrictions. (See fee simple, restrictive covenant).
conditional delivery
Transfer of documents and funds to escrow agent or settlement officer to be held until the transaction is closed, at which time they are transferred to the designated party.
conditional license
A conditional license is issued to a real estate salesperson who has not completed all of the required education courses, and is contingent on all education requirements being met.
conditional public report
An interim report that allows a subdivider to enter into a binding contract with a buyer prior to the issuance of the final public report. (See public report)
conditional sales exemption
An exemption to the A.R.S. legislation that an owner of six or more lots in the state of Arizona cannot sell those lots, except to a bulk purchaser (purchasing six lots or more), unless the owner has received a subdivision public report from the Arizona Real Estate Commissioner. Those who have been granted the conditional sales exemption may write purchase contracts on the lots before the issuance of a public report.
conditional use permit
A permit that allows a city or county to consider special uses which may be essential or desirable to a particular community, but which are not allowed as a matter of right within a zoning district, through a public hearing process. The issuance of this permit is conditional upon certain requirements that the recipient of the permit must meet.
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. (See zoning)
condo certification from mortgage lender
When a lender is financing a unit in a homeowners association for purchase or refinancing, they usually require the board of directors to fill out a questionnaire asking pertinent questions about the community, including ownership structure, delinquent fee percentages, reserves, etc. Buyers should obtain and carefully review this questionnaire.
condo unit demand statement
A document prepared by the homeowners association (HOA) management company that alerts a buyer to the HOA fees amount, and any restrictions, violations, lawsuits, etc. on the unit or against the HOA.
condominium
A subdivision providing an exclusive ownership interest in the airspace of a particular portion of real property, as well as an undivided interest in the common area portion of that property.
condominium ownership
An estate in real property consisting of an individual interest in an apartment or commercial unit and an undivided common interest in the common areas in the condo project such as the land, parking areas, elevators, stairways, exterior structure and so on. Each condominium unit is a statutory entity that may be mortgaged, taxed, sold or otherwise transferred in ownership, separately and independently of all other units in the condo project. Units are separately assessed and taxed based on the combined value of the individual living unit and the proportionate ownership of the common areas. The unit also can be separately foreclosed upon, in case of default on the mortgage note or other lienable payments. In effect, the condominium permits ownership of a specific horizontal layer of airspace as opposed to the traditional view of vertical property ownership from the center of the earth to the sky. Typically, the unit, the percentage of common interest and the limited common elements are appurtenant to each other and cannot be sold or transferred separately.
conduits
A party that purchases loans from one lender and resells the loans to investors.
Conference of State Bank Supervisors (CSBS)
Self Described as " the nation's leading advocate for the state banking system, and the only national organization dedicated to advancing the state banking system"
confession of judgment clause
Permits judgment to be entered against a debtor without the creditors needing to institute legal proceedings.
confidentiality
Obligation to safeguard the principal's confidence and secrets (any information that might weaken the principal's bargaining position if it were revealed).
Confirmation bias
The unconscious mind's tendency to seek only the information that confirms a pre-existing belief, while ignoring facts that suggest otherwise.
conflict of interest
Refers to a situation when someone, such as a lawyer, public official or REALTOR®, has competing professional or personal obligations or personal or financial interests that would make it difficult to fulfill his or her duties fairly.
conforming loan
A mortgage loan that meets all Fannie Mae and Freddie Mac underwriting guidelines. (See Fannie Mae, Freddie Mac)
conformity
The appraisal principle that holds that the greater the similarity among properties in an area, the better they will hold their value. (See appraisal)
consensual lien
A lien to which the debtor has consented, to the lien, as in a loan or an advancement of a line of credit. As a general rule, with a consensual lien, the debtor will have signed a promissory note. This differs from statutory liens or judgments because under those types of liens the debtor did not consent to the lien, but the creditor has a legal right to recover the debt.
consent order
A consent order is governed by federal and state laws, which vary by jurisdiction. Generally, it is a voluntary agreement worked out between two or more parties to a dispute. It has the same effect as a court order and can be enforced by the court if one of the parties to the agreement does not comply with the orders.
Consent orders may also be issued by administrative agencies. For example, a licensing commission may issue a consent order to a licensee in which the licensee agrees to the imposition of certain disciplinary sanctions, such as reprimand or the suspension or revocation of his or her license. The use of a consent order allows the licensing agency and the parties involved to resolve a disciplinary proceeding initiated by the agency without the time and expense required by a formal administrative hearing.
consent order
An order given by a state agency to a licensee in which the licensee agrees to the imposition of certain disciplinary sanctions, such as reprimand or the suspension or revocation of his or her license. A consent order allows the licensing agency and the parties involved to resolve a disciplinary proceeding initiated by the agency without the a formal administrative hearing.
conservator
A guardian, protector, preserver or receiver appointed by a court to administer the person and property of another (usually an incapable adult) and to ensure that the property will be properly managed. A conservator may not need a real estate license to sell the protected real estate, although the sale does require court approval.
consideration
An act or the promise thereof, which is offered by one party to induce another to enter into a contract; that which is given in exchange for something from another; also the promise to refrain from doing a certain act, like filing a justifiable lawsuit (the forbearance of a right). Consideration, which distinguishes a contractual obligation from a gift, is usually something of value, such as the purchase price in and paid for a promise or it may be a return promise. Thus, the mere promise to pay money is sufficient consideration, so an earnest money deposit is not necessary for purposes of creating a binding contract.
conspirator
A person who takes part in a conspiracy, which is a plan or agreement to carry out an illegal or harmful act.
constitutional law
Law set forth in federal or state constitutions. (See civil law, common law, statutory law)
construction loan
A short-term loan made during the construction phase of a building project, often referred to as a interim financing.
construction terms
baluster, bearing wall, bracing, building code, building paper, building permit, coping, crawl space, detached garage, downdrain, drywall, , eave, elevations, flashing, header, joist, junction box, masonry, on center, P trap, plot plan
construction/permanent loan
A construction permanent loan, also known as a "construction-to-permanent loan" or "CP loan," is a type of loan used to finance the construction of a new home or building. Unlike a traditional construction loan, which is typically short-term and covers only the cost of construction, a construction permanent loan combines the construction financing with a long-term mortgage.
constructive eviction
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. (See eviction, actual eviction, lease)
constructive fraud
Breach of a legal or equitable duty that the law declares fraudulent because of its tendency to deceive others, despite no showing of dishonesty or intent to deceive. A broker may be charged with constructive fraud for failing to disclose a known material fact when the broker had a duty to speak — for example, if a listing broker failed to disclose a known major foundation problem not readily observable upon an ordinary inspection. (See material fact)
constructive notice
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.
constructive receipt
Control of the cash proceeds in a delayed exchange without actual physical possession by the exchanger or his or her agent.
consulting contract
A consulting contract is an agreement between a homeowner and a distressed property consultant under which the consultant agrees to provide consulting services.
consulting services
Consulting services are services provided by a distressed property consultant to a homeowner that the consultant represents will help to achieve any of the following:
- top, enjoin, delay, void, set aside, annul, stay, or postpone a foreclosure filing, a foreclosure sale, or the loss of a home for nonpayment of taxes
- Obtain forbearance from any servicer, beneficiary, or mortgagee, or relief with respect to the potential loss of the home, for nonpayment of taxes
- Assist the homeowner to exercise a right of reinstatement or similar right provided in the mortgage documents or any law or to refinance a distressed home loan
- Obtain any extension of the period within which homeowners may reinstate or otherwise restore their rights with respect to the property
- Obtain a waiver of an acceleration clause contained in any promissory note or contract secured by a mortgage on a property in foreclosure
- Assist the homeowner to obtain a loan or advance of funds
- Assist the homeowner in answering or responding to a summons and complaint, or otherwise providing information regarding the foreclosure complaint and process
- Avoid or ameliorate the impairment of the homeowner's credit resulting from the commencement of a foreclosure proceeding or tax sale
- Save the homeowner's property from foreclosure or loss for nonpayment of taxes
consumer
Consumer means a natural person who seeks or acquires goods, services, or money for personal, family, or household use other than for the purchase of real property.
consumer confidence
Consumer confidence is a measure of how optimistic or pessimistic consumers are about the overall state of the economy and their personal financial situation. It influences spending and saving behaviors, as higher confidence typically leads to increased spending, while lower confidence can result in reduced consumer activity.
Consumer Financial Protection Bureau
Federal agency created by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 to create and coordinate regulations intended to correct the mortgage lending practices that led to the housing crisis of 2007-2010.
consumer loan
A consumer loan establishes consumer credit; usually for unsecured purposes. Also known as a personal loan.
Consumer Price Index (CPI)
Published by the Bureau of Labor Statistics, the CPI measures change in prices for a carefully defined market basket of goods and services, including food, rent, maintenance costs, medical and dental services, transportation, entertainment, clothing, and other items commonly purchased. The average prices of a base year are defined as 100, so an index of 200 means prices have doubled since that base year.
Consumer Recovery Account
State fund financed by real estate license fees and intended to help compensate victims of real estate licensee fraud, misrepresentation, deceit, or conversion of trust funds, when a court-ordered judgment cannot be collected.
consumer transaction
Consumer transaction means a transaction between a lender and a consumer, in which the money, property, or services are primarily for personal, family, or household purposes.
consumer-driven model
Creating products and services tailored to suit consumer demand, essentially answering the question about what consumers want.
consumer-driven model
A business model where a company creates products and services tailored to suit consumer demand, essentially answering the question about what consumers want.
consumerism
1. Advocating the rights of consumers, as against the efforts of advertisers; 2. The emphasis of advertising and marketing toward creating consumers.
consummate
The word consummated, when used to describe a loan, means "to make the borrower responsible" for the loan.
consumption
The use of goods and services by consumer purchase or in the production of other goods.
contact management
A program that allows the user to manage contact information and scheduling.
contempt
A civil contempt is the refusal to obey an order in a civil case. Usually the person is ordered into custody or is fined progressively, or both, until the contempt is purged by compliance.
contested case
Contested case hearing is the name for quasi-judicial administrative hearings governed by state law. It is simply a hearing where the accused party is allowed to present his/her case. State agencies that make decisions that could affect people's rights, duties, and privileges must have a process for holding contested case hearings.
contingency
A provision in a contract that requires a certain act to be done or a certain event to occur before the contract becomes binding.
contingency plan
A contingency plan is designed to take effect in the event of a possible future circumstance.
contingency recruiters
Recruiters who place candidates in order to collect fees.
contingent beneficiary
Person or other legal entity designated to receive a benefit in case the primary beneficiary is unable, unavailable, or unwilling to receive it. Also called secondary beneficiary.
continuing education
A requirement in most states that real estate and appraiser licensees complete a specified number of educational offerings as a prerequisite to license renewal or reinstatement.
continuum
Something absolutely continuous and homogenous; an uninterrupted sequence.
contract
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. (See valid contract)
FindLaw Contract Law Web GuideContract Compliance Unit (CCU)
The Contract Compliance Unit (CCU) implements Executive Law Article 15-A to ensure the participation of minority- and women-owned business enterprises (M/WBEs) in contracts for construction, commodities, and professional services with housing entities under DHCR supervision in New York. It monitors M/WBE participation goals in contracting and subcontracting opportunities and reviews the affirmative action aspects of contractors' workforce utilization plans to ensure the hiring of minorities and women.
contract for deed
The contract for deed is used extensively in many areas, where it may be called a land contract, agreement of sale, installment contract, articles of agreement, conditional sales contract, bond for deed or real estate contract.
contract of sale
A contract for the purchase and sale of real property in which the buyer agrees to purchase for a certain price and the seller agrees to convey title by way of a deed or an assignment of lease (for leasehold property). In addition to binding the parties to the purchase and sale of the property during the period of time required to close the transaction, the contract frequently serves as the initial directions to the closing agent or escrow company to process the mechanics of the transaction. In essence, the contract of sale is an executory contract to convey property, serving as the vehicle to get to the deed, which finally conveys title; it is the blueprint for the entire transaction. Some of the many names for this contract are sales contract, purchase agreement, deposit receipt, offer and acceptance, agreement of sale, offer to lease or purchase and sale agreement.
contract rent
The rental income as stipulated by the parties in a lease. (See market rent)
Contract Writing Course Certificate (AZ)
The contract writing course certificate is given by the providing school to each student who completes the 6-hour "Introduction to Contract Writing" course. It must be included in your application package.
contractor system
Home construction involves a large number of specialized trades, including carpenters, painters, plumbers, glaziers, and stonemasons among others. The demands of organizing and supervising a this legion of specialists gave rise to the contractor system under which a single supervising contractor oversees an entire building project. The specialists hired by the contractor are referred to as subcontractors.
Contractors State License Board
The state agency that licenses and regulates building contractors.
www.cslb.ca.govcontractual obligation
The agreed-on performance by one of the parties to a contract.
contribution
The appraisal principle that states that the value of any component of a property is what it contributes to the value of the whole or what its absence detracts from that value. (See appraisal)
control person
A control person is an individual, partnership, corporation, trust, or other organization that directs the management or policies of a company. The term includes, but is not limited to, the following: A company's executive officers, including the president, chief executive officer, chief financial officer, chief operations officer, chief legal officer, chief compliance officer, director, and other individuals having similar status; For a corporation, each shareholder that, directly or indirectly, owns 10 percent or more, or that has the power to vote 10 percent or more, of a class of voting securities unless the applicant is a publicly traded company; For a partnership, all partners who have contributed 10 percent or more of the partnership's capital; For a trust, each trustee; For a limited liability company, all elected managers and members who have contributed 10 percent or more of the partnership's capital; Principal loan originators.
controlled business arrangements
As defined under the Real Estate Settlement Procedures Act (RESPA), an arrangement or combination in which an individual or a firm has more than a 1 percent interest in a company to which the individual or firm regularly refers business. Such arrangement is permitted provided that written disclosure of the affiliation is made; an estimated charge for the service is provided; consumers are free to obtain the services elsewhere; and referral fees are not exchanged among the affiliated companies. (See Real Estate Settlement Procedures Act (RESPA))
controlled substance
A drug or chemical substance whose possession and use are either controlled by law, or illegal.
conventional lender
One who makes loans that are neither insured by the FHA nor guaranteed by the VA.
conventional life estate
A conventional life estate is created intentionally by the owner. It may be established either by deed at the time the ownership is transferred during the owner's life or by a provision of the owner's will after his or her death. The estate is conveyed to an individual who is called the life tenant. The life tenant has full enjoyment of the ownership for the duration of his or her life. When the life tenant dies, the estate ends and its ownership passes to another designated individual or returns to the previous owner. (See life estate)
conventional loan
A loan made with real estate as security and not involving government participation in the form of insuring (FHA) or guaranteeing (VA) the loan. The mortgagee can be an institutional lender or a private party. The loan is conventional in the sense that it conforms to accepted standards and the lender looks solely to the credit of the borrower and the security of the property to ensure payment of the debt. Conventional loans include those loans insured by private mortgage insurance companies.
Because the lender is not subject to the more stringent government regulations of the FHA and VA, conventional loans are frequently more flexible with respect to terms and interest rates, although they do reflect a higher interest rate and larger down payment requirements due to the higher risk involved. Nonconventional loan interest rates (VA loans) are fixed by federal regulation. Conventional loans are subject to institutional regulation, which may be statutory (federal, state) or self-created. (See FHA, VA loan)
conventional mortgage rate
Conventional mortgage rate means the most recently published annual yield on conventional mortgages published by the Board of Governors of the Federal Reserve System.
conventional prepayment penalty
Conventional prepayment penalty means any prepayment penalty or fee that may be collected or charged in a home loan and that is authorized by law, provided the home loan does not have an annual percentage rate that exceeds the conventional mortgage rate by more than two percentage points and does not permit any prepayment fees or penalties that exceed 2 percent of the amount prepaid. The penalty is usually limited to the first 3 to 5 years of the loan's term.
conversion
The appropriation of property belonging to another. The conversion may be illegal (as when a broker misappropriates client funds), or it may be legal (as when the government condemns property under the right of eminent domain). (See eminent domain)
conversion clause
A provision in some ARMs that allows you to change the ARM to a fixed-rate loan at some point during the term.
converted-use properties
Factories, warehouses, office buildings, hotels, schools, churches and other structures that have been converted to residential use. Developers often find renovation of such properties more aesthetically and economically appealing than demolishing a perfectly sound structure to build something new. An abandoned warehouse may be transformed into luxury loft condominium units, a closed hotel may reopen as an apartment building, and an old factory may be recycled into a profitable shopping mall.
convertible loan
An adjustable-rate loan that the borrower can convert to fixed-rate at any time during the life of the loan. (See adjustable-rate mortgage, hybrid financing)
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. (See title)
cookie
A cookie is a message sent to a web browser by a web server. The browser stores the cookie as a text file. When you return to the same web site, your browser will send the cookie to the web server. The server uses the cookie information to present custom web pages. For example, instead of seeing a generic page when you return to a proU.net course, you are returned to the page in the course where you left off after a previous study session. Your web browser settings must allow cookies to be accepted for proU.net courses to function correctly.
cooperating broker
A broker who assists another broker in the sale of real property. Usually the cooperating broker is the selling broker who found a buyer for the listing broker. (See listing broker)
cooperating broker fee agreement
An agreement between brokers specifying the commission split should the cooperating broker sell a property listed by the listing broker. (See cooperating broker, listing broker)
cooperating split
Sharing of the compensation (usually, a commission) received by the listing broker with the broker who brings the buyer to the transaction.
cooperative
A residential multiunit 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.
coping
1. The tile around the outer edge of a swimming pool at the water line. 2. The flat portion at the top of a parapet wall rising above the roof line of a building. (See construction terms)
copyright
Copyright is the exclusive legal right to print, publish, perform, film, or record literary, artistic, or musical material, and to authorize others to do the same. (See copyright infringement)
copyright infringement
Copyright infringement is a violation of the rights secured by a copyright. (See copyright)
core services
For real estate, the meaning of core services has expanded beyond brokerage in many companies to include an array of services that seamlessly take buyers and sellers from doorstep to settlement. In some companies, that includes linking consumers with job placement for a spouse, day care for a child or elderly parent, or housecleaning, yard care, or handyman services.
corporate deed
A deed conveying corporation-owned real estate that is valid when signed by an authorized officer of the corporation. If all or a substantial portion of a corporation's real estate is being conveyed, usually a resolution authorizing the sale must be secured from the shareholders.
corporate property manager
A corporate property manager is a professional responsible for overseeing and managing real estate assets owned by a corporation. This role can vary significantly depending on the company's size, the nature of its property holdings, and the strategic importance of the real estate to its business operations. Duties include property maintenance and operations, tenant relations, budget management, and strategic planning to increase the corporation's real estate portfolio.
corporation
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.
corporation franchise tax lien
State governments generally levy a corporation franchise tax on corporations as a condition of allowing them to do business in the state. Such a tax is a general statutory involuntary lien on all real and personal property owned by the corporation.
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 measured and corrected to a full six miles. Range lines are only parallel in theory. Due to the curvature of the earth, range lines gradually approach each other. If they are extended northward, they eventually meet at the North Pole. The fact that the earth is not flat, combined with the crude instruments used in early days, means that few townships are exactly six-mile squares or contain exactly 36 square miles. Also called guide meridians. (See government survey system)
Corrective action
Corrective action is process of rectifying problems. Corrective action to real property usually involves structural change to ensure that such problems do not recur.
corrective decisions
Corrective decisions resolve problems, dilemmas, or crises that require solutions to keep the organization on track or to maintain order in its systems and processes.
correlation
Also known as reconciliation. The step in the appraisal process in which the appraiser reconciles the estimates of value received from the sales comparison, cost, and income capitalization approaches to arrive at a final opinion of market value for the subject property. (See cost approach, income capitalization approach, sales comparison approach)
correlative use
Doctrine that states that property owners may use a reasonable amount of water from an underground source, but not to the detriment of adjoining property owners. Information about California water rights can be found at the Web site of the Bureau of Land Management (www.blm.gov).
correlative water rights
A modern law in some states that holds that a riparian owner who has rights in a common water source is entitled to take only a reasonable amount of the total supply for the beneficial use of land (such as irrigation). (See appropriative water rights, riparian rights)
correspondent
A mortgage banker. (See mortgage banker)
correspondent contracts (Arizona definition)
An agreement between a lender and a funding source under which the funding source may fund, or is required to fund, loans originated by the lender.
corridor development
Corridor development refers to the strategic planning and construction of infrastructure, commercial, residential, and mixed-use projects along major transportation routes such as highways, railways, or transit lines. This approach aims to maximize land use efficiency, improve connectivity, and stimulate economic growth in the surrounding areas. By focusing development along these corridors, communities can enhance accessibility, reduce traffic congestion, and promote sustainable urban growth.
corrosion
The dissolving and wearing away of metal caused by a chemical reaction such as between water and the lead pipes or solder in a home's plumbing. (See corrosive)
corrosive
A substance that eats or wears away materials gradually by chemical action. (See corrosion)
cosigner
Additional signers of a financial agreement that add their personal guarantees to that of the borrower. A cosigner is a natural person who assumes liability for the obligation of a consumer without receiving goods, services, or money in return for the obligation; or, in the case of an open-end credit obligation, without receiving the contractual right to obtain extensions of credit under the account. Cosigner includes any person whose signature is requested as a condition to granting credit to a consumer, or as a condition for forbearance on collection of a consumer's obligation that is in default. The term does not include a spouse whose signature is required on a credit obligation to perfect a security interest pursuant to state law.
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. (See appraisal)
cost basis
A cost basis of real property is usually based on the purchase price of the property plus the buyer's capitalized closing costs. (See closing costs)
cost manuals
Publications, now often electronic, that provide updated information on building and component construction costs in various areas.
cost of credit
The interest paid on a loan used to make a purchase.
cost of sales
Cost of sales are the direct costs of production of goods sold by a company. They include the cost of the materials and direct labor. It excludes indirect expenses, like distribution and sales force costs. COGS appears on the income statement and can be deducted from revenue to calculate a company's gross margin. Also known as cost of goods sold.
cost recovery
An Internal Revenue Service term for depreciation. (See depreciation)
cost service index method
An appraisal technique used to determine reproduction or replacement cost. The appraiser multiplies the original cost of construction by a price index for the geographic area to allow for price changes. Also known as index method.
cost-plus
A method of paying construction contractors when the contractor is paid the actual costs of the job plus a percentage for profit. (See fixed-fee)
Costa-Hawkins Rental Housing Act
Costa-Hawkins refers to the Costa-Hawkins Rental Housing Act, a California state law that was enacted in 1995 to limit local rent control policies. The law established statewide guidelines for rent control and provided certain protections for property owners. Key aspects of Costa-Hawkins include:
- Vacancy Decontrol: Under Costa-Hawkins, landlords can set rental rates for new tenants when a rental unit becomes vacant. This means that when a tenant moves out of a rent-controlled unit, the landlord can increase the rent to market rate for the new tenant.
- Exemptions: The law exempts single-family homes and condominiums, as well as new construction from local rent control regulations.
counteroffer
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.
county assessor
The official responsible for determining property values for ad valorem taxation purposes.
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. (See CC&R)
covenant against encumbrances
The grantor warrants that the property is free from liens or encumbrances, except for any specifically stated in the deed. Encumbrances generally include mortgages, mechanics' liens and easements. If this covenant is breached, the grantee may sue for the cost of removing the encumbrances. (See encumbrances, liens)
covenant of further assurance
The grantor promises to obtain and deliver any instrument needed to make the title good. For example, if the grantor's spouse has failed to sign away dower rights, the grantor must deliver a quitclaim deed (discussed later) to clear the title.
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. The grantor guarantees that the grantee's title will be good against third parties who might bring court actions to establish superior title to the property. If the grantee's title is found to be inferior, the grantor is liable for damages.
covenant of seisin
The grantor warrants that he or she owns the property and has the right to convey title to it ("seisen" simply means "possession").
covenant of warranty forever
The grantor promises to compensate the grantee for the loss sustained if the title fails at any time in the future. These covenants in a general warranty deed are not limited to matters that occurred during the time the grantor owned the property: they extend back to its origins. The grantor defends the title even against himself/herself and all those who previously held title.
covenant to repair
In most lease agreements the landlord expressly covenants (promises) to make necessary repairs to the premises. If there is no express promise to repair, a court may find an implied covenant to repair, depending on the nature of the work required.
covenants that run with the land
Convenants that become part of the property rights and benefit or bind successive owners of the property.
Covered account
An account that a financial institution or creditor offers or maintains, primarily for personal, family, or household purposes, that involves or is designed to permit multiple payments or transactions, such as a credit card account, or mortgage loan.
covered contract
A covered contract is any contract, agreement, or arrangement between equity purchasers and equity sellers.
covered loss
A covered loss refers to an event or damage that falls within the terms of an insurance policy, entitling the insured party to a payout. It is typically outlined in the policy's coverage section, specifying which types of losses are included. Exclusions and limits may apply, affecting the extent of the coverage.
covered multi-family dwelling (Arizona Fair Housing Act)
Residential building housing more than one household, such as an apartment building.
covered services
Covered services include financial counseling, including debt and budget counseling, to assist a homeowner in connection with a residence in foreclosure; contacting a creditor on behalf of a homeowner; receiving money for the purpose of distributing it to creditors; arranging, or attempting to arrange, an extension of the period within which a homeowner may cure a default and reinstate their obligation pursuant to a note, mortgage, or deed of trust; arranging or attempting to arrange any delay or postponement of the time of a foreclosure sale; advising in the preparation and filing of documents with the United States bankruptcy court; giving any advice, explanation, or instruction to a homeowner that relates to the cure of a default in, or the reinstatement of, an obligation secured by a mortgage or other lien on the residence in foreclosure, to the full satisfaction of the obligation or to the postponement or avoidance of a foreclosure sale.
crawl space
1. The space between the ground and the first floor, often found in homes with no basement. 2. The space found between the top floor and the roof, often found in the place of an attic. (See construction terms)
creative financing
Structuring the financing of a real estate transaction based on the cash positions of the buyer and seller. It involves working in conjunction with the existing financing to create a financing package that enables the buyer to purchase the property at better interest rates or terms than a conventional loan. (See conventional loan)
credit
In closing statements, that which is due and payable to either the buyer or seller—the opposite of a charge or debit. The credit appears in the right-hand column of the accounting statement.
credit agency/bureau
A credit agency is a company that maintains credit data and provides credit information. Also known as a credit bureau or credit repository. (See credit repository, credit report, credit score)
Equifax, Experian, TransUnioncredit bid
Bid made by a lender at a foreclosure sale representing the amount of the outstanding indebtedness owed to the lender by the defaulting borrower.
credit check
A report an owner/landlord obtains, with the prospective resident's approval, providing an independent look at the resident's past credit history, debts, judgments, evictions, etc.
credit loan
A mortgage issued upon the financial strength of a borrower, without regard for collateral. (See mortgage)
credit property insurance
The term credit property insurance does not include fire and hazard insurance, flood insurance, FHA mortgage insurance, DVA loan guarantees, guaranteed rural housing (GRH) loan guarantees, and private mortgage insurance that would compensate the holder of a home loan directly for any shortfall between the value of the real property securing the loan and the amount owed on an obligation in default.
credit rating
The Dun & Bradstreet credit rating system. Rating the financial strength of commercial and industrial companies. Information can be found at Dun & Bradstreet Website
credit report
A document, obtained from a credit repository, indicating an individual's credit circumstances. Used to derive credit scores for borrowers seeking a real estate loan. (See credit repository, credit score)
credit reporting agency (CRAs)
Credit reporting agencies (CRAs), also called credit bureaus, collect information relevant to a person's credit history, and use the information to assign a credit score to indicate creditworthiness. Prospective creditors purchase credit reports from CRAs about specific individuals, and use this information to decide how much credit, if any, to extend to the individual. (See credit bureau, credit repository, credit report, credit score) Information can be found at Equifax, Experian, TransUnion
credit repository
Organizations that maintain and make available public credit history records; lenders use information from credit repositories to derive credit scores for potential borrowers. (See credit report, credit score) Information can be found at Equifax, Experian, TransUnion
credit score
A snapshot of a borrower's credit worthiness; a numerical score based on statistics indicating the risk of default on a loan; takes into consideration available credit, management of existing credit, and any detrimental credit information. (See credit repository, credit report)
credit unions
Credit unions are cooperative organizations whose members place money in savings accounts. In the past, credit unions made only short-term consumer and home improvement loans. Recently, however, they have branched out to originating longer-term first and second mortgages and deed of trust loans. (See noninstitutional lenders)
creditor
The person to whom a debtor owes a debt or obligation; a lender.
creditworthiness
The way a lender measures the ability of a person to qualify and repay a loan.
creosote
A potentially flammable oily byproduct of wood burning. Often builds up in the chimney of wood burning fireplaces. (See construction terms)
criminal history verification
Checking a prospective resident/tenant's past criminal behavior can be part of the credit check. Owners/landlords might want to consider checking the local county court database for any additional information.
criminal penalties
Criminal penalties are sanctions imposed by a court of law on individuals or entities found guilty of violating criminal laws. These penalties can include imprisonment, fines, probation, community service, or other punishments designed to deter criminal behavior and uphold justice.
cross-default
A provision of many junior mortgages stipulating that a default in one mortgage also triggers a default in the mortgage in which the clause appears. (See junior lien/mortgage)
crunch down
A form of recasting where the lender rewrites an existing mortgage loan to a lower balance to avoid a foreclosure. (See foreclosure, recasting)
culture of inclusion
Roles and behaviors that respect mutual interests expressed internally, externally, at a community level and globally.
cumulative zoning
Zoning that allows more restrictive uses. For example, a lot zoned for a multi-family dwelling would allow a single-family home if the zoning were cumulative. (See zoning)
curable depreciation
A depreciated item that can be restored or replaced economically. (See also functional obsolescence and physical deterioration)
curb appeal
Curb appeal refers to the overall attractiveness of a property and its surroundings when viewed from the street. Enhancing curb appeal can involve various improvements such as landscaping, a fresh coat of paint on the exterior, updating the front door, and ensuring the property is well-maintained and visually appealing from the outside.
cure period
A cure period is a period of time given to a party in non-compliance to remedy the non-compliance. Failure to cure within the cure period will result in a breach.
currency
Notes and coin that are the "current" medium of exchange in a country (money supply). Gold, as well as national currencies, that act as reserve currencies—such as the U.S. dollar—are referred to as international currency because they are regarded as acceptable for the settlement of international debts.
current rent
Current rents are rents that tenants are currently paying. (As opposed to 'market rents', which refer to what the property would rent for if offered to new tenants.)
curriculum vita
Resume that is chronological in format and emphasizes educational background first, and then work history. It can exceed two pages because it can include publications, patents and research.
curtesy
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.
customer
A prospective buyer of real estate. Not to be confused with a property seller, who is the listing broker's client.
customer
Any person who is or may be required to pay for goods or services offered through telemarketing.
cyber security
Technologies and processes designed to protect computers, networks and data from vulnerabilities, unauthorized access, and attacks by criminals delivered over the Internet.
D&O Insurance
Provides liability coverage for board members against claims alleging wrongful acts in their capacity as directors or officers.
damage or contamination
damages
Damages refer to the monetary compensation awarded by a court to a party who has suffered a loss or injury due to another party's breach of contract or wrongful action. The purpose of damages is to restore the injured party to the position they would have been in if the breach or wrongful act had not occurred.
data
Raw facts (See database)
data source list
A listing of government offices, companies, and other locations at which information regarding real estate can be found.
database
A collection of data stored on a computer and arranged for ease of manipulation, search and retrieval. (See data)
database software
A software program designed to allow the user to easily create and manage databases. (See data, database)
date of the appraisal report
The date of the appraisal report indicates when the appraisal analysis was completed.
datum
A horizontal plane from which heights and depths are measured.
days
Days means a period of time expressed in calendar days, except when disclosures are required to be given to borrowers—then days will exclude Saturdays, Sundays, and legal holidays.
Days in each month
| JAN - | 31 | FEB - | 28 | MAR - | 31 | |||
| APR - | 30 | MAY - | 31 | JUN - | 31 | |||
| JUL - | 31 | AUG - | 31 | SEP - | 30 | |||
| OCT - | 31 | NOV - | 30 | DEC - | 31 |
De facto steering
De facto steering happens when there is no explicit acts of steering, but the policies of or regulators produce an outcome that is the same as if there were. The result is a racial gap in housing opportunities and values…which is simply another way of saying housing segregation.
debenture
A type of long-term bond or note given as evidence of debt. Unlike a mortgage note, a debenture is not secured by a specific property. Fannie Mae issues debentures to finance the acquisition of mortgages in the secondary mortgage market. If a borrower defaults on an FHA loan, the government gives interest-bearing debentures to the mortgagee after the title is transferred to FHA. (See Fannie Mae, FHA)
debit
A charge on an accounting statement or balance sheet (appearing on the left-hand column); the opposite of a credit. Used in bookkeeping and in preparing the closing statement in a real estate transaction.
debt financing
Debt financing is when a firm raises money for working capital or capital expenditures by selling bonds, bills, or notes to individual and/or institutional investors. In return for lending the money, the individuals or institutions become creditors and receive a promise that the principal and interest on the debt will be repaid.
debt ratio
The relationship between a person's long term debt payments and their monthly income.
debt relief service
Any program or service represented, directly or by implication, to renegotiate, settle, or in any way alter the terms of payment or other terms of the debt between a person and one or more unsecured creditors or debt collectors, including, but not limited to, a reduction in the balance, interest rate, or fees owed by a person to an unsecured creditor or debt collector.
debt service coverage ratio
The ratio of the annual loan payment to an income property's net operating income (NOI). The ratio is calculated by dividing the NOI by the annual loan payment. (See net operating income)
debt-to-income ratio
A borrower's monthly long term debt payments divided by the borrower's gross monthly income and expressed as a percentage. This ratio is used by lenders to determine if a loan applicant is qualified for the amount of the loan.
debtor
One who owes money; a borrower, a maker of a note; a mortgagor.
debug
To look for and remove errors in a software program.
decedent
A deceased person, particularly one who has died recently.
decentralized organization
An organization where decision-making authority does not sit with a central figure or group. Some decentralized organizations empower all levels within the hierarchy with decision influence.
decimal
A numerical system based on representations of numbers in units of 10, with the decimal point indicating positive multiples of ten to the left of the decimal point, and negative multiples of ten to the right of the decimal point.
decisiveness
Having the power or quality of deciding; putting an end to controversy; displaying no or little hesitation; resolute; determined.
declaration of condominium
The declaration includes: 1. A legal description of the condominium units and the common elements (including limited common elements-those that serve only one particular unit); 2. A copy of the condominium's bylaws, drafted to govern the operation of the owners' association; 3. A survey of the property; 4. An architect's drawings, illustrating both the vertical and horizontal boundaries of each unit; and 5. Any restrictive covenants controlling the rights of ownership. (See condominium)
declaration of default
A notice, accompanied by the original note and trust deed, provided by a lender (beneficiary) to a trustee upon the default of trustor (borrower), stating the reason for the default.
declaration of restrictions
A statement of all the covenants, conditions and restrictions (CC&Rs) that affect a parcel of land. A subdivider may note the restrictions on the map or plan when recording the subdivision plat. If the restrictions are numerous, the subdivider may also prepare a separate document called a declaration, listing all the restrictions, and then record this declaration. (See CC&Rs)
declarations of coverage/coverage amount/limit of liability
The maximum amount of money the insurance company will pay out for a covered loss. If a policy holder's house burns down, and their coverage amount is $200,000, that is the maximum they will receive. Generally the policy holder selects the amount of coverage, subject to insurance company minimums and maximums allowed for a given property.
declaratory relief action
An action to have a court determine the rights of parties under a contract or a statute. The theory is that an early resolution of legal rights will resolve some or all of the other issues in the matter.
declaratory statement
A declaratory statement is a formal, legally binding determination issued by a regulatory agency or court in response to a request for clarification on how a law, rule, or regulation applies to specific facts or circumstances. Its purpose is to provide guidance and prevent uncertainty or potential violations by interpreting legal or regulatory provisions in advance.
decline
Decline is a period in which property loses value due to lack of maintenance.
declining-balance method
An accounting method of depreciation for income-tax purposes designed to provide larger-than-straight-line deductions in the early years of a property's life, and applicable to property placed in service before 1981.
The declining-balance method of calculation is applied in the IRS percentage tables for determining ACRS depreciation deductions applicable to personal property. The 3-, 5-, 7- and 10-year classes use the 200 percent declining-balance method, switching to straight-line at the appropriate time, and the 15- and 20-year classes use the 150 percent declining-balance method, also switching to straight-line. (See depreciation, straight-line method)
dedication
The voluntary transfer of private property by its owner to the public for some public use, such as for streets or schools. deed A written instrument that, when executed and delivered, conveys title to or an interest in real estate.
deductible
The amount a policy holder must first pay in any approved insurance claim. If the policy holder has a $5,000 loss and their deductible is $1000, the insurance company will reimburse $4,000. The higher deductible, the lower the annual policy premiums.
deductions
Amounts on which income tax need not be paid; the home mortgage interest deduction from taxable income benefits homeowners.
deed
A written instrument, when executed and delivered, that conveys title to or an interest in real property. The deed is recorded on public record with the property description and the owner's signature. Also known as the title. (See title)
deed executed pursuant to court order
Executors' and administrator' deeds, masters' deeds, sheriffs' deeds and many other types are all deeds executed pursuant to a court order. These deeds are established by state.
deed in lieu of foreclosure
Voluntarily signing over to a lender the property pledged as collateral on a defaulted loan. It is an alternative to a foreclosure action. Its main disadvantage to a lender is that the deed does not wipe out junior liens, as a foreclosure action would. (See junior liens)
deed in trust
An instrument that grants a trustee under a land trust full power to sell, mortgage and subdivide a parcel of real estate in the case of default. The beneficiary controls the trustee's use of these powers under the provisions of the trust agreement.
deed of reconveyance
A document used to transfer naked title from the trustee back to the borrower (trustor) after a debt secured by a deed of trust has been paid to the lender (beneficiary). (See deed of trust)
deed of trust (Arizona definition)
A deed of trust is a legal document signed and notarized by the borrower, which is then recorded at the courthouse to publicly disclose that the property is secured by a debt. It acts as security for the loan. It outlines the borrower’s rights and responsibilities in relation to the Promissory Note that represents the loan. The deed of trust also details insurance requirements, default provisions, property use restrictions, and other relevant terms, typically spanning about 15 pages.
deed of trust (DOT)
A deed of trust is a legal document signed and notarized by the borrower, which is then recorded at the courthouse to publicly disclose that the property is secured by a debt. It acts as security for the loan. It outlines the borrower's rights and responsibilities in relation to the Promissory Note that represents the loan. The deed of trust also details insurance requirements, default provisions, property use restrictions, and other relevant terms, typically spanning about 15 pages.
Deed of Trust and Assignment of Rents
The first page of a lending instrument; identifies the parties to the agreement, conveys title to the trustee, describes the collateral, states the terms and conditions of the note, and refers to previously recorded "fictitious deeds of trust."
deed restrictions
Provisions placed in deeds to control future uses of the property. (See covenants, conditions & restrictions, restrictive covenants)
defamation
An untrue statement lowering one's reputation in the community and causing injury to that person. Opinions are not false statements. However, if the opinion is stated as fact, then it can be construed as a false statement. The plaintiff in a defamation suit must show that the defendant understood the statement, and understood that the statement applied to the plaintiff.
default
The nonperformance of a duty or obligation that is part of a contract. The most common occurrence of default on the part of a buyer or lessee is nonpayment of money when due. A default is normally a breach of contract, and the nondefaulting party can seek legal remedies to recover any loss. Defaults in long-term leases or contracts for deed other than nonpayment might be failure to pay real estate taxes, damage to the property and so forth.
defeasance clause
A clause used in leases and mortgages that cancels a specified right upon the occurrence of a certain condition, such as cancellation of a mortgage upon repayment of the mortgage loan.
defeasible fee estate
An estate in which the holder has a fee simple title that may be divested upon the occurrence or nonoccurrence of a specified event. There are two categories of defeasible fee estates: fee simple on condition precedent (fee simple determinable) and fee simple on condition subsequent.
defect
A condition that materially affects the value or use of residential property in an adverse manner.
defect of record
Any encumbrance on a title that is made a part of the public record. Recorded defects include judgments, deeds of trust, mortgages, other liens and easements. (See encumbrance)
defendant
A defendant is the person to which a legal action or lawsuit is taken. (See plaintiff)
deferred capital gain
The part of the realized gain that is tax deferred. (See capital gains, excluded capital gain, realized capital gain (loss), recognized capital gain)
deferred maintenance
Physical deterioration of a building resulting from postponed maintenance.
deficiency judgment
1. A personal judgment levied against the borrower when a foreclosure sale does not produce sufficient funds to pay the mortgage debt in full. 2. A deficiency judgment is a judgment against a borrower for the balance of a debt owed when the security for a loan is insufficient to satisfy the debt. A deficiency occurs when the foreclosure sale of a property produces less than the amount due on the loan.
deficit rent
The amount by which market rent exceeds scheduled rent at the time of the appraisal.
defragment
Reorganizing the data on a computer storage disk so that the data is stored in sequence rather than in various locations on the disk. (See data)
delayed exchange
A three way exchange in which the properties close at different times.
delegation
To appoint another person as deputy or representative; to commit powers or functions to another as agent or deputy.
delete
delinquent
The status of a financial obligation, such as a mortgage loan, when it is past-due.
delinquent taxpayer
demand
The amount of goods people are willing and able to buy at a given price; often coupled with supply. (See supply)
demand feature
The Closing Disclosure has a statement that reads “Your loan has a demand feature,†which is checked “yes†or “no.†If it is checked “yes,†the lender can require that that the borrower immediately pay the entire loan balance (principal and interest) at any time. The lender can make this demand for any reason or for no reason.
demand for payoff
Lender's statement of remaining indebtedness that will be paid at closing on transfer of the property securing the debt.
Democratic Style
A humanistic management style in which the manager creates a democratic environment that promotes initiative and recognizes the value of the human resources. Participative management utilizes the talents and insight of people to a greater extent than is common in other styles of management. See also autocratic style; dictatorial style; laissez-faire style.
demographics
"Demographics" is the study and description of a population, especially in reference to size, density and distribution. Demographic information is of particular importance to people involved in market analyses and highest and best use analyses in determining potential land uses of sites.
demography
The statistical study of human populations, especially in reference to size, density and distribution. Demographic information is of particular importance to people involved in market analyses and highest and best use analyses in determining potential land uses of sites.
demolition
The systematic destruction of a building, all or in part. Demolition is the opposite of construction.
density zoning
Zoning ordinances that restrict the maximum average number of houses per acre that may be built within a particular area, generally a subdivision. (See zoning)
Department
Arizona Department of Real Estate.
department
The department is the Department of Banking of the Commonwealth.
department
The department is the Department of Banking and Finance.
Department of Housing and Community Development
State agency that carries out California's State Housing Law by adopting building standards and administrative regulations that ensure safe and durable housing while safeguarding affordability.
Department of Veterans Affairs
Federal agency providing assistance to veterans, including the guarantee of VA mortgage loans. Department of Veterans Affairs Website
deposit
Money offered by a prospective buyer as an indication of good faith in entering into a contract to purchase; earnest money; security for the buyer's performance of a contract. An earnest money deposit is not necessary to create a valid purchase contract because the mutual promises of the parties to buy and to sell are sufficient consideration to enforce the contract. If the buyer completes the purchase, the deposit money is applied toward the purchase price.
deposition
A witness's out-of-court testimony that is reduced to writing. Usually, there is a court reporter present during the testimony. The deposition is conducted under oath, usually in one of the lawyer's offices. A transript is always made of the deposition and it is used for discovery purposes.
depository institution
The term depository institution means any bank, credit union or savings association.
depreciable basis
In investment real estate only structures can be depreciated. The depreciable basis is the original basis less the value of the land. (See basis)
depreciation
The decrease in the value of an asset allowed when computing property value for tax purposes. It can also be a loss in the appraised value of a property due to physical deterioration. This latter type of depreciation is curable when it can be remedied by repair or an addition to the property, and incurable when there is no easy or economical remedy. (See appreciation)
depreciation deduction
This is a deduction that goes on Schedule E and applies to real estate and any other capital asset that has a useful life of more than one year. For rental properties this could include flooring, sidewalks, a new kitchen, etc. The IRS required years of useful life for residential real estate is 27.5 years depreciation, while commercial real estate is 31 years. (See Schedule E)
depression
A severe and prolonged downturn in economic activity. A depression is commonly defined as an extreme recession that lasts two or more years. A depression is characterized by high unemployment, a drop in available credit, diminishing output, bankruptcies and debt defaults, reduced trade and commerce, and sustained volatility in currency values. In times of depression, consumer confidence and investments decrease, causing the economy to shut down.
descent
Acquisition of an estate by inheritance in which an heir succeeds to the property by operation of law.
designated agent
A licensee authorized by a broker to act as the agent for a specific principal in a particular transaction. A designated agent is the only agent in the company who has a fiduciary responsibility toward the principal.
desk costs
The term "desk costs" reflect the fact that salespeople do, in fact, make use of support staff, have telephone calls, need desk space, and take up some of the time of colleagues and managers. Overhead is divided by the number of salespersons NOT desks.
Desktop Originator
Desktop Originator (DO) is a system developed by Fannie Mae aimed at streamlining the mortgage origination process for brokers and correspondents. It works in conjunction with Desktop Underwriter (DU), Fannie Mae's automated underwriting system. DO allows mortgage originators to input loan application data, run it through DU for risk assessment, and receive immediate feedback on loan eligibility.
desktop publishing
A program that allows a user to manipulate text, graphics and images to create documents.
Desktop Underwriter
Desktop Underwriter (DU) is an automated system developed by Fannie Mae to help mortgage lenders evaluate mortgage loan applications. DU analyzes the credit report, employment, income, and assets of a borrower and provides an assessment of the credit risk posed by the borrower. The system also suggests mortgage loan terms that are appropriate based on the risk assessment. DU helps streamline the loan origination process, reduce the time and costs associated with underwriting, and increase the consistency and accuracy of loan evaluations. It does this by using complex algorithms to assess borrower information against predefined criteria and historical data. By providing a more standardized and objective approach to assessing mortgage applications, DU contributes to fair lending practices and helps ensure that loan decisions are based on the merits of the application rather than any subjective or potentially discriminatory factors.
destruction of premises
In many states, once the sales contract is signed by both parties, the buyer bears the risk of any damage to the property that may occur before closing. Of course, the contract may provide otherwise.
detached garage
A garage that is not attached to a home. Usually found in older homes. (See construction terms)
Developer (AZ Definition)
A person who offers real property in a development for sale, lease or use, either immediately or in the future, on the person's own behalf or on behalf of another person, under any of the provisions of Arizona subdivision law. A person whose involvement with a development is limited to the listing of property within the development for sale, lease or use is not included in the definition of "development".
developmental skills
Skills that can be developed through education and training, such as building self-esteem, motivation and goal-setting, and career planning.
deviation
The measure of how widely the individual varies from the general population.
devise
A transfer of real property under a will. The donor is the devisor, and the recipient is the devisee.
devisee
A devisee is the recipient of a property transferred under a will. (See devise, devisor)
devisible contract
A contract that consists of separate agreements that are not dependent on each other. The illegality of one part will not void the balance of the contract.
devisor
A devisor is the donor of property transferred under a will. (See devise, devisee)
dictatorial leadership
A leader or manager who operates like a dictator, making all the decisions about what, where, when, why, how things are done, and who will do them. Employees failing to following directions are usually disciplined.
diffusion index
A diffusion index indicates the percentage of items such as stocks, or characteristics in a given population that are rising or falling. This is a broad measure of the direction of change in economic activity.
digital storytelling
Tools of digital media to craft, record, share, and value the stories of individuals and communities, in ways that improve all our lives.
digital subscriber line (DSL)
DSL (digital subscriber line) uses existing copper telephone lines to connect users to the Internet. DSL users realize much higher transmission rates than when using normal dial-up Internet connections.
direct capitalization
Selection of a capitalization rate from a range of overall rates computed by analyzing sales of comparable properties and applying the following formula to each: Income / Value = Rate or I / V = R.
direct costs
The costs of erecting a new building involved with either site preparation or building construction, including fixtures.
direct endorsement
The ability of an FHA-approved lender to secure FHA single- and multifamily mortgage insurance by following FHA guidelines. Under a direct endorsement program, applications for many of FHA's mortgage insurance programs can be underwritten by approved lenders who certify that the mortgage complies with applicable FHA requirements. (See mortgage insurance)
direct injection
Direct injection is a method of groundwater recharge where water is directly injected into an aquifer through wells. This technique is used to quickly and efficiently replenish groundwater levels, bypassing the natural infiltration process that occurs in recharge basins.
direct management costs
Expenses that can be attributed to the operation of a management firm or department. (See indirect management costs)
direct-mail campaigns
Mailing of resumes to many potential employers, usually major employers.
director
The director is the director of the Financial Institutions Division of the Regulation and Licensing Department.
disability
A physical or mental impairment that substantially limits one or more major life activities, such as walking, seeing, learning and working. Disability includes a record of such impairment or the fact of being regarded as having such impairment. The Americans with Disabilities Act (ADA) protects individuals with disabilities from various forms of discrimination in employment, public services, transportation, public accommodations and telecommunication services. A person abusing illegal drugs or alcohol is not covered, but a person who is rehabilitated in these areas may be protected under ADA. (See handicap)
discharge
The release of any waste into the environment from a point source. Usually refers to the release of a liquid waste into a body of water through an outlet such as a pipe, but also refers to air emissions.
discharged contract
A contract is discharged when the agreement is terminated. Obviously, the most desirable case is when a contract terminates because it has been completely performed, with all its terms carried out. However, a contract may be terminated for other reasons, such as a party's breach or default.
disciplinary hearing
A hearing at which the conduct of a member of an organization or profession is examined and a punishment may be handed down.
disclaimer
A statement denying legal responsibility, frequently found in the form of the statement, "There are no promises, representations, oral understandings or agreements except as contained herein." Such a statement, however, would not relieve the maker of any liabilities for fraudulent acts or misrepresentations. (See hold-harmless clause)
disclosed dual agency
Real estate licensing laws may permit dual agency only if the buyer and seller are informed and consent to the broker's representation of both in the same transaction. Although the possibility of conflict of interest still exists, disclosure is intended to minimize the risk for the broker by ensuring that both principals are aware of the effect of dual agency on their respective interests. The disclosure alerts the principals that they may have to assume greater responsibility for protecting their interests than they would if they had independent representation. The broker must reconcile how, as agent, he or she will discharge the fiduciary duties on behalf of both principals, particularly providing loyalty and protecting confidential information.
disclosure
It is the duty of an agent to keep a principal informed of all facts or information that could affect a transaction. The duty includes disclosure of all relevant information or material facts that the agent knows or should have known.
Disclosure documentation
In conjunction with the LI-214/244 form (the disciplinary actions disclosure form), on which the candidate must disclose past convictions or criminal history, the disclosure documentation is all supporting documents associated with any criminal convictions that are disclosed on the LI-214/244. Disclosure Document Checklist
discount
To sell at a reduced value; the difference between face value and cash value.
discount points
An added loan fee charged by a lender to make the yield on a lower-than-market-interest VA or FHA loan competitive with higher-interest conventional loans. The price of one discount point is equal to 1 percent of the loan amount, or 100 basis points.
discount rate
1. An annual competitive rate of return on total invested capital necessary to compensate the investor for the risks inherent in a particular investment. 2. The interest rate at which Federal Reserve banks lend money to eligible banks. These are short-term loans to fulfill immediate cash needs, not supplement the bank's capital. Thus, the discount rate is not a cost of funds indicator but more of a signal to the banking community. (See Federal Reserve System)
discount rate
The discount rate is the interest rate charged by the Federal Reserve Bank for loans to commercial banks and other depository institutions. The discount rate also refers to the interest rate used in discounted cash flow (DCF) analysis to determine the present value of future cash flows. A third meaning of the term is the rate used by pension plans and insurance companies for discounting their liabilities. (See discounted cash flow, Federal Reserve)
discounted cash flow
Used in measuring the return from a real estate investment, the present value of a future income stream as determined by a given discount rate. (See present worth, return on investment)
discounted cash flow (DCF)
A valuation method used to estimate the attractiveness of an investment opportunity. DCF analysis uses future cash flow projections and discounts them to arrive at a present value estimate, which is used to evaluate the potential for investment. If the value arrived at through DCF analysis is higher than the current cost of the investment, the opportunity may be a good one.
discounted initial rate
In an ARM with a discounted initial rate, the lender offers a lower rate and lower payments for part of the mortgage term. Also known as a start rate or teaser rate.
discounting
To sell at a reduced value; the difference between face value and cash value. Some companies specialize in buying mortgages and real estate contracts (often referred to as paper) at a discount. Often the original lender, wanting to cash out on the loan, will thus sell the mortgage at the current published mortgage discount rate. If the discount rate is 12 percent, for example, the lender could sell a $100,000 mortgage at 88 percent of its worth ($88,000 or 12 percent below par).
discover
Brokers must observe the:
- duty to disclose reasonably obtainable material information, which may require the agent to investigate facts not known to the agent;
- duty to discover and disclose material defects in property;
- duty, when transmitting material information from the seller (or others) to the buyer, the buyer's broker must either verify the accuracy of the information or disclose to the buyer that the information has not been verified.
The duty is to first, to conduct a "reasonably competent and diligent visual inspection of the property"; and second, to "disclose to . . . prospective purchaser[s] all facts materially affecting the value or desirability of the property that an investigation would reveal."
discover (AZ definition)
Brokers must observe the:
- duty to disclose reasonably obtainable material information, which may require the agent to investigate facts not known to the agent;
- duty to discover and disclose material defects in property;
- duty, when transmitting material information from the seller (or others) to the buyer, the buyer's broker must either verify the accuracy of the information or disclose to the buyer that the information has not been verified.
discovery (Arizona Fair Housing Act)
The pre-trial phase in a lawsuit in which each party through the law of civil procedure can request documents and other evidence from other parties or can compel the production of evidence by using a subpoena or through other discovery devices, such as requests for production of documents, and depositions.
discretionary income
Income left over for investment after allocations for bills and savings.
discrimination
Discrimination as defined by the Fair Housing Act is the unfair treatment of individuals based race, color, religion, sex, national origin, handicap, or familial status.
disintermediation
The process of individuals investing their funds directly instead of placing their savings with banks, savings and loan associations and similar institutions for investment by such institutions. This bypassing of financial institutions occurs when proportionately higher yields are available on secure investments (such as high-grade corporate bonds, money market funds and government securities) than can be obtained on savings deposits.
Disk Operating System (DOS)
The first operating system designed for personal computers, developed by Microsoft Corporation. (See operating system)
Disparate impact
A legal doctrine declaring that a policy is discriminatory if it has a disproportionate adverse impact on members of a group based on the group's race, color, religion, or sex.
display ads
Newspaper and magazine advertisements sold by the column inch. More elaborate than classified ads, display ads often include more extensive text, graphics and photographs. (See classified ads)
disposal
The discharge, deposit, injection, dumping, spilling, leaking, or placing of any solid waste or hazardous waste into the environment (land, surface water, ground water, and air).
dissecting a GFE
This is the process of pulling the relevant numbers off a good faith estimate (or initial cost estimates worksheet) from multiple lenders' bids and trying to determine who is offering the fairest "price" on a loan for the lender costs they are charging - only the lender costs are relevant.
Dissimilarity index
Measures the segregation between two groups, reflecting their relative distributions across neighborhoods within the same area.
distressed home loan
A distressed home loan is a home loan that is in danger of being foreclosed because the homeowner has one or more defaults under the mortgage that entitle the lender to accelerate full payment of the mortgage and repossess the property, or a home loan in which the lender has commenced a foreclosure action.
distressed property
Distressed property is a property for which the current owner may have lost the ability to pay the mortgage, that may be in a state of foreclosure, or that an owner can't sell because the value of the liens on the property exceeds the current value.
distressed property consultant
A distressed property consultant or consultant is an individual or a corporation, partnership, limited liability company, or other business entity that solicits or undertakes employment to provide consulting services to a homeowner for compensation, or promise of compensation, with respect to a distressed home loan or a potential loss of the home for nonpayment of taxes.
distribution
Distribution is the process of making a product or service available for use or consumption by a consumer or business user, using direct means, or using indirect means with intermediaries.
diversity
The state of having people of different races and/or cultures in the same group or organization.
divided agency
Acting for more than one party in a transaction without the knowledge and consent of all parties thereto. This situation is considered unlawful and may be grounds for revocation or suspension of license under Section 10176(d) of the Business and Professions Code. (See dual agency)
division
The division is the Financial Institutions Division of the Regulation and Licensing Department of New Mexico.
Division of Housing and Community Renewal (DHCR)
The Division of Housing and Community Renewal (DHCR) was created in 1926 within New York's Department of State. It was originally an arm of the State Board of Housing that administered a Limited Dividend Program, the first of its kind in the nation. Under this program, private developers were granted special incentives to build affordable housing. From that beginning, the Division of Housing and Community Renewal has evolved into a housing agency, a community development agency, and a regulatory agency all rolled into one.
doctrine of prior appropriation
In states where water is scarce, ownership and use of water are often determined by the doctrine of prior appropriation. Under this doctrine, the right to use any water; with the exception of limited domestic use, is controlled by the state rather than by the landowner adjacent to the water.
documentary transfer tax
Tax applicable to property transfers and affixed to the grant deed; varies from county to county, city to city.
Dodd-Frank Wall Street Reform and Consumer Protection Act
Dodd-Frank Wall Street Reform and Consumer Protection Act (H.R.4173) was enacted to provide for financial regulatory reform, to protect consumers and investors, to enhance Federal understanding of insurance issues, and to regulate the over-the-counter derivatives markets. This legislation overhauls regulations in the financial sector. It established a new Consumer Financial Protection Agency to regulate products like home mortgages, car loans and credit cards, and gave the Treasury Department new authority to place non-bank financial firms, like insurance companies into receivership, regulate the over-the-counter derivatives market, and more.
dollar adjustment
The difference in value between property being appraised and a comparable property, measured by the net effect on market value of property features present in one and not the other, positively or negatively.
domain
A network of computers sharing a common IP address. (See domain name, domain host, domain name server)
domain host
A company that provides computer servers on which a domain name is made available to the Internet. (See domain, domain name, domain name server)
domain name
The name that corresponds to the numeric IP address of a computer on the Internet; the address or URL of a particular website. (See domain, domain host, domain name server)
domain name servers (DNS)
The servers where domain names are located on the Internet. (See domain, domain name, domain host)
domicile
From domus, Latin for "house." The state where an individual has his or her true, fixed permanent home and principal business establishment and where that person has the intention of returning whenever he or she is absent from it. Once established a domicile is never lost until there is a concurrence of specific intent to abandon the old domicile, intent to acquire a specific new domicile and actual physical presence in the new domicile.
Though a person may have residences in different states and reside there at different times of the year, it is possible to have only one domicile. Because domicile consists of physical presence plus an intention to make the state one's permanent abode, such factors as local registration of autos, driver's license, voting, paying taxes, membership in local organizations, local bank accounts and local business interest are all important in establishing the requisite intent.
dominant tenement
The estate that is said to attach to and derive benefit from the servient estate in reference to an easement appurtenant. For example, an easement road crosses an owner's land (servient tenement) to give access to an adjacent parcel (dominant tenement). The dominant tenement usually adjoins the servient tenement. (See easement, servient tenement)
donee
One who receives a gift.
donor
One who makes a gift.
DORA (Department of Regulatory Agencies)
DORA is the Department of Regulatory Agencies, which is one of 22 executive branch agencies directly overseen by the governor of Colorado.
double entry accounting
Double entry is the fundamental concept underlying present-day bookkeeping and accounting. Double entry accounting is based on the fact that every financial transaction has equal and opposite effects in at least two different accounts. It is used to satisfy the equation Assets = Liabilities + Equity, whereby each entry is recorded so as to maintain the relationship.
double taxation
One of the main disadvantages of corporate ownership of income property is that the profits are subject to double taxation. As a legal entity, a corporation must file an income tax return and pay tax on its profits. The portion of the remaining profits distributed to shareholders as dividends is taxed again as part of the shareholders' individual incomes.
Dow Jones Industrial Average (DJIA)
The Dow Jones Industrial Average, invented by Charles Dow back in 1896, is a price-weighted average of 30 representative stocks traded on the New York Stock Exchange and the Nasdaq. DJIA is often used as an economic indicator for the United States economy.
dower
The legal right or interest, recognized in some states, that a wife acquires in the property her husband held or acquired during their marriage. During the husband's lifetime the right is only a possibility of an interest; upon his death it can become an interest in land.
down payment
The portion of a home's purchase price that is paid in cash and is not part of the mortgage loan. This amount varies based on the loan type, but is determined by taking the difference of the sale price and the actual mortgage loan amount. Mortgage insurance is required when a down payment less than 20 percent is made.
Down payment assistance loan
Down payment assistance loans allow State of New York Mortgage Agency (SONYMA) borrowers to secure down payment assistance through a second mortgage that can be used in combination with any currently available SONYMA program. DPALs have no interest rate and no monthly payments and will be forgiven after ten years as long as borrowers stay in their homes.
download
To transfer a file from one computer to another over the Internet.
downsizing
To reduce in number or size a company's workforce in response to a poor economy. To dismiss or lay off from work.
downspout
A downspout is a drain pipe or similar conduit to allow water to flow from the rain gutter at the edge of the roof to the ground. (See construction terms)
downzoning
A change in zoning from a higher to a lower classification or from a more active to less active classification, such as from residential to conservation, or multifamily to single-family use. In these cases, there is no taking under eminent domain and thus no compensation paid to the affected landowner who helplessly sees the property reduce in value. (See zoning)
DPI
Dots per inch; used to measure printer resolution
draws
Periodic advances of funds under a construction loan agreement.
drive-by appraisal
A drive-by appraisal, also known as a "curbside appraisal" or "exterior-only appraisal," is a type of property valuation typically conducted by a real estate appraiser. In a drive-by appraisal, the appraiser only assesses the exterior of the property and does not enter the premises. Drive-by appraisals are often used when a quick estimate of a property's value is needed or when access to the interior of the property is restricted. They are commonly employed for refinancing purposes or for properties that are easily observable from the street.
drywall
A construction material used as a basis for interior walls in a home. Drywall is composed of an inner core of chalk with a paper facing on each side. (See construction terms)
dual agency
An agency relationship in which the agent acts concurrently for both principals (the buyer and the seller) in a real estate transaction. (See agency, agent, fiduciary)
dual tracking
Some borrowers who are in default on their mortgages work with their lenders to save their homes through loan modification. Some lenders continue to pursue foreclosure against these homeowners while the loan modification approval process is underway. While lenders defend this "dual tracking" method as a way to protect their investments, consumer advocates and regulators feel it misleads homeowners during a confusing and frustrating time.
due diligence
Generally, due diligence refers to the care a reasonable person should take before entering into an agreement or a transaction with another party.
due-on-sale-clause
A form of acceleration clause found in some mortgages, especially savings and loan mortgages, requiring the mortgagor to pay off the mortgage debt when the property is sold, resulting in automatic maturity of the note as the lender's option. This clause effectively eliminates the possibility of the new buyer's assuming the mortgage unless the mortgagee permits the assumption, in which case the mortgagee might increase the interest rate or charge as assumption fee.
dump
A land site where wastes are discarded in a disorderly or haphazard fashion without regard to protecting the environment. Uncontrolled dumping is an indiscriminate and illegal form of waste disposal. Problems associated with dumps include multiplication of disease-carrying organisms and pests, fires, air and water pollution, unsightliness, loss of habitat, and personal injury.
duplex
A structure that provides housing accommodations for two families and supplies each with separate entrances, kitchens, bedrooms, living rooms and bathrooms. A two-family dwelling with the units either side by side or one above the other.
duration
Continuance in time; the time during which something exists or lasts.
duress
Unlawful constraint or action exercised upon a person whereby the person is forced to perform an act against his or her will. A contract entered into under duress is voidable.
duties of agency
The common law duties of agency are
care - The obligation to do diligent research.
obedience - Obey all lawful instructions from the client.
accounting - account for all funds entrusted to you.
loyalty - do not disclose non-material facts.
disclosure - disclose in writing, all material facts to all parties to the transaction.
duty of care
Refers to the obligations placed on individuals to act towards others in a certain way, in accordance with certain standards. A principal owes certain contractual duties to his/her agent including compensating the agent as agreed and indemnifying and protecting the agent against claims, liabilities, and expenses incurred while correctly discharging the duties assigned the agent by the principal. Duty of care requires an agent to act with the level of care, skill, and diligence that a reasonable and competent agent would use in similar circumstances.
dwelling
Any building, structure or part thereof used and occupied for human habitation or intended to be so used, including any appurtenances. Many municipalities have adopted ordinances relating to the repair, closing and demolition of dwellings unfit for human habitation.
dwelling or building coverage
A category of insurance coverage of the structure of a building, flooring, cabinets, roof, and mechanical equipment.
dynamic
A force that stimulates change or progress within a system.
dynamic random access memory (DRAM)
A dynamic computer memory that must be refreshed. (See RAM, ROM, SRAM, SDRAM)
e-book
Books in digital form that can be read online or downloaded onto an electronic device.
e-commerce
Business activity carried out over the Internet.
Messages that are transmitted between computers over the Internet.
e-networking
Allows you to create a community of virtual contacts who can provide critical information on job leads, industry trends and possible openings. These are people whom you might never have met in any other way.
e-portfolio
Personal digital collection of information describing and illustrating a person's learning, career, experience and achievements. e-portfolios are privately owned and the owner has complete control over who has access to what and when. See electronic portfolio
e-profile
1. Requiring job applicants to fill out an template on their website solves several problems simultaneously for organizations. All applicant data is received in a structured format suitable for a searchable talent pool/database (most applicant tracking systems enable this). Second, the information received on candidate experience is better. 2. Enables individuals or employees to perform their own profile maintenance; depending upon the confidentiality of the e-profile, sometimes it can be tracked on the Internet and used by others (i.e., advertisers) to track the profile and habits of an Internet user.
Early Closing Sample Contract Verbiage
Close of escrow may occur on a date earlier than the date specified on line 24 if (1) all parties are ready, willing and able to close escrow and (2) all parties have affirmed their readiness.
earned surplus
Earned surplus has the same meaning as in generally accepted accounting standards.
earnest money
Money deposited by a buyer under the terms of a contract, to be forfeited if the buyer defaults but applied to the purchase price if the sale is closed. The cash deposit (including initial and additional deposits) paid by the prospective buyer of real property as evidence of good-faith intention to complete the transaction; called bargain money, caution money, hand money, or a binder in some states. (See trust funds)
earnings
Earnings means compensation paid or payable to an individual or for the individual's account for personal services rendered or to be rendered by the individual, whether denominated as wages, salary, commission, bonus, or otherwise, including periodic payments pursuant to a pension, retirement, or disability program.
earthquake fault zone
As defined by the state geologist, the area in such close proximity to an earthquake fault that movement of the fault presents a property hazard; location within an earthquake fault zone must be disclosed to a prospective purchaser by the seller (or seller's agent, if there is one).
earthquake insurance
Typically a separate policy from homeowners insurance that covers damages caused by an earthquake.
earthquake safety disclosure
By California law, real estate agents or owners are required to prepare a "Residential Earthquake Hazards Report" disclosing the earthquake safety preparedness of all houses sold in the state.
California Seismic Safety Commissioneasement
The right to a specific use of or right to travel over land owned by another. The land being used or traveled over is the servient tenement; the land that is benefited by the use is the dominant tenement. An easement appurtenant is a property interest belonging to the owner of dominant tenement and is transferred with the land; an easement in gross is a personal right that usually is not transferable by its owner. (See affirmative easement, dominant tenement, easement appurtenant, easement in gross, implied easement, negative easement, servient tenement
easement appurtenant
An easement that is annexed to the ownership of one parcel and allows the owner the use of the neighbor's land. (See easement)
easement by condemnation
An easement created by the government or government agency that has exercised its right under eminent domain. (See easement, eminent domain)
easement by estoppel
An easement created when a person's words or actions lead another to believe that an easement exists. If, in relying on those words or actions, the easement user acts to his or her detriment, they may not deny the existence of the easement. (See easement, estoppel)
easement by implication of law
An easement that will be created by law to provide access to a parcel of land that is otherwise landlocked. (See easement)
easement by necessity
An easement allowed by law as necessary for the full enjoyment of a parcel of real estate; for example, a right of ingress and egress over land owned by someone else. (See easement)
easement by prescription
An easement acquired by continuous, open and hostile use of property for the period of time prescribed by state law. (See easement)
easement in gross
An easement in gross is a type of easement that grants a specific individual or entity the right to use another person's property for a particular purpose. Unlike an easement appurtenant, which benefits a specific piece of land (known as the dominant estate), an easement in gross benefits a person or entity (the easement holder) rather than a specific parcel of land. The most common type of easement in gross is a utility easement, in which the utility company has the right to cross the landowner's property to access utilites equipment. (See easement)
Easton v. Strassburger
The duty of the licensee to make a reasonable investigation of the property evolved from the case of Easton v. Strassburger (1984). As the leading case on this issue, the courts decision sent the message "loud and clear" to all real estate licensees that their responsibility does not stop at a mere disclosure of material facts known to the licensee. Easton filed suit against Strassburger, the real estate agency and others for fraudulent concealment and intentional misrepresentation regarding potential soil problems and a resulting slide on the property. (See material fact)
easy-monetary policy
A central bank policy designed to stimulate economic growth by lowering short term interest rates, making money less expensive to borrow. Opposite of tight monetary policy. (See open market operations, reserve requirements, tight-monetary policy)
Federal Reserve Websiteeave
The eave is the portion of a roof that extends over the exterior wall. (See construction terms)
econometrics
Econometrics combines economics, mathematics and statistics to express economic relationships in terms of mathematical equations.
economic base study
An economic base study gives detailed information about how a community earns its living. The study attempts to determine: the current sources of employment and income; which sources depend on markets outside the local economy and are affected by external forces, and which sources serve markets within the local economy.
economic cycle
The natural fluctuation of the economy between periods of expansion (growth) and contraction (recession). Factors such as gross domestic product (GDP), interest rates, levels of employment and consumer spending can help to determine the current stage of the economic cycle.
economic life
1. The estimated period over which an improved property may be profitably used so that it will yield a return over and above the economic rent attributable to the land itself; the period during which an improvement has value in excess of its salvage value. In the case of an older structure or improvement, economic life refers to the remaining period during which the improvements to the real property (not land) are depreciated for tax purposes. The economic lives of such improvements are normally shorter than their actual physical lives. Also called service life. 2. As applied to a structure, the years or age indicated by the condition and utility of the structure, as opposed to its actual or chronological age. (See improvement)
economic obsolescence
A loss in the value of a property due to outside forces over which the owner has no control. (See functional obsolescence, physical obsolescence)
economic oversupply
Economic oversupply occurs when the quantity of a product or service available in the market exceeds the demand for it. This situation often leads to downward pressure on prices and can result in excess inventory or unused services. Oversupply can be caused by several factors, including overproduction, technological advancements, sudden drops in consumer demand, or poor market forecasting. In real estate, for example, economic oversupply happens when more properties are built than are needed by buyers or renters, leading to vacant homes and declining property values. In broader economic terms, persistent oversupply can lead to economic inefficiencies, layoffs, and business closures if producers fail to adjust production levels to reflect actual market demand.
economic relationship
For example, if the agent's brother is going to be the buyer, or if the agent is going to represent both parties to the transaction.
economic rent
Currently referred to as market rent, it is the rental income that real estate can command in an open, competitive market at any given time, as contrasted with contract rent, or the income actually received under a lease agreement.
Economic Stimulus Act of 2008
Legislation passed by Congress in 2008 to bolster the economy by making payments of up to $1,200 to over 130 million households.
economics
A branch of science that deals with the production, distribution and consumption of goods and services, and their management.
economy
An economy is any system designed for the production, distribution, and consumption of necessary and desired goods and services.
EDD offices
State Employment Development Departments (EDD) provide direct links to job placement and referrals, unemployment insurance, disability insurance, employment and training, labor market information, payroll taxes, and more. (See One Stop Centers)
Education and Research Account
The Education and Research Account is a California fund financed by a fixed portion of real estate license fees, designed to encourage research in land use and real estate development.
education and training
Participation in degree and certificate programs, continuing education, non-traditional education to enhance your knowledge and skills.
educational information
Information about schools or financial aid.
effect
Something that inevitably follows an antecedent. (See cause)
effective age
The age of a building based on the actual wear and tear and maintenance, or lack of it, that the building has received.
effective date of the appraisal
Uniform Standards of Professional Appraisal Practice (USPAP) requires that each appraisal report specifies the effective date of the appraisal and the date of the report. The date of the report indicates the perspective from which the appraiser is examining the market.
effective date of the appraisal
Uniform Standards of Professional Appraisal Practice (USPAP) requires that each appraisal report specifies the effective date of the appraisal and the date of the report. The date of the report indicates the perspective from which the appraiser is examining the market.
effective gross income
Effective gross income is a property's income from all sources, less allowance for vacancy and collection losses.
effective gross income multiplier
A factor that can be applied to gross income less vacation and collection losses to determine market value. (See effective gross income)
effective interest rate
The actual rate or yield of a loan, regardless of the amount stated on the debt instrument. (See nominal interest rate)
efficiency
The ratio of usable energy delivered by a dynamic system to the energy supplied to it.
efflorescence
Efflorescence is the deposit of water soluble salts on the surface of masonry. It is caused by the dissolving of salts present in the masonry migrating to the surface and deposited as the water evaporates.
effluent water
Effluent water is defined by the United States Environmental Protection Agency as "Wastewater, treated or untreated, that flows out of a treatment plant, sewer, or industrial outfall. Generally refers to wastes discharged into surface waters."
ego
Egotism; conceit; self-importance; self-esteem or self-image. The part of the human psyche that experiences and reacts to the outside world and thus mediates between the primitive drives of the "id" and the demands of the social and physical environment.
egress
A way to exit from a property; the opposite of ingress.
elasticity
"Elasticity" is the measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which demand and supply change in response to changes in price or income.
elderly person
An elderly person is any individual who is qualified, by reason of age, to draw benefits from Federal Old Age and Survivors Insurance, or from any other pension or annuity in which the age of the recipient is the criterion for entitlement.
electrical system
Building components that provide adequate electrical service for the needs of occupants, meeting all safety requirements of the National Electrical Code (NEC).
electromagnetic fields (EMFs)
Fields generated by the movement of electrical currents.
electronic contract
An electronic contract (or e-contract) is an agreement created and "signed" in electronic form. No paper or other hard copies are used. E-contracts are formed in the course of e-commerce by the interaction of two or more individuals using electronic means, such as e-mail, a computer program, or the interaction of at least two electronic agents that are programmed to recognize the existence of a contract.
electronic data interchange
The exchange of business transaction information in a computer-processable format, used in online banking and e-commerse transaction processing. (See e-commerce)
electronic funds transfer
The transfer of money initiated through an electronic terminal, automated teller machine, computer, telephone, or magnetic tape. EFT also applies to credit card and automated bill payments.
electronic resume format
Resume in a variety of styles (such as chronological, functional, or combined) that is transferred electronically.
Electronic Signatures in Global and National Commerce Act
Congress enacted the Electronic Signatures in Global and National Commerce Act (P.L. 106-229; also known as E-SIGN) on June 30, 2000, and the law became effective on October 1, 2000. The main purpose of this statute is to create an equivalent legal status for electronic signatures and documents with the legal status of handwritten documents. This act enhances possibilities of e-commerce especially in legal transactions and the financial services industry. The act's purpose is "to facilitate the use of electronic records and signatures in interstate and foreign commerce by ensuring the validity and legal effect of contracts entered into electronically."
Electronic Signatures in Global and National Commerce Act
Enacted by Congress in 2000 to facilitate the use of electronic records and signatures in interstate and foreign commerce by ensuring the validity and legal effect of contracts entered into electronically.
electronic-portfolio
Portfolio on the web that includes such categories as career vision, career highlights, professional links, references, activities and interests, resume and work samples, contacts in academic situations. Electronic-portfolios are privately owned and the owner has complete control over who has access to what and when.
elevations
1. Elevations show the exterior sides of a building as it appears after all structural work has been completed. Views are often identified as front, rear, left, and right elevation. Symbols on elevation drawings indicate the kind of exterior materials, their placement and the height of their construction. 2. Just as surface rights must be identified, surveyed and described, so must rights to the property above the earth's surface. In the same way land may be measured and divided into parcels, the air itself may be divided. An owner may subdivide the air above his or her land into air lots. Air lots are composed of the airspace within specific boundaries located over a parcel of land. (See construction terms)
eligible borrower
AN eligible borrower is a credit applicant who has an ownership interest in the security property, signs the security instrument, and signs the mortgage note.
eligible renovations
Eligible renovations include repair or replacement of plumbing, electrical, and heating systems, structural repairs, additions, modernization of kitchens and bathrooms, new siding, and windows.
emancipated minor
A legal mechanism by which a person below the age of majority ("adulthood") gains certain rights, generally identical to those of adults. An emancipated minor is free of any authority from his or her parent or other legal guardian. The extension of these rights, as well as the remaining prohibitions, vary according to the jurisdiction.
emancipated minor (Arizona)
In Arizona, a person under the age of 18 years is said to be an emancipated minor if the person: (1) has entered into a valid marriage (case law: [Crook vs. Crook, 80 Ariz 275, 296 P.2d 951 (1956)) ; or (2)is on active duty in any armed forces; or (3)willingly lives apart from his/her parents with the parents' consent and manages his/her own financial affairs regardless of the source of income; or has had an official court ruling stating that the minor is emancipated.
In Arizona, emancipated minors are considered competent contractual parties. Occasionally, you will see the term infant used when referring to a unemancipated minor. These two terms are used interchangeably in most situations.
embezzlement
The fraudulent appropriation for one's own use or benefit of property or money, by a clerk, agent, trustee, public officer, or other person acting in a fiduciary capacity for another. (See fiduciary)
emblements
1. Growing crops produced by the labor of the cultivator. 2. The right to the profits from such crops. (See fructus industriales)
emergency spokesperson
In property management, an emergency spokesperson is responsible for communicating on behalf of the management team during emergencies. They inform residents, coordinate with emergency services, and handle media relations to ensure accurate and timely information is disseminated. Their role is crucial in managing the crisis and maintaining order and safety.
Emergency Suspension Order
An Emergency Suspension Order (ESO) is an immediate, temporary suspension of a professional license issued by a regulatory agency when the licensee's actions or conduct are deemed to pose a serious and immediate threat to public health, safety, or welfare. This order is enforced without prior notice or hearing to prevent further harm while the underlying case is investigated or adjudicated.
eminent domain
The right of the government to acquire title to property for public use by condemnation; the property owner receives compensation which is generally fair market value. (See taking)
FindLaw® eminent domainempathy
The intellectual identification with or experiencing of the feelings, thoughts, or attitudes of another.
employability skills
1) Job search strategies and placement techniques. 2) Transferable core skills that are necessary for career success at all levels of employment and for all levels of education. Specialized skills (such as computer programming), critical thinking, social, and problem-solving skills. (see basic competency skills)
employee
Person who is hired by someone else to perform work; for purposes of the Real Estate Law, a real estate salesperson is always considered an employee under the supervision of the employing broker; for tax purposes, a real estate salesperson working for a real estate broker can be hired as an employee or as an independent contractor, if the requirements of the Internal Revenue Service are met. (See employer, independent contractor)
employee (Arizona definition)
A natural person who has an employment relationship with a licensee that is acknowledged by both the person and the licensee, and
- the person is entitled to payment, or is paid, by the licensee;
- the licensee withholds and remits, or is liable for withholding and remitting, payroll deductions for all applicable federal and state payroll taxes;
- the licensee has the right to hire and fire the employee and the employee's assistants;
- the licensee directs the methods and procedures for performing the employee's job;
- the licensee supervises the employee's business conduct and the employee's compliance with applicable laws and rules.
employee handbook
An employee handbook is a compilation of the policies, procedures, working conditions, and behavioral expectations that guide employee actions in a particular workplace. Employee handbooks generally also include information about the company, employee compensation and benefits, and additional terms and conditions of employment.
employer
An individual or company that pays people to work for them. Employers are obligated to withhold income taxes and social security taxes from the compensation of employees. (See employee)
employer information
Information about a specific employer (i.e., financial condition, product or service development, staffing).
employment
The condition of having paid work; an individual's trade or profession; the action of providing work to a person. (See employment contract, employment-at-will, employer)
employment and income verification
When an owner/landlord verifies that the employment and income information provided by a prospective renter/tenant is accurate and correct. The owner/landlord should probably call the prospective renter/tenant's past two employers and verify income.
employment contract
A document evidencing formal employment between employer and employee or between principal and agent. In the real estate business this generally takes the form of a listing agreement or management agreement. (See listing agreement)
employment-at-will
Employment-at-will is the common-law rule where an employment contract of indefinite duration can be terminated by either the employer or the employee at any time for any reason; also known as terminable-at-will.
enabling acts
Congressional act that confers powers onto the states.
encapsulation
A method of controlling environmental contamination by sealing off a dangerous substance (such as asbestos). The treatment of asbestos containing material with a liquid that covers the surface with a protective coating or embeds fibers in an adhesive matrix to prevent the release of asbestos fibers into the air. (See asbestos)
encroachment
An unauthorized invasion or intrusion of an improvement or other real property onto another's property, thus reducing the size and value of the invaded property. For example, a roof of a building that extends over a neighbor's property. (Most encroachments happen unintentially.)
encryption
The process of scrambling data so that it can not be deciphered; encrypted data can only be unscramble by using the key necessary to decrypt the data.
encumbrance
Any claim, lien, charge or liability attached to and binding on real property that may lessen its value or burden, obstruct or impair the use of a property but not necessarily prevent transfer of title; a right or interest in a property held by one who is not the legal owner of the property.
There are two general classifications of encumbrances: those that affect the title, such as judgments, mortgages, mechanics' liens and other liens, which are charges on property used to secure a debt or obligation; and those that affect the physical condition of the property, such as restrictions, encroachments and easements. (See easement, encroachment, judgment, lien, mechanics' lien, mortgage)
Endangered Species Act
Passed by the United States Congress in 1973. The Act was originally intended to protect endangered species on federal lands. Since passage, the Act has been used to prohibit development or other land use in habitats of protected species. Endangered Species Act of 1973
endless chain
A method of prospecting where agents asks each prospect to recommend other prospects. (See prospecting)
endorsement
A method of transferring title to a negotiable instrument, such as a check or promissory note, by signing the owner's name on the reverse side of such instrument. A blank endorsement guarantees payment to subsequent holders. An endorsement that states that it is without recourse does not guarantee payment to subsequent holders. A special endorsement specifies the person to whom or to whose order the instrument is payable.
endowment funds
Many commercial banks and mortgage bankers handle investments for endowment funds. The endowments of hospitals, universities, colleges, charitable foundations and other institutions provide a good source of financing for low-risk commercial and industrial properties.
energy audit
An inventory and description of all the features and products in a home or building that effect the use of energy.
energy efficient mortgage (EEM)
A home mortgage in which the qualifying debt-to-income and housing expense-to-income ratios have been increased by 2% because the home meets or exceeds model standards for energy efficiency.
energy improvement mortgage (EIM)
A loan secured by real property that is made to an owner for the specific purpose of making energy efficient improvements to a home or building.
Energy Star® Home
A home that has been certified and labeled by the U.S. Environmental Protection Agency as having a 30% higher energy efficiency rating than the national residential standards for energy efficiency. Energy Star® is a registered trademark of the U.S. EPA.
ENERGY STAR®-labeled homes
ENERGY STAR®-labeled homes are typically 20-30 percent more energy efficient than a standard home.
energy-efficiency ratio (EER)
A measure of an electrical appliance's energy consumption found by dividing its capacity measured in British Thermal Units (BTUs) by the number of watts of electricity needed to run it. Information on the EER in a variety of applications can be found at www.eere.energy.gov/consumer
enjoin
1. to direct or order (someone) to do something. 2. to prescribe (a course of action) with authority or emphasis. 3. to prohibit or restrain by an injunction. (See injunction)
entitlement
The portion of a VA-guaranteed loan that protects a lender from defaults. (See certificate of eligibility)
entity rule
Three entities can hold property: individuals, partnerships and corporations. In the case of a property exchange, the way an exchanger holds property going into an exchange is the way they must hold the property coming out of the exchange.
entrepreneurial decisions
Entrepreneurial decisions involve significant strategic directions, policies, or fundamental systems within the organization.
entrepreneurial profit
The amount of profit attributable to the development function.
environment
The circumstances, objects, or conditions by which one is surrounded; the complex of climatic, edaphic, and biotic factors that act on an organism and ultimately determine its form and survival.
environmental hazards disclosure
By California law (AB 983) a real estate agent or owner is required to inform prospective buyers of environmental hazards located on a residental property.
environmental impact report
A report required by the California Environmental Quality Act that projects the impact a project may have on the environment. The report includes relevant data and an analysis of its effects on the environment.
environmental impact statement
Required by the National Environmental Policy Act and applies to federal government actions or legislation, it includes relevant data about an action and an analysis of its effect on the environment. (See Environmental Protection Agency)
Environmental Protection Agency (EPA)
A federal agency created in 1970 by bringing together various federal pollution control activities that had been scattered among a number of federal departments and agencies. The EPA is involved with environmental problems of air and water pollution, solid-waste management, pesticides, radiation and noise.
The EPA sets standards, determines how much pollution is tolerable, establishes timetables to bring polluters into line with its standards and enforces environmental laws. The EPA conducts an extensive environmental research program; provides technical, financial, and managerial help to state, regional and municipal pollution control agencies; and allocates funds for sewage-treatment facilities.
The original authority of the EPA was broadened by passage of the Clean Air Amendments and the Resource Recovery Act in 1970; the Federal Water Pollution Control Act Amendments, the Federal Environmental Pesticide Control Act, the Noise Control Act and the Marine Protection Research and Sanctuaries Act in 1972; the Safe Drinking Water Act in 1974; and the Comprehensive Environmental Response Compensation and Liability Act (CERCLA) in 1980. (See CERCLA, hazardous waste) Environmental Protection Agency Website
environmental site assessment
An independent investigation and assessment of a property to determine if any existing or potential environmental problems or hazards exist on property. It is usually done to determine if any environmental problems exist on a property that might effect the use or market value of the property. It is sometimes referred to as the "due diligence" audit since it can be done to establish the "innocent landowner" defense in a Superfund suit. Usually done by an outside environmental engineering firm.
environmentalism
The philosophy of living in harmony with the global ecosystem. A broad term incorporating the concerns and actions in aid of the protection and preservation of the environment.
Equal Credit Opportunity Act (ECOA)
The Equal Credit Opportunity Act is Federal legislation passed in 1974 to ensure that the various financial institutions and other firms engaged in the extension of credit exercise their responsibility to make credit available with fairness and impartiality, and without discrimination on the basis of race, color, religion, national origin, sex or marital status, age, receipt of income from public assistance programs (food stamps, social security), and to ensure good-faith exercise of any right under the Consumer Credit Protection Act (creditor must state reasons for denial of credit).
equal dignities rule
A rule of agency law that stipulates that when a contract is required by law to be in writing, the authority of an agent to enter into such a contract on behalf of the principal must also be in writing.
Equal Employment Opportunity Unit (EEOU)
The Equal Employment Opportunity Unit (EEOU) monitors Division of Housing and Community Renewal's (DHCR) personnel policies and practices and its implementation of hiring goals to ensure appropriate representation of women, minority groups, disabled persons, and Vietnam veterans in employment. It advises managers and supervisors on equal opportunity in hiring, training, promotion, and other personnel actions, and monitors such activities in light of the agency's affirmative action goals and objectives. The EEOU conducts special recruitment for certain DHCR job titles and engages in SCOPE conferences with the Department of Civil Service to ensure that civil service examinations are relevant and fair.
equal housing opportunity
The U.S. national policy/concept that all people should have an equal opportunity to purchase or lease housing, without regard to race, color, sex, disability, religion, familial status, or national origin.
Equal Housing Opportunity logo
The Equal Housing Opportunity logo is a visual symbol used in the United States to indicate compliance with the Fair Housing Act. It features a simple design of a house with an equal sign inside, signifying that housing opportunities are provided without discrimination based on race, color, religion, sex, disability, familial status, or national origin. This logo is commonly displayed by real estate agencies, rental offices, and on advertisements to affirm a commitment to fair housing practices.
equalibrium point
The point at which the number of buyers willing to purchase a good or service equals the number of sellers willing to sell that good or service. (See supply, demand)
equalization
In some jurisdictions, when it is necessary to correct inequalities in state wide tax assessments, an equalization factor is used to achieve uniformity. An equalization factor may be applied to raise or lower assessments in a particular district or county. The assessed value of each property in the area is multiplied by the equalization factor, and the tax rate is then applied to the equalized assessment.
equalization factor
A factor (number) by which the assessed value of a property is multiplied to arrive at a value for the property that is in line with statewide tax assessments. The ad valorem tax would be based on this adjusted value.
equilibrium
A state of rest due to the action of forces that counteract each other; equal balance between any powers or influences; mental balance.
equilibrium
Period of stability in the life cycle of a building or neighborhood in which little change is evident.
equitable estoppel
The doctrine of equitable estoppel prevents fraud by the present owner of a property and prohibits their refusal to transfer the property.
equitable lien
A lien arising out of common law or the court system —in contrast to a statutory lien, which is imposed on property by statute. (See common law, statutory lien)
equitable redemption
A defaulted property owner recovering his or her property prior to its sale by curing the default. (See statutory redemption)
equitable right of redemption
The right of a defaulted property owner to recover the property prior to its sale by paying the appropriate fees and charges.
equitable rights
Equitable rights are rights that are based on principles of fairness, justice, and equity, as opposed to strict legal rules. Equitable rights are often used in situations where the law does not provide a specific remedy or where enforcing strict legal rights would result in unfairness.
equitable title
The interest held by a vendee under a contract for deed or an installment contract; the equitable right to obtain absolute ownership to property when legal title is held in another's name.
equitable title
Title to the equity. Equity is the difference between what a borrower owes and what the property is worth. Therefore, when a borrower has equitable title (or ownership of the equity), if the property if the property has positive equity (worth more than is owed), the borrower holds title to equity as an asset. If the property has negative equity, the borrower holds a liability.
equitably estop
The doctrine of equitable estoppel prevents fraud by the present owner of a property and prohibits their refusal to transfer a property.
equity
The interest or value that an owner has in property over and above any indebtedness.
equity capitalization rate
A rate that reflects the relationship between a single year's before-tax cash flow and the equity investment in the property. The before-tax cash flow is the net operating income less the annual debt service payment, and the equity is the property value less any outstanding loan balance. The equity capitalization rate, when divided into the before-tax cash flow, gives an indication of the value of the equity. Also called cash on cash rate, case flow rate, or equity dividend rate.
equity financing
Equity financing is the act of raising money for company activities by selling common or preferred stock to individual or institutional investors. In return for the money paid, shareholders receive ownership interests (equity) in the corporation.
equity invested
The actual amount you will invest to buy a property. Typically it is your downpayment (20% - 30% cash plus closing costs) plus rehabilitation monies you invest to get the property into rentable shape.
equity loans
A loan based on a percentage of the equity a borrower holds in a collateral property.
equity participation loan
A lender obtains or has the right to obtain an ownership interest in the project being financed.
equity purchaser
An equity purchaser is any person or entity who acquires title to a residence in foreclosure.
equity seller
An equity seller is any natural person who is the property owner at the time of an equity sale.
equity skimming
In equity skimming, a subject may use a straw buyer, false income documents, false satisfaction of lien, or false credit reports to obtain a mortgage loan in the straw buyer's name. Subsequent to closing, the straw buyer signs the property over to the investor in a quit claim deed, which relinquishes all rights to the property. The investor does not make any mortgage payments and rents the property until foreclosure takes place many months later. (See straw buyer)
equity trust
An investment trust dealing with ownership rather than financing. (See investment group financing)
erosion
The gradual loss of soil due to the operation of currents, tides or winds.
errors and omissions insurance
A type of professional liability insurance that protects businesses and professionals, including real estate agents, from legal claims made by clients for inadequate work or negligent actions. In the context of real estate, E&O insurance covers real estate brokers and agents against potential lawsuits related to errors, omissions, or negligence in the services they provide, such as failure to disclose a property defect or mistakes in documentation. It typically covers legal defense costs and any resulting settlements or judgments, excluding intentional misconduct or fraudulent acts.
escalator clause
An escalator clause in a lease provides for an increase in payments based on an increase in an index such as the consumer price index (CPI) or the wholesale price index (WPI).
escape clause
1. A contract provision relieving a party of liability for failure to perform, as where a stated contingency does not occur. If such a clause allows the party to cancel the contract for no reason whatsoever, there really is no enforceable contract, for mutuality of obligation is lacking. 2. A clause in a proprietary lease of a tenant-stockholder that permits the tenant to surrender the stock and lease back to the cooperative association and thereby terminate continuing liability for payments due under the lease. Essential elements of a valid contract: 1. Offer and acceptance; 2. Consideration; 3. Legally competent parties; 4. Consent
escheat
The reversion of property to the state or county, as provided by state law, in cases where a decedent dies intestate and there are no heirs capable of inheriting or when the property is abandoned. In some states, bank accounts that are unused for more than seven years will escheat to the government. (See intestate)
escrow
The process by which money and/or documents are held by a disinterested third person (a stakeholder) until satisfaction of the terms and conditions of the escrow instructions (as prepared by the parties to the escrow) have been achieved. Once these terms have been satisfied, delivery and transfer of the escrowed funds and documents takes place. Although in some states a real estate broker is authorized to handle escrow functions, the common practice is to employ the services of a licensed escrow company, title company or lending institution. (See bilateral instructions, final escrow instructions, joint escrow instructions, lender's escrow instructions, supplemental instructions)
escrow account
The trust account established by a broker under the provisions of the license law for the purpose of holding funds on behalf of the broker's principal or some other person until the consummation or termination of a transaction. (See trust fund bank account)
escrow agent/officer
An individual qualified to perform all the steps necessary to prepare and carry out escrow instructions. Tasks include obtaining title insurance; securing payoff demands; prorating taxes, interest, rents, etc.; and distributing the funds held in escrow. (See escrow instructions, prorations, title insurance)
Escrow Disbursement Order (EDO)
An Escrow Disbursement Order (EDO) is a directive issued by a regulatory authority, such as a real estate commission, to resolve a dispute over funds held in escrow. It provides legally binding instructions on how the escrowed funds should be disbursed to the appropriate parties, ensuring compliance with applicable laws and agreements.
escrow fee
A fee covering all the usual escrow services except for title insurance. The fee is normally determined by the amount of money involved in the transaction.
escrow holder
An escrow holder is essentially the same as an escrow agent in terms of function. The term "holder" emphasizes the role of holding the funds or documents until the transaction conditions are satisfied. This term might be used to highlight the physical or fiduciary responsibility of holding the assets in escrow. Like escrow agents, escrow holders can be companies, law firms, or other entities, and they are responsible for safeguarding the escrowed items.
escrow instructions
In a sales transaction, a writing signed by buyer and seller that details the procedures necessary to close a transaction and directs the escrow agent how to proceed. Sometimes the buyer and seller execute separate instructions and sometimes the contract of sale itself serves as the escrow instructions. (See bilateral instructions, final escrow instructions, joint escrow instructions, lender's escrow instructions, escrow, supplemental instructions)
escrow officer
An individual qualified to perform all the steps necessary to prepare and carry out escrow instructions. Tasks include obtaining title insurance; securing payoff demands; prorating taxes, interest, rents, etc.; and distributing the funds held in escrow. Also known as an escrow agent. (See escrow instructions, prorations, title insurance)
essentials of a valid lease
A lease is a form of contract. To be valid, a lease must meet essentially the same requirements as any other contract:
- Offer and acceptance—The parties must reach a mutual agreement on all the terms of the contract.
- Consideration—The lease must be supported by valid consideration. Rent is the normal consideration given for the right to occupy the leased premises. However, the payment of rent is not essential as long as consideration was granted in creating the lease itself, sometimes, for instance, this consideration is labor performed on the property. Because a lease is a contract, it is not subject to subsequent changes in the rent or other terms unless these changes are in writing and executed in the same manner as the original lease.
- Capacity to contract—The parties must have the legal capacity to contract.
- Legal objectives—The objectives of the lease must be legal.
established business relationship
A relationship between a seller and a consumer based on: (1) the consumer's purchase, rental, or lease of the seller's goods or services or a financial transaction between the consumer and seller, within the eighteen (18) months immediately preceding the date of a telemarketing call; or (2) the consumer's inquiry or application regarding a product or service offered by the seller, within the three (3) months immediately preceding the date of a telemarketing call.
estate
The interest held by the owner of property.
estate (tenancy) at sufferance
The tenancy of one who continues to occupy the premises improperly and against the will of the landlord. Sufferance because someone is "suffering".
estate (tenancy) at will
An estate (or tenancy) in which a person holds or occupies real estate with the permission of the owner, for a term of unspecified or uncertain duration; i.e., there is no fixed term to the tenancy.
estate (tenancy) for years
An interest in property for a certain, exact period of time, and leased for a specified consideration.
estate (tenancy) from period to period
An interest in leased property that continues from period to period—week to week, month to month or year to year. This type of tenancy auto-renews indefinitely at the end of each period, unless the auto-renewal is stopped by one of parties giving notice to the other.
estate in land
The degree, quantity, nature and extent of interest a person has in real property.
estate taxes
Federal estate taxes and state inheritance taxes (as well as the debts of decedents) are general, statutory, involuntary liens that encumber a deceased person's real and personal property. These are normally paid or cleared in probate court proceedings. (See inheritance taxes, lien)
estates of tenancy
The right to hold or use property for a fixed period of time at a given price, without transfer of ownership, on the basis of a lease contract. (See lease)
estimated buyer's costs
An estimate of the buyer's total cash requirements to purchase real property. A realistic estimate of all costs and payments based on the buyer's offer.
estimated remaining economic life
The estimated time period over which a structure is expected to add value above the value of the land as if vacant and valued at its highest and best use.
estimated seller's proceeds
An estimate of the net amount an owner will receive from the sale of his or her property. An "Estimated Seller's Proceeds" form is filled out by the listing broker and calculates the proceeds based on the listing price and seller's costs.
estoppel
Method of enforcing an agency relationship in which someone stated incorrectly that another person is his or her agent, and a third person relied on that representation.
estoppel certificate
A document in which a borrower certifies the amount owed on a mortgage loan and the rate of interest.
ethics
Refers to a set of moral principles or values that govern individual or group behavior, guiding individuals and organizations in distinguishing between what is considered morally right and wrong.
ethnicity
A grouping of people sharing a common and distinctive racial, national, religious, linguistic, or cultural heritage.
evacuation drills
In property management, an evacuation drill is a planned exercise to practice the safe and orderly evacuation of a building in case of an emergency, such as a fire or natural disaster. It involves coordinating with tenants and staff to follow predefined escape routes and procedures. The goal is to ensure everyone knows how to exit the building quickly and safely, minimizing potential injuries or casualties.
evaluate
To determine or fix the value of; to quantify and to qualify information about.
evaporative coolers (swamp cooler)
An economical method of cooling a home in a dry climate. An evaporative cooler is a large box-like unit, four sides of which are removable panels with vents that let air flow through. Inside of each panel is a "cooler pad," usually made of wood fibers. The unit contains a large fan and a water pump. At the bottom of the unit is a water reservoir. Water is pumped from the reservoir, continually soaking the cooler pads. The fan draws hot outside air through the pads. As the warm air evaporates water from the pads, heat is carried away, cooling the air by up to 20 degrees-F. The water-cooled air is then pumped into the house through an air duct.
event
The fundamental entity of observed physical reality represented by coordinates of place and time in the space-time continuum.
eviction
1. The legal process of removing a tenant from the premises as a result of a breach of a lease. 2. The distrubance of a tenant's enjoyment of any material part of a leased premises by an act of the landlord, or by a claim of superior title by a third party. (See actual eviction, constructive eviction, lease, retaliatory eviction)
eviction suit
An eviction suit, also known as an eviction proceeding, is a legal process initiated by a landlord to remove a tenant from rental property due to violations of the lease agreement, such as non-payment of rent or other breaches. This legal action is filed in a court, and it requires the landlord to provide proof of the alleged lease violations and follow specific legal procedures outlined by local tenant-landlord laws. If the court rules in favor of the landlord, it will issue an order that legally compels the tenant to vacate the property by a specified date, and if necessary, law enforcement may be involved to enforce the eviction.
evidence of title
Proof of ownership of property; commonly a certificate of title, an abstract of title with lawyer's opinion, title insurance or a Torrens registration certificate.
exaction
A concept in real property law where a condition for development is imposed on a parcel of land that requires the developer to mitigate anticipated negative impacts of the development.
exception to the title policy
An exception is a specific item that is not covered by the policy. Generally, most of the exceptions are listed on the Schedule B-II. The first few exceptions are called "standard exceptions".
Exceptions to AZ License Laws
Arizona has provisions that unlicensed person may receive a commission, if that person lives in an apartment complex and refers a prospective tenant who ultimately signs a lease. However, the payment cannot be in cash. It must be in the form of a credit on the monthly rent. Also, an unlicensed person who owns a timeshare property can receive a finder's fee for referring another person to the timeshare development, but the finder's fee cannot be in the form of cash.
excess rent
The amount by which scheduled rent exceeds market rent.
exchange
A transaction in which all or part of the consideration for the purchase of real property is the transfer of property of "like kind" (i.e., real estate for real estate). (See like kind, realized capital gains)
exchange period
The period during which the exchanger must acquire replacement property in the exchange. The exchange period starts on the date the exchanger transfers the first relinquished property and ends on the earlier of the 180th day thereafter or the due date (including extensions) of the exchanger's tax return for the year of the transfer of the relinquished property.
exchanger
The property owner seeking to defer capital gain tax by utilizing an IRS 1031 tax deferred exchange. (See tax deferred exchange)
excluded capital gain
The part of the realized gain that is "excluded" from taxes. (See capital gains, deferred capital gain, realized capital gain (loss), recognized capital gain)
exclusion
Exclusions include recreational vehicles, such as boats or campers, which are not dwellings for purposes of the HMDA. Also excluded are transitory residences such as hotels, hospitals, and college dormitories—whose occupants have principal residences elsewhere.
exclusionary zoning
Zoning that excludes stated uses. (See zoning)
exclusive agency listing
A written listing agreement giving a sole agent the right to sell a property for a specified time, but reserving to the owner the right to sell the property himself without owing a commission. The exclusive agent is entitled to a commission if he or she personally sells the property or if it is sold by anyone other than the seller. It is exclusive in the sense that the property is listed with only one broker. The multiple-listing service must accept exclusive-agency listings submitted by participating brokers. (See listing agreement)
exclusive authorization to acquire real property
A contract providing for the exclusive representation of a buyer by a broker. It authorizes a broker to act as the exclusive agent of the buyer. Similar to an exclusive-authorization-and-right-to-sell listing. (See exclusive-authorization-and-right-to-sell listing)
exclusive buyer representation agreement
Agreement in which the buyer works with only one broker, although the broker is free to represent other buyer clients.
exclusive-agency-buyer-agency-agreement
Similar to the exclusive buyer agency agreement, this is an exclusive contract between the buyer and the agent. However, this agreement limits the broker's right to payment. The broker is entitled to payment only if he or she locates the property the buyer ultimately purchases. The buyer is free to find a suitable property without obligation to pay the agent.
exclusive-buyer-agency-agreement
This is a completely exclusive agency agreement. The buyer is legally bound to compensate the agent whenever the buyer purchases a property of the type described in the contract. The broker is entitled to payment regardless of whether he or she locates the property. Even if the buyer finds the property independently, the agent is entitled to payment.
exclusive-right-to-sell listing
A written listing agreement appointing a broker as the exclusive agent for the sale of property for a specified period of time. The listing broker is entitled to a commission if the property is sold by the owner, by the broker or by anyone else. The phrase "right-to-sell" really means the right to find a buyer; it does not mean that the agent has a power of attorney from the owner to sell the property. (See listing agreement)
exculpatory clause
An exculpatory clause, also known as a liability waiver, is a contract provision that relieves one party of liability for damages or injuries that might be caused during the performance of the contract. These clauses are typically included in contracts to limit the responsibility of one party for certain risks or unforeseen events.
execute
The act of making a document legally valid, such as formalizing a contract by signing or acknowledging and delivering a deed. In some cases, execution of a document may refer solely to the act of signing, in other cases it may refer to complete performance of the document's terms.
executed contract
Written agreement that has been signed by all parties; agreement that has been completed according to its terms. (See contract)
executive officer
An executive officer is the chief executive officer, the president, the principal financial officer, the principal operating officer, each vice president with responsibility involving policy-making functions for a significant aspect of a person's business, the secretary, the treasurer, or any other person performing similar managerial or supervisory functions with respect to any organization, whether incorporated or unincorporated.
executive recruiters
Recruiters who represents candidate in all phases of job placement including salary negotiations; search fees may be paid by candidate.
executive summary
An executive summary is a short document or section of a document that summarizes a longer report or proposal in such a way that readers can rapidly become acquainted with the larger body of material without having to read it all. It usually contains a brief statement of the proposal covered in the full document, along with concise background information, analysis and conclusions.
executor
A person appointed by a testator to carry out the directions and requests in his or her last will and testament, and to dispose of his or her property according to the provisions of the will. State probate laws generally refer to this person as a "personal representative of the decedent."
executory contract
A contract under which some future contract obligation remains to be done by one or more of the parties.
executory contract
Agreement with terms that have not yet been completed.
executrix
A female person appointed by a testator to carry out the directions and requests in his or her last will and testament, and to dispose of his or her property according to the provisions of the will. State probate laws generally refer to this person as a "personal representative of the decedent."
exemplary damages
Monetary damages that go beyond the actual compensatory damages. They are awarded to punish a wrongdoer for fraudulent, malicious and wrongful conduct. (See compensatory damages, nominal damages)
exercise
Systematic voluntary behavior performed in a controlled environment for the purpose of improving metabolic function. (See behavior, environment, metabolism, performance, systemic, voluntary)
expansion
The phase of the economic or business cycle when the economy moves from a trough to a peak. It is a period when business activity surges and gross domestic product expands until it reaches a peak. (See peak, recession, recovery, trough)
expansion option
An expansion option in leasing is a provision that grants a tenant the right to expand their leased space under specified conditions, typically within the same building or complex. This option is particularly valuable for businesses that anticipate growth and may need additional space in the future. It allows the tenant to secure additional space without having to relocate, providing a convenient and cost-effective solution for expanding their operations.
expansionism
A government policy of the economic or territorial expansion of a nation.
expansive soil
Expansive soils are soils that expand when water is added, and shrink when they dry out. This continuous change in soil volume can cause homes built on this soil to move unevenly and crack.
expectation
Wishing with confidence of fulfillment; the feeling that something is about to happen; same as expected value.
expense-stop clause
A lease provision to pass increases in building maintenance expenses on to tenants on a pro rata basis.
experience
Direct participation in events; the state or result of being engaged in an activity.
Explicit bias
Bias that is a function of the conscious mind, such as a purposeful targeting of a certain group of people because of a openly held belief that the particular group is bad.
exponential growth
Change in a population that is proportional to the size of the population; population growth in which population size expands by ever-increasing increments.
exposure time
As defined in Uniform Standards of Professional Appraisal Practice (USPAP), the estimated length of time the property interest being appraised would have been offered on the market prior to the hypothetical consummation of a sale at market value on the effective date of the appraisal. Exposure time is always presumed to precede the effective date of the appraisal. Exposure time is a function of price, time, and use—not an isolated opinion of time alone.
express agency
A stated (written or verbal) agency agreement.
express agreement/contract
An oral or written contract in which the parties state the contract's terms and express their intentions in words.
express authority
The stated (written or verbal) authority of an agent. (See express agency)
express grant
An easement created by an owner expressly granting in a deed a specific right to another to use the owner’s property.
express reservation
Property interest identified in a deed as retained by grantor.
extended coverage policy
A title insurance policy that covers risks normally excluded by most standard coverage policies. The standard policy normally insures the title only as shown by the public records. It does not cover unrecorded matters that might be discovered during an inspection of the premises. Most lenders require extended coverage mortgage title insurance policies. Extended coverage indemnifies the insured against such things as mechanic's liens, tax liens, miscellaneous liens, encumbrances, easements, rights of parties in possession and encroachments, which may not be disclosed by the public records. (See standard coverage, title insurance)
extender clause
1. A condition, once found in most listing forms, providing that the listing would continue for a set period of time, such as 90 days, and then would be automatically renewable until the parties agreed to terminate it. Use of such clauses in listing contracts is frowned on by the courts and violates many state license laws. The use of such a clause by an organization may be a violation of the antitrust laws. Such clauses, however, do not violate antitrust laws if inserted by individual brokers in their own exclusive listing forms, though the clause must state a final termination date.
2. A "carryover" clause (often referred to as a safety clause) may be contained in a listing. It provides that a broker is still entitled to a commission for a set period of time after the listing has expired if the property is sold to a prospect of the broker introduced to the property during the period of the listing. A clause stating such conditions for payment might read: "If within 90 days after expiration of the listing agreement, the property is sold to or exchanged with any person who physically inspected the property with the broker or any cooperating broker during the listing period and if the broker gave the seller the name of such a person in writing within five days after the stated expiration date of the listing agreement." The owner should disclose to any broker seeking a listing whether there are any expired listings. Unless careful disclosure is made of any extender clauses in such expired listings, the owner could be faced with a claim for commissions from both the former broker who showed the buyer the property and the new broker. In many states the extender clause is revoked once the owner relists the property with another broker.
external depreciation
Reduction in a property's value caused by outside factors (those that are off the property). (See depreciation)
external obsolescence
A type of incurable depreciation caused by negative factors not on the subject property, such as environmental, social or ecomomic forces. The loss in value can not be reversed by spending money on the property. (See depreciation)
external sources of support for job and employment networking
Sources of support from other people, including the following: a) personal, b) professional, c) organizational and community, and d) opportunistic.
externalities
The principle that states that outside influences may have a positive or negative effect on property value.
extraction method
A method of finding land value in which all improvement costs (less depreciation) are deducted from the sales price; also called abstraction method.
facilities manager
A facilities manager is a professional responsible for overseeing the operation, maintenance, and management of an organization's physical buildings and grounds. Their duties include ensuring the functionality, safety, and efficiency of the built environment, which involves tasks such as coordinating maintenance services, managing budgets, and implementing space planning strategies. Facilities managers play a crucial role in creating a conducive work environment, optimizing facility use, and supporting the organization's overall operational goals.
factors of production
According to economists there are four essential resources needed to produce goods and services: land, labor, capital and entrepreneurship. These are called 'factors of production.'
Fair and Accurate Credit Transaction Act of 2003 (FACTA)
The Fair and Accurate Credit Transaction Act of 2003 (FACTA) added new sections to the federal Fair Credit Reporting Act (FCRA, 15 U.S.C. 1681 et seq.), intended primarily to help consumers fight the growing crime of identity theft. Accuracy, privacy, limits on information sharing, and new consumer rights to disclosure are included in FACTA. (See Fair Credit Reporting Act)
Fair Appraisal Act
A California law requiring that every real estate sales contract must include a notice stating that any appraisal must be unbiased, objective, and not influenced by factors such as race, color, religion, gender, sexual orientation, marital status, medical condition, military or veteran status, national origin, source of income, ancestry, disability, genetic information, or age.
Fair Credit Reporting Act
The Fair Credit Reporting Act gave consumers the rights of access to, and correction of, credit reports. FCRA can be found in 15 U.S. Code section 1681, et seq. (See credit report, FACTA) (Fair Credit Reporting Act)
fair deal on mortgage
Receiving a fair "price" (recall price = interest rate/points combination) on a mortgage loan corresponding to what you "deserve" considering your personal risk factors, income, credit score, and property type. If you don't get several financing quotes from different lenders, and dissect those quotes, you might get a much higher price on your loan than you "deserve."
fair deal on mortgage
Receiving a fair "price" on a mortgage loan corresponding to what you "deserve" considering your personal risk factors, income, credit score, and property type. If you don't get several financing quotes from different lenders, and dissect those quotes, you might get a much higher price on your loan than you "deserve."
Fair Employment and Housing Act
California's Fair Employment and Housing Act (FEHA) (Sections 13100-13196 of the Government Code) prohibits housing discrimination based on marital status as well as race, color, religion, sex, national origin or ancestry. The Department of Fair Employment and Housing enforces the law, which is based on the former Rumford Fair Housing Act.
CA Fair Employment and Housing WebsiteFair Housing Act
Pursuant to the federal Fair Housing Act, any offer to sell, rent, buy, or exchange property shall not contain any preference, limitation, or discrimination based on race, color, religion, sex, national origin, handicap, familial status, or an intention to make such preference, limitation or discrimination.
Fair Housing Amendment Act of 1988
Amends the Fair Housing Act of 1968 to include handicapped persons and families with children.
Fair Housing Compliance program
All REALTORS® are bound by the REALTOR® Code of Ethics to comply with the Fair Housing laws. The Code, however, does not represent the brokerage's personal commitment to fair housing. Thus, a brokerage compliance program is important because:
- There is no obligation for a plaintiff, tester or fair housing agency to give advance warning before it files a complaint.
- Everyone is presumed to know the legal obligations of fair housing.
fair housing tester
Fair housing testers are individuals who, often on behalf of governmental agencies or non-profit organizations, pose as potential renters or buyers of real estate to gather information and determine whether housing providers are complying with anti-discrimination laws. These testers are trained to identify and document practices that may indicate bias against certain groups based on race, gender, religion, disability, familial status, or national origin. The information collected by fair housing testers can be used to initiate legal action or inform policy-making aimed at preventing discriminatory practices in housing.
Fair Housing Unit (FHU)
The Fair Housing Unit (FHU) seeks to promote fair housing and equal housing opportunity by requiring awardees of capital program funding and tax credits to comply with state and federal civil rights laws in the marketing of the low-income housing they develop.
Fair Isaac and Company
Fair Isaac and Company is an independent company that came up with the credit scoring method and software, known as FICO score, used by banks and lenders, insurers and other businesses. (See FICO score)
Fair Isaac and Company
Fair Isaac and Company is an independent company that came up with the credit scoring method and software, known as FICO score, used by banks and lenders, insurers and other businesses. (See FICO score)
fair lending
The prohibition against unlawful discrimination in lending. The Fair Housing Act prohibits discrimination on the basis of race, color, religion, national origin, sex, familial status, or disability. In addition, the Equal Credit Opportunity Act (which is not administrated by HUD) prohibits discrimination because of age, receipt of public assistance, marital status, and the good faith exercise of rights under the Consumer Protection Act.
familial status
Familial status is defined as one or more individuals who have not obtained the age of eighteen (18) years, being domiciled with a parent or other person having custody, or anyone who is pregnant. It is therefore unlawful to refuse housing to anyone with children under the age of 18 or anyone who is pregnant, except when such housing meets the definition of housing for older persons.
Fannie Mae
The Federal National Mortgage Association, popularly known as "Fannie Mae," an active participant in the secondary mortgage market. Fannie Mae was established as a federal agency in 1938 for the purpose of purchasing FHA loans from loan originators to provide some liquidity for government-insured loans in a depression-wracked economy when few lending institutions would undertake this type of loan.
Farm Credit System
A national banking system for financing the activities of farmers and ranchers.
 Farm Credit Administration WebsiteFarm Service Agency (FSA)
Formerly the Federal Agricultural Mortgage Corporation (FAMC or Farmer MAC), the FSA is a federal agency of the Department of Agriculture. FSA offers programs to help families purchase or operate family farms. It also provides loans to help families purchase and improve single-family homes in rural areas. The FSA provides assistance to rural and agricultural businesses and industry through the Rural Business and Cooperative Development Service. Loan programs fall into two categories: guaranteed loans, made and serviced by private lenders and guaranteed for a specific percentage by FSA, and loans made directly by the FSA.
Farm Service Agency WebsiteFarmer Mac
Farmers Home Administration; provides financing of agricultural real estate and rural housing loans and liquidity to agricultural and rural housing lenders.
Farmers Home Administration Websitefast-track construction
Fast-track construction is a project delivery approach where design and construction phases overlap to expedite the overall project timeline. This method allows for the start of construction before the complete design is finalized, aiming to reduce the project's duration. By overlapping these phases, potential delays are minimized, but it requires close coordination and communication among all stakeholders to manage the risks associated with incomplete designs.
fat
See lipids
feasibility study
A study to determine the likelihood that a proposed project or development will fulfill the objectives of investors.
federal agency
Federal agency refers to the United States of America, the President, or any department of the United States or any corporation, agency, or instrumentality, created, designated, or established by the United States.
federal bank
Federal bank means a national banking association, savings and loan association, or savings bank that exists by authority of the United States, the main office of which is located in the commonwealth.
federal banking agencies
The term federal banking agencies refers to the Board of Governors of the Federal Reserve System, the Comptroller of the Currency, the Director of the Office of Thrift Supervision, the National Credit Union Administration, and the Federal Deposit Insurance Corporation.
federal branch
Federal branch means a branch in the commonwealth of any out-of-state federal bank.
federal credit union
Federal credit union means a credit union organized under the provisions of the Federal Credit Union Act.
Federal Deposit Insurance Corporation (FDIC)
An independent federal agency that insures the deposits in commercial banks. See FDIC Website and Federal Deposit Insurance Act—Full Text
Federal Emergency Management Agency (FEMA)
Federal Emergency Management Agency (FEMA) is the federal agency that is responsible for assisting the nation in the event of a disaster providing response and recovery efforts.
Federal Fair Housing Act
In 1968, Congress enacted Title VIII of the Civil Rights Act, called the Federal Fair Housing Act, which declared a national policy of providing fair housing throughout the United States (reference Sections 3601-3631 of Title 42, United States Code). This law makes discrimination based on race, color, sex, familial status, handicap, religion or national origin illegal in connection with the sale or rental of most dwellings and any vacant land offered for residential construction or use. The law does not prohibit discrimination in other types of real estate transactions, such as those involving commercial or industrial properties. The law is administered by the Office of Equal Opportunity (OEO) under the direction of the Secretary of the Department of Housing and Urban Development (HUD).
federal funds rate
The interest rate the Federal Reserve charges its member banks on uncollateralized loans. (See Federal Reserve System)
Federal Home Loan Bank System (FHLB)
Regulates the nation's savings and loan associations, much like the Federal Reserve governs the commercial banking industry. See Federal Home Loan Bank System Website
Federal Home Loan Mortgage Corporation (FHLMC)
Commonly known as "Freddie Mac," a federally chartered corporation established in 1970 for the purpose of purchasing mortgages in the secondary market. Freddie Mac was created as a part of the savings association system and, while it is not so limited, its loan purchase policies are designed to accommodate savings association needs. It functions with an independent board of directors but is subject to oversight by HUD. Freddie Mac Online
Federal Housing Administration (FHA)
A federal agency established in 1934 under the National Housing Act to encourage improvement in housing standards and conditions, to provide an adequate home-financing system through the insurance of housing mortgages and credit and to exert a stabilizing influence on the mortgage market. FHA was the government's response to a lack of quality housing, excessive foreclosures and a building industry that collapsed during the depression. (See National Housing Act) Federal Housing Administration Website
federal housing assistance program
The federal housing assistance program is the housing assistance program under which a mortgage loan or project receives assistance from a federal agency, department, or other federally related entity in the form of a federal guarantee, insurance, co-insurance, interest reduction payments, rental subsidies, commitment for permanent financing of a project upon completion of construction, or other assistance.
Federal Housing Finance Agency (FHFA)
Created in 2008, the FHFA serves as regulator and conservator of Fannie Mae and Freddie Mac and regulator of the 12 Federal Home Loan Banks. Federal agency created following the merger of the Federal Housing Finance Board (FHFB) and the Office of Federal Housing Enterprise Oversight (OFHEO).
www.fhfa.govFederal income taxes
This is what you pay to the U.S. Internal Revenue Service (IRS) based on your income and tax rate. These funds go to run the government - the military, IRS, SEC, TSA, Social Security, Dept. of Education, Dept. of Transportation, pay for the past spending, fund Medicare and Medicaid, government employee Pensions, the Dept. of the Treasury, etc. etc. etc.
Federal Insurance Contributions Act (FICA)
The Federal Insurance Contributions Act (FICA) is a United States federal law that mandates a payroll tax on both employees and employers to fund Social Security and Medicare programs. The tax is split between the employer and the employee, with each paying half of the total contribution rate, which covers both Social Security and Medicare.
Federal National Mortgage Association (FNMA)
Popularly known as "Fannie Mae," an active participant in the secondary mortgage market. Fannie Mae was established as a federal agency in 1938 for the purpose of purchasing FHA loans from loan originators to provide some liquidity for government-insured loans in a depression-wracked economy when few lending institutions would undertake this type of loan.
Federal Open-Market Committee (FOMC)
The Federal Open Market Committee (FOMC) is a branch of the Federal Reserve System in the United States. It is responsible for overseeing the nation's open market operations, which involve buying and selling government securities to control the supply of money and credit in the economy. The FOMC is composed of 12 members, consisting of the seven members of the Federal Reserve Board, the president of the Federal Reserve Bank of New York, and four of the remaining 11 Reserve Bank presidents, who serve on a rotating basis.
Federal Reserve Board
The Federal Reserve Board is the governing body of the Federal Reserve System, the central bank of the United States. It oversees the nation's monetary policy, regulates banks, maintains financial stability, and provides financial services to the government and the public.
Federal Reserve System (The Fed)
The nation's central bank created by the Federal Reserve Act of 1913. Its purpose is to help stabilize the economy through the judicious handling of the money supply and credit available in this country. The system functions through a seven-member Board of Governors (appointed by the President) and 12 Federal Reserve District Banks, each with its own president. The system sets policies and works with the privately owned commercial banks. See Federal Reserve Website
Federal Savings and Loan Insurance Corporation (FSLIC)
Created by the National Housing Act of 1934, the FSLIC, which was administered by the FHL Bank Board, insured savings and loan deposits until 1989.
Federal Trade Commission (FTC)
Under the Federal Reserve Board, the Federal Trade Commission (FTC) investigates and eliminates unfair and deceptive trade practices. It enforces and monitors the Equal Credit Opportunity Act, the Fair Credit Reporting Act, the Home Mortgage Disclosure Act, and the Truth in Lending Act. See the Federal Trade Commission Website
Federal Unemployment Tax Act (FUTA)
The Federal Unemployment Tax Act (FUTA) is a United States federal law that imposes a payroll tax on employers to fund state workforce agencies. This tax is used to provide unemployment benefits to workers who have lost their jobs. Unlike other payroll taxes, FUTA is paid solely by employers, based on the wages paid to employees, up to a limit on taxable income.
Federal Water Pollution Control Act
Enacted by Congress in 1972, this federal law administered by the EPA regulates the release of pollutants into navigable waters. Federal Water Pollution Control Act of 1972
federally regulated institution
An institution that is supervised by a federal financial institutions regulatory agency. This includes a national or a state-chartered bank and its subsidiaries, a bank holding company and its non-bank subsidiaries, a federal savings association and its subsidiaries, a federal savings and loan holding company and its subsidiaries, and a credit union.
federally related transaction
A federally related transaction is any real estate—related financial transaction involving or identified as such by a federal institution's regulatory agency. This includes all loans made by federally chartered banks and savings and loans. They also include the use of real property as security for a loan or an investment.
fee
Any cost that the borrower(s) must pay for services.
fee simple absolute
The maximum possible estate or right of ownership of real property, continuing forever.
fee simple defeasible
An estate in land in which the holder has a fee simple title subject to being divested upon the occurrence of a specified condition; also called a qualified fee or a defeasible fee. There are two categories of fee defeasible estates--fee simple determinable and fee simple subject to a condition subsequent. The term fee simple determinable implies that the duration of the estate can be determined from the deed itself. This is not true of a fee simple subject to a condition subsequent, in which case the estate's duration depends on the grantor's independent choice of whether to terminate the estate. (See fee simple determinable, fee simple subject to a condition subsequent)
fee simple determinable
A fee simple determinable is an estate in real property that exists "so long as," "while" or "during the period" that a certain prescribed use continues. Such use is described in the grant of conveyance. For example, a conveyance to the University of Knowitall "so long as" the real estate is used for educational purposes would give the university title, provided the granted land is used as prescribed. If, at some future time, the university were to stop using the property for educational purposes, title would revert to the original grantor, if living, or to his or her heirs if the grantor is deceased. A fee simple determinable automatically ends when the purpose for which it has been prescribed terminates. Upon the grant of a fee simple determinable, there remains in the grantor a possibility of reverter.
fee simple estate
The maximum possible estate one can possess in real property. A fee simple estate is the least limited interest and the most complete and absolute ownership in land; it is of indefinite duration and is freely transferable and inheritable. Fee simple title is sometimes referred to as "the fee." (See fee title)
fee simple qualified
In a fee simple qualified, the right of possession is restricted in some way.
fee simple subject to a condition subsequent
A fee simple subject to a condition subsequent is an estate conveyed "provided that," "on the condition that" or "if" it is used for a specific purpose. If it is no longer used for that purpose, it reverts to the original grantor or his heirs. This type of estate is much the same as a fee determinable, except that in a fee determinable conveyance, the words are of duration while a fee condition subsequent refers strictly to a specific condition. In addition, unlike a fee determinable, when fee condition subsequent property is no longer used for its prescribed purpose, the original grantor (or heirs) must physically retake possession of the property within a reasonable period of time after the breach (i.e., the grantor must exercise his or her right of reentry). Any transaction involving a fee simple defeasible estate should be referred to an attorney for a professional opinion.
fee title
A relationship that implies a position of trust or confidence wherein one person is usually entrusted to hold or manage property or money for another. The term fiduciary describes the faithful relationship owed by an attorney to a client or by a broker (and salesperson) to a principal. The fiduciary owes complete allegiance to the client. Among the obligations that a fiduciary owes to his or her principal ane the duties of loyalty, obedience and full disclosure; the duty to use skill, care and diligence; and the duty to account for all monies. (See law of agency, principal)
feedback
The return to the input of a part of the output of a machine, system, or process.
feudalism
A medieval system of economic and political organization in which a king or other sovereign was the source of all rights. The right to possess real property was granted by the sovereign to an individual as a life estate only. Upon the death of the individual, title passed back to the sovereign, not to the decedent's heirs. Feudalism predated the birth of the modern nation-state.
FHA 203K
The Section 203(k) program is HUD's primary program for the rehabilitation and repair of single family properties. As such, it is an important tool for community and neighborhood revitalization and for expanding home ownership opportunities.
FHA Upfront Mortgage Insurance Premium (UFMIP)
The FHA provides loan insurance as a condition of the loan and charges the borrower 1/2% of the loan balance as a UPFRONT premium, which can be financed over the term of the loan. Because of this loan insurance, the FHA will lend as much as 97% of the purchase price. FHA loan insurance works the same way as the private loan insurance except that it cannot be canceled when the loan balance declines to 80% of the property's market value.
FICO score
Consumer credit score developed by the Fair Isaac Corporation; found at www.myfico.com.
fictitious business name
A business name that DOES NOT include the surname of the individual owner, and each of the partners or the nature of the business is not clearly evident by the name.
For example, doing business under a name like "Smith & Jones Associates" or "Smith & Jones Sons" WOULD require a Fictitious Business Name be registered. Even though the surname of the owner is stated, the words following the surname suggest other owners that are not specifically named.
HOWEVER, doing business under a name like "John Smith Plumbing" or "Smith Plumbing" WOULD NOT require a Fictitious Business Name be registered, because the owner (John Smith) is conducting business under his legal name.
In the case of a corporation, a Fictitious Business Name is any name other than the EXACT corporate name as stated in the articles of incorporation.
fictitious business name statement
A fictitious business name statement is a document indicating the name under which a business is operating; filed with the county where the business is located.
fictitious business name statement
A fictitious business name statement is a document indicating the name under which a business is operating; filed with the county where the business is located. (See fictitious business name)
fiduciary
A relationship that implies a position of trust or confidence wherein one person is usually entrusted to hold or manage property or money for another. The term fiduciary describes the faithful relationship owed by an attorney to a client or by a broker (and salesperson) to a principal. The fiduciary owes complete allegiance to the client. Among the obligations that a fiduciary owes to his or her principal are the duties of loyalty, obedience and full disclosure; the duty to use skill, care and diligence; and the duty to account for all monies.
Figuring Depreciation
- Determine Cost Basis—Cost basis is usually the purchase price plus the buyer's capitalized closing cost, as determined by a tax expert.
- Calculate Depreciable Improvements—Allocate basis between land and improvements, expressed as percentages of the cost basis. (In other words, the buildings are what percentage of total cost?) Investors frequently use an appraisal, property tax bill allocation, or comparable sales to arrive at the allocation.
- Divide by 27.5—Divide depreciable improvements by 27 1/2 years to estimate 12 months depreciation, ignoring mid-month convention.
- Worksheet—Fill in the information in the appropriate field, and click on each "EQUALS" to calculate that item.
Depreciation for Residential Rentals
file transfer protocol (FTP)
A protocol for transferring files from one computer to another; typically used to upload files to a server.
filled land
An area of a property where the grade has been raised by depositing dirt, gravel or rock. Under most circumstances a seller (broker) has a duty to disclose to a buyer the fact that a property is on filled land.
final escrow instructions
Statements prepared by the escrow agent which reflect the final figures and instructions required to close escrow. (See escrow instructions)
Final order
A final order is the official, binding decision issued by a regulatory agency, court, or governing authority at the conclusion of a case or administrative proceeding. It represents the resolution of all issues in the case, is enforceable by law, and typically marks the end of the agency’s involvement unless an appeal is filed.
final rule
As used in this chapter, applies to transactions for which the creditor or mortgage broker receives an application on or after that date, except that new provisions concerning pre-disclosure activity of creditors, and revisions to existing regulations concerning the rule's effect on State laws and State exemptions, will be effective on that date without regard to whether an application has been received.
finance charge
The finance charge is the total cost of a loan or charge for the use of money, including any extensions or grant of credit, regardless of the characterization of the same, and includes any interest, time price differential, points, premiums, finder's fees, and other charges levied by the residential mortgage lender against the person obtaining the loan or against the seller, lender, mortgagee, or any other party to the transaction except any actual settlement costs.
The finance charges plus the actual settlement costs charged by the residential mortgage lender includes all charges made by the residential mortgage lender to the residential mortgage debtor other than the principal of the loan.
In computing the finance charge on any mortgage that does not require the full amount of the first year's interest to be paid during the first year and on a variable interest rate mortgage, interest must be calculated at the rate applicable to the first year of the loan.
Financial Accounting Standards Board
The Financial Accounting Standards Board (FASB) is the independent, private-sector, not-for-profit organization that establishes financial accounting and reporting standards for public and private companies. It derives its authority to set accounting standards from the U.S. Securities and Exchange Commission (SEC).
financial audit report
A financial audit report is a report prepared in connection with a financial audit conducted in accordance with generally accepted auditing standards prescribed by the American Institute of Certified Public Accountants by a certified public accountant licensed to do business in the United States. The audit report includes the following: Financial statements, notes, and supplementary information, prepared in conformity with generally accepted accounting principles; an expression of opinion regarding whether the financial statements are presented in conformity with generally accepted accounting principles, or a statement that such an opinion cannot be expressed and the reasons why.
financial institution
A financial institution is a bank, insurance company, credit union, savings and loan association, investment trust, or other organization held out to the public as a place of deposit for funds or medium of savings or collective investment.
Financial Institutions Reform, Recovery and Enforcement Act (FIRREA)
Legislation that in 1989 abolished the FSLIC and established a new deposit insurance fund, SAIF, for savings institutions; appropriated funds and created the Resolution Trust Corporation to dispose of failed thrifts; imposed wide-ranging changes in savings institution investment activities and operations; and created the Office of Thrift Supervision as part of a restructuring of the federal thrift regulatory and supervisory systems. (See Resolution Trust Corporation)
financial intermediaries
A financial institution that accepts deposits and makes loans.
Financial Management Rate of Return (FMRR)
A multi-year analysis of rate of return. Used by investors in medium and large properties (occasionally on small properties). Multi-year cash flows and net sale proceeds are analyzed using discounted cash flow techniques to solve for the Financial Management Rate of Return (FMRR).
FMRRs are the best rate of return indicator, because they require an analysis of the investor's entire holding period, not just a single year. The discounting process takes into consideration the time value of money, and thereby produces a more realistic rate of return.
financial statement
A brief summary of a person's assets, liabilities and earnings records.
financing instrument
Another name for "promissory note". It is a borrower's personal promise to repay a debt according to the agreed terms.
financing statement
Security interests in chattels (personal property) are created by an instrument known as a security agreement. To give notice of a security interest, a financing statement must be recorded. (See personal property, Uniform Commercial Code)
finder's fee
A finder's fee in real estate refers to a payment made to an individual or entity who helps connect a buyer with a seller of a property, often without being directly involved in the transaction itself. This fee is compensation for the service of locating the property or facilitating the transaction, and is subject to regulations regarding payment of finder's fees to unlicensed individuals.
Findings of Fact and Conclusions of Law
This is an official document written by an Administrative Law Judge. It sets forth the facts the judge found to be true and the conclusions of law he/she reached regarding those facts.
Fingerprint clearance card (AZ)
All applicants for original licensure must have a background check completed and receive a fingerprint clearance card from the Arizona Department of Public Safety. Scanned images of front and back of the fingerprint clearance card must be submitted with the application package.
fire insurance requirement form
A statement signed by the "borrower" agreeing to comply with the lender's requirements for fire insurance coverage.
fire rating
A rating of the length of time it takes a fire to penetrate a barrier. Designates the ability of a material to contain a fire in a carefully controlled test setting for a specified period of time. A material tested in a laboratory that adequately contains a fire for two hours and meets other requirements during the laboratory fire test, is given a two-hour fire resistance rating. Fire-resistance ratings are based on full-scale tests under controlled conditions and are generally recognized by building code authorities and fire insurance rating bureaus. Requirements for fire-resistance ratings are usually set by local building code officials based on the expected occupancy of the building.
fire stops
Fire stops are wood blocks placed at intervals between wall studs to slow the spread of fire.
firewall
A computer system used as a security measure to protect a computer system or network from unauthorized access.
first-degree misdemeanor
A first-degree misdemeanor is a criminal offense that is less severe than a felony but more serious than lower-level misdemeanors. Punishments for a first-degree misdemeanor typically include fines, probation, or jail time, with the maximum sentence varying by jurisdiction, often up to one year in jail and substantial fines.
first-time home buyer
A first-time home buyer, according the I.R.S., is a person who has not owned a primary residence for three years prior to the purchase date of the home for which they are claiming the first-time homebuyer's credit. (See American Recovery and Reinvestment Act of 2009, and http://www.irs.gov/newsroom/article/0,,id=204671,00.html for summaries.
fiscal policy
The government's policy in regarding to taxation and spending programs. The difference between these two areas determines the amount of money the government will withdraw from or feed into the economy, which can stimulate or restrain economic growth.
fiscal policy
Government spending policies that influence economic conditions. Through fiscal policy, regulators attempt to improve unemployment rates, control inflation, stabilize business cycles and influence interest rates in an effort to control the economy.
fiscal year
A fiscal year is a 12-month period used by organizations, businesses, and governments for financial planning, budgeting, accounting, and reporting purposes. Unlike the calendar year, which runs from January 1 to December 31, a fiscal year can begin and end in any month, depending on the organization's operational cycle and reporting needs.
five-year forecast
A five-year forecast is a strategic planning tool that projects the expected financial performance, market conditions, and operational results of a business, project, or economy over a five-year period. It typically includes projections for revenue, expenses, cash flow, and other key financial metrics. Five-year forecasts are essential for budgeting purposes and are often used to attract investors by demonstrating the future potential and stability of a business. In the context of economics or specific industries, such as real estate or technology, these forecasts can also provide insights into anticipated market trends and economic conditions, helping stakeholders prepare for future changes in the market environment.
Fix-up cost
Estimated costs the seller will incur to ready the property for viewing, such as the cost to add color to the landscaping, paint, and replace plumbing or electrical fixtures which are beyond repair or of unacceptable appearance, etc.
fixed expenses
Those recurring expenses that have to be paid regardless of whether the property is occupied; for example, real property taxes, hazard insurance and debt service. These expenses contrast with operating expenses necessary to maintain the production of income from the operation of a property. (See operating expenses)
fixed-fee
A contractor submits a bid proposing a fixed amount to do a job. Most construction bids are made on this basis. (See cost-plus)
fixed-rate loan/mortgage
1. A loan with the same rate of interest for the life of the loan. 2. A loan secured by mortgage or deed of trust on real estate that carries an interest rate that does not change over the life of the loan.
fixtures
A fixture is an article that was once personal property but has been so affixed to real estate that it has become real property. Whether an article is a fixture depends on the intention of the parties and may be determined by the manner in which the item is attached, its type and adaptability to the real property, the purpose it serves, and the relationship of the parties. (See trade fixtures)
flashing
Sheet metal or other impervious material used in roof and wall construction as a barrier to water seepage. (See construction terms)
flat fee
A property management fee expressed as a dollor amount per year or month. (See percentage fees)
flipping
Property flipping is the sale of the same property in a relatively short time frame with increasing values on the same property.
float
Float is getting a final rate and fees set nearer to the settlement date. If rates decline, the borrower benefits, but if they increase, the borrower risks paying a higher rate.
flood hazard areas
Locations specified on Federal Emergency Management Agency (FEMA) maps indicating areas that are subject to flooding. The seller's agent is required to inform potential buyers if the agent has knowledge that a property is located in such an area.
flood insurance
Typically a separate policy from homeowners insurance that covers damages caused by a flood. A river overflowing it's banks and flooding an insured's home would be covered by flood insurance. Note that a burst pipe flooding a home is typically covered by homeowners insurance, not a flood policy.
Flood Insurance Rate Map
A Flood Insurance Rate Map (FIRM) is an official map created by FEMA that shows flood risk areas within a community. It identifies different flood zones, Base Flood Elevations (BFEs), and areas subject to special flood hazard regulations. FIRMs are primarily used to determine flood insurance requirements, set building standards in flood-prone areas, and guide local floodplain management efforts. Lenders also use FIRMs to decide when flood insurance is required for federally backed mortgages.
Florida HOA Insurance Coverage
Florida Statute §718.111(11) outlines the insurance requirements for condominium associations within the state. This provision is designed to ensure the safety, health, and welfare of residents by mandating that associations maintain adequate property insurance coverage.
Florida Statute 718-103(2)
"Association" means the corporate entity responsible for the operation of a condominium... in which the unit owners, through membership, are obligated to operate and maintain the common elements and association property.
Florida Statute 718-111(1)(a)
"The operation of the condominium shall be by the association... the unit owners of a condominium shall be members of the association."
Florida Statute 718.113(1)
Maintenance of the common elements is the responsibility of the association, except for any maintenance responsibility for limited common elements assigned to the unit owner by the declaration. The association shall provide for the maintenance, repair, and replacement of the condominium property for which it bears responsibility pursuant to the declaration of condominium.
Florida Statute 718.115(1)(a)
Common expenses include the expenses of the operation, maintenance, repair, replacement, or protection of the common elements and association property, costs of carrying out the powers and duties of the association, and any other expense, whether or not included in the foregoing, designated as common expense by this chapter, the declaration, the documents creating the association, or the bylaws. Common expenses also include reasonable transportation services, insurance for directors and officers, road maintenance and operation expenses, in-house communications, and security services, which are reasonably related to the general benefit of the unit owners even if such expenses do not attach to the common elements or property of the condominium.
flue
The pipe or conduit that allows combustion gasses to exit the house. (See combustion gasses)
flush
To open a cold-water tap to clear out all the water that may have been sitting for a long time in the pipes. In new homes, to flush a system means to send large volumes of water gushing through the unused pipes to remove loose particles of solder and flux.
For Sale By Owner (FSBO)
Some owners choose to sell their own property without the aid of a real estate broker. "For Sale By Owner" properties are often a source of listings when the owner is unsuccessful finding qualified buyers.
forbearance
The act of refraining from taking legal action despite the fact that payment of a promissory note in a mortgage or deed of trust is in arrears. It is usually granted only when a borrower makes a satisfactory arrangement by which the arrears will be paid at a future date.
force and effect of law
A phrase referring to the principle that an administrative regulation has the same significance and legal weight as a law or act of legislature.
force-placed insurance
An insurance policy taken out by a lender or creditor when a customer does not carry insurance on an asset. The charges for this insurance are passed on to the customer.
forces for change
forces for change: economic, physical, political, social
forcible entry and detainer
Forcible Entry and Detainer (FED) is a legal process used by property owners to regain possession of their property from occupants who are unlawfully holding it, such as tenants who remain after lease termination or nonpayment of rent.
forecast absorption
The rate at which properties in a subdivision are expected to sell.
foreclosure
A legal procedure whereby property used as security for a debt is sold to satisfy the debt in the event of default in payment of the mortgage note or default of other terms in the mortgage document. The foreclosure procedure brings the rights of all parties to a conclusion and passes the title in the mortgage property to either the holder of the mortgage or a third party who may purchase the realty at the foreclosure sale, free of all encumbrances affecting the property subsequent to the mortgage. There are three general types of foreclosure proceedings: judicial foreclosure, nonjudicial foreclosure and strict foreclosure.
foreclosure consultant
A foreclosure consultant is a person who makes any solicitation, representation, or offer to a homeowner to perform for compensation or who, for compensation, performs any covered service that the person represents to prevent or postpone a foreclosure sale; or to avoid or ameliorate the impairment of the homeowner's credit; or assist the homeowner to accomplish a foreclosure reconveyance.
foreclosure reconveyance
Foreclosure reconveyance is a transaction that involves the transfer of title to a residence in foreclosure by a homeowner during a foreclosure proceeding by either the transfer of an interest in the residence or creation of a mortgage or other lien during the foreclosure process that allows the acquirer to obtain title to the residence in foreclosure by redeeming the property as a junior lienholder; or the subsequent conveyance or promise of a subsequent conveyance of an interest in the residence to the former homeowner by the acquirer, or a person acting in concert with the acquirer, that allows the former homeowner to remain in possession of the residence following the completion of the foreclosure proceeding.
foreclosure sale
A foreclosure sale is the sale of real property to enforce an obligation secured by a mortgage or lien on the property, including the exercise of a trustee's power of sale.
Foreign Investment in Real Property Tax Act (FIRPTA)
Enacted by the United States Congress in 1985, the act requires buyers to withhold estimated taxes equal to 10% of the sale price of a property sold or exchanged by a foreign person. The withholdings must be reported and paid to the Internal Revenue Service within 10 days of closing. The act applies to sales of personal residences with prices of $300,000 or more.
foreign judgment
The recognition of a foreign judgment occurs when the court of one jurisdiction accepts a judicial decision made by the courts of another (foreign) jurisdiction, and enforces a judgment in substantially identical terms without rehearing the substance of the original lawsuit.
foreign person
A Foreign Person is a nonresident alien individual, foreign corporation that has not made an election under section 897(i) of the Internal Revenue Code to be treated as a domestic corporation, foreign partnership, foreign trust, or foreign estate. It does not include a resident alien individual.
foreign trade zones (FTZs)
A Foreign Trade Zone (FTZ) is a designated area within a country where goods can be imported, handled, manufactured, or reconfigured without being subject to customs duties until they enter the domestic market. These zones are typically located near ports or airports and aim to encourage international trade by reducing regulatory and tax burdens on businesses. FTZs provide companies with advantages such as deferred or reduced duties, streamlined customs procedures, and the ability to store goods duty-free for extended periods.
forfeiture
Breach of a condition subsequent in a deed; entitles grantor or grantor's successor to reacquire title to the property. (See condition subsequent)
Form 1073
Form 1073 is the Individual Condominium Unit Appraisal Report of Fannie Mae and Freddie Mac.
Form 2075
Form 2075 is the Desktop Underwriter Property Inspection Report.
form appraisal report
Any of the relatively brief standard forms prepared by agencies such as the Federal Home Loan Mortgage Corporation and Federal National Mortgage Association and others for routine property appraisals. Narrative appraisal report: A detailed written presentation of the facts and reasoning behind an appraiser's estimate of value.
form-based planning
Type of land use planning permitted in California that provides for a mix of land uses while taking into account the relationship of buildings and public areas.
formal career assessments
Standardized tests and inventories that have been developed by experts according to scientific principles of test construction; specific steps must be followed in developing, administering, and interpreting; typically produce scores or score profiles.
Formal complaint
A formal complaint is a written, legally documented accusation filed by a regulatory agency or governing body against an individual or entity, alleging violations of laws, rules, or regulations. It initiates formal disciplinary or enforcement proceedings and outlines the specific charges and evidence supporting the allegations.
formal education
Education that is structured, longer in duration, and possibly more in-depth than information training.
Formal hearing
A formal hearing is a structured legal proceeding conducted before an administrative law judge (or equivalent authority) where evidence is presented, witnesses may testify, and legal arguments are made to resolve disputes or determine whether a violation of laws or regulations has occurred. It is typically used for more serious or contested cases and follows established rules of procedure.
formaldehyde
A colorless, pungent, and irritating gas, used chiefly as a disinfectant and preservative and in synthesizing other compounds like resins. (See urea-formaldehyde)
National Safety Council on Formaldehydefoundation
Base of building, typically of poured concrete consisting of walls or footings. (See anchor bolts, sill)
four corners of the contract
The meaning of a written contract, will or deed as represented solely by its textual content, without relying upon other resources or witnesses.
four factors of production
The four elements that contribute to value including capital, labor, land, and management.
four unities
Four "unities" are required to create a joint tenancy:
- Unity of possession - all joint tenants holding an undivided right to possession.
- Unity of interest - all joint tenants holding equal ownership interests.
- Unity of time - all joint tenants acquiring their interests at the same time.
- Unity of title - all joint tenants acquiring their interests by the same document.
The four unities are present when the following requirements are met:
- Title is acquired by one deed.
- The deed is executed and delivered at one time.
- The deed conveys equal interests to all of the parties.
- The parties hold undivided possession of the property as joint tenants.
Because the unities must be satisfied, many states require the use of an intermediary when a sole owner wishes to create a joint tenancy with another party(ies). The owner conveys the property to a nominee, or straw man. Then the nominee conveys it back, naming all the parties as joint tenants in the deed. As a result, all the joint tenants acquire title at the same time by one deed.
Four Zero One 401(k) retirement plan
401(k) retirement plans allow an individual to contribute part of their "pre-tax" income to an investment account. Pre-tax contributions are not tax-free, they are tax-deferred, meaning the person does not pay income tax on this money until they withdraw it from the plan (which should be at retirement). Some companies offer to "match" the individual's contribution as an incentive to join the company's retirement plan.
Depending on the provisions of a company's retirement plan, a person may take a loan from their 401(k) account, however, not all plans allow for loans. The loan is paid back, plus interest (a fixed rate determined at the time of the loan), through after-tax payroll deductions. As long as the individual repays the loan on time, they are not subject to withholding taxes or penalties.
Fourteenth Amendment to the United States Constitution (1868)
Section 1 is the relevant section of the amendment in this context. All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the state wherein they reside. No state shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any state deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.
Constitution of the United States of Americafraction
A portion of a whole number, with the numerator (above-the-line number) of the fraction divided by the denominator (below-the-line number) of the fraction.
fractional basis
Each property in the improvement district is charged a prorated share of the total amount of the special tax assessment. The share is determined either on a fractional basis (four houses may equally share the cost of one streetlight) or on a cost-per-front-foot basis (wider lots incur a greater cost than narrower lots for street paving and curb and sidewalk installation).
Fractional Interests (AZ definition)
An undivided interest in improved or unimproved land, lots or parcels of any size created for the purpose of sale or lease. A good example of a fractional interest is the interest that condominium owners have in the common areas.
fractional section
A parcel of land less than 160 acres, usually found at the edge of a rectangular survey. Undersized or oversized sections are classified as fractional sections. Fractional sections may occur for a number of reasons. In some areas, for instance, the rectangular survey may have been made by separate crews and gaps less than a section wide remained when the surveys met. Other errors may have resulted from the physical difficulties encountered in the actual survey. For example, part of a section may be submerged in water.
frame
Support posts, beams, and roof members, typically wood in residential construction; steel-frame construction is common for commercial structures and is also used for homes.
franchise
1. A privilege granted to conduct certain service businesses, such as a franchise real estate brokerage. 2. The private contractual right to operate a business using a designated trade name and the operating procedures of the parent company (the franchisor). Such firms as Century 21 and Coldwell Banker operate national franchise brokerages.
Franchise Investment Law
Administered by the California corporations commissioner, the law requires disclosure from the franchisor to the franchisee and is intended to protect prospective purchasers of franchises. (See franchise)
franchise tax
An income tax, California corporations pay.
fraud
Any form of deceit, trickery, breach of confidence or misrepresentation by which one party attempts to gain some unfair or dishonest advantage over another. Unlike negligence, fraud is a deceitful practice or material misstatement of a material fact, known to be false, and done with intent to deceive, or with reckless indifference as to its truth, and relied on by the injured party to his or her damage.
fraud alert
A "fraud alert" is a statement in a consumer credit report that notifies all prospective users of the report that the consumer may be a victim of fraud, including identity theft.
fraudulent misrepresentation
Misrepresentation with intent to defraud. The person making the statement knew that the statement was false, and made it anyway.
Freddie Mac
Federal Home Loan Mortgage Corporation, commonly known as "Freddie Mac," is a federally chartered corporation established in 1970 for the purpose of purchasing mortgages in the secondary market. Freddie Mac functions with an independent board of directors but is subject to oversight by HUD.
free trade
An economic concept where restrictions, quotas and tarrifs are removed, and all goods and services can flow between countries in an open competitive market. (See balance of payments, balance of trade)
freehold estate
An estate in land in which ownership is for an indeterminate length of time, in contrast to a leasehold estate. (See leasehold estate)
frequency
The number of repetitions of a periodic process in a unit of time.
frequency distribution
The arrangement of data into groups according to the frequency with which they appear in the data set.
friable
The breaking down of a substance into tiny filaments and particles. Asbestos is harmful only if it is disturbed or exposed, as often occurs during renovation or remodeling. Asbestos is highly friable. This means that as it ages, asbestos fibers break down easily into tiny filaments and particles. When these particles become airborne, they pose a risk to humans. (See asbestos)
friable asbestos
Any material containing more than one-percent asbestos, and that can be crumbled or reduced to powder by hand pressure. (See asbestos, friable)
frivolous
Void of significance or reason; of little or no worth, or importance; not worthy of serious notice; trivial; unimportant.
front footage
The measurement of a parcel of land by the number of feet of street or road frontage.
front-end ratio
The ratio of monthly housing cost (PITI) to gross monthly income. (See back-end ratio, PITI)
front-end zero
Under a conventional loan, a borrower may elect to finance all of the mortgage insurance premium, thus incurring no cash obligation for this charge at closing. (See mortgage insurance premium)
frost line
Frost line is how deep the frost permeates the ground. When building codes address frost line or frost depth they are referring to the building code mandate for the depth a foundation must penetrate into the ground.
fructus industriales
Corn, wheat and other crops that are produced annually by labor and industry, and not spontaneously. They are referred to in Latin as "fructus industriales." (See emblements)
fructus naturales
Fructus naturales are the "natural fruits" of the land where they grow, such as such as timber and wild game. Under common law, fructus naturales are considered part of the real property, and not separate chattels in relation to any legal sale of the property.
frustration of purpose
Frustration of purpose occurs when unexpected events arise which make a contract impossible to be performed, entitling the frustrated party to rescind the contract without paying damages.
full disclosure of material facts
Obligation of real estate licensee to make known to the licensee's client as well as prospective purchasers all facts concerning the property and likely to affect its value that are known to the licensee and that the licensee is not otherwise prohibited by law from disclosing.
full-time employee
Individuals who work more than 20 hours a week, according to the ADA. (See Americans with Disabilities Act)
fully amortized
Fully amortized mortgages are paid in equal monthly installments, which include interest and amortization of principal, paid over a period of years. The interest is set at a predetermined rate and is charged only on the loan balance. As payments are made, the amount allocated to interest decreases while the amount allocated to principal increases. At the end of the term the mortgage will be paid in full, including interest. No balloon payment is required. (See amortization, balloon payment)
functional obsolescence
A loss of value to an improvement to real estate arising from functional problems, often caused by age or poor design. (See depreciation, economic obsolescense, physical obsolescence)
functional resume
Resume that emphasizes major skills and accomplishments from your complete work history. Unlike the chronological resume, in which the dates, employer, job title, and job tasks are combined together, the functional format organizes the work history into two separate sections: (a) a skills and accomplishments section and (b) a reverse chronological work history describing company, job title and employment dates.
functional utility
1. The ability of a property or building to be useful and to perform the function for which it is intended, according to current market tastes and standards. 2. The efficiency of a building's use in terms of architectural style, design and layout, traffic patterns, and size and type of rooms. The ultimate test of functional utility is marketability.
funding fee
A percentage of the loan amount charged on VA loans to provide for administrative costs. The fee has increased over time and is higher for subsequent use by veterans, reservists and National Guard.
funding letter
Cover letter prepared by the escrow agent to the lender detailing the documents being forwarded to the lender to complete the borrower's loan and release the loan proceeds to escrow.
future interest
A person's present right to an interest in real property that will not result in possession or enjoyment until some time in the future, such as a reversion or right of reentry.
future value (FV)
A value of an amount of money in the future, like $1,000 five years from today.
future worth
The compounding increase in the value of money over time.
GAAP (generally accepted accounting principles)
The term "generally accepted accounting principles" has a specific meaning for accountants and auditors. It identifies that the financial statements utilize accounting principles established by a body designated by the AICPA Council to establish such principles.
gap
A defect in the chain of title of a particular parcel of real estate; a missing document or conveyance that raises doubt as to the present ownership of the land.
Garden City movement
The Garden City Movement proposed public green belts and agricultural areas surrounding self-supporting, satellite communities surrounding a central garden city with maximum populations to prevent sprawl.
Garn-St. Germain Bill
Or the Depository Institutions Deregulation and Monetary Control Act of 1980 which authorized the deregulation of banks and savings institutions. Allowed savings and loan associations to offer checking-type accounts; to issue credit cards; and established loan loss reserve requirements. A follow-on bill, The Depository Institutions Act of 1982 (also sponsored by Senators Garn and St. Germain), allowed savings and loan associations to have up to 50% of assets in real estate development; 30% of assets in consumer loans and corporate debt; own real estate development companies; and offer money market deposit accounts. Garn-St. Germain—Full Text
gateway
A computer system that transfers data between normally incompatible applications or networks. A gateway reformats data so that it is acceptable for the new network or application before passing it on. For example, "gateways" between e-mail systems allow users on different e-mail systems to exchange messages.
general agent
Someone authorized to transact every kind of business for the principal. (See agent)
general contractor
A licensed construction specialist who enters into a construction contract with a developer or property owner to construct a building or real estate project. The general contractor often negotiates individual contracts with sub-contractors who specialize in various aspects of the building process, such as electricity, drywall and plumbing.
general index
A county recorder's office index used by title company examiners when searching the chain of title of a property. The examiner uses the index to research all the grantors and grantees in the chain of title. The index lists all the things that apply to a person by name, including liens, judgments and power of attorneys. (See chain of title)
general lien
The right of a creditor to have all of a debtor's property — both real and personal — sold to satisfy a debt. (See lien)
general objectives
General objectives are an organization's priorities during a specific time frame. The number of objectives is typically a function of the size and complexity of the organization and the capacity of its human and financial resources. For a fairly small organization, two general objectives are likely most feasible. Larger organizations typically don't choose more than four. Although, even a very large, complex organization may choose only one or two competencies so that all efforts are mobilized in a highly focused direction.
general partner
In a limited partnership, the individual or company aquiring, organizing and managing the investment. (See limited partnership)
general partnership
In a general partnership, all the partners participate in the operation and management of the business and share full liability for business losses and obligations. (See partnership)
Uniform Partnership Act - Full Textgeneral plan
A general plan, also known as a comprehensive plan or a master plan, is a long-term policy document that serves as a blueprint for the future growth and development of a community, city, or region. The plan outlines a vision for the community's future and sets goals, objectives, and policies to guide land use, infrastructure, and resource allocation decisions.(See comprehensive zoning, master plan, regional planning)
general power of attorney
Authority to act on behalf of someone else for financial purposes. (See power of attorney
general real estate tax
General real estate taxes are levied to fund the operation of the governmental agency that imposes the taxes.
general warranty deed
A deed in which the grantor fully warrants good clear title to the premises. Used in most real estate deed transfers, a general warranty deed offers the greatest protection of any deed.
generation x
The generation born after the baby boomers (roughly from the early 1960s to mid 1970s), often perceived to be disaffected and directionless.
generation y
The generation born in the 1980s and 1990s, comprising primarily the children of the baby boomers and typically perceived as increasingly familiar with digital and electronic technology. Also referred to as "millennials."
gentrification
Gentrification or urban gentrification, is the physical renovation of low-cost, physically deteriorated neighborhoods, leading to an increase in property values, along with an influx of wealthier residents who may displace the prior residents.
geographic farming
Farming/prospecting an area defined by specific "geographic" boundaries. The best geographic farms are particular subdivisions with similar demographics, such as: the price of homes, the ages of residents, family composition, etc. (See farming, nongeographic farming)
Georgia Fair Lending Act (GAFLA)
The Georgia Fair Lending Act (GAFLA) provides certain limitations on lending practices related to residential mortgage lending, impacting lenders, brokers, servicers and assignees and purchasers of mortgage loans.
get rich quick schemes
These are real estate pitches for your money that come with tag lines like "no money down, no risk, no work, use other people's money" etc., that promise riches in short periods of time. Many people fall into these traps, 99.5% of which end up being too good to be true and leave a bamboozled investor with less wealth than when they undertook that investment. GRQS rarely earn wealth for people.
get rich slowly schemes
This is earning money the old fashioned way. This is doing the hard work for years, educating oneself, doing the proper due diligence on purchases, managing one's property's well, and earning long term wealth from real estate - or other assets, businesses, etc. - ownership. There is a high probability of success of wealth building with long term ownership of real estate if an individual did the proper due diligence and made smart purchase decisions.
gift
Voluntary transfer by an individual of any type of property for less than full consideration. (See gift tax)
gift deed
A deed in which the consideration is "love and affection." Because the deed is not supported by valuable consideration, the donee (recipient of the gift) may not be able to enforce against the donor certain promises or agreements contained in the deed. (See deed, donee, donor)
gift tax
A federal tax applied to an individual giving anything of value to another person. For something to be considered a gift, the receiving party cannot pay the giver full value for the gift, but may pay an amount less than its full value. It is the giver of the gift who is required to pay the gift tax. The receiver of the gift may pay the gift tax, or a percentage of it, on the giver's behalf in the event that the giver has exceeded his/her annual personal gift tax deduction limit. California's gift tax was repealed by voters on June 8, 1982. (See gift)
Ginnie Mae
Government National Mortgage Association is a federal agency created in 1968 when the Federal National Mortgage Association (FNMA) was partitioned into two separate corporations. "Ginnie Mae Online," as it is commonly called, is a corporation without capital stock and is a division of HUD. The GNMA operates the special assistance aspects of federally aided housing programs and has the management and liquidating functions of the old FNMA. The FNMA is authorized to issue and sell securities backed by a portion of its mortgage portfolio, with the GNMA guaranteeing payment on such securities.
girders
Girders are the beams that span foundation walls and footings to provide support for the floor of a structure.
glucose
A simple sugar that is the main source of energy for the body. (See lipids, protein)
goal setting
A planning tool where agents establish, in writing, exact short-term, intermediate-term and long-term goals. Goals should be reasonably attainable and progress should be periodically evaluated.
gold standard
A monetary system in which a government allows its currency to be freely converted into fixed amounts of gold and vice versa. The exchange rate under the gold standard monetary system is determined by the economic difference for an ounce of gold between two currencies.
good faith
1. A term describing an individual's legitimate and honest efforts to meet his or her obligations in a given situation. 2. An act performed on the basis of trust and with no intent to misrepresent or defraud.
good faith and honesty
Obligation of real estate agent to act in the client's best interests while acting fairly to all parties in the transaction. (See fiduciary
good faith estimate or GFE
An estimate of settlement charges a borrower is likely to incur, as a dollar amount, and related loan information based upon common practice and experience in the locality of the mortgaged property, as provided on the form prescribed.
good funds
Cash, cashier's checks and personal checks that have cleared the bank.
good-faith estimate
A preliminary accounting of expected closing costs. The Real Estate Settlement Procedures Act (RESPA) requires the lender to promptly give loan applicants a good-faith estimate of closing costs. (See Real Estate Settlement Procedures Act (RESPA))
goods
Material things perceived to have monetary or exchange value. (See services)
goodwill
An intangible, salable asset arising from the reputation of a business; the expectation of continued public patronage; including other intangible assets like trade name and going concern value. When a business is sold, the sales price often reflects its goodwill value.
government check
The 24-mile-square parcels composed of 16 townships in the rectangular (government) survey system of legal description.
government controls
Governments sometimes implement price or production controls when prices on essential items, such as food or oil, are rising or falling rapidly.
government lot
Fractional sections in the rectangular (government) survey system that are less than one quarter-section in area. Areas smaller than full quarter-sections were numbered and designated as government lots by surveyors. These lots can be created by the curvature of the earth; by land bordering or surrounding large bodies of water; or by artificial state borders. (See rectangular (government) survey system
Government National Mortgage Association (GNMA)
A federal agency created in 1968 when the Federal National Mortgage association (FNMA) was partitioned into two separate corporations. "Ginnie Mae," as it is commonly called, is a corporation without capital stock and is a division of HUD. The GNMA operates the special assistance aspects of federally aided housing programs and has the management and liquidating functions of the old FNMA. The FNMA is authorized to issue and sell securities backed by a portion of its mortgage portfolio, with the GNMA guaranteeing payment on such securities.
Ginnie Mae Onlinegovernment sponsored enterprise (GSE)
One of the organizations comprising the secondary mortgage market, such as Fannie Mae, that is supervised by the federal government through the Office of Federal Housing Enterprise Oversight (OFHEO)
government survey system
The government survey system is a system of land description that applies to much of the land in the United States, particularly in the western states; also called the geodetic or rectangular survey system. It is based on pairs of principal meridians and base lines, with each pair governing the surveys in a designated area. (See baselines, meridians)
grace period
An agreed upon time after an obligation is past due when a party can perform without being considered in default.
graduated commission splits
Other companies have graduated commission splits based on a salesperson's achieving specified production goals. For instance, a broker might agree to split commissions 50/50 up to a $25,000 salesperson's share; 60/40 for shares from $25,000 to $30,000; and so on. Commission splits as generous as 80/20 or 90/10 are possible, however, particularly for high producers.
graduated payment adjustable-rate mortgage
Financing instrument that carries an interest rate that is subject to change based on a specified index, with loan payments limited to increases permitted at specified intervals.
graduated-payment mortgage (GPM)
A loan in which the monthly principal and interest payments increase by a certain percentage each year for a certain number of years and then level off for the remaining loan term. (See mortgage)
grandfather clause
An expression that conveys the concept that something that was once permissible continues to be so, despite changes in the law.
grant
A conveyance of real estate. (See grant deed
grant
A conveyance of real estate.
grant deed
A type of deed in which the grantor warrants to the grantee, that he has not previously conveyed the estate, that he has not encumbered the property (except as noted in the deed) and that he will convey any title to the property he may later acquire.
grantee
The person who receives a conveyance of real property from a grantor. The grantee must be a person, either natural or otherwise (e.g. corporation, public agency, partnership, etc.) existing at the time of the conveyance and is capable of taking title. (See grant deed
granting clause
Words in a deed of conveyance that state the grantor's intention to convey the property at the present time. This clause is generally worded as "convey and warrant," "grant," "grant, bargain and sell" or the like.
grantor
The person transferring title, or an interest in real property. A grantor must be competent to convey title. A corporate grantor must have legal existence and be authorized to hold and convey title to real property. The grantor must be clearly identified in the deed.
graphical user interface (GUI)
An computer user interface that uses onscreen objects such as menus and icons to allows a user to access information from the computer.
gravity
The quality of having weight; weight used chiefly in the phrase "center of gravity"; the gravitational attraction of the mass of the Earth, Moon, or planet for bodies at or near its surface; acceleration of gravity. (See acceleration of gravity)
green belt
A belt of parks or rural land surrounding a town or city.
green building
A building that takes maximum advantage of environmentally friendly building design and components.
green card test
A person fulfills the requirements of green card test if he/she is a lawful permanent resident of the United States at any time during the calendar year. This is known as the "green card" test. A lawful permanent resident is a person who has been issued an alien registration card (Form I-551)(also known as a "green card") by the office of U.S. Citizenship and Immigration Services (USCIS).
gross collectible rental income
Gross collectible rental income refers to the total amount of rental income that a property owner or landlord expects to collect from all leased units or properties before any deductions for vacancies, credit losses, or operating expenses. This figure represents the maximum potential revenue from rent over a specific period, assuming 100% occupancy and full payment from all tenants.
gross domestic product
The total market value of the goods and service produced domestically in a country in a given period of time (monthly, yearly).
gross income multiplier
A figure used as a multiplier of the gross annual income of a property to produce an estimate of the property's value.
gross lease
A lease of property where a landlord pays all property charges regularly incurred through ownership, such as repairs, taxes, insurance and operating expenses. Most residential leases are gross leases. (See lease)
gross living area (GLA)
The total finished, habitable, above-grade space, measured along the building's outside perimeter.
gross national product (GNP)
The dollar value of all goods and services produced by a nation's economy in a year. Technically, this means the market value of newly produced final goods and services. The value of intermediate goods and services is assumed to be incorporated in the final value.
gross operating income
The result when other income is added to rental income. (See other income, rental income)
gross rent multiplier (GRM)
The figure used as a multiplier of the gross monthly income of a property to produce an estimate of the property's value.
gross scheduled income
The maximum amount of rent if the property were 100 percent occupied.
grossed-up income
Grossed-up income is income that is not taxable by the federal government and has been increased to reflect the amount of tax savings attributed to this type of income. The maximum amount of grossed-up income allowable is 25 percent, it but could be less based on the tax savings of the borrower. For example, if nontaxable income is $1,000 per month, and assuming a tax savings of 25 percent, the allowable grossed-up income would be $1,250 per month.
ground lease
A lease of land alone, sometimes secured by improvements placed on the land. Also called a land lease, the ground lease is a means used to separate the ownership of the land from the ownership of the buildings and improvements constructed on the land. (See lease)
ground rents
A perpetual lease where the landowner retains title and the lessee recieves the right of possession and use. Used predominantly in Maryland and Pennsylvania prior to 1885.
groundwater
Water under the earth's surface, regardless of the geological structure in which the water is standing or flowing. It does not include water in underground streams that have identifiable banks and beds.
group effectiveness skills
Skills that are effective in groups; such as interpersonal skills, teamwork, and negotiation.
Group-think bias
This happens when humans try too hard to fit into a particular group by holding back their own opinions or expressing perspectives that vary from the consensus of the group.
growing equity mortgage (GEM)
A loan in which the monthly payments increase annually, with the increased amount being used to reduce directly the principal balance outstanding and thus shorten the overall term of the loan.
growth
A period of the life cycle of a neighborhood in which property development is ongoing.
growth control
Also called growth management. Since the late 1960s, many communities have developed a variety of growth control measures to address environmental, social, and economic problems. Growth controls are intended to protect the aesthetic and environmental quality of communities, providing adequate water, sewer, and infrastructure, and preserving community identity.
guarantee
A pledge to investors that the issuing company will bear the default risk on the collateral pool of loans, thereby ensuring the timely payment of principal and interest owed to investors.
guarantee of title
Guarantee of title as determined from examination of the public records and described in the guarantee document.
guarantor
A person or entity that agrees to be responsible for another's debt or performance under a contract, if the other fails to pay or perform.
guardian
A person, appointed by court or by will, given the lawful custody and care of the person or property of another (called a ward). The ward might be a minor, an insane person or even a spendthrift. The guardian may, upon court approval and without necessity of obtaining a real estate license, sell the ward's property if it is in the best interest of the ward.
guide meridian
A guide meridian is a line, marked by monuments, running North and South through a section of country between other more carefully established meridians called principal meridians, used for reference in surveying. (See meridians, monuments)
guide meridian
A guide meridian is a line, marked by monuments, running North and South through a section of country between other more carefully established meridians called principal meridians, used for reference in surveying.
guide meridian
A guide meridian is a line, marked by monuments, running North and South through a section of country between other more carefully established meridians called principal meridians, used for reference in surveying.
gutter
A gutter is the trough along the roof line of a structure that collects rainfall, which is diverted to a drainage pipe that carries the water to the ground and away from the structure.
habendum clause
That part of a deed beginning with the words "to have and to hold," and then defines the ownership right received by the grantee
habitability
Fit for human habitation. (See implied warranty)
hacker
A person who illegally gains access to your computer system.
hacking
Unauthorized access to computer systems or networks.
Halo effect
Humans' unconscious mind thinking that everything is good just because that person is attractive.
handicap
As defined in the fair housing act, a physical or mental impairment that substantially limits one or more major life activities (walking, seeing, learning, working) or a record of having such an impairment or being regarded as having such impairment. Handicap does not include current, illegal use or addiction to a controlled substance.
hard earned cash equity
Many people would term this "cash equity." It is a buyer's down payment, closing costs, and estimated rehabilitation costs to get the property into rentable shape. We use the term "hard earned cash equity" to remind you that it is difficult, takes many years and a lot of hard work to save money. There is no easy way other than to save your pennies, skip the get rich quick investor schemes, and when you are young and trying to save money for real estate, don't do anything foolish like blow your savings on a fancy car or other depreciating value asset.
hard earned equity needed to close escrow
This is money you have in savings that you might use to buy real estate. It has probably taken you years, or decades, to save this money. Every time you write a check for property, you should think carefully whether or not you have reduced you risk, and hence increased the chances that you will earn, not diminish, your wealth.
hard money loan
A loan made in cash by a non-institutional lender.
hauled water area
A hauled water area refers to a geographic region where residents and businesses do not have access to a public water supply system or private wells. Instead, they rely on water that is transported and delivered by truck. This water is typically stored in large tanks on the property and used for drinking, cooking, bathing, and other household needs. Hauled water areas are often found in rural or remote locations where the infrastructure for a public water supply is not feasible or cost-effective. Residents in these areas may need to manage their water usage carefully and ensure regular deliveries to maintain an adequate supply.
hazard insurance
Hazard insurance policies are commonly referred to as fire insurance but actually include more perils, including liability.
hazardous waste
A subset of solid wastes that pose substantial or potential threats to public health or the environment and meet any of the following criteria:
- Is specifically listed as a hazardous waste by EPA;
- Exhibits one or more of the characteristics of hazardous waster (ignitability, corrosiveness, reactivity, and/or toxicity;
- Is generated by the treatment of hazardous waste or is contained in a hazardous waste.
Toxic waste materials jeopardizing the value of real estate. (See asbestos, Environmental Protection Agency, undergound storage tanks, urea-formaldehyde)
hazardous waste disclosure
California Health and Safety Code (§ 25359.7(a)) requires owners of nonresidential properties to disclose to prospective buyers or lessees the existence of hazardous substances on or beneath a property. Both residential and nonresidential tenants are required to notify landlords if hazardous substances have been released on a property.
header
In construction, a header is a framing member over an opening in a wall. The most common headers are those over windows and doorways which serve to transfer the load. (See construction terms)
heat absorbing glazings
A technology that uses heat-absorbing glazing with tinted coatings to absorb solar heat gain through windows. This approach does allow some light to pass through the tinted windows.
heat exchanger
Heat exchange is the method by which the unwanted heat is removed from a system. A heat exchanger is a device by which energy (in the form of heat) is transferred from one fluid or gas to another across a solid surface.
heir
A person who inherits under a will or a person who succeeds to property by the state laws of descent if the decedent dies intestate. (See intestate)
helping professionals
Professionals who may be able to help you network; such as minister, priest, rabbi, therapist, career practitioner, counselor, etc.
hereditaments
Property capable of being inherited.
HERS score
A number between 0-100 that is used to designate the energy efficiency of a home compared to guidelines established by the Home Energy Rating System Council. The higher the score (number), the greater the energy efficiency of the residence. (See Home Energy Rating System (HERS))
heterogenious
The quality or state of being heterogeneous; different in kind; unlike; diverse; incongruous. (See homogeneous)
hidden unemployment
The hidden unemployed are those unemployed or underemployed workers not reflected in official unemployment statistics because of the way they are compiled. Only those who have no work but are actively looking for work are counted as unemployed.
high-cost home loan
A high-cost home loan is a home loan in which the terms of the loan exceed one or more of the defined thresholds.
high-cost mortgage
A mortgage for your primary home, where the annual percentage rate (APR) or points and fees charged exceed certain threshold amounts.
highest and best use
In appraising real estate, the most profitable, physically possible, and legally permissible use for the property under consideration.
highrise developments
Sometimes called mixed-use developments (MUDs), these combine office space, stores, theaters and apartment units in a single vertical community. MUDs usually are self-contained and offer laundry facilities, restaurants, food stores, valet shops, beauty parlors, barbershops, swimming pools and other attractive and convenient features.
historic rent
Scheduled (or contract) rent paid in past years.
history
An list of websites that have been visited by a computer.
HIV
Human immunodeficiency virus. The virus that causes AIDS.
HOA assessments
Assessments are special payments required of unit owners to address some specific expense, such as a new roof. Assessments are structured like condo fees: Owners of larger units pay proportionately higher assessments than smaller units. The relative ownership shares are established by the developer prior to the sale of the units.
HOA certificate
The homeowners association certificate (HOA cert) provides a summary of the fundamental information (bylaws, articles of incorporation, and insurance policy) regarding the HOA. Completed by the homeowners association, the HOA cert is delivered to escrow.
HOA fees
In an homeowners association (HOA), the board decides upon a monthly fee that HOA unit owners need to pay in order to cover the costs of the community. There are two parts to an HOA fee; 1. the monthly cost of operating the community; and 2. Saving monies for long term reserves for capital repairs and capital replacements.
HOA reserve funds
Money saved by a homeowners association (HOA) and noted in the financial statements, for doing long term capital repairs and replacements at the property. It is typically much less than is needed as estimated by a reserve study.
hold-harmless clause
A contract provision whereby one party agrees to indemnify and protect the other party from any injuries or lawsuits arising out of the particular transaction. Such clauses are usually found in leases in which the lessee agrees to "indemnify, defend and hold harmless" the lessor from claims and suits of third persons for damage resulting from the lessee's negligence on the leased premises.
holdback
Funds not released under a construction loan agreement due to a failure to lease to the required minimum.
Holden Credit Denial Act
A California state law imposing substantially the same requirements imposed by the Equal Credit Opportunity Act and Regulation B with respect to notice to an applicant of a lender's decision to extend or deny credit. (See Equal Credit Opportunity Act)
holder in due course
The holder of a negotiable instrument (check or note) purchased for value when the instrument appears complete and regular on its face; is taken before its due date and without notice of previous dishonor; and the holder has no notice of any defects in title of the transferor.
holder of evidence of debt
The holder of evidence of debt is the person in actual possession of, or otherwise entitled to enforce an evidence of debt, but does not include a person acting as a nominee solely for the purpose of holding the evidence of debt or deed of trust as an electronic registry without any authority to enforce the evidence of debt or deed of trust.
holdover tenancy
A tenancy whereby a lessee retains possession of leased property after the lease has expired and the landlord, by continuing to accept rent, agrees to the tenant's continued occupancy as defined by state law.
holds out to the public
Refers to advertising or otherwise informing the public that mortgage banking loans, commercial mortgage loans, or mortgage loans are made or negotiated at a location. "Holds out to the public" includes listing a location on business cards, stationery, brochures, rate lists, or other promotional items.
holographic will
A will that is written, dated and signed in the testator's handwriting, but not witnessed. Some states consider a holographic will to be valid even though it was not witnessed, presumably on the theory that the handwriting can be analyzed to verify authenticity and demonstrate competency.
Home Affordable Foreclosure Alternatives (HAFA)
A program of the Departments of the Treasury & Housing and Urban Development (HUD) for home owners who can no longer afford their mortgage. HAFA provides two options for transitioning out of a mortgage: a short sale or a deed-in-lieu of foreclosure.
Home Affordable Modification Program (HAMP)
A program of the Departments of the Treasury & Housing and Urban Development (HUD) that provides foreclosure-prevention initiatives to help borrowers in or at risk of default avoid foreclosure by loan modification or principal reduction to lower their monthly mortgage payments.
Home Affordable Refinance Program (HARP)
A program of the Departments of the Treasury & Housing and Urban Development (HUD) for mortgage borrowers who are current on their payments but having trouble refinancing because the value of their home has declined.
Home Energy Rating System (HERS)
Program of the California Energy Commission that certifies home energy rating services and is intended to provide reliable information to differentiate the energy efficiency levels among California homes and to guide investment in cost-effective home energy efficiency measures; found at www.energy.ca.gov/HERS.
Home equity conversion mortgage
Home equity conversion mortgage, also known as a reverse mortgage, is a loan where no monthly payments are due. The loan is repaid when you cease to occupy your home as a principal residence. The amount owed can never exceed the value of your home. If the home is sold and sales proceeds exceed the amount owed on the reverse mortgage, the excess money goes to you or your estate.
home equity loan
A loan (sometimes called a line of credit) under which a property owner uses his or her residence as collateral and can then draw funds up to a prearranged amount against the property. (See line of credit)
home equity sales contract
Agreement to sell a homeowner's equity in the home; regulated by the California Civil Code, which requires specific notice, including right of cancellation, to the homeowner.
home expense-to-income ratio
A ratio expressed as a percentage that is used by the mortgage industry to determine a borrower's qualification for a loan. It is calculated by dividing the borrower's total monthly housing expenses by his or her gross monthly income.
home improvement loan
A classification requirement for loans not secured by a lien on a dwelling. Institutions classify a loan as a "home improvement loan" if the loan is entered on its books as a home improvement loan, or has otherwise been coded or identified as a home improvement loan, for example, by color-coding loan files.
Home inspection report
home loan
A home loan is a loan in which the debt is incurred by the homeowner primarily for personal, family, or household purposes, and the loan is secured by a mortgage or deed of trust on property upon which is located, or there is to be located, a structure or structures intended principally for occupancy of one to four families that is or will be occupied by the homeowner as the homeowner's principal dwelling.
Home Mortgage Disclosure Act (HMDA)
Enacted by Congress in 1975 and implemented by the Federal Reserve Board's Regulation C, a federal law that requires lenders with federally related loans to disclose to the Federal Reserve the number of loan applications and loans made in different parts of their service areas; designed to eliminate the discriminatory practice of redlining. (See Federal Reserve, redlining) Home Mortgage Disclosure Act Website
Home Valuation Code of Conduct (Code)
Legislation passed in 2009 to regulate appraisals, stating Freddie Mac would not purchase mortgages from lenders who did adopt the code for single-family properties; prohibited lenders and third parties from influencing or attempting to influence the development, result, or review of an appraisal report.
home warranty insurance policy
An insurance policy that insures against plumbing, electrical, heating, and major appliance problems for the term of the policy.
HomeFirst Down Payment Assistance Program
The HomeFirst Down Payment Assistance Program provides qualified homebuyers with up to $25,000 toward the down payment or closing costs on a one- to four-family home, a condominium, or a cooperative in one of the five boroughs of New York City.
homeostasis
The state of an organism in physiological equilibrium maintained by the coordinated functioning of the entire body. (See equilibrium)
Homeowner
A law enacted after the 2003 Southern California wildfires to clarify the rights of homeowners under homeowner insurance policies.
homeowner
A homeowner is a natural person who owns a building that is intended as a dwelling.
Homeowner Assistance Program
A California program for senior citizens and blind or disabled citizens of any age, providing a property tax rebate for low-income taxpayers.
homeowner instructions
Instructions given to a property owner by a listing broker that advise the owner of cleaning and repairs that will improve the appearance and increase the value of a listed property.
homeowner's association
A nonprofit association of homeowners organized pursuant to a declaration of restrictions or protective covenants for a subdivision, PUD or condominium.
homeowner's association (HOA) board of directors
A group of individuals, usually unit owners, who are elected to make decisions for the community members - like hiring a property manager, setting homeowners association (HOA) fees, and making repair decisions. (See BOD meeting minutes and notes)
Homeowner's Bill of Rights of 2004
Law enacted after 2003 Southern California wildfires to clarify rights of homeowners under homeowner insurance policies.
homeowner's exemption
An amount of property value of owner-occupied residence excluded from property taxation.
Homeowner's Guide to Earthquake Safety
A document produced by the State of California Seismic Safety Commission intended to help inform homeowners on earthquake safety issues in homes.
homeowner's insurance policy
A standardized package insurance policy that covers a residential real estate owner against financial loss from fire, theft, public liability and other common risks. (See basic form homeowner's policy and broad form homeowner's policy)
Homeowner's Protection Act of 1998 (HPA)
Federal law requiring that lenders or servicers provide certain disclosures and notifications concerning private mortgage insurance (PMI) on residential mortgage transactions completed on or after July 29, 1999.
Homeownership Education Classes
Classes that stress the need to develop a strong credit history and offer information about how to get a mortgage approved, qualify for a loan, choose an affordable home, go through financing and closing processes, and avoid mortgage problems that cause people to lose their homes.
homeownership education classes
Classes that stress the need to develop a strong credit history and offer information about how to get a mortgage approved, qualify for a loan, choose an affordable home, go through financing and closing processes, and avoid mortgage problems that cause people to lose their homes.
homestead
A statutory exemption of real property used as a shield from the claims of certain creditors and judgments up to a specified amount; requires a declaration of homestead be completed and filed with the county recorder's office.
homestead (AZ)
A statutory exemption of real property used as a shield from the claims of certain creditors and judgments. No declaration of homestead is required. The homestead rights become effective upon a person taking title and moving into a property as the primary residence.
homestead exemption
The amount of the homestead exemption is the greater of the following:
- The countywide median sale price for a single-family home in the calendar year prior to the calendar year in which the judgment debtor claims the exemption, not to exceed six hundred thousand dollars ($600,000).
- Three hundred thousand dollars ($300,000).
homogeneous
Composed of parts all of the same kind or of the same kind or nature; essentially alike. (See heterogeneous)
horizontal growth
Horizontal growth is a business strategy based on replicating a standardized retail model in new geographic areas.
Horn effect
Humans' unconscious NEGATIVE categorizing of someone because of a single trait that we consider unattractive, such as: "Those buyers have bad breath from all of those exotic spices they eat! I don't trust them to tell me the truth about their income."
hotelling
Hotelling is the short-term provision of office space to a temporary worker. It is a reservation system (though without a fee). With a phone call, e-mail, or website calendar, the salesperson can reserve a workstation for the desired time or in another office site that has availability.
House Price Index (HPI)
The HPI is an indicator of house price trends in various regions of the United States, developed by the Federal Housing Finance Agency (FHFA).
household
A household is a social unit consisting of all the people who live together in a housing unit.
household waste (also referred to as domestic waste)
Solid waste, composed of garbage and rubbish, which normally originates from residential, private households, or apartment buildings. Domestic waste may contain a significant amount of toxic or hazardous waste from improperly discarded pesticides, paints, batteries, and cleaners.
housing accommodation
Housing accommodations are any improved or unimproved real property, or portion thereof, used as the home, residence, or sleeping place of one or more human beings. It does not include accommodations operated by non-profit religious, fraternal, or charitable associations or corporations, provided that such accommodations are used in the furtherance of the primary purposes for which the association or corporation was formed.
housing affordability index
A measure of the percentage of the United States population who can afford to purchase a home; based on average income and average home price.
Housing and Community Development Act
Under the Housing and Community Development Act, no person in the United States shall on the ground of race, color, national origin, religion, or sex be subjected to housing discrimination. Housing discrimination on the basis of age was added under the Age Discrimination Act of 1975 or with respect to an otherwise qualified handicapped individual.
Housing and Economic Recovery Act of 2008 (HERA)
Intended to help the housing market, HERA provided new guarantees for owners of subprime mortgages, provided funding for Fannie Mae and Freddie Mac and placed both organizations in conservatorship, and created the Federal Housing Finance Agency.
Housing Element
This element shall consist of standards and programs for the elimination of substandard dwelling conditions, for the improvement of housing quality, variety, and affordability, and for provision of adequate sites for housing. This element shall contain an identification and analysis of existing and forecasted housing needs, and be designed to make equal provision for the housing needs of all segments of the community regardless of race, color, creed or economic level.
Housing Finance Board
Created by the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) to supervise savings and loan associations. (See FIRREA)
Housing Financial Discrimination Act of 1977 (Holden Act)
The Act prohibits financial institutions (banks, savings & loans, or other financial institutions, including mortgage loan brokers, mortgage bankers and public agencies) from engaging in discriminatory loan practices.
Housing for Older Persons Act of 1995 (HOPA)
An act amending the Fair Housing Act to provide that housing intended for persons aged 55 or older no longer needs to have significant facilities and services designed for the elderly.
housing preservation
Housing preservation includes all of the programs that maintain and enhance New York state's portfolio of existing housing.
housing starts
The beginning of construction of new housing; housing starts are an index of construction activity and, thus, an important economic indicator.
housing stock
Housing stock is comprised of the total dwelling units in a community, state or nation as a whole.
housing unit
A housing unit is a physical structure with a full range of living facilities in one or more rooms, within which an individual, group, or family may live privately, separated from people in other units.
hub
A common connection point for computers, printers and other devices on a local area network (LAN). A hub contains multiple ports to which devices are connected. Data travels in packets from one device to another through the hub. (See local area network, packet)
HUD-1 or HUD-1A Settlement Statement
The statement that is prescribed by the Secretary in this part for setting forth settlement charges in connection with either the purchase or the refinancing (or other subordinate lien transaction) of 1- to 4-family residential property.
HUD-1 settlement statement
At closing, in conformance with Real Estate Settlement Procedures Act (RESPA) regulations, the HUD-1 Real Estate Settlement Statement itemizes all charges imposed on the Borrower and the Seller by the loan originator and all sales commissions, whether to be paid at settlement or outside of settlement, and any other charges which either the Borrower or the Seller will pay at settlement. (See RESPA)
Human instinct
Human instincts are genetically hard-wired behaviors that enhance our ability to cope with vital environmental contingencies. Their purpose is to help people adapt to their environments. They are pre-programmed in the brain itself, and are a part of the unconscious mind. These instincts allow you to protect yourself and keep yourself alive.
HVAC
The acronym for Heating, Ventilation, and Air Conditioning.
hybrid financing (ARMs)
ARMs that are a mix, or hybrid, of a fixed-rate period and an adjustable-rate period. The interest rate is fixed for the first several years of the loan; after that period, the rate can adjust annually. (See convertible loan, participation mortgage)
hydraulic fracturing (fracking)
A natural gas production technique involving the injection of millions of gallons of water, chemicals and sand, underground at very high pressure in order to create fractures in the underlying geology to allow natural gas to escape.
hydrostatic pressure
Pressure exerted by standing water; the pressure exerted by a fluid at equilibrium due to the force of gravity. Hydrostatic pressure increases in proportion to depth from the surface due to increasing weight of fluid exerting downward force.
hygroscopic
Hygroscopic refers to the ability of a substance to absorb moisture from the air. Hygroscopic materials tend to attract and hold water molecules from their surrounding environment, often leading to changes in their physical properties. This characteristic is commonly seen in substances like salts, sugars, and certain polymers. Hygroscopic materials can become wet or sticky when exposed to humid conditions and are often used in applications where moisture control is important, such as in desiccants or humidity regulators.
hyper text markup language (HTML)
A programming format used to create webpages.
hyperlink
A selectable (clickable) connection from one word or object to another document or location in a document.
hypertrophy
Development of an organ or part; increase in size or bulk (as by thickening of muscle fibers).
hypothecation
To pledge real or personal property as security for a loan or other obligation without surrendering possession of the property. The borrower retains the rights of control and possession, and the lender secures an underlying equitable right in the pledged property.
I-9 form
The I-9 form, officially known as the Employment Eligibility Verification form, is used in the United States to verify the identity and legal authorization to work of all paid employees. Employers are required to complete this form for each individual they hire, which includes reviewing the employee's documentation that proves their identity and employment authorization. The form must be retained by the employer either for three years after the date of hire or for one year after employment ends, whichever is later.
iBuyer
A generic name for an online company that will make an offer on a seller's home using AVM technology (automatic valuation methods) to offer the seller convenience and speed in closing (in exchange for a service fee and/or lower than market sales price)
icon
a small graphic that when clicked, executes a command.
ideal
A standard of perfection, beauty, or excellence.
identification period
The period during which the exchanger must identify replacement property in a 1031 tax deferred exchange. The identification period starts on the day the exchanger transfers the first relinquished property and ends at midnight on the 45th day thereafter.
identity theft
Identity theft is the illegal practice of setting up and using bank accounts and credit facilities fraudulently in another person's name without his or her knowledge.
identity theft report
The meaning given the term by the Federal Trade Commission is at minimum: a) a report that alleges an identity theft; b) a copy of an official, valid report filed by a consumer with an appropriate Federal, State, or local law enforcement agency; and/or c) the filing of which subjects the person filing the report to criminal penalties relating to the filing of false information if, in fact, the information in the report is false.
illusory contract
An apparent contract that is not a contract because the parties have not agreed to be bound.
immediate family member
An immediate family member is a spouse, child, sibling, parent, grandparent, or grandchild, and includes a stepparent, a stepchild, a stepsibling, and an adoptive relationship.
immobility
The fact that property cannot be relocated to satisfy demand where supply is low, nor can buyers always relocate to areas with greater supply.
impact fees
A municipal assessment against new residential, industrial or commercial development projects to compensate for the cost of the public services generated by the new construction.
imperfect markets
An imperfect martket arises when a small group of buyers or sellers is able to directly influence the price and output of a good or service. (See monopoly, oligopoly, monopsony, oligopsony, perfect market)
Implicit bias
Implicit bias is our unconscious brain's ability to recognize patterns and use them to assign people and things to categories, such as threats and non-threats, or safe or non-safe. Every human being has honed the skills of implicit bias because it is a necessary function for survival.
implied agency
An agency agreement created by the actions of the parties, and not a stated (written or verbal) agreement. (See express agency)
implied agreement/contract
A contract under which the agreement of the parties is demonstrated by their acts and conduct.
implied authority
The authority of an agent to perform acts which are reasonably necessary to accomplish the purpose of the agency.
implied covenant
A covenant implied rather than expressly written into a lease. On the part of the lessor this could include the asset being fit for the purpose for which it is let and allowing for quiet enjoyment. On the part of the lessee it could include keeping the premises clean.
implied easement
When the owner of two or more adjacent properties sells a part thereof, he or she grants by implication all those apparent and visible easements which are necessary for the reasonable use of the property granted. (See easement)
implied guarantee
The assumption, prevalent in the financial markets, that the federal government will cover Government Sponsored Enterprise (GSE) debt obligations.
implied warranty
A theory in landlord/tenant law in which the landlord renting residential property implies quiet enjoyment of the property or that the property is habitable. (See habitability, quiet enjoyment)
impossibility of performance
An event, such as the destruction of property, that makes it impossible to perform a contract on its terms.
impound account
A trust account established to set aside funds for future needs relating to a parcel of real property. Many mortgage lenders require an impound account to cover future payments for taxes, assessments, private mortgage insurance and insurance in order to protect their security from defaults and tax liens. In the case of FHA loans, many lenders require a tax reserve of six months and an insurance reserve of one year. When the property is sold and the buyer assumes the seller's mortgage, the lender does not usually return the escrow account balance to the owner. The sum remains with the lender, and it is the responsibility of the buyer and seller to prorate the balance between them. Impound accounts are required for FHA loans, and although VA regulations do not require an impound account for taxes and insurance premiums on GI loans, many lenders customarily require that such accounts be established and maintained. Under RESPA, the amount of reserves in the impound account is limited to one-sixth of the estimated amount of taxes and insurance that will become due in the 12-month period beginning at settlement. Sometimes, part of the purchase price due the seller may be impounded or put aside by escrow to meet the post-closing expense of clearing title or repairing the structure. The issue of use of interest earned on reserve funds is frequently debated. Typically, lenders do not pay interest to borrowers on money held as reserves.
impound funds
Impound funds are collected by the lender as part of the borrower's monthly mortgage payments. These funds are set aside in an impound account, also known as an escrow account, and used to pay property taxes, homeowners insurance, and sometimes other expenses such as homeowners association fees. The lender manages the impound account and ensures that these obligations are met on behalf of the borrower.
impracticability of performance
Excuse for failure to perform contract obligation because of changed circumstances that make a purchase uneconomic; also called impracticability of performance. Also called commercial frustration.
improved lot (AZ subdivision law)
An improved lot is defined as one that has a structure on it or a contract is written for a structure to be built within two years.
The purchaser of improved property does not have the seven-day unilateral rescission right that the purchaser of unimproved property has. In fact, the laws do not provide for unilateral rescission rights for the purchaser of improved property, unless:
- the subdivider/developer has failed to deliver the public report; or
- the purchaser signed the purchase contract before delivery of the public report; or
- the property does not have permanent access.
In all three of the above situations, the rescission period for the purchaser of improved property is three years.
improvement
1) Any structure, usually privately owned, that humans either have erected or built on the property or done to the property, for example, building a fence or a driveway or digging a trench. The key is that humans have done it or placed it. 2) A publicly owned structure added to or benefiting land, such as a curb, sidewalk, street or sewer.
imputed notice
The legal concept that a principal is deemed to have knowledge of information if notice of the information was conveyed to the principal's agent.
in-class
Traditional classroom setting
in-house sale
A sale in which the listing broker is the only broker in the transaction; there is no outside broker involved as in a cooperative sale. Either the listing salesperson finds the buyer, or another salesperson working for the listing broker finds the buyer. If the buyer is a client of the broker, the issue of dual agency arises.
incentive zoning
Zoning that offers incentives to developers, such as retail shops on the first floor of multistory office buildings if a plaza for public use is included. (See zoning)
inclusionary zoning
Inclusionary zoning is a land-use concept where local ordinances require builders to include a certain amount of housing for low and moderate income households.
income
Income is the money an individual, business, or organization receives in exchange for providing goods, services, or through investments. In the context of budgeting and financial management, income refers to the total inflow of funds during a specific period. For a business or association, this can include membership dues, service fees, rental income, investment returns, or grants. Income is a crucial component of a budget, as it determines the available funds for covering expenses, building reserves, and planning for future projects or obligations.
income and expense report
A financial report generated by a property manager that details the income and expenses from a property and the amount remitted to the owner.
income approach
The process of estimating the value of an income-producing property through capitalization of the annual net income expected to be produced by the property during its remaining useful life. (See appraisal)
income capitalization approach
Appraisal method in which the actual or likely net operating income of property is divided by its expected rate of return (capitalization rate) to arrive at an estimate of market value. (See capitalization rate)
income ratio
The relationship between a person's total income and the amount needed to make one month's mortgage payment.
income statement
An income statement is a financial statement that measures a company's financial performance over a specific accounting period. Financial performance is assessed by giving a summary of revenue and expenses through both operating and non-operating activities. It also shows the net profit or loss over a specific accounting period, typically a fiscal quarter or year. Also known as the "profit and loss statement."
income tax
A tax levied on net personal or business income. (See progressive tax)
incorporeal right
A nonpossessory right in real estate; for example, an easement or a right of-way.
increased interest rate
An increased interest rate is an increase in the interest rate after default. This does not apply to interest rate changes in a variable-rate loan otherwise consistent with the home loan documents, provided that the change in the interest rate is not triggered by the event of default or the acceleration of indebtedness.
increasing and diminishing returns
The addition of more improvements to land and structures which increases value only to the assets' maximum value. Beyond that point, additional improvements no longer affect a property's value. As long as money spent on improvements produces an increase in income or value, the law of increasing returns applies. At the point where additional improvements do not increase income or value, the law of diminishing returns applies.
inculpate
The act of becoming culpable or having guilt. Any time evidence or testimony tends to show culpability of a person, it is inculpatory evidence.
incurable depreciation
A depreciated item that would be impossible or too expensive to restore or replace. (See also external obsolescence, functional obsolescence and physical deterioration)
indemnification
Indemnification is an agreement between two parties not to hold one of them liable for future legal action or fines.
indemnify
To guarantee against any loss which another might suffer. For example, a party might agree to pay any claims which may arise from the contract, holding the other harmless.
independent
A brokerage firm operating on-its-own without an affiliation with a regional or national franchise. (See franchise)
independent contractor
One who is retained to perform a certain act, but who is subject to the control and direction of another only as to the end result and not as to how he or she performs the act. The critical feature, and what distinguishes an independent contractor from an employee or agent, is the degree of control the employer has over such a person's activities.
Because many licensing laws make brokers responsible for the activities of their salespeople, even if they are independent contractors, many brokers want to exercise a high degree of control over such activities. However, the state licensing laws do not preclude the establishment of independent contractor status for tax purposes, provided the relationship is carefully structured to avoid possible classification of such a person as an employee. A broker should always consult a tax attorney concerning such matters.
index
An index, such as the Consumer Price Index, is used to set interest rates. (See index rate)
index lease
A lease containing an escalation clause that is tied to an index. (See lease)
index method
The appraisal method of estimating building costs by multiplying the original cost of the property by a percentage factor to adjust for current construction costs. (See appraisal)
index rate
The rate to which the interest rate on an adjustable rate loan is tied (see adjustable-rate mortgage). At set adjustment periods, the borrower's interest rate will move up or down as the index rate changes. Four indices are most commonly used:
- Six-Month Certificate Of Deposit (CD) Spot Indexâ€â€This index is the weekly average of the interest rates paid by institutions on negotiable six-month certificates of deposit. Because it reflects every blip and swing of the market, it can change quickly.
- One-Year Treasury Spot Indexâ€â€This index is the weekly average interest paid by the U.S. Government on funds borrowed for one year. It changes more slowly than the CD index.
- Treasury Twelve-Month Average Indexâ€â€This index is the yearly average of the monthly interest paid by the U.S. Government on actively traded securities. It changes more slowly than either of the preceding indices.
- Eleventh District Cost-of-Funds Indexâ€â€This index is the monthly weighted average cost of what banks on the West Coast pay for their various deposits and for the advances they get through the Federal Home Loan Bank Board of San Francisco. It moves at a tortoise's pace compared to the other indices.
indicators
Certain characteristics or facets of an economy relied on by economists as symptoms of the relative health of the whole economy. Indicators may be coincident (reflecting the economy’s present state), lagging (trailing the business cycle), or leading (providing advance notice of change).
indirect costs
The costs of erecting a new building not involved with either site preparation or building construction, for example, building permit, land survey, overhead expenses such as insurance and payroll taxes and builder's profit.
indirect management costs
Expenses in a budget of a real estate agency or parent company the are partially attributable to the operation of a management department. (See direct management costs)
individual
An individual is a natural person.
Individual Retirement Account (IRA)
An Individual Retirement Account (IRA) is an IRS-approved way for any working individual to set aside savings for retirement each year in a tax-deferred account. The individual is not taxed for accumulated earnings in an IRA until benefits are withdrawn (usually after retirement when the person may be in a lower income tax bracket).
indoor air
Breathing air inside a habitable structure, often highly polluted because of lack of exchange with fresh oxygen from outdoors. Solvents, smoke, paints, furniture glues, carpet padding, and other synthetic chemicals trapped inside contribute to an often unhealthy environment.
industrial broker
A real estate broker who specializes in brokering industrial real estate. (See broker)
industrial development bonds
A bond that allows private investors to finance apartment and commercial development by using tax-exempt, inexpensive funds. TRA '86 imposed severe restrictions on this financing technique. (See TRA '86)
industrial location theory
Industrial location theory attempts to place facilities where the transportation costs of raw materials and final product is at a minimum. The goal is to select a location that assists in maximizing profit.
industrial park
An industrial park is a designated area zoned and planned for the purpose of industrial development, where multiple industrial businesses operate in close proximity. These parks are typically equipped with infrastructure such as roads, utilities, and services tailored to the needs of manufacturing, warehousing, and distribution companies. Industrial parks aim to promote economic growth by providing a centralized location for industries, fostering business synergies, and facilitating efficient logistics and supply chain operations.
industrial property/parks
A property primarily used for the production or manufacture of goods or products.
industrial revenue bonds
Bonds issued for the development of an industrial park or the construction of a building for lease to commercial tenants.
industrialization
The process by which a society transforms itself from primarily agricultural into one based on the manufacturing of goods and services. Manual labor is often replaced by mechanized mass production. Characteristics of industrialization include the use of technological innovation to solve problems, a more efficient division of labor, and economic growth. (See goods, services)
Industrialized
Industrialized housing is factory-made or prefabricated to some degree.
industrialized housing
Housing that is factory-made or prefabricated to some degree.
industry questions
Questions that may be asked about the industry Industry is any department or branch of art, occupation, or business; especially, one which employs much labor and capital and is a distinct branch of trade; as, the sugar industry; the iron industry; the cotton industry.
infestation (AZ definition)
"Infestation" or "infested" means that the presence of bedbugs is sufficient to materially affect the health and safety of tenants and their guests.
inflation
The gradual reduction of the purchasing power of the dollar, usually related directly to increases in the money supply by the federal government. (See reserve requirements)
inflationary cycles
Inflationary cycles are periods of inflation and disinflation that take turns in a trend over a period of years. During inflationary cycles, present prices are cheaper than future prices. Disinflation is a lowering in prices.
influencing skills
Skills that require an understanding of organizational culture and informal networks, and that enable the establishment of a sphere of influence in which to contribute ideas.
informal career assessments
Tests, assessments, surveys, and inventories that gather information about a person through less structured methods than standardized tests.
Informal hearing
An informal hearing is a less structured proceeding where a respondent meets with a regulatory agency or board to address alleged violations or disputes. It often involves discussions to clarify issues, present evidence, and potentially negotiate a resolution without the formalities of a trial or strict procedural rules. Decisions made in an informal hearing are usually binding unless appealed.
informal organization
An informal organization is a network of personal and social relationships that arise as people associate with others in the work environment.
informal training
Skill development that may be more targeted than formal education to specific employer needs.
informational interview questions
Questions that you can ask another person about their job.
informational interviewing
1) Interviewing others to gain specific career-focused information. 2) process that involves interviewing others to gather information about careers, jobs and worksites before making the decision to change fields.
infrastructure
Basic physical and social facilities: airports, roads and bridges, electrical power generation and transmission, schools and universities, dredged harbors, water supply, waste disposal, mail and telephone systems, radio, television and newspapers.
ingress
A way to enter a property - access. The opposite of egress.
inherent authority
The authority of an agent to perform activities that are not specifically mentioned in the agency agreement but are necessary or customary to carry out an authorized act.
inheritance taxes
An "estate" tax imposed by the state on heirs for their right to inherit property. The tax is not levied on the property itself, but rather on the heirs for their right to acquire the property by succession or devise. Therefore, the rates or the deductions may vary depending on the degree of the relationship.
At the time of a person's death, a statutory lien usually attaches to all real property interests owned by the decedent, which lien remains in effect until the inheritance taxes have been paid and a "tax clearance" is issued. This applies even if property was held in joint tenancy with right of survivorship. (See estate taxes, statutory lien)
initial adjustment cap
The cap that indicates how much the interest rate can increase the first time it adjusts after the fixed-rate period expires.
initial deposit
The initial deposit is the earnest money deposit (as defined in the CAR Purchase Contract).
initial rate
The inital rate charged to a borrower for the first adjustment period of an adjustable rate mortgage. (See adjustable rate mortgage)
injunction
A legal action whereby a court issues a writ or order that forbids a party to a suit or defendant from doing some act. An injunction requires the person to whom it is directed to refrain from doing a particular thing, such as violating deed restrictions or house rules. (See restraining order)
input-output analysis
A technique used in economics for tracing resources and products within an economy. The system of producers and consumers is divided into different branches, which are defined in terms of the resources they require as inputs and what they produce as outputs. The quantities of input and output for a given time period, usually expressed in monetary terms, are entered into an input-output matrix within which one can analyse what happens within and across various sectors of an economy where growth and decline take place.
insolvent
Insolvent means that, for any reason, a financial institution is unable to pay its obligations in the ordinary or usual course of business, or the present fair salable value of its assets is less than the amount that will be required to pay its probable liabilities on its existing debts as they become absolute and matured.
installment contract
A contract for the sale of real estate whereby the purchase price is paid in periodic installments by the purchaser, who is in possession of the property even though title is retained by the seller until a future date, which may not be until final payment. Also called a contract for deed or articles of agreement for warranty deed. (See contract for deed, warranty deed)
installment note
A promissory note with payments of principal and interest made at designated intervals. (See promissory note)
installment sale
An income tax method of reporting gain received from the sale of real estate when the sales price is paid in installments, i.e., where at least one payment is to be received after the close of the taxable year in which the sale occurs. No down payment is required in an installment sale.
If certain conditions are met the taxpayer can save on taxes by postponing the receipt of an installment and the reporting of such income to future years when his or her other income may be lower. Thus, a taxpayer can avoid paying the entire tax on the gain in the year of sale. (See realized capital gains)
installment sales contract
Land contract; sales contract; a contract used in a sale of real property whereby the seller retains title to the property until all or a prescribed part of the purchase price has been paid, but no earlier than one year from the date of possession.
Institute of Real Estate Management (IREM)
A national organization concerned with professional management of real estate. The professional designation conferred by IREM is ARM, Accredited Resident Manager.
IREM Websiteinstitution
A corporation, joint stock company, limited liability company, limited liability partnership, association, trust, partnership, or any similar entity.
institutional advertising
Institutional advertising is comprised of promotional messages aimed at creating an image, enhancing reputation, building goodwill, or advocating the philosophy of an organization, instead of sales promotion.
institutional investor
An institutional investor is a depository institution, real estate investment trust, insurance company, real estate company, accredited investor, licensed mortgage broker or mortgage lender, or other business entity that invests in mortgage loans, including secondary mortgage market institutions, such as the Federal National Mortgage Association (FNMA or Fannie Mae), the Federal Home Loan Mortgage Corporation, and the Government National Mortgage Association (GNMA or Ginnie Mae).
institutional lenders
Institutional lenders are those lenders who lend their own money. Savings and loan associations, banks, life insurance companies and mutual savings banks. (See noninstitutional lenders, savings and loan associations)
insulation
Use of wrapping and filling materials to reduce heat conductivity and improve energy efficiency of buildings and building components; measured in R-value. (See R-value)
insurable value
The highest reasonable value that can be placed on property for insurance purposes.
insurance companies
Insurance companies accumulate large sums of money from the premiums paid by their policyholders. While part of this money is held in reserve to satisfy claims and cover operating expenses, much of it is free to be invested in profit-earning enterprises, such as long term real estate loans. Although insurance companies are considered primary lenders, they tend to invest their money in large, long-term loans that finance commercial and industrial properties rather than single-family home mortgages. (See primary lenders)
insurance policy
A contract between a policy holder and an insurance carrier/company that helps reimburse costs the policy holder might have to pay on a loss, subject to the coverage provided in the insurance policy.
insured mortgage
An insured mortgage is a mortgage insured, or approved to be insured or guaranteed by a federal agency and includes instruments or certificates that are guaranteed by a federal agency and secured by insured or guaranteed mortgages.
integrity
The adherence to moral and ethical principles; soundness of moral character; honesty.
intellectual property
Intellectual property is comprised of knowledge or creative ideas that have commercial value and are protectable under copyright (ⓒ), patent, servicemark (℠), trademark (™), or trade secret laws from imitation, infringement, and dilution. Intellectual property includes brand names, discoveries, formulas, inventions, knowledge, registered designs, software, and works of artistic, literary, or musical nature.
intentional interference with a contract
Intentional interference with contract rights can occur where the tortfeasor convinces a party to breach the contract against the plaintiff, or where the tortfeasor disrupts the ability of one party to perform his obligations under the contract, thereby preventing the plaintiff from receiving the performance promised. Also, this tort may occur when a first party's conduct intentionally causes a second party not to enter into a contractual relationship that otherwise would probably have occurred.
inter vivos trust
An arrangement in which a property owner (trustor) transfers assets to a trustee who assumes specified duties in managing the asset. After payment of operating expenses and trustee's fees, the income generated by the trust property is paid to or used for the benefit of the designated beneficiary. Also known as a living trust.
inter-governmental agreement
An agreement describing tasks to be accomplished using a team effort between two government agencies.
interaction
Mutual or reciprocal action or influence.
interest
This is the cost paid for borrowing money, or the earnings from lending money.
interest factor
In a table, numbers derived from formulas used to determine the present or future value of money. Interest factors are a function of interest rate and time, and can be derived for any combination of the two. (See future worth)
interest only note
A note where installment payments of interest are made during the term of the loan, and the final installment includes all of the principal. Many lines of credit operate this way with periodic interest payments until maturity, when the entire balance is due.
interest rate
A rate which is charged or paid for the use of money. An interest rate is often expressed as an annual percentage of the principal. It is calculated by dividing the amount of interest by the amount of principal. Interest rates often change as a result of inflation and Federal Reserve policies.
interest rate reduction refinance loan (IRRRL)
A type of VA-guaranteed loan that can be used for loan refinancing.
interest rate risk
The exposure of an institution's financial condition to adverse movements in interest rates.
interest-only
A term loan calling for payments of interest only, not to include any amount for principal. (See term loan)
interim financing
A short-term loan usually made during the construction phase of a building project (in this case often referred to as a construction loan).
interim loan
A short-term loan usually made during the construction phase of a building project (in this case often referred to as a construction loan).
interim occupancy agreement
An agreement allowing a buyer to take possession of a property as a tenant prior to close of escrow.
interim use
A temporary property use awaiting transition to its highest and best use.
interlocutory
A legal term referring to a court ruling given in an intermediate stage before the termination of an existing cause of action. It is used to provide a temporary or provisional decision on an issue. Thus, an interlocutory ruling is not final and is not subject to immediate appeal.
intermediate theory
Some states have adopted an intermediate theory of mortgage based on the principles of title theory, but requiring the mortgagee (lender) to foreclose to obtain legal title as is necessary in lien theory. (See lien theory, title theory)
internal rate of return (IRR)
A multi-year analysis of rate of return similar to "financial management rate of return" (FMRR). Used by investors in medium and large properties (occasionally on small properties). Multi-year cash flows and net sale proceeds are analyzed using discounted cash flow techniques to solve for the Financial Management Rate of Return (FMRR).
IRRs and FMRRs are the best rate of return indicators, because they require an analysis of the investor's entire holding period, not just a single year. The discounting process takes into consideration the time value of money and thereby produces a more realistic rate of return. (See Financial Management Rate of Return (FMRR))
Internal Revenue Code Section 1031
In real estate, a "1031 exchange," also known as a like-kind exchange or a Starker exchange, refers to a section of the Internal Revenue Code (Section 1031) that allows an investor to defer paying capital gains taxes on the sale of certain types of property if they reinvest the proceeds into a similar property. By using a 1031 exchange, the investor can defer paying capital gains taxes that would normally be due upon the sale of the original property. This allows the investor to reinvest the full amount of the proceeds into the replacement property.
internal sources of support for job and employment networking
Your inner resources or talents (innate or developed)
International Code Council (ICC)
Organization of national and international building code officials that established and updates the International Building Code.
internet
A worldwide system of computer networks that use the TCP/IP network protocols to facilitate data transmission and exchange.
Internet Data Exchange (IDX)
Internet Data Exchanges (IDXs) give consumers access to information through a company's website.
internet search
A job search strategy that provides assistance with most of the other approaches that are presented, including information on labor markets, salary information, job search techniques and job listings.
Internet service provider (ISP)
A company that provides Internet access to users.
internships
Supervised practical experiences provided by or referred by institutions where student is in process of earning an education, degree, or certification.
interpersonal skills
Observing others closely and expressing yourself effectively.
interplead
A judicial proceeding by which, when two parties make the same claim against a third party, the rightful claimant is determined. As such, he could require them to litigate their problems between themselves, instead of litigating it with him.
interpleader
A judicial proceeding where an innocent third party, such as an escrow agent or broker, can deposit with the court property or money that he or she holds and that is subject to adverse claims. The court can then distribute it to the rightful claimant.
interrogatories
A requests for further information. A formal set of written questions required to be answered in order to clarify matters of evidence and help to determine in advance what facts will be presented at any trial in the case.
Interstate Land Sales Full Disclosure Act
A federal law, enacted in 1968, that regulates interstate land sales. The main purpose of the act is to require disclosure of full and accurate information regarding the property to prospective buyers before they decide to buy. To comply with the act, the developer must prepare a statement of record and register the subdivision with the CFPB. After the registration is effective, the developer must deliver to the purchaser (and obtain a receipt for) the property report before execution of the purchase agreement. The developer must give prospective buyers a cooling-off period of seven calendar days to consider the material contained in the property report.
intestate
The condition of a property owner who dies without leaving a valid will. Title to the property will pass to the decedent's heirs as provided in the state's law of descent.
intestate succession
A succession of a property to the heirs when a person dies without a will.
intranet
An intranet is a local, private and restricted communications network created using World Wide Web software.
intrinsic value
An appraisal term referring to the value created by a person's personal preferences for a particular type of property.
intrusion alarm
In property management, an intrusion alarm is a security system designed to detect unauthorized entry into a building or area. It uses sensors on doors, windows, and other access points to trigger an alarm if breached. The alarm can notify property management and/or a security company, helping to prevent theft, vandalism, or other security breaches.
inure
1. to come into use; take or have effect. 2. to become beneficial or advantageous.
inventories
Stocks of raw materials, work in progress, and finished goods. Inventories represent capital tied up in unsold goods that require storage space, insurance, and other incurred costs but are an inevitable part of the process of production and distribution.
inverse condemnation
A property owner forcing a government to take a property by eminent domain when that government's actions resulted in the owner's inability to use the property. (See condemnation, eminent domain)
investing
Investing is when one does research, pencils out their deal, does due diligence, and buys a lower risk property that will pay back positive cash flow from the first day of closing escrow.
investment
Money directed toward the purchase, improvement and development of an asset in expectation of income or profits.
investment group financing
Large real estate projects, such as highrise apartment buildings, office complexes and shopping centers, are often financed as joint ventures through group financing arrangements like syndicates, limited partnerships and real estate investment trusts. (See equity trust)
investment opportunity
Anything, tangible or intangible, that is offered, offered for sale, sold, or traded based wholly or in part on representations, either express or implied, about past, present, or future income, profit, or appreciation.
investment options
When one invests their hard earned cash equity, they don't need to buy real estate. They can buy stocks, bonds, mutual funds, etc. and an investor should compare investment returns and the risk profile on those types of assets to investment returns on real estate - and consider those options if a particular property, or real estate in general, is not an attractive investment for the corresponding risk.
investment property rule
The Internal Revenue Code specifies that no gain or loss should be recognized on the exchange of property held for productive use in trade or business or for investment if the property is exchanged for property of like kind that is to be held for productive use in trade or business or for investment. (See like kind)
investment value
The worth of investment property to a specific investor.
involuntary lien
A lien placed on property without the consent of the property owner. (See lien)
Inwood annuity table
A table that supplies a factor to be multiplied by the desired yearly income (based on the interest rate and length of time of the investment) to find the present worth of the investment.
irrevocable right
Unable to cancel or recall; that which is unalterable or irreversible.
irrigation non-expansion area (INA)
An area that uses irrigation water, but the owners of the property cannot expand their irrigation rights beyond the boundaries of the area.
IRS tax lien
A federal tax lien, or Internal Revenue Service (IRS) tax lien, results from a person's failure to pay any portion of federal taxes, such as income and withholding taxes. A federal tax lien is a general, statutory, involuntary lien on all real and personal property held by the delinquent taxpayer. Its priority, however, is based on the date of filing or recording; it does not supersede previously recorded liens. (See lien)
isolate
To set apart from others.
itemized deduction
Located on 1040 Form line 40. This is a deduction that is calculated on Schedule A. A taxpayer uses the larger of the Government given Standard Deduction or the Itemized Deduction.
java
A programming language used to write computer applications and small applets for webpages that will run on any computer (cross-platform).
javascript
A programming language used mostly on webpages to perform various functions.
job analysis
Job analysis refers to a detailed examination of the tasks that make up a job, the conditions under which they are performed, and the job requirements in terms of knowledge, skills, and the physical condition of the employee. Comprehensive job analysis begins with the study of the organization's purpose, structure, resources, and markets. It is the first step in a thorough understanding of the job and forms the basis of a job description.
job club
1) Using social and professional resources for job seeking, identifying opportunities for job leads, strategy development and job search support. 2) A group that provides structure to the job search process, as well as an opportunity to connect with others who are going through the same process.
job fairs
Scheduled gatherings of local employers to recruit for current and future openings at all levels.
job placement centers
Job placement location and services where people may go to receive unemployment assistance and job search support, training and employment counseling; employment agencies, nonprofit agencies or member-specific groups.
job search
The use of classified ads, direct-mail campaigns, job placement centers, job fairs and the Internet to find a job.
job search strategies
Strategies used to find a job
joinder
The legal term that describes the process of joining the terms and conditions of an original contract with the terms and conditions of an amendment.
joint and several liability
A situation when more than one party is liable for repayment of a debt or obligation. A creditor can obtain compensation from one or more parties, either individually or jointly. (See liability)
joint escrow instructions
Instructions prepared on one form for both the buyer and the seller. (See escrow, escrow instructions)
joint protection policy
A title insurance policy insuring the interest of both owner and lender. (See title insurance)
joint tenancy
An estate or unit of interest in real estate that is owned by two or more natural persons with rights of survivorship. The basic idea of a joint tenancy is unity of ownership; title is held as though all owners collectively constituted one person, a fictitious entity. The death of one joint tenant does not destroy the owning unit--it only reduces by one the number of persons who jointly own the unit. The remaining joint tenants receive the deceased tenant's interest by the right of survivorship. Thus, the decedent's interest cannot be transferred by will or descent. As each successive joint tenant dies, the remaining tenants acquire the interest of the deceased. The last survivor takes title in severalty, fully inheritable at his or her death by heirs and devisees. (See four unities)
joint venture
The joining of two or more people to conduct a specific business enterprise. A joint venture is similar to a partnership in that it must be created by agreement between the parties to share in the losses and profits of the venture. It is unlike a partnership in that the joint venture is for one specific project only, rather than for a continuing business relationship. (See partnership)
joist
A joist is a heavy piece of horizontal timber to which the boards of a floor or the lath of a ceiling are nailed. Joists are laid edgewise to form the floor support. (See construction terms)
Jones v. Mayer
The 1968 decision of the U.S. Supreme Court that upheld the Civil Rights Act of 1866; As a result of this case, there are NO EXCEPTIONS to the prohibition of discrimination based on race.
Jones v. Mayerjudgment
1. An opinion or estimate formed after consideration or deliberation, especially a formal or authoritative decision. 2. A determination of a court of law; a judicial decision. 3. A court act creating or affirming an obligation, such as a debt. 4. A writ in witness of such an act.
judgment debtor
A judgment debtor is any defendant who is the subject of a judgment.
judgment decree
Specifiies the award made by the court in a civil case.
judgment lien
A general lien on the property of a judgment debtor, giving the holder of the judgment a right to levy the property to satisfy the debt. (See general lien, lien)
judicial foreclosure
Proceeding in which a mortgagee, a trustee, or another lienholder on property requests a court-supervised sale of the property to cover the unpaid balance of a delinquent debt. In a judicial foreclosure, there is an appraisal, after which the court determines an upset price below which no bids to purchase will be accepted. (See nonjudicial foreclosure, strict foreclosure)
judicial precedent
In law, the requirements established by prior court decisions.
Judicial review
A judicial review is a process where a court examines the decisions or actions of a regulatory agency, government body, or lower court to determine if they were lawful, fair, and in compliance with statutory or constitutional requirements. It provides a check on the authority of administrative or governmental entities.
judicial survey
A survey performed to provide professional evidence regarding the legal description, including boundaries of a property. A judicial survey is used in a court of law. (See legal description)
jumbo loan
A "jumbo" loan is any loan that exceeds the underwriting guidelines for Fannie Mae/Freddie Mac maximum loan limits ($240,000 as of January 1999). (See Non-conforming loan, Fannie Mae, Freddie Mac)
junction box
A rectangular metal or plastic box that provides a nexis (junction) for a home's electrical wiring system. Protects the wiring from the elements. (See construction terms)
junior lien
An obligation, such as a second deed of trust lien, that is subordinate in right or lien priority to an existing lien (senior loan) on the same real estate. (See senior lien/loan)
jurisdiction
The right and power to interpret and apply the law.
justifiable reliance
Justifiable reliance refers to a person's justifiable dependence on another's representations. Reliance is not justifiable if another person of similar intelligence, education, or experience would not have relied on the alleged representation.
key words
1) In a database, important terms related to a topic of interest that can be combined in a search statement to pinpoint useful information on a topic; 2) Words that describe the type of candidate sought by the employer.
kickback
Payment made to someone for referral of a customer or business. Unlike a commission, a kickback is made without the customer's knowledge; thus, the referral could have been made without the customer's best interest at heart.
kicker
A "kicker" in a loan payment refers to an additional benefit or incentive added to a loan that is intended to sweeten the deal for the lender or investor. In real estate, a kicker can involve additional payments or equity shares that the borrower agrees to provide the lender. For example, in a commercial real estate deal, a kicker might be a percentage of the property's income or profits, over and above the regular interest and principal payments. This can make the loan more attractive to lenders by offering potential for higher returns.
kiosk
A kiosk is a freestanding structure (open sides, usually multi sided) located in a shopping center or mall from which merchandise is sold. A multi-sided structure found in a shopping mall or center.
knowledge skills
Skills such as planning, acquiring, searching, analyzing, organizing, storing, programming, distributing, marketing, or otherwise contributing to the transformation and commerce of information.
knowledge worker
Anyone who works for a living at the tasks of developing or using knowledge; fields in which brain power, rather than machinery or processes, drive production.
labor market information
Employment and industry trends.
labor-oriented industry
Labor-oriented industries are sectors that rely heavily on human labor rather than automation or machinery for production and operations. These industries typically require a large workforce to perform tasks that are often manual, intricate, or service-based, such as in agriculture, textiles, construction, and hospitality. The success and efficiency of labor-oriented industries are closely tied to the availability, skill level, and productivity of their workers.
laches
A lack of diligence and activity in making a legal claim, or moving forward with legal enforcement of a right. It is an unreasonable delay in the plaintiff asserting its claims. The person invoking a laches defense is asserting that the plaintiff has "slept on its rights", and that, as a result of this delay, circumstances have changed to such a degree that to grant the plaintiff's claim would not be a proper resolution.
lactic acid
A hygroscopic organic acid C3 H6 O3 present normally in tissue, produced from protein metabolism when the body experiences oxygen debt. (See metabolism, oxygen debt)
laissez-faire
French for 'leave alone,' laissez-faire is an economic theory that the less government involvement in free market capitalism, the better off business will be, and by extension society as a whole. (See capitalism)
laissez-faire leadership
A hands-off leadership style in which the leader allows group members to make the decisions. This is a leadership style that often leads to the lowest productivity among group members.
land
The earth's surface, extending downward to the center of the earth and upward infinitely into space, including things permanently attached by nature, such as trees and water. (See land contract, subsurface rights, surface rights, air rights)
land contract
A land contract is a real property sales contract whereby the seller is the lender. The seller retains actual title until the entire debt is paid off. (See contract for deed, installment sales contract)
land development
The improvement of land with utilities and services, making the land more suitable for resale as building plots for housing or other purposes.
land development method
A method of valuing land to be used for subdivision development. It relies on accurate forecasting of market demand, including both forecast absorption (the rate at which properties will sell) and projected gross sales (total income that the project will produce); also called the subdivision development method.
land residual technique
A method of capitalization using the net income remaining to the land after return on and recapture of the building value have been deducted.
land trusts
A few states permit the creation of land trusts, in which real estate is the only asset. As in all trusts, the title to the property is conveyed to a trustee, and the beneficial interest belongs to the beneficiary. In the case of land trusts, however, the beneficiary is usually also the trustor. While the beneficial interest is personal property, the beneficiary retains management and control of the real property and has the right of possession and the right to any income or proceeds from its sale.
One of the distinguishing characteristics of a land trust is that the public records usually do not name the beneficiary. A land trust may be used for secrecy when assembling separate parcels. There are other benefits as well. A beneficial interest can be transferred by assignment, making the formalities of a deed unnecessary. The beneficial interest in property can be pledged as security for a loan without having a mortgage recorded. Because the beneficiary's interest is personal, it passes at the beneficiary's death under the laws of the state in which the beneficiary lived. If the deceased owned property in several states, additional probate costs and inheritance taxes can be avoided.
land use controls
Methods of regulating the uses to which a given land area may be put, including such things as zoning, subdivision regulation, and floodplain regulation, etc.
land-employment density
Land-employment density refers to the number of jobs or employees situated within a specific area of land, typically measured in employees per acre or per square mile. This metric helps assess the intensity of economic activity and land use efficiency in a given area. High land-employment density indicates a concentration of workplaces and businesses, which can influence infrastructure planning, transportation needs, and urban development strategies.
landfill
A landfill is an enormous hole, either excavated for the purpose of waste disposal or left over from a surface mining operation. The hole is lined with clay or a synthetic lining to prevent leakage of waste into the surrounding water supply. Waste is laid on the liner at the bottom of the landfill and a layer of topsoil is then compacted into the waste. The layering is repeated again and again until the landfill reaches its full capacity.
landlord
The lessor or the owner of leased premises. The landlord retains a reversionary interest in the property, so that when the lease ends the property will revert to the landlord. (See lease, lessor, lessee)
Landlord-Tenant Law Overviewlandlord's lien
A landlord's lien is a legal right granted to landlords to seize a tenant's property and retain it as security for unpaid rent or other breaches of the lease agreement. This lien allows the landlord to either hold onto the property until debts are paid or to sell the property to recover the owed amounts. The specific rules and enforceability of a landlord's lien vary by jurisdiction, and some regions require a court order before property can be seized under such a lien.
large and growing communities - Arizona Definition
Jurisdictions that meet either of the following two conditions: (1) a population of 2,500 or more with an annual growth rate averaging 2% or more for the 10 year period of the most recent census, or (2) a population of 10,000 or more. In calculating population totals and growth rates, the statutes direct communities to use the most recent U.S. decennial census.
latent defect
A hidden structural defect that would not be discovered by ordinary inspection and that threatens the property's soundness or the safety of its inhabitants. Some states impose on sellers and licensees a duty to inspect for and disclose latent defects. Buyers have been able to either rescind the sales contract or receive damages when a seller fails to reveal known latent defects. The courts have also decided in favor of the buyer when the seller neglected to reveal violations of zoning or building codes.
lateral support
Lateral support is a concept in real estate and civil engineering that refers to the natural or artificial support that a parcel of land receives from adjoining properties. This support is necessary to keep the land stable and prevent it from shifting or collapsing. Lateral support can be particularly important when land is situated on a slope or when there are construction projects near property boundaries. (See subjacent support)
lath and plaster
Lath and plaster is a method of interior wall finishing used in older homes in which wet plaster is applied to a framework of wood slats, called laths, and wire.
latitude
Distance on the earth's surface, measured northward or southward from the equator measured in degrees of the meridian; angular distance reckoned on a meridian. (See longitude, meridian)
law of agency
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. (See agent, fiduciary)
law of decreasing returns
The principle that there is a point after which improvements to land and structures no longer will result in a corresponding increase in the property's income or value.
law of increasing returns
The principle that there is a point after which improvements to land and structures will produce a proportionate or greater increase in the property's income or value.
lawful object
Contract performance that does not violate any laws; and is a requirement for a valid contract.
laws of descent
A succession of a property to the heirs when a person dies without a will.
leach
Water that collects contaminants as it trickles through wastes, pesticides, or fertilizers. Leaching may occur in farming areas, feedlots, and landfills, and may result in hazardous substances entering surface water, ground water, or soil.
lead
Lead is an element that was once used as a pigment and drying agent in paint. An elevated level of lead in the body can cause serious damage to the brain, nervous system, kidneys and red blood cells. The degree of harm is related to the amount of exposure and the age at which a person is exposed. The Federal government estimates that lead is present in about 75 percent of all private homes in the United States built before 1978.
lead-based paint
Paint, no longer allowed for use in buildings or products, that contains lead. Information on lead found in paint, dust, and soil is available at www.epa.gov/lead.
Lead-Based Paint Hazard Reduction Act
Federal legislation requiring disclosure of the presence of any known lead-based paint hazards to potential buyers or renters. The law does not require that anyone test for the presence of lead-based paint, however.
leadership
The ability to lead; the function of a leader, a person who guides or directs a group.
Leadership in Energy and Environmental Design
A rating system designed by the U.S. Green Building Council to promote construction practices that increase profitability while reducing the negative environmental impacts of buildings and improving occupant health.
lease
An agreement, written or unwritten, transferring the right to exclusive possession and use of real estate for a definite period of time. To create a valid lease, the lessor must retain a reversionary right; that is, the lessor (landlord) must grant the right of possession to the lessee (tenant) but retain the right to retake possession after the lease term has expired. (See landlord, tenant)
lease agreement
A written agreement between an owner/landlord and their residents/tenants that states the lease term, amount, security deposit, rules, etc. Consider using the Association of REALTORS® lease, or the Apartment Building Owners Association lease, plus whatever addendums are needed or legally required.
lease assignment
Transfer of leasehold interest by tenant to another party, with first tenant secondarily liable for lease obligations unless landlord agrees to a release of first tenant from those responsibilities. (See lease)
lease option
A lease under which the tenant has the right to purchase the property either during the lease term or at its end. (See lease)
lease purchase
The purchase of real property, the consummation of which is preceded by a lease, usually long-term. Typically done for tax or financing purposes. (See lease)
lease renewal
A lease renewal refers to the process by which a lease agreement is extended beyond its original end date, allowing the tenant to continue occupying the rental property. This renewal can occur through a formal agreement that may involve signing a new lease with potentially revised terms, or it can be automatic based on the provisions originally outlined in the lease agreement. Typically, lease renewals involve negotiations over terms such as rent amounts, lease duration, and other conditions, and they require the mutual consent of both the landlord and the tenant.
leaseback
A transaction in which an owner sells his or her improved property and, as part of the same transaction, signs a long term lease to remain in possession of the premises.
leased fee estate
The lessor's interest and rights in the real estate being leased.
leasehold estate
The right to hold or use property for a fixed period of time at a given price, without transfer of ownership, on the basis of a lease contract. A leasehold is a fixed asset. (See lease)
leasehold lending
Loans on a leased property with satisfaction dates usually 10 to 20 years prior to the expiration of the lease. (see lease)
leasing agent
A leasing agent's main responsibility is to lease units in apartments, homes, or commercial properties. They focus on attracting tenants to fill vacancies. A leasing agent differs from a property manager in that a property manager oversees the daily operations of a rental property. Their responsibilities extend beyond leasing to include comprehensive management tasks that ensure the property is well-maintained and profitable over time.
ledger sheet
Before accounting for all funds, payments, and credits, the escrow holder accounts for these monies on the ledger sheet, indicating individual receipts and disbursements that are then transferred to the settlement statement. (See escrow holder)
legacy
A disposition of money or personal property by will.
legal capacity
Person who is an adult or emancipated minor and mentally competent to enter into a contract. (See emancipated minor)
legal description
A description of a specific parcel of real estate complete enough for an independent surveyor to locate and identify it. (See government survey system, lot and block system, metes and bounds system)
legal life estate
A legal life estate is not created voluntarily by an owner. Rather, it is a form of life estate established by state law. It becomes effective automatically when certain events occur. (See life estate)
legal title
Refers to the ownership or rights associated with a particular piece of real estate. It represents the lawful ownership and possession of the property, indicating that the holder has the right to use, sell, or transfer the property as they see fit, within the boundaries of the law. Having a legal title also means that the owner has certain responsibilities and liabilities associated with the property. See fee simple
legally competent parties
People who are recognized by law as being able to contract with others; those of legal age and sound mind.
Legally sufficient
Legally sufficient means that a complaint or allegation contains enough specific facts and evidence to support a reasonable belief that a violation of law, rule, or regulation may have occurred, warranting further investigation or action by a regulatory body or authority.
legatee
A person who receives money or personal property under a will.
legislative history
Legislative history includes any of various materials generated in the course of creating legislation, such as committee reports, analysis by legislative counsel, committee hearings, floor debates, and histories of actions taken. Sometimes the legislative history can help resolve an uncertainty as to what a legislature intended at the time of enactment.
legislative intent
Legislative history includes any of various materials generated in the course of creating legislation, such as committee reports, analysis by legislative counsel, committee hearings, floor debates, and histories of actions taken. Sometimes the legislative history can help resolve an uncertainty as to what a legislature intended at the time of enactment.
legitimate government interest
A governmental action that is a reasonable means to an end that may be legitimately pursued by the government. State action or leglislation (whether administrative or procedural) must have a rational basis. In other words, without the legislation, the rights of the public or a particular person might be violated under the U.S. Constitution's Fourteenth Amendment's Equal Protection Clause. The reasoning behind the action must not be arbitrary.
lender
A lender is a mortgage banker or an exempt organization.
lender
Lender means an entity that originated five or more home mortgage loans within the past 12-month period or acted as an intermediary between originators and borrowers on five or more home mortgage loans within the past 12-month period. This is provided that lender does not include a person who is an attorney providing legal services in association with the closing of a home loan who is not also funding the home loan and is not an affiliate of the lender.
lender
A lender is a mortgagee and/or servicing agent of the mortgagee, provided the servicing agent is bound by the requirements approved by the mortgagee.
Lender 3 C
1) Credit - your past payment history and FICO score; 2) Capacity - your income less your monthly debts vs. your maximum housing payment 3) Collateral - the value of the property you are buying verified by an independent appraisal.
lender's escrow instructions
A lender's written instructions to the escrow company stating the conditions which must be met before the deed of trust can be recorded. (See escrow instructions)
lender's policy
A type of title insurance that protects the mortgage lender's interest in a property, ensuring that they are covered against potential title defects or claims that could affect their loan's security.
lending institution
A lending institution is any bank, bank and trust company, trust company, savings bank, national banking association, federal national mortgage association, approved mortgage banker, FHA-approved mortgage service company, savings and loan association, federal savings and loan association, building and loan association, credit union, or other financial institution that customarily provides service or otherwise aids in the financing of mortgages on residential housing.
lessee
The person to whom property is rented or leased; called a tenant in most residential leases. (See tenant)
lessor
The person who rents or leases property to another. In residential leasing, he or she is often referred to as a landlord. (See landlord)
letter of concern
An advisory letter to notify a licensee that, while the conduct or evidence does not warrant other disciplinary action, the commissioner believes that the licensee should modify or eliminate certain practices and that continuation of the activities may result in further disciplinary action against the licensee.
letter of concern
An advisory letter to notify a licensee that, while the conduct or evidence does not warrant other disciplinary action, the commissioner believes that the licensee should modify or eliminate certain practices and that continuation of the activities may result in further disciplinary action against the licensee.
letter of engagement
A communication to an appraiser that includes a request to perform a specified appraisal assignment.
leverage
Using someone else's money to purchase a property. Refers to the ability to use the investment as collateral for a loan.
levy
To assess, seize or collect. To levy a tax is to assess a property and set the rate of taxation. To levy an execution is to officially seize the property of a person in order to satisfy an obligation.
LI-214/244 (AZ)
The LI-214/244 form is the disciplinary actions disclosure form, on which the candidate must disclose past convictions or criminal history. LI-214/244
liability
1. Legal responsibility for an act. 2. A debt. (See joint and several liability, retroactive liability, strict liability)
liability insurance
An insurance policy that protects an individual or business from the risk of being sued and held legally liable for malpractice, injury or negligence. Liability insurance policies cover both legal costs and any legal payouts for which the insured would be responsible if found legally liable. Intentional damage and contractual liabilities are typically not covered in these types of policies.
license
The revocable permission for the temporary use of land—a personal right that cannot be sold.
license
1. A license provides permission to enter onto the land of another for a specific purpose and/or length of time. 2. The revocable permission for a temporary use of land — a personal right that cannot be sold.
license
A license is a license issued by the department to act as a mortgage loan originator, mortgage lender, or mortgage broker.
license (New Mexico)
A license is a license issued pursuant to the New Mexico Mortgage Loan Originator Licensing Act.
License Revocation (Florida)
License revocation in the context of the Florida Real Estate Commission (FREC) is the permanent cancellation of a real estate license as a disciplinary action for severe violations of Florida real estate laws or regulations. Once revoked, the individual loses the legal authority to practice real estate in Florida, and the license cannot be reinstated. The individual must apply for a new license if eligible, following the revocation period and meeting any conditions set by FREC.
license-in-referral organizations (LIFROs)
License-in-referral organizations (LIFROs) are licensed brokerage firms that hire licensed salespeople. These hires don't actually engage in sales activities. Instead, they provide referrals that the LIFRO passes on to the affiliated brokerage firm. LIFROs are a way to attract or retain salespeople who don't meet a company's full-time criteria but can contribute by referring business.
licensed activity (AZ)
Licensed activities means any act in consideration or expectation of compensation which is included in the definition of salesperson, or real estate broker.
licensee
Any person or entity that is granted a broker's license or salesperson's license by the state real estate licensing agency.
licensee
A licensee is any person who is licensed by the commissioner as a mortgage lender or mortgage broker.
lien
A charge or claim that one person (lienor) has on the property of another (lienee) as security for a debt or obligation. (See general lien, involuntary lien, mechanics' lien, statutory lien, tax lien, voluntary lien)
lien release
Filed by holder of a lien to voluntarily remove the encumbrance from the property owner's title. (See encumbrance, lien.)
lien release bond
Filed with the county recorder by a property owner who disputes the correctness or validity of a mechanic's lien to stop foreclosure of the property; must be in an amount equal to 150 percent of either the entire claim against the property or the portion of the claim allocated to the parcel(s) sought to be released; can also be filed by anyone having an interest in the property or by any other lienholder affected by the claim. (See lien, lien release
lien theory
Lien theory states are states that interpret a deed or trust loan as being purely a lien on real property, without the lender having any actual title interest.
lien waiver
Documents signed by subcontractors and suppliers, indicating they have received payment in full.
life cap
A life cap is a restriction or limitation on the amount by which interest rates or payments can change over the life of the loan.
life cycle
The life cycle are the stages in the life of a product or company. It is a pattern of demand for a good or service from introduction, growth, stagnation, and decline.
life cycle costing
In property management, comparing one type of equipment to another based on both purchase cost and operating cost over its expected useful lifetime.
life cycle of property
Four stages through which a property will pass: growth, equilibrium, decline, revitalization (GEDR).
life estate
Any estate in real or personal property that is limited in duration to the life of its owner or the life of some other designated person. Although classified as a freehold estate because it is a possessory estate of indefinite duration, a life estate is not an estate of inheritance. For example, Bob Smith conveys his home to his son John and reserves a life estate for himself. Bob (the life tenant) has a life estate, and John has a reversionary interest in the property. When Bob Smith dies, the fee simple property reverts to John. (See freehold estate)
life safety control center operator
In property management, a Life Safety Control Center Operator is responsible for monitoring and managing a building's life safety systems, such as fire alarms, emergency lighting, and security systems. They ensure all safety protocols are followed and coordinate emergency responses. Their role is crucial in maintaining a safe environment for occupants and responding effectively to emergencies.
life tenant
A person in possession of a life estate. (See life estate)
lifetime adjustment cap
The cap that indicates how much the interest rate can increase, in total, over the life of the loan.
Lifework Book Club
Group of people who meet regularly to explore job search and employability issues that are discussed in books read by the members.
lifting clause
A provision in a junior mortgage that allows the underlying senior loan to be replaced or refinanced so long as the amount of the new senior loan does not exceed the amount of the first lien outstanding at the time the junior loan was made. (See junior mortgage, senior loan, subordination agreement)
like kind
A term relating to the nature of a property rather than its quality or quantity. Only like kind properties qualify for a real estate exchange and the resulting tax benefit. (See exchange)
limited equity housing cooperative
A stock cooperative financed by the California Housing Finance Agency.
California Housing Finance Agencylimited liability company (LLC)
LLCs are a relatively recent form of business organization. An LLC combines the most attractive features of limited partnerships and corporations. The members of an LLC enjoy the limited liability offered by a corporate form of ownership and the tax advantages of a partnership. In addition, the LLC offers flexible management structures without the complicated requirements of S corporations or the restrictions of limited partnerships. The structure and methods of establishing a new LLC, or of converting an existing entity to the LLC form, vary from state to state. (See corporation, partnership)
limited partnership
Consists of one or more general partners as well as limited partners. The business is administered by the general partners and funded, for the most part, by limited or silent partners. Each limited partner can be held liable for business losses only to the extent of his or her investment. (See general partner, partnership, passive income)
Uniform Limited Partnership Actlimited representation
Real estate licensing laws permit limited representation only if the buyer and seller are informed and consent to the brokerage's representation of both in the same transaction. Although the possibility of conflict of interest still exists, disclosure is intended to minimize the risk for the brokerage by ensuring that both principals are aware of the effect of limited representation on their respective interests. The disclosure alerts the principals that they may have to assume greater responsibility for protecting their own interests than they would if they had independent representation.
limits to growth
The belief that there are natural limits to possible growth which if exceeded will lead to environmental catastrophe.
line authority
An official authority to issue orders to subordinates within an organization. For example, sales managers empowered with line authority typically have the responsibility of achieving company business goals with the greatest possible efficiency.
line item
Each line item breaks the overall budget down into detailed components, making it easier to track, manage, and evaluate financial activity. For example, under “Expenses,” line items might include categories such as utilities, landscaping, insurance, and administrative fees. Under “Income,” line items might include homeowner dues, special assessments, or rental income.
Using line items allows for greater transparency and accountability, as stakeholders can see exactly where money is being allocated and spent.
line of credit
An amount of money stipulated by a commercial bank to an active customer on an annual basis. The balance normally must be brought to zero on an agreed upon regular date. (See commercial bank)
lipids
Any of various substances including fats, waxes, phosphatides, cerebrosides, and related and derived compounds that with proteins and carbohydrates constitute the principal structural components of living cells. (See carbohydrates, protein)
liquefaction
A phenomenon which occurs during an earthquake whereby the ground/soil turns into a highly unstable, jelly-like substance.
liquid crystal display (LCD)
A screen type used for flat screen displays including notebook computers and flat screen displays.
liquidated damages
An amount predetermined and agreed by the parties to an agreement as the total amount of compensation an injured party should receive if the other party breaches a specified part of the contract. (See damages)
liquidity
Refers to the time it takes to convert an asset to cash that is a reflection of its market value. (See market value)
lis pendens
A recorded legal document that gives constructive notice that an action affecting a particular piece of property has been filed in a state or federal court. Lis pendens is Latin for "action pending' and is in the nature of a "quasi lien." A person who subsequently acquires an interest in that property takes it subject to any judgment that may be entered; that is, a purchaser pending a lawsuit is bound by the result of the lawsuit.
listing agreement
A written employment agreement between a property owner and a real estate broker authorizing the broker to find a buyer or a tenant for certain real property. Listing can take the form of open listings, net listings, exclusive-agency listings, or exclusive-right-to-sell listings. The most common form is the exclusive-right-to-sell listing. (See exclusive-agency listings, exclusive-right-to-sell listing, net listings, open listings)
listing broker
The broker in a multiple-listing situation from whose office a listing agreement is initiated, as opposed to the cooperating broker, from whose office negotiations leading up to a sale are initiated. The listing broker and the cooperating broker may be the same person. (See listing agreement)
listing presentation manual
Used by real estate brokerages to make presentations to listing prospects. A visual aid used in combination with a verbal presentation made by a real estate agent.
listserv
A free service available on the Internet that is like a forum that allows users to discuss a subject via e-mail.
littoral rights
The rights of a landowner whose land borders a pond, lake or ocean shore-line where the body of water is non-flowing. Littoral rights extend to the mean high watermark of ocean or tidal waters. (See riparian rights, water rights)
livery of seizin ceremony
A ceremonial and legal conveyancing ceremony, formerly practiced in feudal England and in other countries following English common law. It was used to convey holdings in property. The term 'livery' is related, if not synonymous with, the word 'delivery as used in modern contract law. The common law in those jurisdictions once provided that a valid conveyance of a feudal tenure in land required the physical transfer by the transferor to the transferee, in the presence of witnesses, of a piece of the ground itself, in the literal sense of a hand-to-hand passing of an amount of soil, a twig, key, or other symbol. Livery of seisin could refer to either livery in deed, whereby the parties actually went on to the land, and the transferor symbolically delivered possession of the land by handing over a twig or a clump of earth to the recipient, or livery in law, whereby the parties went within sight of the land and the transferor declared to the recipient that possession was being given, followed by the recipient entering onto the land.
living document
A living document or dynamic document is a document which may be continually edited and updated by an authorized person or either a limited or unrestricted group.
living trust
An arrangement in which a property owner (trustor) transfers assets to a trustee who assumes specified duties in managing the asset. After payment of operating expenses and trustee's fees, the income generated by the trust property is paid to or used for the benefit of the designated beneficiary.
load-bearing wall
A wall that provides necessary support to the ceiling joists above it.
loan
Money borrowed that is usually repaid with interest.
loan application
A lender's initial sourse of information on a borrower/applicant and the collateral involved; stipulates the amount of money requested and repayment terms.
loan broker listing
A mortgage loan broker's contract with a buyer to obtain a loan.
loan commitment
A loan commitment or commitment is a statement by the lender setting forth the terms and conditions upon which the lender is willing to make a particular mortgage loan to a particular borrower.
loan constant
The annual payment required per dollar of a mortgage loan, including principal and interest.
loan documents
Documents prepared by a lender in conjunction with granting the loan to the borrower; may include a promissory note, deed of trust, and required loan disclosure documents.
loan estimate
The loan estimate provides disclosures that will be helpful to consumers in understanding the key features, costs, and risks of the mortgage loan for which they are applying.
loan fees
Also called loan origination fees. Costs charged by a lender for giving out a loan; may include points, tax service fees, an appraisal fee, etc. (See loan origination fee)
loan fraud
Purposely giving incorrect information on a loan application in order to better qualify for a loan; may result in civil liability or criminal penalties.
loan guaranty program
A Department of Veterans Affairs (VA) benefit program that provides assistance to Veterans, certain spouses, and Servicemembers to enable them to buy and retain homes. Assistance is provided through VA's partial guaranty of loans made by private lenders in lieu of the substantial down payment and private mortgage insurance required in conventional mortgage transactions. This protection means that in most cases qualified Veterans can obtain a loan without making a down payment.
loan modification
According to HUD, loan modification is a permanent change in one or more of the terms of a mortgagor's loan, allowing the loan to be reinstated, resulting in a payment the mortgagor can afford, not including a refinancing transaction.
loan origination fee
The processing of a mortgage application is known as loan origination. When a mortgage loan is originated, a loan origination fee, or transfer fee, is charged by most lenders to cover the expenses involved in generating the loan. These include the loan officer's salary, paperwork and the lender's other costs of doing business. Any payment for processing mortgage loan applications must be included in the fee and must be paid to the mortgage broker.
loan originator
A loan originator is an individual who, for compensation or gain, directly or indirectly: solicits or offers to solicit a mortgage loan; accepts or offers to accept an application for a mortgage loan; negotiates or offers to negotiate the terms or conditions of a new or existing mortgage loan on behalf of a borrower or lender; processes a mortgage loan application; or negotiates or offers to negotiate the sale of an existing mortgage loan to a noninstitutional investor. The term includes the activities of a loan originator as defined in the SAFE Mortgage Licensing Act of 2008. It does not include an employee of a mortgage broker or mortgage lender who performs only administrative or clerical tasks, including quoting available interest rates, physically handling a completed application form, or transmitting a completed form to a lender on behalf of a prospective borrower.
Loan Originator (Arizona definition)
- A natural person, employed by a mortgage broker, or a mortgage banker, or a consumer lender, who either takes a residential mortgage loan application for a mortgage broker, a mortgage banker, or a consumer lender or offers or negotiates terms of a residential mortgage loan for direct or indirect compensation or gain or in the expectation of direct or indirect compensation or gain; or
- a person who claims to the public the ability to perform any of these activities.
- a person who performs purely administrative or clerical tasks and who is employed by a mortgage broker, mortgage banker, or consumer lender;
- an individual engaged solely as a loan processor or underwriter except as provided in A.R.S. section 6-991.02.
loan packing
Loan packing occurs when a financing package includes charges for items not revealed to the borrower/buyer. The charges are added to the base cost of the item being purchased and included in the loan without telling the borrower/buyer.
loan principal
Loan principal refers to the original sum of money that was borrowed and that must be repaid, excluding any interest or fees that may accrue over time. The principal amount is the initial amount of the loan that the borrower receives from the lender. When making payments on a loan, a portion of the payment typically goes toward reducing the principal balance, while another portion goes toward paying the interest that has accumulated on the remaining balance.
loan processing
Loan processing is the submission of the loan application, and verifications of employment and deposit, credit report, property appraisal, and other documents to underwriting where the decision to approve or reject the loan will be made.
loan processor or underwriter
A loan processor or underwriter is an individual who performs clerical or support duties as an employee at the direction of, and subject to the supervision and instruction of, a person licensed, or exempt from licensing, under the Mortgage Loan Company Act.
loan processor or underwriter
A loan processor or underwriter is an individual who performs clerical or support duties as an employee at the direction of, and subject to the supervision and instruction of, a person licensed, or exempt from licensing, provided that the person may not represent to the public, through advertising or other means of communicating or providing information, including the use of business cards, stationery, brochures, signs, rate lists, or other promotional items, that the individual is licensed or otherwise authorized by law to perform any of the activities of a mortgage loan originator, or that the person intends to perform any of the activities of a mortgage loan originator.
loan processor or underwriter
A loan processor or underwriter is an individual who performs clerical or support duties as an employee at the direction of, and subject to the supervision and instruction of, a person licensed or exempt from licensing.
Loan Prospector®
Loan Prospector is an automated underwriting system (AUS) developed by Freddie Mac, one of the major government-sponsored enterprises (GSEs) in the United States along with Fannie Mae. It serves a similar function to Fannie Mae's Desktop Underwriter (DU) but is tailored to align with Freddie Mac's specific guidelines and criteria.
loan servicing transfer statement
A disclosure required of loan servicers by a lender if the lender intends to sell or assign the right to service a loan to that loan servicer. The loan servicer must notify the borrower 15 days before the effective date of the loan transfer, including in the notice the name and address of the new servicer, toll-free telephone numbers, and the date the new servicer will begin accepting payments.
loan term
The loan term is the length of time before the mortgage loan is due to be repaid in full. Most mortgage loans have 15, 20, or 30-year terms.
loan yield
A loan yield is the annual rate of return obtained by a residential mortgage lender from a residential mortgage debtor over the term of the loan and must be determined in accordance with regulations issued by the secretary of banking. The regulations establish the method for calculating the rate of return and provide that the finance charge be amortized over the contract term of the loan. In computing loan yield on any mortgage that does not require the full amount of the first year's interest to be paid during the first year and on a variable interest rate mortgage, interest must be calculated at the rate applicable to the first year of the mortgage.
loan-to-value ratio
The relationship between the amount of the loan and the value of the real estate being pledged as collateral. For example, the loan amount could be $80,000, compared to a value or price of the property of $100,000 value. In this case the LTV is 80% - $80,000 loan amount divided by $100,000 property value.
local area network (LAN)
Computers that are in relatively close proximity and connected over a network.
Local ordinance compliance report
local public authority
The city council, board of supervisors, planning commission, city or county manager, or community development/planning director.
lock
To guarantee a rate quote for a specified length of time. The lock protects the borrower from rising interest rates, but also commits the borrower to rates even if rates decline.
lock-in agreement
A lock-in agreement is an agreement whereby the lender guarantees, for a period of days or until a specified date, the availability of a specified rate of interest or specified formula by which the rate of interest will be determined, or specific number of discount points that will be given, if the loan is approved and closed within the stated period of time.
lock-in clause
A lock-in clause is a provision in a contract or agreement that restricts the ability of one or both parties to terminate or withdraw from the agreement for a specified period of time. These clauses are commonly found in various types of contracts, such as loans, mortgages, investment agreements, or employment contracts.
long term secular trends
Economic changes that occur over an extended period of time (decades).
long-lived items of depreciation
Individual components of a structure that are not expected to be replaced over the structure's useful life. Foundation, framework, walls, ceilings, and masonry would fall within this category.
long-range plan
Upper management usually defines the long-range plan. Long-range planning begins with the current status and charts out a path to a projected status, and generally includes short-term (operational or tactical plans) for achieving interim goals.
longitude
Distance measured east or west on the earth's surface, measured by the angle which the meridian through a place makes with some standard meridian, as that of Greenwich, Great Britain or Paris, France. Longitude may be measured in time (longitude in time) or in degrees (longitude in arc). (See latitude, meridian)
loss of use/additional living expenses coverage
Money paid to an insured in a loss if they can't live in their home and need to rent another residence.
lot books
Catalogs maintained by title and abstract companies listing properties by location and showing deeds and other documents affecting title.
lot, block, tract (recorded plat) system
A method of describing real property that identifies a parcel of land by reference to lot and block numbers within a subdivision, as specified on a recorded subdivision plat map. (See legal description, subdivision)
low and moderate income persons or families
Low income persons or families and moderate income persons or families are families and persons who cannot afford to pay the amounts at which private enterprise, without assistance, is providing a substantial supply of decent, safe, and sanitary housing. The income limits for the admission of these families and persons to projects will be those established pursuant to the rules and regulations established by the Pennsylvania Housing Finance Agency.
low flame spread rating
In property management, a low flame spread rating indicates that a building material resists the spread of fire across its surface. This rating is crucial for ensuring the material contributes minimally to fire growth, enhancing overall fire safety. It is an important consideration in selecting materials for construction and renovation to comply with safety regulations and protect occupants.
low quality, bad area, poor tenant credit, bad condition property
Generally these are properties that sound too good to be true and usually turn out to be too good to be true. When you pencil out a deal in a bad or rundown area of town, you'll be amazed at how high the rents are compared to the purchase price. You might pencil out a 15% or 20% cash on cash deal. But you'll never achieve that when the year comes to an end. Bad areas often have low credit quality and high hassle tenants. You might have to chase down rent, deal with short term vacancy, tenants move out and take the appliances, etc. - so beware when a deal pencils out as too good to be true.
low rentals
Low rentals are rent charges at least 10 percent lower than moderate rentals.
low-e glazings
Low-e glazings have special coatings that reduce heat transfer through windows. This type of window film is inexpensive, lasts 10-15 years, reduces interior fading, and saves energy.
loyalty
The duty of loyalty requires the agent to place the principal's interests above those of all others, including the agent's own self-interest. The agent must be particularly sensitive to any possible conflicts of interest. Confidentiality about the principal's personal affairs is a key element of loyalty.
lymph
A pale coagulable fluid that bathes the tissue, passes into lymphatic channels and ducts and is discharged into the blood via the thoracic duct and that consist of a liquid portion resembling blood plasma and containing lymphocytes, white blood cells (but normally no red blood cells); circulation depends on the systemic contractions of the voluntary muscles.
lymph node
One of the rounded masses of lymphoid tissue surrounded by a capsule of connective tissue that occur in association with the lymphatic vessels that act as filters for the lymph and delivery points for lymphocytes.
lymphatic system
The system of vessels, glands, fluid, and lymphocytes concerned with the elimination of metabolic waste and defense against chemical and pathological imbalance in the body.
lymphocyte
A colorless, weakly motile macrophage cell produced in lymphoid tissue that is the typical cellular element of lymph.
M1, M2, M3
Three measurements of the United States money supply. M1, or the basic money supply, consists of cash in public hands, private checking accounts, credit union share accounts and demand deposits at thrifts. M2 includes all of M1 plus money market mutual fund shares, and savings deposits of less than $100,000 at all depository institutions. M3 includes M2 plus large time deposits at all depository institutions.
macroeconomics
The study of a national economy and its various segments including national income, national output, employment and economic growth. (See microeconomics)
maintenance and repairs expense
This is how much you will spend maintaining a property. Maintenance and repairs expense is the toughest expense category to estimate, so it is best to be conservative.
maintenance charges
Monthly or annual charges assessed in a condominium, planned united development, or cooperative development to cover operational costs.
maintenance request
In the context of property management, a maintenance request is a formal notice from a tenant to the property maintenance team or landlord, reporting a need for repairs or upkeep. This request can pertain to issues ranging from routine tasks like landscaping or cleaning communal areas to urgent repairs such as plumbing leaks, electrical faults, or heating system failures. The property manager must assess the request, determine the appropriate response, and schedule the maintenance work to ensure the property remains in good condition and habitable.
maker
The maker of a check is known as the drawer. (See payee)
makeready
The renovation of a previously occupied space to prepare it for new tenants may be termed "makeready." This process involves cleaning, repairing, and updating the space to ensure it meets the standards required for occupancy. Makeready activities can include painting, fixing fixtures, replacing flooring, and ensuring all systems are in working order.
making a mortgage loan
Making a mortgage loan means closing a mortgage loan in a person's name, advancing funds, offering to advance funds, or making a commitment to advance funds to an applicant for a mortgage loan.
management
Refers to the amount of personal or hired time, it takes to run the investment.
management agreement
A contract between the owner of income property and a management firm or individual property manager that outlines the scope of the manager's authority.
management plan
A property management plan is a comprehensive document that outlines how a property, whether residential, commercial, or industrial, will be managed over a specific period. It is typically created by property owners, property managers, or real estate investors to establish guidelines and procedures based on market analysis and the owner's goals for the property. (See market analysis, property analysis)
management pricing worksheet
A management pricing worksheet is a tool used by property management companies to analyze and set prices for their management services, ensuring they cover costs and achieve desired profit margins. It typically includes variables such as cost of services, operational expenses, market conditions, and competitor pricing.
managing broker
A person acting on behalf of a real estate firm to perform real estate brokerage services under the supervision of the designated broker, and who may supervise other brokers or managing brokers licensed to the firm.
mandatory settlement conference
A mandatory settlement conference is a court-required meeting with the parties to a foreclosure action within 60 days of when the plaintiff files a proof of service of the complaint.
manifest error
Complete disregard of case facts and the applicable rule or law as an indisputable error of judgment that affected the decision-making process, and may have had an outcome on the decision that was made.
manifest system
Tracking of hazardous waste from "cradle to grave" (generation through disposal), with accompanying documents known as "manifests." (See hazardous waste)
manufactured home
A structure (transportable in one or more sections) when in the traveling mode, is eight body feet or more in width, or 40 body feet or more in length, or, when erected on site, is 320 or more square feet. It is built on a permanent chassis and designed to be used as a dwelling, with or without a permanent foundation, when connected to the required utilities, and includes the plumbing, heating, air conditioning, and electrical systems contained therein. (H & S Code SS 18007) Manufactured Housing Institute
manufactured home loan
A manufactured home loan, also known as a mobile home loan, is a type of loan designed specifically for the purchase or refinance of a factory-built home that is not permanently affixed to a foundation. If the manufactured home is permanently affixed to the land then the loan finances both the purchase of the manufactured home and the land where it is placed, much like a traditional real estate loan.
manufactured home park
A manufactured home park, also known as a mobile home park, is a residential area where multiple manufactured homes are situated on leased lots within a larger plot of land. These parks provide infrastructure such as roads, utilities, and sometimes communal facilities like pools or clubhouses. Residents typically own their manufactured homes but pay rent for the use of the lot and any amenities provided by the park management.
margin
In an adjustable rate loan, the amount added to the index rate that represents the lender's cost of doing business (including costs, profits and risk of loss on the loan). Generally the margin stays constant during the life of the loan. (See adjustable-rate loan, index rate)
marginal tax rate brackets
The marginal tax brackets dictate the tax rate percentage you pay on each additional dollar of income you earn as you increase tax brackets.
marginal tax rate brackets
The marginal tax brackets dictate the tax rate percentage you pay on each additional dollar of income you earn as you increase tax brackets. (See Federal income tax, tax rate tables)
marital status
Persons classified in one of four relationship categories: never married, married, widowed, or divorced.
marker
In the metes-and-bounds system, markers are used to clearly mark the point of beginning and the boundaries of a tract of land. (See legal description, metes-and-bounds)
market
A place where goods can be bought and sold and a price established.
Market allocation
Market allocation is an illegal antitrust practice in which competing businesses agree to divide markets, customers, or territories among themselves instead of competing freely, restricting consumer choice and eliminating competition in violation of the Sherman Antitrust Act.
market analysis
A regional and neighborhood study of economic, demographic and other factors made to determine supply and demand, market trends, and other factors important to leasing and operating a specific property.
market approach
A method of pricing single-family rental homes and condos using comparable market data. When pricing multiple unit rental properties, the income approach is probably better. (See comparative market analysis, net income approach)
market data approach
Also known as the sales comparison approach. An estimate of value obtained by comparing property being appraised with recently sold comparable properties.
market extraction method
The process of estimating the value of a property by examining and comparing actual sales of comparable properties. (See appraisal)
market rent
The rent that could be charged for property at the present time, based on demand and the supply of comparable properties. (See contract rent)
market share
Market share is the percentage of an industry or market's total sales earned by a particular company over a specified time period. Market share is calculated by taking the company's sales over the period and dividing it by the total sales of the industry over the same period. This metric is used to give a general idea of the size of a company to its market and its competitors.
market value
The most probable price a property should bring in a competitive and open market under all conditions requisite to a fair sale. Such conditions include the assumption that the buyer and seller acted prudently and knowledgeably and that the price is not affected by undue stimulus. (See value)
market-data approach
Estimating a property's value based on a comparison of the property with similar properties in the same locale that have sold recently. Also known as the direct sales comparison approach. (See appraisal)
market-oriented industries
Market-oriented industries are sectors that locate their operations close to their consumer markets to minimize transportation costs, respond quickly to market demand, and better understand customer preferences. These industries often produce goods and services that need to be readily available to consumers, such as food and beverage production, retail, and certain types of manufacturing. By being near their markets, these industries can improve their efficiency, reduce delivery times, and enhance their competitive advantage.
marketable title
Good or clear title, reasonably free from the risk of litigation over possible defects.
marketing plan
A product-specific, market-specific, or company-wide plan to achieve specific marketing objectives within a set timeframe. A marketing plan begins with the identification of specific customer needs and plans to fulfill them while generating acceptable returns. It usually includes analysis of market opportunities, detailed action plans, budgets, sales forecasts, strategies, and projected financial returns.
marketing services agreement
Marketing services agreements, or “MSAs,” are agreements that commonly involve an arrangement where one person (or company) agrees to market or promote the services of another and receives compensation in return. MSAs may involve only settlement service providers or may also involve third parties who are not settlement service providers. For example, an MSA exists when a mortgage loan originator agrees to market or promote the services of a real estate agent in return for compensation.
marketing time
According to Uniform Standards of Professional Appraisal Practice (USPAP), the time it might take to sell the property interest at the appraised market value during the period immediately after the effective date of the appraisal.
masonry
Any construction material or methods involving bricks and mortar or related materials. (See construction terms)
Massachusetts bank
Massachusetts bank means any bank, other than an association or corporation, chartered pursuant to M.G.L. c. 171.
Massachusetts branch
Massachusetts branch means a branch in the commonwealth of any out-of-state bank.
master deed
The principal conveyance document used by the owners of land on which condominiums are located. (See fictitious deeds of trust)
master insurance policy(ies)
Insurance policy(ies) issued and paid for by the homeowners association (HOA) to cover HOA common areas, liability, the structure, etc. Buyers/owners should take these policies to their personal insurance agent to determine if there are any gaps in coverage that apply for their particular unit.
master plan
A comprehensive plan to guide the long-term physical development of a particular area. (See comprehensive zoning, general plan, regional planning, urban planning)
master-planned community
Two or more subdivisions with CC&Rs. This is an Arizona-specific definition. A generic definition might be here: planned unit development.
matched pairs analysis
A method of estimating the amount of adjustment for the presence or absence of any feature by pairing the sales prices of otherwise identical properties with or without the features in question. A sufficient number of sales must be found to allow the appraiser to isolate the effect on value of the pertinent factor (also called paired data set analysis and paired sales analysis).
matched pairs analysis
A method of estimating the amount of adjustment for the presence or absence of any feature by pairing the sales prices of otherwise identical properties with or without the features in question. A sufficient number of sales must be found to allow the appraiser to isolate the effect on value of the pertinent factor (also called paired data set analysis and paired sales analysis).
material change
A material change is a change that would be important to a reasonable borrower in making a borrowing decision, including a change in the interest rate, a change in the type of loan offered, or a change in fees to be charged to a borrower greater than $100.
material fact
Any fact that is relevant to a person making a decision. Agents must also disclose to buyers material facts about the condition of the property, such as known structural defects, building code violations and hidden dangerous conditions. Brokers are often placed in a no-win situation of trying to evaluate whether a certain fact is material enough that it needs to be disclosed to a prospective buyer, such as the fact that a murder occurred on the property 10 years ago or the fact that the neighbors throw loud parties. It is sometimes difficult to distinguish between "fact" and "opinion." The statement "real property taxes are low" is different from "real property taxes are $500 per year." Even though brokers act in good faith, they may still be liable for failure to exercise reasonable care or competence in ascertaining and communicating pertinent facts that the broker knew or "should have known." Many state laws provide that the fact that an occupant of property has AIDS is not deemed to be a material fact. A broker who fails to disclose this fact is not liable for concealment of a material fact.
material facts
Any fact that is relevant to a person making a decision. Agents must also disclose to buyers material facts about the condition of the property, such as known structural defects, building code violations and hidden dangerous conditions. Brokers are often placed in a no-win situation of trying to evaluate whether a certain fact is material enough that it needs to be disclosed to a prospective buyer, such as the fact that a murder occurred on the property 10 years ago or the fact that the neighbors throw loud parties. It is sometimes difficult to distinguish between "fact" and "opinion." The statement "real property taxes are low" is different from "real property taxes are $500 per year." Even though brokers act in good faith, they may still be liable for failure to exercise reasonable care or competence in ascertaining and communicating pertinent facts that the broker knew or "should have known." Many state laws provide that the fact that an occupant of property has AIDS is not deemed to be a material fact. A broker who fails to disclose this fact is not liable for concealment of a material fact.
material terms and conditions
Material terms and conditions include credit scores, debt to income ratios, loan to value ratios, and occupancy types.
maturity
Maturity is the date when the principal balance of a loan becomes due and payable.
mean
The average of all items included within a group, calculated by dividing the sum of the individual items, or variates, by the number of variates. (See variate)
measuring life
The person, usually the holder of a life estate, against whose life the duration of the life estate is determined.
mechanic's lien
A statutory lien in favor of a building contractor (architects and designers in some states) to secure payment for materials supplied and services rendered in the improvement, repair or maintenance of real property. (See lien)
median
The middle figure in a set of numbers.
median price
"Median price" refers to the middle figure in a set of numbers, for example the purchase price of homes in a given area.
mediation
A process where a neutral third party intervenes between the disputing parties to reach a satisfactory solution.
mediation decisions
Mediation decisions are essentially negotiated solutions, primarily involving personnel issues and customer service.
medium of exchange
A medium of exchange is an intermediary used in trade to avoid the inconveniences of a pure barter system. In a barter system, people who want to trade must want exactly what the other has to offer, when and where it is offered, so that the exchange can occur. A medium of exchange permits the value of a good to be assessed and rendered in terms of the intermediary, most often, a form of money widely accepted to buy any other good.
meeting of the minds
Refers to what happens when two parties to an agreement (contract) both have the same understanding of the terms of the agreement. Such mutual comprehension is essential to a valid contract. It is provable by the express provisions of a written contract, without reference to any statements or hidden thoughts outside the writing.
megabyte (MB)
1,000,000 bytes (See bit, byte)
megahertz (MHz)
One million cycles per second
Megan's Law
Megan's Law is a statute in the United States that requires law enforcement authorities to make information available to the public regarding registered sex offenders. It was established in 1996 in response to the murder of Megan Kanka, with the intent to help communities protect themselves from individuals who have committed sex crimes. Under Megan's Law, each state has its own system for registering offenders and disseminating this information, which can include the offender’s address, photograph, and nature of their crime, accessible through various online registries or local police notifications.
Mello-Roos Bonds
Based on passage of the Mello-Roos Community Facilities Act of 1982, certain housing tracts may be within what are called "community facilities districts" where special taxes are assessed to finance designated public facilities and/or services. Mell-Roos liens are usually municipal bonds issued to fund streets, sewers and other infrastructure needs before a housing development is built. These special assessments are paid by the seller and will be assumed by the buyer. (See Mello-Roos Community Facilities Act)
Mello-Roos Community Facilities Act
California law that requires property owners benefiting from public improvements financed by bond issues to repay the bonds; requires notification to a prospective purchaser of lien assessments on the property. (See Mello-Roos Bonds)
mentor
Person or program that facilitates the personal and professional growth of others.
mentor program
A training program in a real estate office wherein newly-hired agents assist successful, knowledgeable salespersons for a period of time.
mentoring
Person or program that facilitates the personal and professional growth of others.
mercantilism
An economic policy of European trading states during the 16th, 17th, and 18th centuries when, through exploration and colonization, they extended European power to other parts of the globe. The policy emphasized strong state control over imports and exports with a view to importing only raw materials, exporting finished goods, and accumulating precious metals that could be used to pay mercenary armies.
merger
The joining of a lesser right with a greater right so that the lesser right is lost.
meridian
A meridian is one of a set of imaginary lines running north and south used by surveyors for reference in locating and describing land under the government survey method of property description. (See guide meridian)
MERS
Mortgage Electronic Registration System (MERS) holds title technically as nominee for the true mortgagees and beneficiaries in its system. As transfers occur they are recorded on MERS's computer in a book-entry system similar to the transfer of stocks.
metabolism
The sum of the processes in the building up and the destruction of protoplasm, i.e., the chemical changes in living cells by which energy is provided for vital processes and activity and the creation of new complex chemicals assimilated to repair damage. (See catabolism)
metadata
Data about data. This is the data that is in the programming code for a webpage, but does not show up when the webpage displays. It sits behind the page and is read by search engines which index the information about the website in their directory.
metes-and-bounds description
Metes-and-bounds is a legal description of a parcel of land that begins at a well marked point and follows the boundaries, using directions and distances around the tract, back to the point of beginning. (See legal description, marker)
Metropolitan Divisions
The U.S. Office of Management and Budget divides every Metropolitan Statistical Area (MSA) with a population of 2.5 million or more into Metropolitan Divisions (MDs). MSAs with populations under 2.5 million population are not so divided. (See Metropolitan Statistical Area)
Metropolitan Statistical Areas
The U.S. Office of Management and Budget defines Metropolitan Statistical Areas and Metropolitan Divisions to provide nationally consistent definitions for collecting, tabulating, and publishing Federal statistics for a set of geographic areas. OMB divides every Metropolitan Statistical Area (MSA) with a population of 2.5 million or more into Metropolitan Divisions (MDs); MSAs with populations under 2.5 million population are not so divided.
microchip
Incredibly complex yet tiny modules that store computer memory or provide logic circuitry for microprocessors. (See CPU, microprocessor, RAM, ROM, SDRAM)
microeconomics
The study of individual units within the general economy including households and business firms. (See macroeconomics)
microprocessor
Silicon chips containing the CPU, ALU and memory. (See CPU, microchip, RAM, ROM, SDRAM)
mid-month convention
The mid-month convention is a rule that affects how non-residential property can be depreciated for tax purposes. Non-residential rental properties are depreciated according to a 39-year life. However, mid-month convention allows only 11.5 months depreciation the first and last year of ownership.
Military airport - Arizona Definition
An airport that is operated by an armed force of the United States and that is primarily used for military fixed wing aircraft operations, excluding a runway or airstrip that is not immediately adjacent to facilities primarily used for operational control, maintenance and permanent parking of aircraft.
military ordnance location
Certain military bases contain live ammunition for various reasons. A seller of residential property located within one mile of such a hazard must give the buyer written notice as soon as practicable before transfer of title.
mill
One-tenth of one cent. Some states use a mill rate to compute real estate taxes; for example, a rate of 52 mills would be $0.052 tax for each dollar of assessed valuation of a property.
mind-mapping
A way to learn, recall, retain, and apply information using the whole brain, devised by Tony Buzan.
mineral rights
Mineral rights are rights to the subsurface land and profits derived therein. Normally, when real property is conveyed, it includes everything above and below the surface of the land, except where specified by the grantor.
minerals
Any of various inorganic homogeneous crystalline chemical elements or compounds that result from the inorganic processes of nature.
minimum level of services
The services that real estate professionals must provide to clients, as prescribed differently by certain states; for example, assisting clients in negotiation and answering questions from clients about offers, counteroffers, and contingencies.
minimum property requirements
A regulation imposed by the US Federal Housing Authority (FHA) that requires a minimally acceptable property condition for FHA-insured or VA-guaranteed loans; usually determined by compliance with loan building codes.
ministorage centers
Ministorage centers, also known as self-storage facilities, are businesses that provide secure storage units for individuals and businesses to rent on a short-term or long-term basis. These facilities offer various unit sizes to accommodate different storage needs, from personal belongings and household items to business inventory and equipment. Ministorage centers are often located in convenient, accessible areas to serve local communities, offering features such as climate control, security systems, and flexible rental agreements.
minor
A person who has not reached the age of majority and therefore does not have legal capacity to transfer title to real property.
MIPS
Millions of instructions per second (MIPS). A measure of computer speed.
misdemeanor
Offenses less serious than felonies and generally punishable by a fine or imprisonment less than one year.
mislabeled
Mislabeled means varying from the standard of truth or disclosure in labeling prescribed by statute or administrative regulation or, if none, as set by established commercial usage; represented as being another person's product, though otherwise labeled accurately as to quality and quantity.
misleading statement
A misleading statement is an offer to sell property or services when the offerer does not intend to sell or provide the advertised property or services at a price equal to or lower than the price offered, or in a quantity sufficient to meet the reasonably expected public demand, unless the quantity available is specifically stated in the advertisement.
misrepresentation
A false statement or concealment of a material fact made with the intention of inducing some action by another party.
mission statement
A mission statement defines what an organization is, why it exists, its reason for being. At a minimum, it should define the organization's primary customers, its products and services, and the geographical location it serves. Everything the organization does should support the mission.
mistake
An error or misunderstanding. A contract is voidable if there is a mistake that is mutual, material, unintentional and free from negligence, such as both parties honestly contracting for a different lot in a subdivision (mistake of fact). Innocent mistakes seldom serve to void a contract. A party cannot claim "mistake" to get out of a contract on the basis that he or she did not read the contract he or she signed and was therefore mistaken as to its material terms; neither ignorance nor poor judgment is a mistake of fact. Nor can a party claim mistake in not knowing the legal consequences upon signing the contract (mistake of law). When there is an ambiguity known by one party who fails to explain the mistake to the innocent party, the innocent party's interpretation generally will prevail.
mitigation
Measures taken to reduce adverse impacts on the environment. To make less severe, as in the "mitigation" of enviromental hazards.
mixed economies
Mixed economies are contemporary economies in which economic decisions and actions are undertaken in both private and public spheres; neither socialism nor capitalism but a mix of elements of both. In today’s world, there are no pure market economies and no pure command economies.
mixed-use developments (MXDs)
MXDs combine office space, stores, theaters and apartment units in a single community. MXDs usually contain and offer laundry facilities, restaurants, food stores, valet shops, beauty parlors, barbershops, swimming pools and other attractive and convenient features. (See highrise developments)
mixed-use zoning
Mixed use zones define a mix of uses that can be allowed as part of a single development project or as part of district or corridor. Development standards can be crafted to allow for shared parking arrangements and common open space areas. Certainly, regulations should also be included to avoid conflicts between uses, such as limiting late-night operations of businesses located directly below or above a residential use.
mobile-home
Prefabricated trailer-type housing units that are semipermanently attached to land, which is either the owner's fee land or a leasehold, such as in a mobile-home park. Mobile homes are usually affixed to a concrete foundation and connected to utilities. Although they may not be as mobile as the word implies, they may be removed from such attachments and hauled to a new location. In this respect mobile homes possess the features of both real and personal property. They are like real property when the units are attached to the earth's surface, and like personal property when they are detached and moved. The courts, however, generally consider a mobile home as a fixture and thus treat it as real property.
mobile-home dealer
A mobile home dealer is an agent who displays or offers for sale two or more registered mobile homes at the agent's place of business, and requires a license issued by the California Department of Housing and Community Development.
mobile-home loan
A mortgage loan on a large mobile-home, usually drawn for a shorter term than conventional mortgages. (mobile-home)
Mobilehome Residency Law (MRL)
Portion of California Civil Code that regulates manufactured (mobile) home rental agreements, charges, grounds for eviction, and eviction procedures.
www.hcd.ca.gov/codes/mp/2013MRL.pdfmode
The most frequently occurring variate. (See variate)
model
A description or analogy to help visualize something that cannot be directly observed; a system of postulates, data, and inferences presented as a mathematical description of an entity or state of affairs.
moderate rentals
Moderate rentals are rent charges less than those rents generally charged for new dwelling units of comparable size and location built by the unassisted efforts of private enterprise and financed at then-current market interest rates.
moderately priced property
Moderately Priced Properties have decent cash flows, decent credit quality tenants, and are in the non-fancy areas. They are what a smart investor will target. These are both residential and commercial properties. You can spot these properties as they will have 4% - 8% Cash on Cash Returns.
modified IRR (MIRR)
Internal rate of return (IRR) has many issues, one is that in an IRR calculation the computer assumes that all cash flows generated by the property will be reinvested at the overall IRR. So the modified IRR calculation compensates by allowing one to input an assumed reinvestment rate.
modular housing
A relatively recent concept in home construction, aimed at producing housing more economically and faster through prefabricating processes; also called prefabricated housing. Modular methods expedite construction because the house itself can be built in the factory while the building site is being prepared, thus potentially eliminating costly delays. Some courts have held that the sale of an unattached modular home is the sale of personal property, and thus no written listing or real estate license is required to earn a commission.
modulation
A regulating according to measure or proportion; the process of varying the amplitude, frequency, or phase.
mold
Molds are simple, microscopic organisms that are present virtually everywhere both indoors and outdoors. Molds are fungi and are needed to break down dead material and recycle nutrients in the environment. For molds to grow and reproduce they need only a food source such as leaves, wood, paper, or dirt - and moisture.
monetary policy
Governmental regulation of the amount of money in circulation through such institutions as the Federal Reserve Board. (See Federal Reserve)
money
Any object or commodity that people in a given society or group commonly accept and use in payment in exchange for goods or services.
money laundering
Money laundering is the act of engaging in transactions designed to obscure the origin of money that has been obtained illegally.
money market
The financial market that brings together investors who trade short-term money instruments, such as Treasury bills and commercial paper.
monolithic organization
A monolithic organization is a highly centralized operation, functioning as a single (mono) unit, with work being structured to flow from one singular source of authority at the top of the organization.
monopoly
A market in which there is only one seller of a good or service. (See imperfect markets)
monopsony
A market in which there are only a few sellers of a good or service. (See imperfect markets)
month-to-month tenancy
A periodic tenancy under which the tenant rents for one month at a time. In the absence of a rental agreement (oral or written) a tenancy is generally considered to be month to month.
monthly housing payment
The total of the PITI (principal, interest, taxes, insurance) plus Homeowners association (HOA) fees and private mortgage insurance (PMI) costs.
monthly index of long-term United States government bond yields
The monthly index of long-term United States government bond yields is the monthly unweighted average of the daily unweighted average of the closing bid yield quotations in the over-the-counter market for all outstanding U.S. Treasury bond issues, based on available statistics, which are either maturing or callable in ten years or more. This index is expressed in terms of percentage interest per annum.
monument
A monument is a fixed natural or artificial object used to establish real estate boundaries for a metes-and-bounds description. (See metes-and-bounds description)
moral turpitude
Moral turpitude refers to conduct that is considered inherently immoral, dishonest, or depraved, and that violates accepted standards of ethics and community values. It often involves acts of fraud, theft, violence, or other behavior that reflects a lack of integrity or moral character.
moratorium
A temporary suspension of payments due under a financial obligation in order to help a distressed borrower recover from financial difficulties and avoid default and foreclosure. (See workout)
moratorium
A temporary suspension of issuing building permits. (See workout)
Morgan Property Taxpayers' Bill of Rights
A California law effective January 1, 1994, that ensures that taxpayers are provided fair and understandable explanations of their rights and duties with respect to property taxation, prompt resolution of legitimate questions and appeals regarding their property taxes, and prompt corrections when errors have occurred in property tax assessments.
mortgage
A legal document used to secure the performance of an obligation. The term mortgage, which is derived from the French words mort meaning "dead" and gage meaning "pledge," is appropriate in that the pledge is extinguished only after the debt is paid. In the usual real estate transaction, the buyer seeks to borrow money to pay the seller the difference between the down payment and the purchase price. When the lender (mortgagee) lends the money, the buyer/borrower (mortgagor) is required to sign a promissory note for the amount borrowed and to execute a mortgage to secure the debt. The purpose of the mortgage note is to create a personal liability for payment on the part of the mortgagor; the purpose of the mortgage is to create a lien on the mortgaged property as security for the debt.
mortgage
A mortgage is a lien, other than a judgment, on a fee simple estate or leasehold in real property located in Pennsylvania, together with the credit instruments secured. Mortgage includes both insured and uninsured mortgages.
mortgage
A mortgage is the loan for a property, but only in about one-half the U.S. states. A mortgage is a document spelling out the rights and responsibilities of the borrower and lender related to the loan, and is typically notarized and recorded on the property at the courthouse. In California and the other half of the states, two documents, the deed of trust (DOT) and promissory note, are used instead of a mortgage and serve the same purpose.
mortgage
A lien on the property that secures the promise to repay a loan. A security agreement between the lender and the buyer in which the property is collateral for the loan. The mortgage gives the lender the right to collect payment on the loan and to foreclose if the loan obligations are not met.
mortgage
A lien on the property that secures the promise to repay a loan. A security agreement between the lender and the buyer in which the property is collateral for the loan. The mortgage gives the lender the right to collect payment on the loan and to foreclose if the loan obligations are not met.
mortgage banker
A person, corporation or firm (not otherwise in banking and finance) that normally provides its own funds for mortgage financing as opposed to savings and loan associations or commercial banks that use other people's money—namely that of their depositors—to originate mortgage loans. Although some mortgage bankers do supply permanent long-term financing, the majority specialize in supplying short-term and interim financing, either through their own resources or by borrowing from commercial sources.
Mortgage Bankers Association of America Websitemortgage banker (Arizona definition)
A person who for compensation or in the expectation of compensation either directly or indirectly makes, negotiates or offers to make or negotiate a mortgage banking loan or a mortgage loan.
Mortgage banking letters
Mortgage banking letters are sent periodically to affected parties by the superintendent of banks to highlight or explain hot topics.
mortgage broker (Arizona definition)
A person who for compensation or in the expectation of compensation either directly or indirectly makes, negotiates or offers to make or negotiate a mortgage loan.
mortgage broker/company
A person or firm that acts as an intermediary between borrower and lender; one who, for compensation or gain, negotiates, sells or arranges loans and sometimes continues to service the loans; also called a loan broker. Loans originated by the mortgage broker are closed in the lender's name and are usually serviced by the lender. This is in contrast to mortgage bankers, who not only close loans in their own names but continue to service them as well. Many mortgage brokers are also licensed as real estate brokers and provide these financing services as supplements to their realty services. (See mortgage)
mortgage call report
A mortgage call report is a single report of condition that reflects the entire mortgage activity and financial information of a company.
mortgage commitment
A mortgage commitment is a legally binding obligation to lend money on the security of a residential mortgage.
mortgage constant
The first-year debt payment divided by the beginning loan balance.
mortgage credit certificates
Mortgage credit certificates feature dollar-for-dollar federal income tax credits that qualified borrowers purchasing a home in a State of New York Mortgage Agency (SONYMA) target area can receive.
Mortgage Disclosure Improvement Act (MDIA)
Enacted in July 2008 as an amendment to the Truth in Lending Act (TILA) to require mortgage loan cost disclosures to consumers. Early disclosure (a good-faith estimate) of mortgage loan cost must be provided within three business days of receiving a consumer's application for a mortgage loan; a creditor must wait seven business days after providing the early disclosures before closing the loan; and a creditor must provide new disclosures and wait an additional three business days before closing the loan, if a change occurs that makes the annual percentage rate quoted in the early disclosure inaccurate beyond a specified tolerance.
mortgage financing
The process of borrowing money to purchase or refinance property where the loan, the mortgage, to you is secured by real property, like a home or rental property.
Mortgage Foreclosure Law (Chapter 507 of the Laws of 2009)
The Mortgage Foreclosure Law (Chapter 507 of the Laws of 2009) targets the mortgage crisis by providing further assistance to homeowners who are at risk of losing their homes and by assisting tenants in foreclosed properties and by refining some of the prior amendments of the Banking Law regarding mortgage lending.
mortgage fraud cells
Mortgage fraud cells consist of a network of individuals who operate in various roles as developers, recruiters, borrowers, real estate agents, loan brokers, appraisers, attorneys, and lenders operating in various combinations and capacities to obtain fraudulent mortgage loans.
mortgage insurance
A kind of insurance policy that will pay off the mortgage balance in the event of death, and in some policies, disability. Premiums are paid with the regular monthly mortgage payment. (See mortgage)
mortgage insurance premium
The fee paid by a mortgagor to obtain Mortgage Insurance on a mortgage loan. The fee may be collected as a lump sum at loan closing or as a periodic amount included in the monthly payment, or both. (See mortgage insurance)
mortgage insurance premiums (MIP)
Most FHA loans require the borrower to pay two mortgage insurance premiums: one up front paid at closing; the second is an annual premium based on the loan balance each year. (See mortgage insurance)
mortgage interest deduction (MID)
This is the tax deduction on personal residences that an individual gets for writing off the mortgage interest (not mortgage payment, just the interest portion of the payment) on their Schedule A - Itemized Deductions. Most people add in the property tax deduction and just call the sum of both interest and property taxes their "Mortgage Interest Deduction".
mortgage interest deduction (MID)
This is the tax deduction on personal residences that an individual gets for writing off the mortgage interest (not mortgage payment, just the interest portion of the payment) on their Schedule A - Itemized Deductions. Most people add in the property tax deduction and just call the sum of both interest and property taxes their "Mortgage Interest Deduction." (See Schedule A form)
mortgage lender
A mortgage lender is a person engaged in the business of making mortgage loans for compensation or gain.
mortgage lien
A lien or charge on the property of a mortgagor that secures the underlying debt obligations. (See lien)
mortgage loan
Any loan primarily for personal, family, or household use that is secured by a mortgage, deed of trust, or other equivalent consensual security interest on a dwelling or residential real estate upon which a dwelling is constructed or intended to be constructed.
mortgage loan
A mortgage loan is a loan or agreement to extend credit made to a natural person. The loan is secured by a deed to secure debt, security deed, mortgage, security instrument, deed of trust, or other document representing a security interest or lien upon any interest in one- to four-family residential property located in Georgia, regardless of where made, including the renewal or refinancing of any loan.
mortgage loan
A mortgage loan is a residential loan primarily for personal, family, or household use that is secured by a mortgage, deed of trust, or other security interest on a dwelling or for the purchase of residential real estate upon which a dwelling is to be constructed; a loan on commercial real property if the borrower is an individual or the lender is a noninstitutional investor; or a loan on improved real property consisting of five or more dwelling units if the borrower is an individual or the lender is a noninstitutional investor.
mortgage loan (Arizona definition)
A loan, other than a mortgage banking loan secured by a mortgage or deed of trust or any lien interest on real estate located in this state created with the consent of the owner of the real estate.
mortgage loan application
A mortgage loan application is the submission of a borrower's financial information in anticipation of a credit decision, which includes the borrower's name, the borrower's monthly income, the borrower's social security number to obtain a credit report, the property address, an estimate of the value of the property, the mortgage loan amount sought, and any other information deemed necessary by the loan originator. An application may be in writing or electronically submitted, including a written record of an oral application.
mortgage loan brokerage
A mortgage loan brokerage is an individual or company that brings borrowers and lenders together. In California, a real estate broker's license also includes the authority to act as a mortgage broker. In California, a real estate licensee who conducts mortgage loan origination (MLO) activities for residential property of one to four units must obtain an MLO license endorsement that is attached to the real estate license and renewed annually.
mortgage loan company
A mortgage loan company is any person defined as such in the Mortgage Loan Company Act (New Mexico).
mortgage loan disclosure statement
Borrower disclosure mandated by Article 7 of the Real Estate Law. (See Article 7)
mortgage loan originator (MLO)
A mortgage loan originator (MLO) is an individual who, for compensation or gain or in the expectation of compensation or gain, takes a residential mortgage loan application or offers to negotiate the terms of a residential mortgage loan application.
mortgage loan rate-lock commitment
A mortgage loan rate-lock commitment is a written or electronically transmitted confirmation issued to a consumer by a mortgage lender for a mortgage loan that, subject to the terms set forth, obligates the mortgage lender to make a mortgage loan at a specified interest rate.
mortgage note
A legal document obligating a borrower to repay a loan at a stated interest rate during a specified period; the agreement is secured by a mortgage that is recorded in the public records along with the deed.
mortgage participation
Mortgage participation refers to a situation where multiple lenders or investors share in the ownership and risk of a mortgage loan. This is typically done through a participation agreement, which outlines each party's rights and responsibilities regarding the loan.
First, a lender originates a loan to a borrower, then sells a portion of the to other investors. Each participant shares in the risk and rewards of the loan based on their percentage of participation. The originating lender typically retains the servicing rights to the loan.
mortgage points rate buy down
When s person borrows money they might decide to pay "points" to lower or "buy down" the mortgage interest rate. One "point" is 1.0% of the loan balance, or 100 basis points.
mortgage revenue bonds
A type of tax-exempt industrial development bond offered by state and local governments through their housing financing agencies. (See industrial development bonds)
mortgage servicer
To act as a mortgage servicer means to engage in the business of receiving any scheduled periodic payments from a borrower pursuant to the terms of any mortgage loan, including amounts for escrow accounts, and making the payments of principal and interest and other payments with respect to the amounts received from the borrower as may be required pursuant to the mortgage loan, the mortgage servicing loan documents, or servicing contract.
mortgage servicing disclosure
This disclosure statement is provided to the borrower by the lender. It informs the borrower whether the lender intends to keep the loan or transfer it to a different lender for servicing. This is important because the borrower will need to know where to send payments and who to contact for questions or concerns. If the lender intends to transfer the servicing of the loan to a different company, the disclosure will explain the process and timing of the transfer. The disclosure also includes information on how the borrower can resolve complaints or disputes related to the servicing of their loan.
mortgage-backed security (MBS)
A security guaranteed by pools of mortgages and used to channel funds from securities markets to housing markets. Ginnie Mae has a popular MBS program recognized for its low risk and high yield. The Ginnie Mae MBS security is a pool of VA and FHA mortgages put together as a bond. Freddie Mac and Fannie Mae also have MBS programs. (See FHA, Fannie Mae, Freddie Mac, Ginnie Mae, VA loan)
mortgagee
In a mortgage transaction, the party who receives and holds a mortgage as security for a debt, the lender. A lender or creditor who holds a mortgage as security for payment of an obligation. (See mortgagor)
mortgagee's title insurance
An insurance policy protecting the lender for the amount of the loan in the event of a future title dispute. (See owner's title insurance, title insurance)
mortgagor
In a mortgage transaction, the buyer/borrower is the mortgagor. The mortgagor is required to sign a promissory note for the amount borrowed and to execute a mortgage to secure the debt. The mortgage note creates a personal liability for payment on the part of the mortgagor. (See mortgagee, promissory note)
move window
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Mrs. Murphy
The common description of the exemption that applies to an owner-occupied building with four or fewer units.
multi-intelligences
Ways of learning (ie, through sound, sight, aromas, taste, movement, with others or within oneself) that address capabilities of thinking and expressing oneself in words, music, mathematical expression, visual images, empathetic understanding of people, and self-awareness and understanding.
multi-lender rule loans
Loans involving 10 or fewer investors regulated by the Corporation Commissioner.
Multi-State Mortgage Committee
The Multi-State Mortgage Committee is comprised of 10 appointed State Regulator members and one member who is from the Conference of State Bank Supervisors (CSBS). The role of the MMC is to implement cooperative protocol between state agencies and the financial industry. (Conference of State Bank Supervisors)
multiclass mortgage securities
Short- and long-term mortgage securities, with or without pass-through privileges. (See pass-throughs)
multiperil policies
Many insurance companies offer multiperil policies for apartment and commercial buildings. Such a policy offers the property manager an insurance package that includes standard types of commercial coverage, such as fire, hazard, public liability and casualty. Special coverage for earthquakes and floods is also available.
multiple listing service (MLS)
A marketing organization composed of member brokers who agree to share their listing agreements with one another in the hope of procuring ready, willing and able buyers for their properties more quickly than they could on their own. Most multiple-listing services accept exclusive-right-to-sell or exclusive agency listings from their member brokers. Members have access to the MLS database of properties for sale through the MLS website.
multiple-category loans
If a loan is a home improvement loan as well as a refinancing, an institution reports the loan as a home improvement loan. If a loan is a home purchase loan as well as a home improvement loan or a refinancing, an institution reports the loan as a home purchase loan. These are examples of multiple-category loans.
multiple-listing clause
A provision in an exclusive listing for the authority and obligation on the part of the listing broker to distribute the listing to other brokers in the multiple-listing organization. (See multiple-listing service)
municipal bonds
Bonds issued to finance public improvements such as parks, schools and urban renewal projects.
muscle
A body tissue consisting of long cells that contract when stimulated and produce kinetic motion; an organ that is essentially a mass of muscle tissue attached at either end to a fixed point and that by contracting moves or checks the movement of a joint through its range of motion. (See blood, smooth muscle, striated muscle, skeleton, tissue)
musculoskeletal
Involving both the musculature and the skeleton. (See skeleton)
must-buy buyers
Buyers looking for properties that meet specific needs. (See must-sell sellers)
must-sell sellers
A highly motivated or desperate seller. (See must-buy buyers)
mutual consent
A meeting of the minds; a mutual assent of the parties to the formation of a contract.
mutual mortgage insurance
Insurance premiums and other specified FHA revenues are paid into one of four FHA funds. Losses due to foreclosure are met from these funds.
mutuality of contract
Agreement that imposes obligations on both parties.
naked title
Naked title is defined as the legal ownership of real property without the right to use, occupy or possess it. This type of ownership interest is often used in trusts, where the trustee holds the legal title to the property, while the beneficiary holds the equitable title. It is only title to such extent that is needed to carry out the power of sale to fulfill the terms of the lien document. (See deed of trust)
NAR Code of Ethics Standard of Practice 1-1
REALTORS®, when acting as principals in a real estate transaction, remain obligated by the duties imposed by the Code of Ethics. (Amended 1/93)
The duties imposed by the Code of Ethics encompass all real estate related
activities and transactions whether conducted in person,
electronically, or through any other means.
The duties the Code of Ethics imposes are applicable whether
REALTORS® are acting as agents or in legally recognized non-agency
capacities except that any duty imposed exclusively on agents by law
or regulation shall not be imposed by this Code of Ethics on
REALTORS® acting in non-agency capacities.
narrative report
A narrative report is an appraisal report that includes all pertinent information about a subject property and the area in which it is located. It includes maps, photographs, charts, plot plans as well as the reasons and computations for a value consideration. It is usually considered the most complete and detailed appraisal report.
NASDAQ
National Association of Securities Dealers Automated Quotation System or Nasdaq is an automatic information network that provides brokers and dealers with price quotations on securities traded over-the-counter. The Nasdaq 100 Index is a common stock market indicator representing the 100 largest nonfinancial domestic companies on the Nasdaq market. (See over-the-counter)
NASDAQ HomepageNational Apartment Assn (NAA)
The National Apartment Association (NAA) is a leading organization for the apartment housing industry. It serves as an advocate for rental housing providers, including apartment owners, managers, developers, and suppliers. The NAA is a federation of more than 150 state and local affiliates, representing over 82,000 members managing more than 9.7 million apartment homes globally.
National Assn of Home Builders (NAHB)
A prominent trade association in the United States that represents the interests of home builders, developers, contractors, and associated businesses. Founded in 1942, the NAHB plays a critical role in influencing public policy through lobbying efforts, aiming to make housing a national priority and to ensure that regulations are reasonable and promote growth in the housing industry.
National Assn of Residential Prop Mgrs (NARPM)
A professional organization for individuals involved in managing residential properties. Founded in 1988, NARPM aims to promote a high standard of business ethics, professionalism, and fair housing practices among its members.
National Association of Consumer Credit Administrators (NACCA)
Organization formed in 1935 to improve the supervision of consumer credit agencies and to facilitate the administration of laws governing these agencies.
National Association of Independent Fee Appraisers (NAIFA)
A professional association of appraisers with more than 2,000 members nationally. NAIFA offers the specialty designations IFA (member), IFAS (senior member) and IFAC (appraiser-counselor).
NAIFA WebsiteNational Association of REALTORS® (NAR)
Formerly known as the National Association of Real Estate Boards (NAREB), NAR is the largest and most prestigious real estate organization in the world. Its members include REALTORS® and REALTOR-ASSOCIATES representing all branches of the real estate industry. The national organization functions through local boards and state associations. NAR Website
National Bank Act of 1863
In 1863, President Abraham Lincoln, at the urging of Salmon Chase, the Secretary of the Treasury, signed the National Bank Act. The Act established a national banking system and a uniform national currency to be issued by new "national" banks. The banks were required to purchase U.S. government securities as backing for their National Bank notes. In 1865, a 10-percent tax levied against State Bank notes essentially taxed those notes out of existence. From 1863 to 1877, National Bank notes were printed privately by the issuing banks. After 1877, the Bureau of Engraving and Printing, a division of the U.S. Department of the Treasury, assumed responsibility for printing all notes.
National Burglar and Fire Alarm Association (NBFAA)
In property management, the National Burglar and Fire Alarm Association (NBFAA), now known as the Electronic Security Association (ESA), is a trade association representing the electronic security and life safety industry. It provides education, certification, and advocacy for professionals who install and maintain security and fire alarm systems. The association aims to enhance the effectiveness and reliability of these systems to ensure the safety and security of property and occupants.
National Credit Union Administration
The National Credit Union Administration (NCUA) is the independent federal agency that charters and supervises federal credit unions. NCUA Website
National Credit Union Administration
The National Credit Union Administration (NCUA) is the independent federal agency that charters and supervises federal credit unions.
NCUA WebsiteNational Do Not Call Registry
The "do not call" list is a registry of phone numbers in the United States that telemarketers are prohibited from calling in most circumstances. The list is maintained by the National Do Not Call Registry of the Federal Trade Commission (FTC). Consumers can contact the agency to have their numbers registered. Organizations are prohibited from making calls to sell goods or services to any numbers listed, and are subject to substantial fines if they fail to comply.
National Environmental Policy Act
Federal agencies are required to prepare an environmental assessment (EA) to determine whether a proposed action would significantly affect the environment. If the EA concludes that there is no significant impact, the agency can issue a Finding of No Significant Impact (FONSI). If the EA determines that the proposed action would significantly affect the environment, the agency must prepare a more detailed Environmental Impact Statement (EIS). This involves a comprehensive analysis of potential environmental impacts, including potential alternatives and mitigation measures.
National Housing Act
Passed by Congress in 1934, the National Housing Act set up the Federal Housing Authority (FHA) to encouraged banks, building and loan associations, etc. to make loans for building homes, small business establishments, and farm buildings. If the FHA approved the plans, it would insure the loans.
In 1937 Congress passed another National Housing Act that enabled the FHA to take control of slum clearance. It made 60 year loans at low interest to local governments to help them build apartment blocks. Rents in these homes were fixed and were only available to low income families. By 1941 the agency had assisted in the construction of more than 120,000 family units.
Federal Housing Administration WebsiteNational Multifamily Housing Council (NHMC)
A trade organization that represents the interests of the multifamily housing industry, which includes apartment owners, managers, developers, lenders, and service providers.
Nationwide Mortgage Licensing System (NMLS)
The Nationwide Mortgage Licensing System (NMLS) is the legal system of record for mortgage originator licensing in the United States. The NMLS&R is the registry for all mortgage originators licensed under the provisions of the NMLS and SAFE Act. (See SAFE Mortgage Licensing Act)
Nationwide Specialty Consumer Reporting Agency
A consumer reporting agency that compiles and maintains files on consumers on a nationwide basis relating to: 1) medical records or payments; 2) residential or tenant history; 3) check writing history; 4) employment history; or 5) insurance claims.
Native American Direct Loan (NADL) Program
The NADL program helps Native American Veterans purchase, construct, improve, or re-finance a home on Native American trust lands. The tribal organization must participate in the VA direct loan program. The veteran must have a valid Certificate of Eligibility (COE).
Natural Hazard Disclosure Statement
Document indicating property location in a hazardous area that must be provided by seller to buyer in California residential transactions of one to four dwelling units, with certain exceptions.
natural increase
In a population, natural increase is the excess of births over deaths.
navigable waterway
1. A body of water, such as a river, canal or lake, is navigable if it is deep, wide and slow enough for a vessel to pass. 2. Waters that provide a channel for commerce and transportation of people and goods.
negative amortization
A financing arrangement in which the monthly payments are less than the true amortized amounts and the loan balance increases over the term of the loan rather than decreases; an interest shortage that is added to unpaid principal.
negative declaration
A declaration by a developer that a project will not have a negative impact on the environment.
negative easement
An easement where the owner of a servient estate is prohibited from doing something on his or her estate that is otherwise lawful, because it will affect the dominant estate. (See easement)
negative fraud
Deliberate concealment of something that should be revealed.
negative incentives
Negative incentives are actions that discourages behavior, for example, fines discourage business activities that pollute.
negative leasehold
Negative leaseholds are created when the contract rent is above the market rent price.
negative option feature
In an offer or agreement to sell or provide any goods or services, a provision under which the customer's silence or failure to take an affirmative action to reject goods or services or cancel the agreement is interpreted by the seller as acceptance of the offer.
negligence
The failure to use ordinary or reasonable care under the circumstances.
negligent misrepresentation
Negligent misrepresentation occurs when the licensee should have known that a statement about a material fact was false. The fact that the licensee may actually be ignorant about the issue is no excuse. (See material fact, misrepresentation)
negotiable instrument
A written promise or order to pay a specific sum of money that may be transferred by endorsement or delivery. The transferee then has the original payee's right to payment.
neighborhood analysis
Neighborhood analysis is an evaluation process used in real estate, urban planning, and community development to assess various characteristics of a neighborhood, including demographic trends, economic conditions, real estate market dynamics, available amenities, infrastructure quality, safety levels, and community involvement. This comprehensive assessment helps stakeholders such as investors, developers, homebuyers, and local governments understand the current state and potential future developments of an area. By analyzing these factors, stakeholders can make informed decisions regarding property investments, urban development projects, and community enhancement strategies, ensuring alignment with both market demands and community needs.
neighborhood boundaries
A residential or commercial area with similar types of properties, buildings of similar value or age, predominant land-use activities, and natural or fabricated geographic boundaries, such as highways or rivers.
neighborhood information request
A questionnaire used by brokers to obtain information about the neighborhood where a listed property is located. The questionnaire is completed by the homeowner and can provide valuable information that will aid in the sale of the property. The questionnaire should include questions about neighborhood schools, recreational facilities, churches, shopping centers, medical facilities, and other features that may be important to prospective buyers.
net absorption
When applied to real estate markets, net absorption is the measurement of the total square footage or units in a specific market area defined by geography (city or region) and by type of properties (i.e. retail, office, and residential) that is occupied minus (-) the total space vacated in a given period of time, typically a monthly or annual basis.
net exports
"Net exports" is the value of a country's total exports minus the value of its total imports. It is used to calculate a country's aggregate expenditures, or GDP, in an open economy.
net gain
Income that remains after allowed deductions from adjusted gross income.
net income approach
A method of pricing multiple unit rental properties where the desire to buy is driven by the property's ability to generate cash flow and profit. Most often used to price rental properties of 2 or more units. When pricing single-family rental homes and condos, the market approach is preferable. (See market approach, net operating income)
net income ratio
The ratio of net operating income to effective gross income.
net lease
A lease requiring the tenant to pay not only rent but also costs incurred in maintaining the property, including taxes, insurance, utilities and repairs. Sometimes known as an absolute net lease, triple-net lease, or net, net, net lease. (See lease)
net listing
An employment contract in which the broker receives as commission all excess monies over and above the minimum sales price agreed on by broker and seller. Because of the danger of unethical practices in such a listing, its use is discouraged in most states. (See listing agreement)
net loan funds
Net loan funds are the mortgage loan amounts specified in the note and mortgage, less lender-retained fees, as specified in the lender's instruction to the closing agent.
net migration
Characteristic of a population study in which the number of people coming into an area is divided by the number of people who leave during the same period.
net operating income
Net operating income is the result when annual operating expenses are subtracted from gross operating income.
Net operating income is a key figure in cash flow analysis:- First, it is the amount of money the property is estimated to produce to cover the loan payments for the year.
- Second, as shown later, net operating income is used by investors and appraisers to estimate the price or value of the property.
net operating income (NOI)
The income projected for an income-producing property after deducting losses for vacancy, collection and operating expenses.
net passive activity loss
In calculating losses for rental activity properties, a taxpayer first nets all their losses and income from all of their properties onto Schedule E. That "net" of all properties is used on Line 17, subject to the PALL limitations on the ability to use those losses.
net passive activity loss
In calculating losses for rental activity properties, a taxpayer first nets all their losses and income from all of their properties onto Schedule E. That "net" of all properties is used on Line 17, subject to the PALL limitations on the ability to use those losses. (See 1040 form, Schedule E form, Line 17 - rental income and losses)
net present value (NPV)
The NPV is the PV calculation netted against the cash outflow that helped earn the cash inflows in the PV calculation. The NPV can be positive, in which can you would want to invest, or negative, in which case most investors would pass on that investment option.
net proceeds
The cash received after paying all liens and expenses including
net spendable income
Net operating income less loan payments and income taxes on the property's taxable income. (See after-tax cash flow, net operating income)
net taxable income
The amount of taxable income earned for the year after subtracting deductions from income. This is also the amount upon which to calculate, based on tax filing status, how much an individual owes in taxes for the year.
net worth
Assets less liabilities pursuant to generally accepted accounting principles. (See asset, liability)
net worth
Net worth is the applicant's or licensee's total assets less total liabilities, omitting that portion of an applicant's assets pledged to secure obligations of any person or entity other than that of the applicant; any asset due from officers or stockholders of the applicant or persons in which the applicant's officers or stockholders have an interest; an amount in excess of the lower of the cost or fair market value of mortgage loans in foreclosure, or real property acquired through foreclosure; an investment shown on the balance sheet in joint ventures, subsidiaries, or affiliates, which is greater than the fair market value of the assets; goodwill or value placed on insurance renewals or other similar intangible value; organization costs; the value of servicing contracts not determined in accordance with the Financial Accounting Standards Board's Statement of Financial Accounting Standards No. 65, Accounting for Certain Mortgage Banking Activities. For an applicant who is applying to hold the mortgage broker or mortgage lender license as a natural person, any real property having a dwelling house with accommodations for four or fewer separate households and occupied, or to be occupied, by the applicant and any other intangible asset, as determined by the commissioner.
net worth
Net worth is a financial metric that represents the difference between a person's or entity's assets and liabilities. In simpler terms, it's the total value of what someone owns (assets) minus what they owe (liabilities). Assets can include cash, investments, real estate, vehicles, and other valuables, while liabilities encompass debts, loans, mortgages, and other financial obligations. Net worth provides a snapshot of an individual's or organization's overall financial health and can be used to assess wealth, financial stability, and creditworthiness.
network contact log
Information stored about each person who could possibly help you in your job search. Include the following items: name, referred by, organization, title, address, phone, fax, email, organizational information, context of contact, spouse/partner/children, copy of resume sent (yes or no?), date of first contact.
networking
Generating prospects through a real estate professional's communications with friends and professional associates. (See prospecting)
networking
1) Meeting, socializing and talking with as many people as you can about the career field(s) that interests you; 2) using an informal group of people (and their referrals) who can help someone hunting for a job.
new construction maintenance
New construction maintenance is often performed at the request and expense of the tenant, encompassing tasks necessary to maintain the newly built space according to their specific needs. This category of maintenance is closely tied to leasing and tenant relations, as it ensures the space remains functional and satisfactory for the tenant's operations.
new home sellout
When a builder begins to sell the new homes in a new subdivision, the process is referred to as the sellout.
New Mexico Mortgage Foreclosure Consultant Fraud Prevention Act
Under the New Mexico Mortgage Foreclosure Consultant Fraud Prevention Act (MFCFPA), foreclosure consultants are required to have a written foreclosure consulting contract with an owner. The bill also requires foreclosure consultants to provide owners a Notice of Rescission Rights and Rescission of Contract Form. In addition, the bill allows owners to rescind a foreclosure consulting contract until midnight of the 3rd business day after the day on which the owner signs a foreclosure consulting contract. The bill became effective May 19, 2010.
New York City Department of Housing Preservation and Development (HPD)
The New York City Department of Housing Preservation and Development (HPD) is the largest municipal developer of affordable housing in the nation. Since 1987, HPD has provided over $8.7 billion to support the repair, rehabilitation, and new construction of hundreds of thousands of units of housing. This administration's housing agenda, The New Housing Marketplace, features Creating Housing for the Next Generation, which features the largest investment in the city's housing stock in 20 years. It is a $8.5 billion plan to create and preserve more than 165,000 homes and apartments in neighborhoods over ten years.
New York State Affordable Housing Corporation (AHC)
The New York State Affordable Housing Corporation (AHC) administers the Affordable Home Ownership Development Program (AHOD Program), which provides grants to governmental, not-for-profit, and charitable groups to build, acquire, rehabilitate, or improve homes for low- and moderate-income families.
New York State Homes and Community Renewal (HCR)
New York State Homes and Community Renewal (HCR) consists of all the state's major housing and community renewal agencies, including the Affordable Housing Corporation, the Division of Housing and Community Renewal, the Housing Finance Agency, the State of New York Mortgage Agency, the Housing Trust Fund Corporation, and others.
New York State Housing Finance Agency (HFA)
The New York State Housing Finance Agency (HFA) offers financing to create and preserve affordable multifamily rental housing throughout the state. Developers can take advantage of several financing resources. These include agency-issued bonds, which can be tax-exempt, taxable, or 501(c)(3) bonds, low-income housing tax credits, and subsidy loans.
niche market
A niche market is a subset of a broader market in which a specific product is sold. The market niche defines the specific product features aimed at satisfying specific market needs, as well as the price range, quality and demographics of the market it is intended to serve.
nine community property states
NMLS&R mortgage call report
A statement of condition on the company and its operations including financial statements and production activity volumes reported on a per state basis.
NO GLOSSARY TERMS FOR THIS CHAPTER
This chapter does not contain any glossary terms.
No Glossary Terms for this Unit
no loan, no commission
A listing agreement requiring that escrow be closed and title transferred before an agent is entitled to a commission. (See listing agreement)
no-choice rule
If a real estate transaction qualifies as an exchange, it must be treated as an exchange. An exchanger who qualifies for the 1031 tax-deferred exchange has "no choice," they cannot recognize the gain or loss. (See exchange)
no-loss rule
If a real estate transaction qualifiies as an exchange, "no loss" can be recognized. (See exchange)
nolo contendere
A Latin word meaning "I am unwilling to contend." In a criminal case, a defendant's pleading that does not admit guilt but subjects him or her to punishment as though a guilty plea had been entered, the determination of guilt remaining open in other proceedings.
nominal damages
Monetary damages of a token amount awarded for a wrongful act where no loss occurred. (See compensatory damages, exemplary damages)
nominal interest rate
The stated interest rate in a note or contract, which may differ from the true or effective interest rate, especially if the lender discounts the loan and advances less than the full amount. (See effective interest rate)
non-agent
An intermediary between a buyer and seller, or landlord and tenant, who assists both parties with a transaction without representing either. Also known as a facilitator, transaction broker, transaction coordinator and contract broker.
non-conforming loan
A mortgage loan that does not meet Fannie Mae and Freddie Mac underwriting guidelines. Non-conforming loans are available as both fixed and adjustable rate mortgages. (See Fannie Mae, Freddie Mac)
non-conforming use
A type of zoning variance where a parcel of land may be given an exception from current zoning ordinances due to improvements made by a prior owner or before the current zoning ordinances made the desired use non-conforming under local law. (The use is "grandfathered in".)
non-depository institution
A finance company that makes loans to individuals or businesses. An investment company, investment firm, investment trust, of fund that sells shares to individuals and invests in securities issued by other companies. A financial institution that funds their investment activities from the sale of securities or insurance. For a non-depository institution, "branch office" does not include the office of an affiliate or other third party such as a loan broker. Certain non-depository institutions must report property location even in Metropolitan Statistical Areas or Metropolitan Divisions where they do not have a physical location.
non-exempt employees
Non-exempt employees are workers entitled to overtime pay after working more than 40 hours in a five day work week. Generally includes secretaries, factory workers, clerical workers and anyone paid by the hour.
non-traditional lending
Non-traditional lending; long-term, fully amortized, fixed-rate loans that were the preferred method of financing from the late 1930s to the early 1980s.
nonaffiliated third party
Any entity that is not an affiliate of, or related by common ownership or affiliated by corporate control with, a financial institution.
nonamortized
A loan that includes payment of interest, and may include payment of principal, but not enough principal to bring the outstanding balance of the loan to zero by the end of the loan term.
noncompete covenants
A contract that restricts participation in a certain market by a company or individual under specific circumstances. Employers often require employees to sign a non-compete agreement to deter them from quitting to join a competitor or starting a competitive firm.
noncompeting clause
In the context of leases, particularly commercial leases, a noncompeting clause can be included to restrict tenants from engaging in business activities that directly compete with other tenants within the same property or shopping center. This type of clause is aimed at protecting existing tenants and maintaining a diverse mix of businesses that do not cannibalize each other’s sales, which can enhance the overall appeal and success of the location. For example, a property owner might include a noncompeting clause in leases to ensure that only one coffee shop or boutique clothing store operates in their shopping center, preventing market saturation and supporting the viability of each tenant.
nonconforming use
A use of property, legally permitted to continue as such, in spite of the original zoning ordinance which prohibited such use for the area.
nonconforming use
A once lawful property use that is permitted to continue after a zoning ordinance prohibiting it has been established for the area; a use that differs sharply from the prevailing uses in a neighborhood.
noncumulative zoning
Zoning that allows only the stated use and not more restrictive uses. (See zoning)
nondisturbance clause
An agreement where the lienholder agrees to honor a tenant's lease in the event that the property is foreclosed. Also known as a nondisturbance agreement, is a provision in a lease that protects a tenant's right to continue occupying the leased premises, even if there are changes in the property's ownership or the property is foreclosed. Specifically, a nondisturbance clause typically ensures that the tenant's lease will not be terminated prematurely or adversely affected if the property is sold or if the landlord defaults on a mortgage.
nongeographic farming
Farming/prospecting a particular segment of the market such as an ethinic group or nationality, as opposed to a geographic area. (See farming, geographic farming)
nonhomogeneity
A lack of uniformity; dissimilarity. Because no two parcels of land are exactly alike, real estate is said to be nonhomogeneous. (See homogeneous)
noninstitutional investor
A noninstitutional investor is an investor other than an institutional investor.
noninstitutional lenders
Credit unions, pension funds, private individuals and real estate investment trusts. (See credit unions, institutional lenders, pension funds, real estate investment trusts)
nonjudicial foreclosure
The process of selling real property under a power of sale in a mortgage or deed of trust that is in default. One disadvantage is that the lender cannot obtain a deficiency judgment. Also, some title insurance companies are reluctant to issue a policy unless a court has judicially foreclosed the mortgagor's interest. (See judicial foreclosure, strict foreclosure)
nonrecognition transaction
According to section 1001(c) of the Internal Revenue Code (IRC section 1001(c)), all realized gains and losses must be recognized “except as otherwise provided..." While the general rule of recognition applies in most cases, there are actually several exceptions located throughout the Internal Revenue Code. These exceptions are commonly referred to as nonrecognition provisions. The three most common nonrecognition provisions are: Like-kind exchanges, Involuntary conversions, and transfers between spouses and certain former spouses.
nonrecourse clause
In the context of real estate loans being sold in the financial market, if the sales agreement includes a nonrecourse clause, the only recourse for the entity purchasing the loan is to forecluse on the property securing the loan. If the borrower defaults and the market value of the collateral property is not sufficient to cover the remaining loan balance, the entity that purchased the loan generally cannot seek further repayment from the borrower's other assets. The seller of the loan is not liable for any shortfall. However, if the real estate loan is sold with recourse, the entity that purchased the loan has recourse not only to the collateral but also to the borrower's other assets. If a real estate loan is sold with recourse, the seller of the security (the loan) is obligated to reimburse the buying entity if the borrower defaults.
nonresident alien
Any person who is not a U.S. citizen and doing business in the U.S. is considered a nonresident alien unless that person meets either the green card test or the substantial presence test for the calendar year (January 1-December 31). See taxation status of resident aliens here:
nontraditional mortgage product
A nontraditional mortgage product is any mortgage product other than a 30-year fixed-rate mortgage.
normal distribution
How the variates in a group will be shown on a line graph, absent any deviation.
normal distribution
How the variates in a group will be shown on a line graph, absent any deviation.
notary public
A person who acknowledges oaths, such as the signing of a grant deed or deed of trust; must be duly appointed by the proper authorities.
note (original note)
A document signed by the borrower of a loan and stating the loan amount, the interest rate, the time and method of repayment and the obligation to repay. The note serves as evidence of the debt. When secured by a mortgage, it is called a mortgage note, and the mortgagee is named as the payee. In a trust deed, the note is usually made payable to the bearer or holder. The note may also contain some of the same provisions as in the mortgage or trust deed document, such as prepayment or acceleration.
notice of cessation
A notice that gives subcontractors 30 days and gives prime contractors 60 days to file liens from the date of cessation of work. (See cessation of work)
notice of completion
A document recorded to give constructive notice that a building job has been completed. (See constructive notice)
notice of default
Notifies a defaulting party that a default has occurred. The defaulting party is usually provided a grace period during which to cure the default. Notices of default are frequently provided for in contracts for deeds and mortgages, and are sometimes required by operation of law.
notice of default
This is a notice which is filed in the public record of the county where the property is located. It states that the borrower is in default, behind in the loan payments, and if the payments are not paid up, the lender will initiate foreclosure proceedings.
notice of deliquency
In junior financing, where the borrower gives the senior lender permission to notify the junior lender in the event of a default. (See default, junior mortgage, senior loan)
notice of intent to terminate lease
A notice of intent to terminate the lease is the notice from a landlord to a tenant to either comply with the terms of the lease, or to quit the premises leased, and to give possession of the same to the landlord.
Notice of non-compliance
A Notice of Non-Compliance is a written warning issued by a regulatory agency to inform a licensee or entity of a minor violation of rules or regulations. It serves as an opportunity to correct the issue without formal disciplinary action, provided the violation is remedied within a specified timeframe.
notice of nonresponsibility
A legal notice designed to relieve a property owner of responsibility for the cost of improvements ordered by another person (such as a tenant). The owner usually gives notice that he or she will not be responsible for the work done by posting notice in some conspicuous place on the property, and by recording a verified copy in the public records.
notice of trustee's sale
Notice of a sale of property under the terms of a deed of trust securing a debt on which the borrower has defaulted.
notice of value (NOV)
A notice insured by the Veterans Administration setting forth a property's current market value estimate, based on a VA-approved appraisal. The CRV places a ceiling on the amount of a VA-guaranteed loan allowed for a particular property. (See VA loan)
Notice requirements for HOAs
- Notice must be mailed, delivered, or electronically transmitted to each member at least 14 days before the meeting.
- Sign posting is also required.
- The notice must include the date, time, and location of the meeting, an agenda of items to be discussed and voted on, and, if applicable, specific language or a summary of any proposed assessments, amendments, or other significant actions.
- The HOA must keep proof that notice was properly given, such as a copy of the notice and a record of where and when it was sent or posted, and must retain this documentation for at least 7 years.
notice to pay or quit
A notice to pay or quit is a request from a landlord to his tenant, to quit the premises leased, and to give possession of the same to him, the landlord, at a time therein mentioned. (See landlord, tenant)
notice to pay or quit
A notice to pay or quit is a request from a landlord to his tenant, to quit the premises lessed, and to give possession of the same to him, the landlord, at a time therein mentioned.
novation
Substituting a new obligation for an old one or substituting new parties to an existing obligation.
nuisance
An interference with a person's use and enjoyment of their property. This interference can be caused by actions or conditions on a nearby property that are unreasonable or harmful. There are generally two types of nuisances in real estate: (1)Public nuisance, which affects a larger group of people or the community as a whole, such as pollution, noise, or hazards that interfere with public health, safety, or welfare; or (2) Private Nuisance, which affects a specific individual or a small group of people, such as loud noises, foul odors, or excessive smoke emanating from a neighboring property that disrupts the use and enjoyment of one's own property.
nuncupative will
An oral will declared by the testator in his or her final illness, made before witnesses and then created in legal written form.
nutrient
Any of numerous individual organic and inorganic factors, which provide nourishment to living organisms. (See vitamins)
nutrition
The sum of the processes by which an animal or plant takes in and utilizes food substances.
NYSE
Abbreviation for the New York Stock Exchange. The NYSE is the oldest and largest auction market for stocks in the United States. It is located on Wall Street in New York City.
NYSE Homepageobedience
The fiduciary relationship obligates the agent to act in good faith at all times, obeying the principal's instructions in accordance with the contract. However, that obedience is not absolute. The agent may not obey instructions that are unlawful or unethical. Because illegal acts do not serve the principal's best interests, obeying such instructions violates the broker's duty of loyalty. On the other hand, an agent who exceeds the authority assigned in the contract will be liable for any losses that the principal suffers as a result. (See fiduciary)
objective
External to the mind.
obligation
The act of binding oneself by a social, legal, or moral tie. A social, legal, or moral requirement, such as a duty, contract, or promise that compels one to follow or avoid a particular course of action.
obligatory advance
Any advance which, under the terms of the credit line deed of trust or other agreement, the secured party has legally obligated itself to make in the absence of a default, breach, or other such event. Obligatory advances include, but are not limited to, advances which the secured party has agreed to make as a term or condition of the credit line deed of trust or other related agreement; obligations arising out of the occurrence of a condition, event or circumstance contemplated by the agreement; obligations arising on a specified date or time; or advances made upon application therefor by the grantor under the credit line deed of trust or by another obligor whose indebtedness is secured by the deed of trust.
obligor
Obligor means a borrower, co-borrower, cosigner, or guarantor obligated to repay a home mortgage loan.
observed condition method
Breakdown method; depreciation computed by estimating the loss in value caused by every item of depreciation, whether curable or incurable. (See depreciation)
occupational information
Information about a specific cluster of jobs.
Occupational Safety and Health Act (OSHA)
Congress created OSHA under the Occupational Safety and Health Act, which was signed by President Richard M. Nixon on December 29, 1970. OSHA's mission is to prevent work-related injuries, illnesses and deaths.
OSHA Websiteoff-the-record lien
An off-the-record lien is a claim or encumbrance on a property that has not been formally recorded in the public records. Because it is not recorded, this type of lien may not be discovered during a standard title search, making it more difficult for prospective buyers or lenders to be aware of its existence.
offer
An offer is a promise made by one party, requesting something in exchange for that promise. The offer is made with the intention that the offeror will be bound to the terms if the offer is accepted. The terms of the offer must be definite and specific and must be communicated to the offeree. (See offeree, offeror)
offer and acceptance
Two essential components of a valid contract; a "meeting of the minds." (See acceptance, offer)
offeree
The person to whom an offer is made - usually the owner. (See offer)
offeror
The party who makes an offer - usually the buyer. (See offer)
office
The office is the Office of Financial Regulation. OFR programs oversee and regulate a wide range of financial enterprises and individuals, such as banks, credit unions, mortgage loan originators, securities industry participants, consumer finance companies, money transmitters, foreign currency exchangers and payday lenders. www.flofr.com
Office of Fair Housing and Equal Opportunity (FHEO)
The Office of Fair Housing and Equal Opportunity (FHEO) was organized to respond to the agency's expanding role in monitoring the progress of access to fair housing initiatives, and it is also responsible for implementing the agency's affirmative action and equal opportunity programs for minority- and women-owned business enterprises in New York.
Office of Federal Housing Enterprise Oversight (OFHEO)
The federal regulatory body that oversees the government-sponsored entities (GSEs), Freddie Mac and Fannie Mae. It was established as an independent entity within the Department of Housing and Urban Development by the Federal Housing Enterprises Financial Safety and Soundness Act of 1992. The OFHEO works to ensure the capital adequacy and financial safety of the two housing GSEs.
Note: Under the Housing and Economic Recovery Act of 2008 (HERA), OFHEO was merged with the Federal Housing Finance Board (FHFB) to create the Federal Housing Finance Agency (FHFA).
www.fhfa.govOffice of Real Estate Appraisers
In 1989, Title XI of the federal Financial Institutions Reform, Recovery and Enforcement Act was adopted by congress mandating states to license and certify real estate appraisers who appraise property for federally related transactions.
In response to the federal mandate, the Real Estate Appraisers Licensing and Certification Law was enacted by the California Legislature in 1990 (AB 527, Chapter 491 of 1990). OREA was established within the Business, Transportation and Housing Agency, and charged with developing and implementing a real estate appraiser licensing and certification program compliant with the federal mandate.
OREA, which is entirely funded by licensing fees, is a single program comprised of two core components, licensing and enforcement.
The Licensing Unit sets the minimum requirements for education and experience, according to criteria set by the federal government and California law, to ensure that only qualified persons are licensed to conduct appraisals in federally related real estate transactions. Applicants must meet minimum education and experience requirements and successfully complete a nationally approved examination.
The Enforcement Unit investigates the background of applicants and licensees to ensure they are fit for licensure. The Enforcement Unit also investigates complaints of violations of national appraisal standards filed against licensed appraisers.
OREA is responsible for the accreditation of educational courses and providers for real estate appraisers.
Note: The Office of Real Estate Appraisers is now called the Bureau of Real Estate Appraisers (BREA) and is part of the Department of Consumer Affairs.
www.brea.ca.govOffice of the Comptroller of the Currency (OCC)
Office of the Comptroller of the Currency (OCC) is the federal agency that charters, regulates, and supervises all national banks. It also supervises the federal branches and agencies of foreign banks. Headquartered in Washington, D.C., the OCC has four district offices plus an office in London to supervise the international activities of national banks. The OCC was established in 1863 as a bureau of the U.S. Department of the Treasury. The OCC's nationwide staff of examiners conducts on-site reviews of national banks and provides sustained supervision of bank operations. The agency issues rules, legal interpretations, and corporate decisions concerning banking, bank investments, bank community development activities, and other aspects of bank operations. See www.occ.treas.gov
Office of Thrift Supervision (OTS)
Monitors and regulates the savings and loan industry. OTS was created by FIRREA Note: The Office of Thrift Supervision (OTS) became part of the Office of the Comptroller of the Currency (OCC); the merger was completed as of July 21, 2011, and the OTS no longer exists. The OCC now has supervisory responsibility for federal savings and loans and federal savings banks. See www.occ.treas.gov
office property
Income-producing commercial property from which a particular service is rendered.
offsite improvements
Improvements made outside of a property's boundaries, such as sidewalks and streets.
oil and gas lease
A grant of the sole and exclusive right to extract oil and/or gas from beneath the surface of land. Such a lease is generally for a designated term of years and is subject to a payment of royalties in the event of production, the commencement of drilling operations on or before a specified date and the performance within a specified time of a certain amount of development work. Typically, an express or implied easement is granted to enter the property in order to drill.
oligopoly
A market in which there are only a few sellers of a good or service. (See imperfect markets)
oligopsony
A market in which there are only a few buyers of a good or service. (See imperfect markets)
on center
On Center (O.C.) indicates the center line of a stud. Stud spacing is usually 16" O.C. This means that the distance between the center line of adjacent studs is 16" on center. (See construction terms)
one stop center
a single point-of-entry to a network of employment, training, and educational programs and providers in each community. Also known as Workforce Investment Centers
one stop shopping
An arrangement where settlement and service providers are all available through the broker.
one-hundred-percent commission plan
Some firms have adopted a 100 percent commission plan. Salespersons in these offices pay a monthly service charge to their brokers to cover the costs of office space, telephones and supervision in return for keeping 100 percent of the commissions from the sales they negotiate. The 100 percent commission salesperson pays all of his or her own expenses.
online
Accessible via a computer network or the Internet.
online community
Asynchronic communication (members participate at different times) conducted over the Internet; access may be restricted to members or open to all.
online forum
A forum is a public meeting or assembly for open discussion. An e-forum is a discussion forum that enables geographically distant participants to share ideas and enhance teamwork via the Web.
onsite construction
Traditional construction, built by contractors. It is built on site from the foundation up without significant use of factory-made modular or panelized elements.
onsite wastewater treatment facility
Any conventional septic tank system or alternative system installed at a site to treat and dispose of wastewater, predominantly of human origin, generated at that site. A conventional system consists of a septic tank that discharges effluent to a leach field or disposal field, usually configured as a trench (or trenches) or bed.
open door policy
An open door policy means, literally, that every manager's door is open to every employee. The purpose of an open door policy is to encourage open communication, feedback, and discussion about any matter of importance to an employee.
open house
The common real estate practice of showing listed homes to the public during established hours.
open listing
A listing given to any number of brokers who can work simultaneously to sell the owner's property. The first broker to secure a buyer who is ready, willing and able to purchase at the terms of the listing earns the commission. In the case of a sale, the seller is not obligated to notify any of the brokers that the property has been sold.
Unlike an exclusive listing, an open listing need not contain a definite termination date. The listing terminates after a reasonable time, usually whatever is customary in the community. Either party can, in good faith, terminate the agency at will. (See listing agreement)
open meetings law
All meetings of any public body shall be public meetings and all persons so desiring shall be permitted to attend and listen to the deliberations and proceedings. A.R.S. § 38431.01(A).
It is the public policy of this state that meetings of public bodies be conducted openly and that notices and agendas be provided for such meetings which contain such information as is reasonable necessary to inform the public of the matters to be discussed or decided. A.R.S. § 38-431.09.
open office
Open office is an office design that resembles the corral or bull pen arrangement that has been used for a number of years in the real estate industry. The appeal is that people can more freely interact with one another without barriers of individual office walls, which inspires creative thinking and joint problem solving.
open-buyer-agency-agreement
This agreement is a nonexclusive agency contract between a broker and a buyer. It permits the buyer to enter into similar agreements with an unlimited number of brokers. The buyer is obligated to compensate only the broker who locates the property the buyer ultimately purchases.
open-end loan
Loan in which the borrower is allowed to re-borrow against principal that has been paid so far. It is basically a credit card that is secured by real property.
open-end trust deed
An expandable loan in which the borrower is given a limit up to which he or she may borrow, with each incremental advance to be secured by the same trust deed. (See trust deed)
open-ended mortgage
A mortgage loan that is expandable by increments up to a maximum dollar amount, the full loan being secured by the same original mortgage.
open-market operations
The buying and selling of government securities by the Federal Reserve to control the amount of money in circulation. (See easy monetary policy, reserve requirements, tight monetary policy, The Federal Reserve System)
Federal Reserve Website
operating budget
A projection of income and expenses for the operation of a property over a one year period.
operating expense ratio
The ratio of total operating expenses to effective gross income.
operating expenses
Those recurring expenses that are essential to the continuous operation and maintenance of a property. Operating expenses are generally divided into the following categories: fixed expenses such as real property taxes and building insurance; variable costs such as utilities, payroll, administration and property management fees; and reserves for replacement. Operating expenses do not include items such as mortgage payments, capital expenditures and depreciation.
operating statement
The written record of a business's gross income, expenses, and resultant net income.
operating system
The instructions that a copmuter uses to "operate" its various systems. (See DOS)
operation of law
A way in which someone acquires certain rights or responsibilities automatically without taking individual action or being the subject of a court order.
opinion of title
An opinion of the marketability of a title given by an attorney based on the abstract of title. (See abstract of title)
opportunistic networks
Chance encounters that are helpful in the job search process.
opportunity cost
Resources are very often scarce. Individuals and societies must choose between the competing uses of limited resources. Once a choice is made, what is given up is the 'opportunity cost' that must be paid for a particular choice.
opportunity cost of capital
The money you would have earned on cash you held in financial assets if you didn't take that money to cover a shortfall on a negative cash flow property. Let's say you took $10,000 from your bank account in a year to cover negative cash flow on a property. You might have earned $500 (at 5.0%) if that money had stayed in your financial investment accounts, but it didn't because you had to cover a cash flow shortfall. So the $500 you did not earn due to this, is your "opportunity cost of capital."
opt-out
The choice to not participate.
optical character recognition (OCR) software
1) OCR software converts digitally scanned static documents into manageable electronic text files; 2) Software that scans resumes into company databases.
optimum price
The optimum price, often referred to as the optimal pricing point, is the price at which a product or service yields the maximum return on investment or profit, balancing between volume sales and profit margin. This pricing strategy considers various factors including production costs, consumer demand, market conditions, competitor pricing, and price sensitivity of the customer base. For instance, in real estate, the optimum price of a property would be the amount that maximizes the seller's profit while being attractive enough to quickly draw buyers in a competitive market. Achieving this balance ensures that the product or service is competitively priced to maximize sales without sacrificing profitability.
optimum rent
Optimum rent refers to the rental price that balances maximizing income for the property owner while remaining attractive and competitive in the market. This rent level ensures a desirable occupancy rate, avoiding vacancies that can occur from setting the price too high. It is determined by considering factors such as market demand, the condition and location of the property, and comparable rental rates in the area.
option
An agreement to keep open, for a set period, an offer to sell or lease real property.
option listing
A listing in which the broker also retains an option to purchase the property for the broker's own account. In view of the body of litigation involving breach of fiduciary duties by brokers who conceal offers from buyers until after the broker has exercised the option, full and fair disclosure must be given to the seller. (See listing agreement)
oral contract
An unwritten agreement. With few exceptions, unwritten agreements for the sale or use of Real Estate are unenforceable. In most states, contracts for the sale or rental of real estate are, unless they are in writing, unenforceable under the Statute of Frauds. Verbal leases for up to a year are often acceptable.
ordinary income
Income that does not qualify for capital gains treatment.
ordnance
A military weapon or item of destruction (e.g. bullets). (See military ordinance location)
organizational and community affiliations
Professional associations, alumni associations, community or volunteer organizations, philanthropic cultural and civic organizations, certifying or licensing bodies, boards of directors, boards of trustees and advisory boards.
organizational colleagues
Professionals at all levels, including clerical and support staff.
orientation
Orientation is the placement of a structure on a site, ideally to take maximum advantage of street frontage, view, and access to light and air.
orientation programs
Employee orientation programs provide an introduction and process of assimilation for new employees. Major objectives include gaining employee commitment, communicating company expectations, and conveying what he or she can expect from the job and company. It is commonly followed by training for specific job responsibilities.
original basis
The sum of the purchase price of a property plus buying expenses on acquisition. (See basis)
origination fee
A fee, often a percentage of the total principal of a loan, charged by a lender to a borrower on initiation of the loan.
osmosis
Diffusion through a semi-permeable membrane, as of a living cell.
ostensible agency
A form of implied agency relationship created by the actions of the parties involved rather than by written agreement or document. (See implied agency)
other disciplinary action
Other possible disciplinary actions are civil penalty up to $1,000 per violation, issuance of a provisional license, requirement for additional continuing education hours, requirement of a surety bond posting.
other income
Refers to income other than rent, such as vending and laundry machines, storage or parking space income, and so on.
other income
Refers to income other than rent, such as vending and laundry machines, storage or parking space income, common area maintenance dues, etc.
out-of-state bank
Out-of-state bank means any association or corporation authorized to do a banking business, the main office of which is located outside the commonwealth and exists by authority of any state of the United States other than the commonwealth.
Out-of-state branch
Out-of-state branch means a branch of any Massachusetts bank located outside the commonwealth.
out-of-state federal bank
Out-of-state federal bank means a national banking association, savings and loan association, or savings bank that exists by authority of the United States, the main office of which is located outside the commonwealth.
outbound telephone call
A telephone call initiated by a telemarketer to induce the purchase of goods or services or to solicit a charitable contribution.
outlier
In statistics, an extreme variate of a population that is taken out of a calculation of the mean of the variates to avoid distorting the computation.
Over-the-Counter (OTC)
A market for securities made up of dealers who may or may not be members of a securities exchange. OTC firms conduct business over the telephone and act either as principals or dealers (buying and selling stock from their own inventory and charging a markup) or as a broker or agent and charging a commission.
overdraft of groundwater supply
Like an overdraft of a bank account where a person draws out more than the balance, an overdraft of groundwater supply is the drawing out of more groundwater than that which can be recharged. See also safe yield
overriding trust deed
A method of financing in which the new mortgage is placed in a secondary or subordinate position; the new mortgage includes both the unpaid principal balance of the first mortgage and whatever additional sums are advanced by the lender. Sometimes called an all-inclusive loan, an overlapping loan or a wraparound mortgage.
owner equity
Owner equity is the combined investments of the owner(s) and the accumulation of profit or losses for the business since it began, expressed in the accounting formula: Net Worth = Assets - Liabilities
owner occupied
A property where the owner physically occupies the property.
owner's policy
The insurance policy that protects the buyer from title defects.
ownership
The right to use, possess, enjoy, transfer, and dispose of a thing to the exclusion of all others.
ownership in severalty
Separate ownership; ownership of property by one person only. (See severalty)
oxygen
A colorless, odorless, tasteless gas which forms about 21 percent of the atmosphere; oxygen is capable of combining with all elements except the inert gasses, is active in physiological processes, and is involved especially in combustion processes.
oxygen debt
A cumulative oxygen deficit which develops during periods of intense bodily activity and which must be made good when the body returns to rest.
oxygenate
To impregnate, combine, or supply (as in blood) with oxygen.
oxyhemoglobin
Hemoglobin loosely combined with oxygen that releases to the tissue.
P trap
A drainage plumbing pipe in the approximate shape of a "p" laid on its face, providing a trap that prevents sewer gasses from entering the living space. (See construction terms)
P.A.R.
To answer behavior-based interview questions, use the P.A.R. approach: (a) State a Problem that you were given, (b) Describe the Action you took, (c) Explain the Results of that action.
package loan
A real estate loan used to finance the purchase of both real property and personal property, such as in the purchase of a new home that includes carpeting, window coverings and major appliances.
packet
A block of data transmitted over a packet switching network. The Internet and local area networks transmit data in "packets." (See Internet, local area network)
paid outside of closing (P.O.C.)
Paid outside of closing (P.O.C.) charges are paid outside of settlement by the borrower, seller, loan originator, real estate agent, or any other person.
paired data set analysis
A method of estimating the amount of adjustment for the presence or absence of any feature by pairing the sales prices of otherwise identical properties with or without the features in question. A sufficient number of sales must be found to allow the appraiser to isolate the effect on value of the pertinent factor (also called paired sales analysis and matched pairs analysis).
paired sales analysis
A method of estimating the amount of adjustment for the presence or absence of any feature by pairing the sales prices of otherwise identical properties with or without the features in question. A sufficient number of sales must be found to allow the appraiser to isolate the effect on value of the pertinent factor (also called paired data set analysis and matched pairs analysis).
Paired testing
A critical methodology for assessing discrimination in the housing market for both research and enforcement purposes.
par
The face value of a bond or security. (See security)
parameter
A single number or attribute of the individual things, persons, or other entities in a population.
parcel map
Map that shows all property boundaries within a subdivision.
parity
Equality, as in amount, status, or value.
parol evidence rule
A rule of evidence providing that a written agreement is the final expression of the agreement of the parties, not to be modified by oral or written negotiations.
partial interest
Any property interest that is less than full fee simple ownership of the entire property.
partial release clause
A mortgage provision under which the mortgagee agrees to release certain parcels from the lien of the blanket mortgage upon payment of a certain sum of money by the mortgagor. The clause is frequently found in tract development construction loans.
partial zoning
Zoning that does not consider its effect on other areas. (See zoning)
participation certificates
Certificates issued by Freddie Mac backed by pools of mortgages. (See Freddie Mac)
participation financing
Where a lender becomes a partner in a development.
participation mortgage
A mortgage loan wherein the lender has a partial equity interest in the property or receives a portion of the income from the property.
participatory leadership
A leadership style in which employees at all levels are encouraged to contribute ideas towards identifying and setting organizational-goals, problem solving, and other decisions.
partition
Co-tenants who wish to terminate their co-ownership may file an action in court to partition the property. Partition is a legal way to dissolve the relationship when the parties do not voluntarily agree to its termination. If the court determines that the land cannot be divided physically into separate parcels without destroying its value, the court will order the real estate to be sold. The proceeds of the sale will then be divided among the co-owners according to their fractional interests. (See co-ownership)
partition action
A court proceeding by which co-owners may force a division of the property or its sale, with co-owners reimbursed for their individual shares.
partners
Partners participate in the operation and management of a partnership business and share liability for business losses and obligations. (See partnership)
Uniform Partnership Act - Full Textpartnership
An association of two or more individuals who carry on a continuing business for profit as co-owners. Under the law a partnership is regarded as a group of individuals rather than as a single entity. (See general partnership, limited partnership, joint venture)
parts per billion (ppb)
Units commonly used to express contamination ratios, as in establishing the maximum permissible amount of a contaminant in water, land, or air. These ratios can also be expressed in "parts per million (ppm)."
parts per million (ppm)
Units commonly used to express contamination ratios, as in establishing the maximum permissible amount of a contaminant in water, land, or air. These ratios can also be expressed in "parts per billion (ppb)."
party wall
A wall that is located on or at a boundary line between two adjoining parcels of land and is used or is intended to be used by the owners of both properties.
party wall easement
A party wall can be an exterior wall on a building that straddles the boundary line between two lots, or it can be a commonly shared partition wall between two connected properties. Each lot owner owns the half of the wall on his or her lot, and each has an appurtenant easement in the other half of the wall. A written party wall agreement must be used to create the easement rights. Expenses to build and maintain the wall are usually shared. A party driveway shared by and partly on the land of adjoining owners must also be created by written agreement, specifying responsibility for expenses. (See easement, appurtenant easement)
pass-through certificates
Pass-through certificates are financial instruments used in the mortgage-backed securities (MBS) market. They represent an undivided interest in a pool of mortgages. Essentially, these certificates allow investors to receive payments derived from the principal and interest payments made by the borrowers on the mortgages that make up the pool.
pass-through security
A security issued by the Government National Mortgage Association (Ginnie Mae) to mortgage investors. Cash flows from the underlying block individual mortgage loans are "passed through" to the holders of the securities in pro rata share, including loan prepayments. With a mortgage-backed security, the timely payment of principal and interest is guaranteed by Ginnie Mae. In 1982, the Federal National Mortgage Association (Fannie Mae) instituted its own mortgage-backed securities program designed to attract billions of dollars into the conventional mortgage market from pension funds and other investors. (See FHA, Fannie Mae, Freddie Mac, Ginnie Mae, mortgage-backed securities, VA loan)
pass-throughs
Payments on securities sold in the secondary market that are sent directly to investors. (See secondary market)
passive activity loss limitations (PALL)
For most rental property owners, real estate is a passive activity for tax purposes. Losses, termed passive activity losses, up to $25,000, with some limitations, can be written off against regular salary, wages or business profits - Line 17 on the 1040 Form.
passive activity loss limitations (PALL)
For most rental property owners, real estate is a "passive activity" for tax purposes. Losses, termed passive activity losses, up to $25,000, with some limitations, can be written off against regular salary, wages or business profits - Line 17 on the 1040 Form. (See 1040 Form, 1040 form line 17 - rental income and losses)
passive income
Income generated when a person is not active in a business or occupation. Examples of situations where passive income is generated include limited partnerships or rental income remaining after allowable deductions. (See limited partnerships)
passive losses
Losses left over when deductions for annual operating expenses, loan interest, and depreciation exceed annual rents. For tax purposes, passive losses can only be used to offset passive income. (See annual operating expenses, depreciation, passive income)
patent
The instrument that conveys real property from the state or federal government to an individual.
patent defect
A defect that is obvious from a reasonable inspection of a property.
pathogen
A pathogen is any organism, such as a virus, bacterium, fungus, protozoan, or parasite, that causes disease or illness in its host organism. Pathogens can vary widely in their characteristics, modes of transmission, and the diseases they cause.
pattern or practice
The courts have found a "pattern or practice" when the evidence establishes that the discriminatory actions were the defendant's regular practice, rather than an isolated instance. This does not mean that the Prosecutor has to prove that a defendant always discriminates or that a large number of people have been affected. A "pattern or practice" means that the defendant has a policy of discriminating, even if the policy is not always followed.
payback period method
Calculates how many years it will take for your cash investment to be repaid to you based off the investment's net cash flows. Like 4, 7, or 12 years until all your money is back in your bank account.
payee
The person to whom a debt instrument, such as a check or promissory note, is made payable; obligee, the "receiver." (See maker, receiver)
payment bond
Bond that may be required of a building contractor to compensate the property owner if the contractor defaults in performance of contract obligations, such as payment of subcontractors, workers, and suppliers.
payment cap
The limit on the amount the monthly payment can be increased on an adjustable-rate mortgage when the interest rate is adjusted. (See adjustable-rate mortgage)
payment option ARM
A nontraditional mortgage that allows the borrower to choose from a number of different payment options. For example, each month, the borrower may choose a minimum payment option based on a "start" or introductory interest rate, an interest-only payment option based on the fully indexed interest rate, or a fully amortizing principal and interest payment option based on a 15-year or 30-year loan term, plus any required escrow payments. The minimum payment option can be less than the interest accruing on the loan, resulting in negative amortization. The interest-only option avoids negative amortization but does not provide for principal amortization. After a specified number of years, or if the loan reaches a certain negative amortization cap, the required monthly payment amount is recast to require payments that will fully amortize the outstanding balance over the remaining loan term.
payment shock
With the change in interest rate of an ARM, the payment may be substantially higher for the borrower which could cause a shock to their income.
payoff statement
See reduction certificate.
payor
The debtor on a promissory note or the party who makes payment to another. (See obligor)
PCOR
A common term used to refer to the preliminary change of ownership (PCOR) report, required before closing and prepared by the buyers of a sale transaction or completing the memorandum of a lease. The form provides essential information regarding the terms of the sale. Each county in California has its own form. Escrow delivers to the county a completed copy at closing.
peak
The top segment of the business cycle curve, a period during which productivity and employment are higher than in the preceding and succeeding periods. (See recession, recovery, trough)
pecuniary
Consisting of or measured in money.
pension funds
Pension funds usually have large amounts of money available for investment. Because of the comparatively high yields and low risks offered by mortgages, pension funds have begun to participate actively in financing real estate projects. Most real estate activity for pension funds is handled through mortgage bankers and mortgage brokers. (See noninstitutional lenders)
per capita income
A measure of the amount of money being earned per person in an area. Per capita income can apply to the average per-person income for a city, region or country and is used as a means of evaluating the living conditions and quality of life in different areas. It can be calculated for a country by dividing the country's national income by its population.
percent
Parts of the whole, when the whole is divided into one hundred parts.
percent funded
Comparing how much is saved in a homeowners association's reserves, for example $200,000 divided by how much should be saved according to the reserve analyst, like $1,000,000. In this case they would be 20.0% funded ($200,000 / $1,000,000).
percentage fee
A property management fee expressed as a percentage of the gross collectable income from a property. (See flat fees)
percentage lease
A lease, commonly used for commercial property, whose rental is based on the tenant's gross sales at the premises. It usually stipulates a base monthly rental plus a percentage of any gross sales above a certain amount. (See lease)
Perception bias
Human unconscious tendency to form stereotypes and assumptions about certain groups, which makes it impossible to form judgments about individuals in those groups. This is an unconscious function of the human mind.
percolation
1) The movement of water downward in a circular direction through subsurface soil layers, usually continuing downward to ground water. Can also involve upward movement of water. 2) Slow seepage of water through a filter.
percolation test
A test of soil to determine if it will absorb and drain water adequately to use a septic system for sewage disposal.
perfect market
The following assumptions hold for a "Perfect Market":
(a) a large number of buyers;
(b) a large number of sellers;
(c) the quantity of goods bought by any individual is so small relative to the total quatity traded that individual trades leave the market unaffected;
(d) the units of goods sold by different sellers are the same (the product is homogeneous);
(e) all buyers and sellers have complete information on the prices being asked and offered in the entire market; and
(f) there is perfect freedom of entry to and exit from the market. (See imperfect market)
performance
The execution of an action; the fulfillment of a promise or request; implementation.
performance bond
A performance bond is a financial guarantee issued by a surety company to ensure the completion of a project according to the terms of a contract. It protects the project owner by providing compensation if the contractor fails to fulfill their obligations, thereby mitigating the risk of non-performance. Performance bonds are commonly used in construction and other industries where project completion is critical.
performance bonus
A bonus that is paid to a residential leasing agent or manager working under the supervision of a licensed real estate broker and that is based on performance, that is received no more frequently than monthly and that does not exceed one-half of the agent's or manager's total compensation for the time period is considered a bonus.
It is not considered to be a special compensation, and it is perfectly legal for an unlicensed person to collect such bonus.
performance criteria
Performance criteria are standards determined by an employer by which employees are rated on how well they do their jobs.
performance review
Performance reviews are an analysis of an employee's work undertaken at a fixed point in time to determine the degree to which stated objectives and expectations have been met.
peril
A cause of a loss, like a fire, flood or theft.
perimeter
periodic tenancy
A leasehold interest from period to period that renews automatically unless a notice of termination is given. (See leasehold)
permanent access (Arizona definition)
Permanent access to subdivided land means ingress and egress over terrain that is traversable by a conventional motor vehicle, and access to and from a Federal, state, or county highway.
person
A person is a natural person, corporation, company, limited liability company, partnership, or association.
personal and collaborative goal setting
Goal setting is critical to effective evaluation in that it can be the primary means through which employees shape their growth. Goals can be set individually or in consultation with others. It helps to include in the goal-setting process those with more experience and or expertise.
personal digital assistant (PDA)
Any small, mobile hand-held device that provides computing and information storage; PDAs combine features such as address book, appointment calendar, calculator, Internet access and telephone directory.
personal income
A person's gross income from wages, salaries, commissions, interest and profits from businesses or investments.
personal property
Personal property are things that are tangible and movable; property that is not classified as real property, such as chattels. Title to personal property is transferred by way of a bill of sale, as contrasted with a deed for real property.
Items of personal property frequently become the object of dispute between buyer and seller, most often due to whether an item is considered a fixture or due to the seller's attempt to substitute a similar item. Some cautious buyers insert a clause in their purchase contracts to the effect that the buyer will get the appliances "as currently installed and used in the premises."
A tree is real property while it is rooted in the ground, but when severed it is transformed into personal property. When lumber is assembled, however, and used as material to construct a house, it once again becomes a fixture or real property. (See fixture)
personal relationships
The following can be helpful in your job search: immediate family, extended family, close friends, neighbors and acquaintances, service professionals, helping professionals, and social groups.
Personal Responsibility and Work Opportunity Act
The Personal Responsibility and Work Opportunity Act took effect August 1, 1998. This federal law requires that certain public benefits be withheld from illegal immigrants.
Personal Responsibility and Work Opportunity Act
The Personal Responsibility and Work Opportunity Act took effect August 1, 1998. This federal law requires that certain public benefits be withheld from illegal immigrants, including professional and occupational licenses issued by state agencies.
Personal Responsibility and Work Opportunity ActPersonal Responsibility and Work Opportunity Act
Federal law, effective August 1, 1998, requiring that certain public benefits be withheld from illegal immigrants, including professional and occupational licenses issued by state agencies. The text of the law is at www.access.gpo.gov/congress/wm015.txt.
personnel file
A personnel file is a company's documentation of the history and status of an employee's entire relationship with the company. It includes employment application materials, emergency contacts, employee addresses, performance evaluations, disciplinary letters, employee recognition, and work history, to name just a few. Some employee records are required by federal or state governments for employers to keep.
petty offense (AZ)
A petty offense is a type of misdemeanor but is punishable with no jail and a maximum $300 fine.
phish
To phish is to try to trick people into giving secret information using fake emails or websites. The details are then used to steal people's money, or to steal their identity in order to commit crimes.
phishing
Phishing is a criminal process of attempting to acquire sensitive information like usernames or passwords by masquerading as a trustworthy entity in an electronic communication.
physical deterioration
A reduction in a property's value resulting from a decline in physical condition; can be caused by action of the elements or by ordinary wear and tear.
physical life
The length of time a structure can be considered habitable, without regard to its economic use.
physical obsolescence
An appraisal term that describes the ordinary deteriorization of a property due to aging. (See economic obsolescense, functional obsolescence)
piggyback loans
A loan divided into two parts with one lender taking a secondary security position.
PITI
Acronym for Principal, Interest, Taxes & Insurance. The four elements of a monthly mortgage payment; payments of principal and interest go directly towards repaying the loan while the portion that covers taxes and insurance (homeowners and mortgage, if applicable) goes into an escrow account to cover the fees when they are due.
plain meaning approach
The plain meaning rule dictates that statutes are to be interpreted using the ordinary meaning of the language of the statute, unless a statute explicitly defines some of its terms otherwise. In other words, the law is to be read word for word and should not divert from its ordinary meaning.
plaintiff
A person who brings an action; the party who complains or sues in a personal action and is so named on the record. (See defendant)
planned unit development (PUD)
A planned unit development (PUD) is a type of residential or mixed-use development that is planned and built as a single entity, typically featuring a combination of residential, commercial, and recreational spaces. These developments are designed to include a variety of housing types and amenities within a cohesive community layout, often incorporating parks, schools, and local shops. PUDs are governed by their own set of rules and regulations, which allow for deviations from standard zoning laws to create a more integrated and efficient community design.
plasterboard
Drywall; interior wall finishing material.
plat map
A plat map is a map of a town, section or subdivision indicating the location and boundaries of individual properties.
platform frame
Platform frame is a construction technique in which each floor of a building provides support for the floor above it.
pledge
Something given or held as security to guarantee payment of a debt or fulfillment of an obligation. A solemn binding promise to do, give, or refrain from doing something.
plenary license
An unqualified or absolute license; one that is not restricted.
plot plan
A plot plan shows the layout of improvements on a property site. The plot plan usually includes location, dimensions, parking areas, landscaping and other details of the improvements. (See construction terms)
plottage
The increase in value or utility resulting from the consolidation (assemblage) of two or more adjacent lots into one larger lot. (See assemblage)
plumbing system
Includes the building components that provide water, a method of warming the water, and disposal of waste water, including the water supply system, water heater, vent piping system, and drainage system.
PMI
Acronym for Private Mortgage Insurance. Privately-owned companies that offer standard and special affordable mortgage insurance programs for qualified borrowers with down payments of less than 20% of a purchase price. (See private mortgage insurance)
pocket listing
Property listing that the listing agent markets privately before entering it in the multiple listing service (MLS); usually a violation of MLS rules. (See multiple-listing service)
podcast
MP3 or other audio file that can be downloaded off your Web page or e-portfolio. It is delivered off a web site via a RSS feed. All you need to know is the URL (website address) of the RSS. Unlike radio, you can listen to recorded podcasts at any time.
point of beginning (POB)
In a metes-and bounds legal description, the starting point or point of beginning (POB) of the survey, is situated in one corner of the parcel; all metes-and-bounds descriptions must follow the boundaries of the parcel back to the point of beginning. (See metes-and-bounds descriptions)
point source
A stationary location or fixed facility such as an industry or municipality that discharges pollutants into the air or surface water through pipes, ditches, lagoons, wells, or stacks - a single identifiable source such as a ship or a mine.
points and fees
Points and fees include all items listed in 15 U.S.C. § 1605(a)(1) through (4), except interest or the time-price differential; all charges for items listed under § 226.4(c)(7) of Title 12 of the Code of Federal Regulations, as amended from time to time, but only if the lender receives direct or indirect compensation in connection with the charge or the charge is paid to an affiliate of the lende; all compensation paid directly or indirectly to a mortgage broker, including a broker that originates a loan in its own name in a tablefunded transaction; the cost of all premiums financed by the lender, directly or indirectly, for any credit life, credit disability, credit unemployment, or credit property insurance, or any other life or health insurance, or any payments financed by the lender directly or indirectly for any debt cancellation or suspension agreement or contract, except that insurance premiums calculated and paid on a monthly basis will not be considered financed by the lender.
points and fees
Points and fees for closed-end loans include all items required to be disclosed under 12 CFR 226.4 (a) and 226.4 (b) or 209 CMR 32.04(1) and 209 CMR 32.04(2), except interest or the time-price differential; charges for items listed under sections 226.4(c)(7) of Title 12 of the Code of Federal Regulations or 209 CMR 32.04(3)(g) (other than amounts held for future payment of taxes) unless the charge is reasonable, the creditor receives no direct or indirect compensation in connection with the charge, and the charge is not paid to an affiliate of the creditor; the maximum prepayment fees and penalties that may be charged or collected under the terms of the loan documents; all prepayment fees or penalties that are incurred by the borrower if the loan refinances a previous loan made or currently held by the same lender; all compensation paid directly or indirectly to a mortgage broker, not otherwise included in 209 CMR 40.02; the cost of all premiums financed by the lender for any credit life, credit disability, credit unemployment, or credit property insurance, or any other life or health insurance, or any payments financed by the lender for any debt cancellation or suspension agreement or contract, except that insurance premiums or debt cancellation or suspension fees calculated and paid on a monthly basis will not be considered financed by the lender.
Points and fees do not include taxes, filing fees, recording and other charges and fees paid to a public official for determining the existence of or for perfecting, releasing or satisfying a security interest, and fees paid to a person other than a lender or to the mortgage broker for the following: fees for flood certification; fees for pest infestation; fees for flood determination; appraisal fees; fees for inspections performed before closing; credit reports; surveys; notary fees; escrow charges; title insurance premiums; and fire insurance and flood insurance premiums, including homeowner premiums.
Points and fees, for open-end loans, must be calculated by adding the total points and fees included within 209 CMR 40.02, plus the minimum additional fees the borrower would be required to pay to draw down an amount equal to the total credit line.
police power
The inherent right of the state to regulate for the purpose of promoting health, safety, welfare, and morality. Police power gives the state the right to impose certain restraints on human conduct which are reasonably necessary in order to safeguard the public interest. This right is the basis of zoning, the official map, building codes, and subdivision regulations.
political subdivision
An administrative division that is a part of another division. It is established for the purpose of government; and granted a certain degree of autonomy. Political subdivisions are required to manage themselves through their own local governments.
political subdivision (Arizona)
A county, city, town, or other municipal corporation, a public authority, and generally any publicly owned entity that is an instrumentality of the state of Arizona or of a municipal corporation.
pollution
Any substances in water, soil, or air that degrades the natural quality of the environment, offends the senses of sight, taste or smell, or causes a health hazard. The usefulness of the natural resource is usually impaired by the presence of pollutants and contamination.
pollution prevention
Actively identifying equipment, processes, and activities which generate excessive wastes or use toxic chemicals and then making substitutions, alterations, or product improvements. Conserving energy and minimizing wastes are pollution prevention concepts used in manufacturing, sustainable agriculture, recycling, and clean air/clean water technologies.
polychlorinated biphenyls (PCBs)
Used as an insulating material in dielectric oil. It can linger in the environment for long periods of time and can cause health problems.
pool insurance
'Pool insurance' insures pools of 'A' or 'prime' mortgages. The coverage is a percentage of the original aggregate unpaid balance of the pool. Traditional pool insurance pays 100 percent of all losses on individual defaulted mortgages after the equity in the home and any primary insurance is exhausted until the aggregate pool coverage amount is reached. Modified pool insurance pays 25 percent. Insurers offer Government-Sponsored Enterprise (GSE) pool insurance, a thin layer of coverage between the equity in the mortgage and any primary insurance and the GSE's guarantee.
population
All of the individual variates (items or units) of a group.
popup window
A pop-up is a graphical user interface display area, usually a small window, that suddenly appears ("pops up") in the foreground of the visual interface.
Many websites, including proU.net courses, use popup windows to deliver content. Please make sure popup blocking is turned off (unchecked) in your web browser settings.
portfolio
Tangible, easily accessible proof of your skills and accomplishments; collection of career-related documents that adds value to your presentation. A portfolio tells a story. It is a visual representation of your experience, strengths, abilities, and skills - the things you like to do best. It is a collection of things - artifacts - tangible materials - that represent work-related events in your life. The portfolio provides "evidence" of your potential by demonstrating, or representing, what you accomplished in the past.
portfolio loan
A loan originated and maintained by the lender and not sold in the secondary mortgage market. (See secondary mortgage market)
positive leasehold
Positive leaseholds are created when market rent prices go above the contract rent price.
positive personal qualities
Qualities necessary to keep a job, such as responsibility, self-esteem, sociability, self management, integrity/honesty.
post-and-beam frame
Post-and-beam frame is a construction technique in which interior posts support ceiling boards, allowing for more open space within a structure than is possible with other forms of construction.
post-possession
Post-possession is the Seller of a property retaining possession of all or part of a property after escrow has closed and the Seller is no longer the owner of record. This is not limited to possession by people. It also applies to partial possession of the property to store personal belongings.
potential
Existing in possibility; capable of developing into actuality.
potential gross income
The maximum income that property is capable of producing.
potential gross income multiplier
A ratio calculated by dividing the sales price of a comparable property by its potential gross income to form an opinion of the subject property's value.
potentially responsible party (PRP)
Any individual or company that is potentially responsible for or has contributed to a spill or other contamination at a Superfund site. Whenever possible, EPA requires PRP's to clean up sites they have contaminated. (See Superfund)
Power of Attorney - Instructor Note
INSTRUCTOR NOTE ABOUT POWER OF ATTORNEY
Remember, A power of attorney is a very special kind of agency relationship... one that is NOT common for agents representing buyers or sellers. A power of attorney that authorizes one person to sign on behalf of another must be a written document with the original signature of the person who is authorizing the other person to sign. The power of attorney must state the words "POWER OF ATTORNEY" at the top of the document, and the signature of the authorizing party must be notarized. Agents are NEVER (I repeat NEVER) authorized to sign any document on behalf of a client without a valid power of attorney with an original notarized signature. |
power of eminent domain
The right of the government to acquire title to property for public use by condemnation; the property owner receives compensation which is generally fair market value. (See taking)
FindLaw® eminent domainpower of issue
The "power of issue" is the authority to print money. The Federal Reserve is the only entity with the authority to print currency in the United States.
power of sale
A clause commonly inserted in a mortgage and deed of trust that grants the creditor or trustee the right and authority, upon default in the payment of the debt, to advertise and sell the property at public auction, without resorting to a court for authorization to do so.
power of termination
power-of-attorney
A written instrument authorizing a person, the attorney-in-fact, to act as the agent on behalf of another to the extent indicated in the instrument.
power-of-sale
The power that may be given by a promissory note to a trustee, a mortgagee, or another lienholder to sell secured property without judicial proceedings if the borrower defaults.
power-of-sale clause
A clause in a mortgage authorizing the holder of the mortgage to sell the property in the event of the borrower's default. The proceeds from the public sale are used to pay off the mortgage debt first, and any surplus is paid to the mortgagor. A power-of-sale clause is also found in trust deeds, giving the trustee authority to sell the trust property under certain circumstances.
pre-approval for loan
The process of supplying a lender with pre-qualification information, and the lender basically underwriting the loan, so they are virtually committed to lending money to buy property. The borrower can then find and contract the property they want to purchase.
Pre-licensure Education Certificate (AZ)
The Pre-licensure Education Certificate is emailed by the providing school to a student who passes the proctored school final exam.
pre-possession
Pre-possession is the Buyer of a property taking possession or all or part of a property before close of escrow. This is not limited to possession by people. It also applies to partial possession of the property to store personal belongings.
predatory lending
Predatory lending refers to secured loans such as home or car loans that are made by a lender with the intention that the borrower default on the loan, allowing the lender to seize the car or home and sell it for a profit. The term has been expanded to refer to the practice of convincing borrowers to agree to unfair and abusive loan terms.
preliminary notice
Notifies a customer that work to be completed is subject to the lien rights of the contractor. Preliminary notice must be given prior to recording of a mechanic's lien, and should be filed by a contractor at least 20 days prior to the start of work. If notice is given later, liens will cover only the work starting 20 days prior to filing. (See mechanic's lien)
preliminary public report
Under the Subdivided Land Law the preliminary public report can be issued before the public report, and allows a subdivider to take reservations from buyers but not sell parcels. (See public report, Subdivided Land Law)
preliminary report
A title report that is made before a title insurance policy is issued or when escrow is opened. A preliminary report or policy of title insurance reports only on those documents having an affect on the title and should not be relied on as being an abstract. An abstract of title, on the other hand, reflects all instruments affecting title from the time of the original grant and also includes a memorandum of each instrument, and makes no attempt to determine which of the documents currently affects record title. The "preliminary" is not a binder or commitment that the title company will insure the title to the property, although this commitment may be obtained at an added cost. (See abstract of title)
premium
A fee paid to an insurance company.
premium
The amount by which the price of a security exceeds its face value or principal amount. When the nominal or coupon rate (the interest rate stated on the bond or security) is higher than the prevailing market interest rate for similar securities, investors are willing to pay more than the face value to buy the bond. This additional amount over the face value is called a "premium."
premium (in excess of par)
A price paid for a security in excess of its face value. (See par)
prepaid items
On a closing statement, items that have been paid in advance by the seller, such as insurance premiums and some real estate taxes, for which he or she must be reimbursed by the buyer. (See closing statement)
Prepaid Rental Listing Service (PRLS)
A Prepaid Rental Listing Service (PRLS) is a business that supplies prospective tenants with property listings on payment of a fee. It may be operated by a licensed real estate broker or under the authority of a PRLS license.
prepayment
Additional payments made to a loan principal by the borrower.
prepayment penalty
The amount set by the creditor as a penalty to the debtor for paying off the debt before it matures; an early-withdrawal charge. The prepayment penalty is charged by the lender to recoup a portion of interest that the lender had planned to earn when the loan was made. It covers the lender for initial costs to set up the loan, to service it and to carry it in the early years of high risk. This punitive device also may represent the loss of income to the lender for the time the mortgage is paid off and the funds remain uncommitted. The reason most lenders are willing to allow prepayment after five years without penalty is that much of the total note's interest has been paid in by that time.
preponderance of evidence
The greater weight of the evidence for the trier of fact to decide in favor of one side or the other. This preponderance is based on the more convincing evidence and its probable truth or accuracy, and not on the amount of evidence. For example, a knowledgeable witness might provide a preponderance of evidence over a dozen witnesses with unreliable or questionable testimony. Likewise, a signed agreement with definite terms will likely outweigh opinions or speculation about what the parties intended.
prequalify
Determine the maximum loan amount a prospective buyer qualifies for prior to showing them properties. Failing to prequalify may result in wasted efforts showing the prospect properties they cannot afford to purchase. (See back-end qualification, front-end qualification)
prescription
Acquiring a right in property, usually in the form of an intangible property right such as an easement or right-of-way, by means of adverse use of property that is continuous and uninterrupted for the prescriptive period established by state statute. Use of land is adverse when it is made under a claim or right. Therefore, there is no adverse use if the owner has granted permission, or if the user has paid for the use of the property, or if the user has admitted that the owner has a superior right in the property.
Prescription is often used interchangeably with the term adverse possession, which more strictly refers to the acquiring of title to lands. As in adverse possession, the essential elements are that the prescriptive right be adverse, under claim of right, continuous and uninterrupted, open, notorious and exclusive, with the knowledge and acquiescence of the servient owner, and continuing for the full prescriptive period. By "continuous" is meant that the property is used on a regular basis.
present value (PV)
If one is going to earn $1,000 five years from now, or a stream of cash flows over a few years, the "present value" is today's value of a future cash flow(s), discounted back to today at an appropriate discount rate.
present worth
The discounted present-day value of money to be collected in the future.
preservation
1. The protection of ecologically important resources in perpetuity through the implementation of appropriate legal and physical mechanisms. Preservation may include protection of upland areas adjacent to wetlands as necessary to ensure protection of the overall ecosystem. 2. Applying measures to sustain the existing form, integrity and material of a building or structure. It may include stabilization work, as well as ongoing maintenance of the historic building materials.
press release
A news announcement written by a property manager or advertising specialist highlighting a property's features. Sent to local newspapers and real estate magazines to promote a property.
pressed wood products
Materials used in building and furniture construction that are made from wood veneers, particles, or fibers bonded together with an adhesive under heat and pressure.
pressure relief valve
A valve used on hot water heating appliances to help keep the pressure in the heated tank or boiler from getting too high by allowing the relief of pressure from the valve.
pretax cash flow
Income that remains from net operating income (NOI) after debt service is paid but before ordinary income tax on operations is deducted.
pretexting
Pretexting is the practice of obtaining personal information under false pretenses. Pretexters sell the information to people who may use it to get credit in another person's name, steal assets, or investigate or sue a person. Pretexting is against the law.
preventive maintenance
Includes regularly scheduled activities such as painting and seasonal servicing of appliances and systems. Preventive maintenance preserves the long-range value and physical integrity of the building. This is both the most critical and the most neglected maintenance responsibility. Failure to perform preventive maintenance invariably leads to greater expense in other areas of maintenance.
price
The amount of money set or paid as the consideration in the sale of an item at a particular time.
price of a loan
The combination of rate and points on your loan.
price supports
Price supports are a form of government subsidy for the production of commodities. The market price of certain goods is fixed at a level that guarantees the producer an "adequate" return on investment. That price is not determined by the free interaction of supply and demand, but rather by government regulators, and often the government purchases surpluses that remain unsold at an artificially high fixed price.
pricefixing
The practice of conspiring to establish fixed fees or prices for services rendered or goods sold. In recent years, the setting of attorney fees by local bar associations and commission percentages and management fees by local realty associations has been successfully attacked as price fixing and thus a violation of the Sherman Antitrust Act.
prima facie
At first sight; on the first appearance; on the face of it; so far as can be judged from the first disclosure; presumably; a fact presumed to be true unless disproved by some evidence to the contrary.
primary lenders
Originators of real estate loans including commercial banks, savings and loan associations and mutual savings banks.
primary mortgage market
The mortgage market in which loans are originated and consisting of lenders such as commercial banks, savings and loan associations and mutual savings banks. (See secondary mortgage market)
primary personal residence
The dwelling in which a taxpayer lives and occupies most of the time.
prime mortgages
A classification of mortgages that are considered to be of high quality.
prime rate
The minimum interest rate a commercial bank will charge to its largest clients. Prime rates are determined in part, by the rate banks pay for the money they lend to borrowers. Decisions of the Federal Reserve Bank to increase or decrease the supply of money, can cause the prime rate that banks charge to fluctuate.
principal
1. One of the main parties to a transaction. For example, the buyer and seller are principals in the purchase of real property. 2. In a fiduciary relationship, the person who hires a real estate broker to represent him or her in the sale of property. The phrase, "principals only," often found in real estate ads, is meant to exclude real estate agents from contacting the owners of the property. 3. A loan principal is the original amount of money borrowed via a loan.
principal (in a fiduciary relationship)
The principal in a fiduciary relationship is the party who entrusts their interests, or affairs to the agent who represents them (the fiduciary). The principal relies on the agent to act in their best interests, with honesty, loyalty, and care.
principal loan originator
A principal loan originator is the licensed loan originator in charge of, and responsible for, the operation of a mortgage lender or mortgage broker, including all of the activities of the mortgage lender's or mortgage broker's loan originators and branch managers, whether employees or independent contractors.
principal meridian
The main imaginary line running north and south and crossing a base line at a definite point, used by surveyors for reference in location and describing land under the rectangular (government) survey system of legal description. (See base line, government survey system, legal description, meridian)
principal place of business
A principal place of business is a mortgage broker's or mortgage lender's primary business office, the street address, or physical location that is designated on the application for licensure or any amendment to such application.
Principal Reduction Alternative (PRA)
A program of the Departments of the Treasury & Housing and Urban Development (HUD) for home owners who owe more on their mortgage than what their home is currently worth. The program encourages non-Government Sponsored Entity mortgage servicers and investors to reduce the principal loan amount.
printer
A hardware device that transfers computer text and graphics to paper.
prior appropriation
A concept of water ownership in which the landowner's right to use available water is based on a government administered permit system.
prior restraint
Prior restraint is censorship imposed, usually by a government, on expression before the expression actually takes place. An alternative is to allow the expression to take place and to take appropriate action afterward, if the expression is found to violate the law, regulations, or other rules.
priority
The order of position, time or place. The priority of liens is generally determined by the chronological order in which the lien documents are recorded; tax liens, however, have priority even over previously recorded liens. Thus the old adage "prior in time is prior in right" is applicable.
priority of claims
Order in which creditors will be paid when there are claims against a homestead that result in a judgment against the homeowner.
private benefits
The benefits an individual or firm receive when they carry on consumption or production of goods or services. In the case of consumption, the benefits are mainly satisfaction from consumption. In the case of production, the benefits are revenue received by the firm from the sale of the good or service.
private costs
Costs that are incurred by an individual or firm when they are carrying out the activities of consumption or production; Costs that individuals or firms have to pay.
private industry councils (PICs)
Private Industry Councils (PICs) are local organizations composed of business, education, and community leaders who collaborate to address workforce development and employment issues within their regions. Established under the Job Training Partnership Act (JTPA) in the United States, PICs aim to ensure that job training programs align with the needs of local employers and industries. They play a crucial role in fostering public-private partnerships, developing workforce strategies, and enhancing the skills and employability of the local labor force.
private mortgage insurance (PMI)
Insurance provided by private carrier that protects a lender against a loss in the event of a foreclosure and deficiency. A special form of insurance designed to permit lenders to increase their loan-to-market-value ratio, often up to 95 percent of the market value of the property. Many lenders are restricted to 80 percent loans by government regulations, special loss reserve requirements or internal management policies related to mortgage portfolio mix. A lender, however, may lend up to 95 percent of the property value if the excess of the loan amount, over 80 percent of value, is insured by a private mortgage guaranty insurer. (See deficiency, foreclosure) (Mortgage Insurance Companies of America)
private offering
An offering of securities to no more than 25 persons and sale to no more than 10 persons.
private restrictions
The covenants, conditions and restrictions (CC&Rs) found in the typical declaration of restrictions filed by a subdivision developer and incorporated by reference in the deed to each subdivision lot.
private road
A private road is a road owned and maintained by a private individual, organization, or company rather than by a government. Consequently, unauthorized use of the road may be considered trespassing, and some of the usual rules of the road may not apply. The most common type of private road is a residential road maintained by a homeowners association, housing co-op, or other group of individual homeowners.
privity of contract
The relationship between contracting parties (mortgagor-mortgagee or assignee-assignor).
prize property
A prize property is a location, location, location, fanciest most "braggable" property in an area. Many of these are beautiful properties, like a beach house or fancy downtown condo, but most of these are terrible investments that will rarely build wealth. You can spot these by their signature negative cash flows and negative Cash on Cash Returns (or very low returns).
pro-forma
A presentation of data, typically financial statements, where the data reflect the world on an 'as if' basis. That is, as if the state of the world were different from that which is in fact the case. For example:
- A pro forma balance sheet might show the balance sheet as if a debt issue under consideration had already been issued.
Probable cause
In the context of a regulatory agency's disciplinary action, probable cause is a reasonable belief, based on facts and evidence, that a licensee or entity has violated laws, rules, or regulations under the agency's jurisdiction. It is the threshold determination that justifies moving forward with formal charges or disciplinary proceedings.
Probable cause panel
In the context of the Florida Real Estate Commission (FREC), a Probable Cause Panel is a subgroup of FREC members responsible for reviewing complaints, investigative reports, and evidence to decide whether probable cause exists to believe a real estate licensee has violated Florida real estate laws or regulations.
probate
The formal judicial proceeding to prove or confirm the validity of a will, to collect the assets of the decedent's estate, to pay the debts and taxes and to determine the persons to whom the remainder of the estate will pass. (See decedent, will)
Probate Code
The portion of California law that covers the court proceedings for disposition of property on the death of the property owner. (See probate)
probate listing
When owns real estate and dies, their property goes through probate to determine how it will be transferred to heirs or beneficiaries. A probate listing is a real estate listing for a property that is part of a probate estate and is being offered for sale as a part of the probate process.
probate value
Probate value of real estate is determined based on the fair market value of the assets at the time of the individual's death, as opposed to fair market value, which is the price the property would fetch in an open market.
procedures manual
Procedures manuals provide instructions and directions for the day-to-day operation of a business, and are essential to ensure consistency and quality in products and services. Every business from a sole proprietor to large corporations should have a procedures manual for each staff member as part of the written job description.
process
Something going on; a natural phenomenon marked by gradual changes that lead toward a particular result; a series of actions or operations conducting to an end.
procuring cause
The cause originating a series of events that lead directly to the intended objective; in a real estate transaction the procuring cause is the real estate agent who starts the uninterrupted chain of events that leads to the sale.
productivity
A measurement of economic output per unit of input. Inputs include labor and capital, while output is typically measured in revenue and other gross domestic product (GDP) components such as business inventories. Productivity measures may be examined collectively (across the whole economy) or viewed industry by industry to examine trends in labor growth, wage levels and technological improvement. (See gross domestic product)
professional corporation
Professional corporations (abbreviated as PC) are those corporate entities for which many statutes make special provision, regulating the use of the corporate form by licensed professionals such as attorneys and real estate licensees.
professional limited liability company (PLLC)
A professional limited liability company, or PLLC, is a type of limited liability company that is owned and operated by members of the same profession and can only offer services related to its profession. The ADRE issues a license for PLLC only if all members and managers hold active real estate licenses. The name of the PLLC must be the name of the licensee, with the letters “PLLC” appended.
professional or trade information
Associations, conferences, and other professional development resources.
professional or trade journal ads
Ads in professional or trade journals, appropriate to your field.
professional portfolio
A professional portfolio is a record of goals, growth, achievement, and professional attributes developed over time and in collaboration with others.
professional relationships
Organizational colleagues, colleagues in other organizations, customers, clients, and collaborators, vendors, consultants, contractors, and union representatives.
professional vita
Resume that is chronological in format and emphasizes educational background first, and then work history. It can exceed two pages because it can include publications, patents and research. (see curriculum vita)
proficiency
Advancement in knowledge, skill, or position regardless of the cost.
profit and loss statement
A detailed statement of income and expenses of a business that reveals the operating position of the business over a period of time. Commonly referred to a P&L.
profit center
A profit center is a distinctly identifiable department or business unit that contributes to the overall financial results of a company.
progression
An appraisal principle that states that, between dissimilar properties, the value of the lesser-quality property is favorably affected by the presence of the better-quality property. (See appraisal)
progressive tax
A progressive tax is a tax that takes an increasing proportion of income as income rises. (See income tax)
project
Project refers to the number of dwelling units constructed, rehabilitated, or converted to a cooperative or condominium with the assistance of a mortgage loan from the Housing Finance Agency. This includes the acquisition, construction, or rehabilitation of lands, buildings, equipment, improvements, and other ancillary facilities, such as streets, sewers, utilities, parks, site preparation, and landscaping. It also includes other ancillary facilities, offices, and nonhousing facilities, such as administrative, community, health, recreational, educational, and welfare facilities as the Housing Finance Agency determines to be necessary, convenient, or desirable appurtenances. In addition, it also includes the acquisition, construction, or rehabilitation of such ancillary commercial facilities as the agency determines to be necessary to make the remainder of the project economically feasible.
projected gross sales
The total income that a project is expected to produce.
projection device
Any computer hardware device that projects information onto a screen.
promissory note
An unconditional written promise of one person to pay a certain sum of money to another person, order or bearer at a future specified time. A broker who accepts a promissory note as a deposit from a prospective purchaser must generally disclose to the seller that the buyer's deposit is in the form of a promissory note.
Proof of Legal Presence (AZ)
Arizona regulations require that all applicants for state licensure submit proof of legal presence in the United States. Proof of legal presence must be in the form of a government-issued identification such as a driver's license or passport.
property
Property is any real property located in this state and improved by a one- to four-family dwelling used or occupied, or intended to be used or occupied, as the home or residence of one or more persons. But property may not refer to unimproved real property upon which such dwellings are to be constructed.
property analysis
A study made to familiarize a property manager with the nature and condition of a building, its relative market position, and its estimated income and operating expenses.
property and casualty insurance
Property and casualty insurance protects against property losses to a business, home or car and/or against legal liability that may result from injury or damage to the property of others. This type of insurance can protect a person or business with an interest in the insured physical property against losses.
property brief
Produced by the listing agent, a property brief is simply a one-page flier about the property pointing out attractive features. It usually contains a drawing or photograph of the home, and is given to people the agent feels are especially interested in the property.
property inspection waiver (PIW)
An option to waive an appraisal for an eligible loan purchased by Fannie Mae.
property management
A branch of the real estate business involving the marketing, operation, maintenance, and other day-to-day requirements of rental properties by an individual or a firm acting as agent of the owner. (See property manager)
property management reserve account
An account whereby a portion of the rental proceeds are set aside by property management company to meet any unexpected costs that may arise in the future as well as the future costs of upkeep. In most cases, the fund is simply a savings account, although the fund might be established to meet the costs of scheduled upgrades
property manager
Someone who manages real estate for another person for compensation. Duties include collecting rents, maintaining the property and keeping up all accounting. (See property management)
Property owners or homeowners
Property owners or homeowners are any or all record title owners of the residential real property in foreclosure or, where applicable, default at the time of the equity sale.
property reports
The mandatory federal and state documents compiled by subdividers and developers to provide potential purchasers with facts about a property prior to their purchase.
property rights
The rights of an individual to own and sell property and keep the income earned from it, subject to certain restrictions, such as zoning. (See bundle of rights)
Property Tax Postponement Law
The Property Tax Postponement Law gives qualified persons who are 62 or older, blind or disabled with a minimum household income the option of having the state pay all or part of the taxes on their homes. The amount of taxes postponed must be repaid to the State of California. The postponed amount becomes due and payable when the Individual moves, sells the property or dies.
property tax year
Fiscal year for California property tax purposes runs from July 1 to June 30. Taxes charged for that period become a lien on the property on the preceding January 1. (See property taxes)
property taxes
A tax levied on land and buildings (real estate) and on personal property. Assessment are made by county or city assessor's office for real property taxes. Payment dates may vary according to state regulation.
Proposed list price
Proposition 13
A voter initiative that added Article XIII A to the California Constitution. It limits property tax rates to no more than 1% of full cash value. Increases in assessed value per year are capped at 2% or the percentage growth in the Consumer Price Index (CPI), whichever is less. In 2002-03, the increase was 1.87%. It has been less than the 2% cap only five times since 1977. New construction and the sale of property, with some exceptions, also increase assessed values.
proposition 19
Limits prior propositions in that transfers to children and grandchildren require they use the property as a residence.
proprietary lease
A proprietary lease is a special type of lease associated with cooperative housing, where the leaseholder is also a shareholder in the cooperative corporation that owns the building. This lease grants the shareholder the right to occupy a specific unit within the cooperative, while also delineating the rights and responsibilities of both the tenant-shareholder and the cooperative association. Unlike traditional leases, a proprietary lease does not have a set expiration as it is tied to the ownership of shares in the cooperative, making it effective as long as the individual remains a shareholder.
prorations
Expenses, either prepaid or paid in arrears, that are divided between the buyer and seller at closing.
prospecting
Locating owners of properties who are interested in selling, or buyers who are interested in purchasing property. (See endless chain, farming, networking)
prospective economic advantage
Legal term for one's expectations in doing business.
protected class
Any group of people designated as such by the Department of Housing and Urban Development (HUD) in consideration of federal and state civil rights legislation. Currently includes ethnic minorities, women, religious groups, the handicapped and others.
protected classes (State-specific FH Acts)
Other protected classes include:
- age;
- source of income;
- marital status
- sexual orientation;
- occupation.
protein
Any of numerous naturally occurring extremely complex combinations of amino acids that contain the elements carbon, hydrogen, nitrogen, oxygen, usually sulfur, occasionally phosphorus, iron or other elements, are essential constituents of all living cells, and are synthesized from raw materials by plants but assimilated as separate amino acids by animals. Proteins, along with carbohydrates and lipids constitute the principal structural components of living cells. (See carbohydrates, lipids)
provisional license
A license the ADRE issues that allows a licensee to practice as a salesperson or broker subject to either a consent order or the Commissioner's terms, conditions and restrictions
psychological contract
The goal of human resource management is to forge a psychological contract between the company and the individual workers. The psychological contract is a set of expectations held by both employer and employee. Employers expect employees to provide a fair day's work, to accept the authority of management, and report to work regularly. Employees expect just compensation, career enhancement and quality in work life.
Public Buildings Element
This element must show locations that have civic and community centers, public schools, libraries, police and fire stations, and other public buildings.
public debt
Public debt is money (or credit) owed by the government—federal, state, or local. The government accumulates debt over time by running a deficit; it spends more than it receives in tax revenue. Governments borrow by issuing securities (bonds). (See credit, bond, security)
Public Health movement
This movement focused on the establishment of industrial safety requirements, maximum work hours, minimum housing standards, public recreation amenities, and ensuring the provision of light and air in cities.
public hearing
A formally announced meeting of a planning commission, the express purpose of which is to receive written and oral testimony on specific matters open to the public for attendance and testimony. Commission members may ask questions, but no deliberation takes place. A full record of information should be kept, reviewed by the staff, and incorporated into its report for subsequent commission deliberation.
public records
Records which by law give constructive notice of matters relating to property.
public report
A disclosure statement required by the Subdivided Lands Law stating that a buyer is not obligated until he or she has read the report and signed a receipt. (See Subdivided Lands Law)
Public Services and Facilities Element
This element must show general plans for police, fire, emergency services, sewage, refuse disposal, drainage, local utilities, rights-of-way, easements and facilities for them.
public water system
A system that provides piped water for human consumption to at least 15 service connections or regularly serves 25 individuals.
puffery
Exaggerated praise or claims, especially when used for promotional purposes.
puffing
Exaggerated or superlative comments or opinions not made as representations of fact and thus are not grounds for misrepresentation, such as, "This property is a real good buy." One test used is whether a reasonable person would have relied on the statement. A statement such as, "The apartment has a fantastic view, " is puffing because the prospective buyer can clearly assess the view for himself or herself, whereas a statement such as "The apartment has a fantastic view of the lake," when in fact all its windows face the street, would be misrepresentation. (See caveat emptor, misrepresentation)
pulse
A regular throbbing caused in the arteries by the contractions of the heart.
pulse rate
The number of heartbeats per unit of time.
punitive damages
Damages awarded to one party to punish another party for dishonest conduct. Meant to deter others from committing a similar offense.
punitive damages
Damages awarded to one party to punish another party for dishonest conduct. Meant to deter others from committing a similar offense.
pur autre vie
"For the life of another." A life estate pur autre vie is a life estate that is measured by the life of a person other than the grantee.
purchase option
A right given to a prospective purchaser or lessee to buy or lease the owner's property at a fixed price within a specified period of time.
purchase-money mortgage
A mortgage given as part of the buyer's consideration for the purchase of real property, and delivered at the same time that the real property is transferred as a part of the transaction. It is commonly a mortgage taken back by a seller from a purchaser in lieu of purchase money. A purchase-money mortgage is usually used to fill a gap between the buyer's down payment and a new first mortgage or mortgage assumed, as when the buyer pays 10 percent in cash, gets an 80 percent first mortgage from a bank, and then the seller takes back a purchase-money second mortgage for the remaining 10 percent.
purify
To clear from material defilement or imperfection; to free from undesirable elements.
purpose approach
This approach to statutory interpretation assesses the aims and objectives of the statute (i.e., legislative intent).
pyramiding
The process of acquiring properties by refinancing properties already owned and investing the loan proceeds in additional properties.
QM
Qualified Mortgage
qualified intermediary
Corporation or entity who facilitates a 1031 tax deferred exchange (also known as an "accommodator"). To be a qualified intermediary, the intermediary must not be a related party.
qualified manager
A qualified manager is an individual, designated by a mortgage loan company, responsible for the activities of the licensed mortgage loan company's office, divisional office, or branch office in conducting the business of that mortgage loan company's office, divisional office, or branch office, and who meets requirements as specified by the director.
qualified real estate agent
A qualified real estate agent under the IRS definition is someone who meets three criteria: (1) they hold a current real estate license, (2) they have a written contract with their brokerage stating they will not be treated as an employee for federal tax purposes, and (3) a significant portion of their income is based on sales production rather than hours worked.
qualified substitute
A qualified substitute is any person who represents the seller or buyer (or both) in settling the transaction. For further information, see the I.R.S. website: Qualified Substitute (agent)
qualifying statement
A qualifying statement (also called a withholding certificate) is a certificate issued by the I.R.S. It certifies that the dollar amount that must be withheld from the disposition of a U.S. real property interest has been adjusted. The buyer, buyer's agent, or the seller may request a withholding certificate. The IRS will generally act on these requests within 90 days after receipt of a complete application including the Taxpayer Identification Numbers (TIN’s) of all the parties to the transaction. A seller that applies for a withholding certificate must notify the buyer in writing that the certificate has been applied for on the day of or the day prior to the transfer. For further information, see: Qualifying statement (also called withholding certificate)
quality service standards
Companies set quality service standards so that everyone, especially the salespeople, know what is expected. The standards should reflect the company's business philosophy and the nature of the services it provides. Most importantly, quality service standards must become a priority in the company.
quantitative easing
Quantitative easing is a monetary policy in which a central bank purchases government securities or other securities from the market in order to lower interest rates and increase the money supply. Quantitative easing increases the money supply by flooding financial institutions with capital in an effort to promote increased lending and liquidity. Quantitative easing is considered when short-term interest rates are at or approaching zero, and does not involve printing new banknotes. (See liquidity, monetary policy)
quantity-survey method
Way of estimating building reproduction cost by making a thorough itemization of all construction costs, both direct (material and labor) and indirect (permits, overhead, profit), then totaling those costs. (See appraisal)
quantum
Quantity; portion; part; a discrete subdivision of magnitude.
quantum number
Any of a set of numbers that indicate the magnitude of various discrete quantities of a particle or system.
quasi contract
A contract implied by law, as a matter of equity, when no actual contract exists.
quasi-community property
Any California real estate acquired by an out-of-state married person that would be considered community property if acquired by a resident of California; any California real estate acquired in exchange for real or personal property located anywhere, when the California real estate would have been considered community property if it had been acquired by a California resident.
quasi-judicial
Noting, pertaining to, or exercising powers or functions that resemble those of a court or a judge.
query
A response to a specific inquiry to a Internet search engine for information on a specific topic. (See search engine, SQL)
quiet title
1. A legal action taken to establish an individual's right to ownership of real property against one or more adverse claimants. 2. A court action to remove a cloud on the title. Quiet title actions are necessary because real estate may change hands often, and it is not always easy to determine who has title to the property.
quitclaim deed
A conveyance by which the grantor transfers whatever interest he or she has in the real estate, without warranties or obligations.
R-value
A term used to describe the effectiveness of various kinds of insulation to indicate their resistance to heat flow. If more than one layer of insulation is used, the R-value of the individual layers are added together to indicate a total R-value.
radon
A naturally occurring gas that is suspected of causing lung cancer. (See carcinogen)
National Safety Council on Radonrafter
1. Rafters are beams that extend from the ridge line of a roof to the eave. 2. A roof structural support system using "2 by" wood components that are nailed together (as opposed to trusses that are connected using press-on metal plates). (See truss)
rafters
1. Rafters are beams that extend from the ridge line of a roof to the eave. 2. A roof structural support system using "2 by" wood components that are nailed together (as opposed to trusses that are connected using press-on metal plates). (See truss)
ranch house
A one-story house that may be built over a concrete slab foundation, crawlspace, or basement.
random access memory (RAM)
The place in computers where stored data is accessed in any order - that is, at random; The place in a computer where the operating system, application programs, and data in current use are kept so that they can be quickly reached by the computer's processor. (See ROM, DRAM, SRAM, SDRAM)
random sample
A subset of a population of variates in which every variate is chosen by chance, with an equal probability of being picked.
range
1. A measure of the difference between the highest and lowest variates. 2. A strip of land six miles wide, extending north and south and numbered east and west according to its distance from the principal meridian in the rectangular (government) survey system of legal description. For example, Range 3 East would be a strip of land between 12 and 18 miles east of its principal meridian.
ranges
In the rectangular survey system of land description, ranges are townships running east and west of a meridian. (See meridians)
rate
Interest rate is percentage of loan amount that must be paid as fee for loan.
rate cap
The limit on the amount the interest rate can be increased at each adjustment period in an adjustable rate loan. Interest caps come in two versions: a periodic adjustment cap that limits the amount the interest rate can adjust up or down from one adjustment period to the next after the first adjustment, and a lifetime cap that limits the interest-rate increase over the life of the loan. By law, virtually all ARMs must have a lifetime cap. (See adjustable rate mortgages (ARMs))
rate factor
The number of dollars required to pay off each $1,000 of a mortgage loan.
rate lock
Once a buyer/borrower gets a property under contract (in escrow) the mortgage lender will quote the current interest rate/points - the "price of a loan (the price changes many times each day) and buyer/borrower will agree to, or "lock in" the current price when they are ready.
rate lock
Once a borrower/buyer gets a property under contract (in escrow) the mortgage lender will quote you the current interest rate/points - the "price of a loan (the price changes many times each day) and the borrower/buyer will agree to, or "lock in" the current price when you are ready.
rate of exchange
The rate or price at which the currency of one country can be exchanged for the currency of another country.
rate of return
A tool for measuring performance, including appreciation (or depreciation), realized capital gains (or losses), and income.
rate-lock commitment fee
A rate-lock commitment fee is points or other fees, or discounts taken by a mortgage broker for transmittal to a mortgage lender, or taken directly by a mortgage lender, as consideration for the making of a mortgage loan rate-lock commitment.
ratification
Method of creating an agency relationship in which the principal accepts the conduct of someone who acted without prior authorization as the principal's agent.
raw land
A parcel or tract of land with no improvements, for example, infrastructure or vertical construction. When an appraisal of raw land includes entitlements, the appraisal should disclose when such entitlements will expire if improvements are not completed within a specified time period and the potential effect on the value conclusion.
read-only memory (ROM)
A type of computer memory on which data can be recorded and read, but cannot be removed. (See RAM, DRAM, SRAM, SDRAM)
ready, willing and able buyer
Real estate term describing a buyer who is prepared to comply with the terms and conditions of a purchase contract, and has the financial ability to complete the transaction. If the real estate broker secures a client who is a ready, willing, and able buyer, then he or she is entitled to a commission.
Ready, willing, and able buyer
Real estate term describing a buyer who is prepared to comply with the terms and conditions of a purchase contract, and has the financial ability to complete the transaction. If the real estate broker secures a client who is a ready, willing, and able buyer, then he or she is entitled to a commission.
real estate
Real estate is physical land at, above and below the earth's surface with all appurtenances, including any structures; any and every interest in land whether corporeal or incorporeal, freehold or non-freehold; for all practical purposes, the term real estate is synonymous with real property. (See real property)
Real Estate Advisory Commission
The Real Estate Advisory Commission is a ten member panel appointed by the Real Estate Commissioner, who presides over its meetings. Six commission members must be licensed CA real estate brokers, and four must be non licensed members of the public. Commission members serve without compensation. The Commission makes recommendations to the Real Estate Commissioner on relevant matters.
real estate assistant
A real estate assistant (also known as a personal assistant or professional assistant) is a combination of office manager, marketer, organizer and facilitator with a fundamental understanding of the real estate industry.
real estate broker
A real estate broker is a person employed for a fee by another to carry on any of the activities listed in the Real Estate Law definition of a broker.
real estate brokerage
A Real Estate Brokerage is a business in which real estate license-related activities are performed under the authority of a real estate broker. (See broker)
real estate brokerage activity
A real estate brokerage activity is any activity that involves offering or providing real estate brokerage services to the public, including acting as a real estate agent or broker for a buyer, seller, lessor, or lessee of real property.
Real Estate Commissioner
The Real Estate Commissioner is appointed by the governor and serves at the governor's discretion. The Real Estate Commissioner determines administrative policy and enforces that policy in the best interests of those dealing with real estate licensees. The person selected as commissioner must have been a practicing real estate broker in California for five years or otherwise engaged in real estate activity for five of the past ten years.
real estate dealer
A real estate dealer holds property primarily for resale to customers in the course of business, in contrast to a real estate investor who holds property for personal investment. Dealers are denied certain income tax benefits available to investors.
Real Estate Educators Association (REEA)
A professional organization established by and for real estate educators, including individuals and institutions. REEA is international in scope and represents every aspect of real estate education which include, degree programs, continuing education, sales training, GRI (Graduate, REALTORS Institute), prelicense, graduate studies, consulting, research and publishing. Members of this association come from colleges, universities and proprietary schools, regulatory agencies, real estate organizations, boards and associations, and other delivery systems.
real estate employment agreements
There are three types of real estate employment agreements. They are the: listing agreement, buyer representation agreement, and property management agreement. These employment agreements create an express agency between the brokerage and the principal.
Real Estate Fraud Prosecution Trust Fund
Authorized by state law for any county that wishes to establish such a fund to help district attorneys and law enforcement agencies deter, investigate, and prosecute real property fraud crimes; up to $2 may be added to the county's recording fees for such a fund.
Real Estate Investment Trust (REIT)
A method of pooling investment money using the trust form of ownership. In the 1960s Congress provided favored tax treatment for certain business trusts by exempting from corporate tax certain qualified REITs that invest at least 75 percent of their assets in real estate and that distribute 95 percent or more of their annual real estate ordinary income to their investors. As an alternative to the partnership or corporate methods of investing in real estate, the REIT offers some of the flow-through tax advantages of a partnership or syndication while retaining many of the attributes and advantages of a corporate operation. (See noninstitutional lenders)
real estate investor
A real estate investor holds property for personal investment reasons, in contrast to a real estate dealer who holds property primarily for resale to customers. Investors are allowed certain income tax benefits denied to dealers.
real estate law
Real Estate Law is a portion of the California Business and Professions Code regarding licensing of real estate brokers and salespeople and the activities of the California Bureau of Real Estate. It also includes Subdivided Lands Law. (See Business and Professions Code)
real estate license (Arizona definition)
License means the whole or part of any agency permit, certificate, approval, registration, public report, charter or similar form of permission required by this chapter.
real estate license law
State law enacted to protect the public from fraud, dishonesty and incompetence in the purchase and sale of real estate.
Real Estate Mortgage Investment Conduit (REMIC)
A tax entity that issues multiple classes of investor interests (securities) backed by a pool of mortgages. (See securitization)
real estate owned (REO)
A term used by lenders to refer to properties acquired through foreclosure. (See foreclosure)
real estate purchase contract and receipt for deposit
Form of real estate sales contract commonly used in California. It is a Legally binding contract to be used to purchase real estate.
real estate recovery fund
A fund established in some states from real estate license revenues to cover claims of aggrieved parties who have suffered monetary damage through the actions of a real estate licensee.
real estate salesperson
A real estate salesperson is a person employed directly or indirectly by a licensed real estate broker. A salesperson performs various tasks and responsibilities that may include selling and/or buying real estate; negotiating purchase, sale or exchange of real estate; or negotiating leases, rents and/or improvements. (See broker)
Real Estate Settlement Procedures Act (RESPA)
A federal law, enacted in 1974 and later revised, that ensures that the buyer and seller in a real estate transaction have knowledge of all settlement costs when the purchase of a one-to-four-family residential dwelling is financed by a federally related mortgage loan. Federally related loans are broadly defined to include loans made by savings and loan associations or other lenders whose deposits are insured by federal agencies, insured by the FHA or VA, administered by the Department of Housing and Urban Development or intended to be sold by the lender to Fannie Mae or a similar federal agency.
real estate syndicate
An organization of real estate investors, typically in the form of a limited partnership. (See limited partnership)
Real Estate Transfer Disclosure Statement
As required by California Civil Code Sections 1102-1102.14, a transferee (buyer) of residential real property is entitled to a statement from the transferor (seller) which provides information regarding the physical condition of the property.
real property
Real estate plus all the interests, benefits, and rights inherent in ownership. Often referred to as real estate.
real property (Arizona definition)
For purposes of this article, "real property" or "subject real property" means the real property interest that is owned by the person who is the party to the agreement with the real estate broker.
Real Property Loan Law
Part of the California Real Estate Law that covers loans solicited or negotiated by a real estate broker.
real property sales contract
A real property sales contract is a legally binding agreement between a buyer and seller concerning the sale and purchase of real estate. This contract outlines the terms and conditions of the transaction, such as the sale price, property description, financing terms, contingencies, and closing date. It serves as the foundation of the real estate transaction process.
real property securities dealer
A real property securities dealer is a broker who sells an existing trust deed and guarantees a return on it.
real property security
A guaranteed loan or a loan where the broker will assume payments.
real property taxation
reality of consent
Although a contract may meet all of the basic requirements, it may still be void or voidable, according to the realty of consent, which states that a contract must be entered into as a free and voluntary act of each party, and each party must be able to make a prudent and knowledgeable decision without undue influence. A mistake, misrepresentation, fraud, undue influence or duress would deprive a person of that ability, and if any of these circumstances were present, the contract would be voidable by the injured party. If the other party were to sue for breach, the injured party could use lack of voluntary assent as a defense.
realized capital gain
When a property is sold, a capital gain or loss is realized. (See capital gains, excluded capital gains, deferred capital gains, recognized capital gains)
Realtist
A member of a national organization, generally composed of African-American real estate brokers, known as the National Association of Real Estate Brokers (NAREB)
REALTOR-ASSOCIATE® (RA)
A licensed salesperson who is a member of the National Association of REALTORS® focusing its efforts on the marketing and brokerage of land.
REALTOR®
A registered trade name that may be used only by members of the state and local real estate boards affiliated with the National Association of REALTORS® (NAR). The term REALTOR®, designates a professional who subscribes to associations of REALTORS®, to govern real estate practices of members of the board. The use of the name REALTOR®, and the distinctive seal in advertising is strictly governed by the rules and regulations of the national association. (See National Association of Realtors)
REALTORS® Code of Ethics
A written system of standards of ethical conduct. Because of the nature of the relationship between a broker and a client or other persons in a real estate transaction, a high standard of ethics is needed to ensure that the broker acts in the best interests of both the principal and any third parties.
reasonable accommodations
One type of disability discrimination prohibited by the Act is the refusal to make reasonable accommodations in rules, policies, practices, or services when such accommodations may be necessary to afford a person with a disability the equal opportunity to use and enjoy a dwelling.3 HUD and DOJ frequently respond to complaints alleging that housing providers have violated the Act by refusing reasonable accommodations to persons with disabilities. (For further information, see HUD public statement.)
reasonable care and skill
Reasonable care and skill is the real estate agent's obligation to conduct their principal's business with appropriate expertise and consideration.
reasonable modifications
Such modifications as may be necessary to afford a disabled person full enjoyment of the premises. Examples of reasonable modifications are: installation of grab bars, handrails, signaling devices, ramps, interior door hardware, widening of a doorway.
reasonable suspicion
A legal standard in United States law that a person has been, is, or is about to be engaged in criminal activity based on specific and articulable facts and inferences. Reasonable suspicion is evaluated using the "reasonable person" or "reasonable officer" standard, in which said person in the same circumstances could reasonably believe a person has been, is, or is about to be engaged in criminal activity; such suspicion is not a mere hunch. Police may also, based solely on reasonable suspicion of a threat to safety, frisk a suspect for weapons, but not for contraband like drugs. A combination of particular facts, even if each is individually innocuous, can form the basis of reasonable suspicion.
reasonable time
In the absence of an express or fixed time established, a reasonable time is any period of time which is not manifestly unreasonable under the circumstances. This is defined as that amount of time which is fairly necessary, conveniently, to do what is required to be done. The reasonableness or unreasonableness of time used or taken by a party may be the subject of Judicial Review in light of the nature, purpose, and circumstances of each case.
reasonably competent
Because they possess specialized knowledge that is superior to the average Joe or Jane, the professional conduct of a real estate licensee is measured on the basis of what a skilled and reasonably competent professional would do in a similar situation, in a given locale and in similar conditions. This is the basis for the reasonably competent professional standard of care.
reassessment event
Sale or other transaction, such as addition of improvements, that triggers a revaluation of property for tax purposes.
Rebate
Sharing of a portion of a compensation under a specified understanding. Unlike a discount (which is deducted in advance of payment), a rebate is given after the compensation has been paid. Unlike a refund, (which is a return of funds to the payor), a rebate given to someone other than the original payor of the funds.
rebate law
Law that prohibits escrow and title insurance companies from giving rebates or favorable treatment as consideration for the referral of business.
recapture clause
A clause in some percentage leases where the lessor has the right to terminate a lease if a tenant does not obtain a desired gross. (See percentage lease)
recapture rate
A periodic allowance for the recovery of investment capital from the property's income stream.
recapture rate
The percentage of a property's original cost that is returned to the owner as income during the remaining economic life of the investment.
recapture tax
Recapture taxes are charges to a homeowner under certain situations, for instance, HUD Low Income Housing loans require the buyer occupy a property and retain ownership for a specific period of time. If the buyer sells the property the tax benefits or subsidies received are recaptured or charged to the homeowner. In such a case, a recapture tax serves as a penalty assessed for selling the house too soon.
recasting
The process of rewriting existing loans, especially when there is a default. The term and interest rate may be adjusted to take pressure off the borrower.
receiver
An independent party appointed by a court to impartially receive, preserve and manage property that is involved in litigation, pending final disposition of the matter before the court.
recession
A significant decline in activity across the economy, lasting longer than a few months. It is visible in industrial production, employment, real income and wholesale-retail trade. The technical indicator of a recession is two consecutive quarters of negative economic growth as measured by a country's gross domestic product (GDP); although the National Bureau of Economic Research (NBER) does not necessarily need to see this occur to call a recession. (See peak, recovery, trough)
recharge basin
A recharge basin is a man-made or natural depression designed to facilitate the infiltration of surface water into the groundwater system. These basins play a critical role in groundwater recharge by capturing and holding water, allowing it to percolate down through the soil and replenish aquifers.
reciprocal easement agreement (REA)
A reciprocal easement agreement (REA) is a legal contract between two or more property owners granting mutual access rights to each other's properties for specific purposes, such as utilities, maintenance, or shared amenities. These agreements are commonly used in commercial developments, such as shopping centers or office complexes, to ensure that all parties can use shared infrastructure and services efficiently. An REA outlines the rights and responsibilities of each party, helping to prevent disputes and facilitate cooperative use of the shared spaces.
reckless disregard
Grossly negligent without concern for ramifications to or danger to others.
recognition clause
A clause found in some blanket mortgages used to purchase a tract of land for subdivision development providing for protection of the rights of the ultimate buyers of individual lots in case of default by the developer. (See blanket mortgages)
recognized capital gains
The profits that result from the sale or exchange of real estate, or other investments. When real estate is sold or exchanged for more than its original purchase price, the difference between the sale price and the purchase price is considered a capital gain. This gain is "recognized" when the sale or exchange occurs, meaning it becomes taxable in the year the transaction takes place. (See capital gains, deferred capital gain, excluded capital gain, realized capital gain)
Recommended order
In the context of the Florida Real Estate Commission (FREC), a Recommended Order is a document issued by an administrative law judge (ALJ) after a formal hearing. It outlines the judge's findings of fact, conclusions of law, and suggested penalties or actions based on the evidence and testimony presented during the hearing. The Recommended Order is then sent to FREC for review, where the Commission decides whether to accept, modify, or reject the recommendations before issuing a Final Order, which is binding and enforceable.
reconciliation
1. The final step in an appraisal process, in which the appraiser reconciles the estimates of value received from the direct sales comparison, cost, and income approaches to arrive at a final estimate of market value for the subject property. 2. The balancing of entries in a double-entry accounting system. (See appraisal)
reconstructed cash flow analysis
An estimated cash flow analysis for a rental property, prepared by an agent using accurate property information. Its purpose is to present what the cash flow numbers for the investment property will look like when in the hands of a potential buyer.
reconveyance agreement
A reconveyance agreement is the transfer of title to residential real property by an equity seller who is in default or that allows the equity purchaser to obtain legal or equitable title to all or part of the property, and to transfer or convey that interest back to the equity seller for consideration.
reconveyance deed
A reconveyance deed, executed by the trustee, is the means by which naked title is returned to the trustor when a debt is paid in full.
reconveys
In satisfying a deed of trust, the trustee reconveys full title to the borrower.
recorded
The act of entering into the book of public records the written instruments affecting the title to real property, such as deeds, mortgages, contracts for sale, options and assignments. There is also a body of public records apart from the real estate recording system that has a bearing on the quality of title. A title searcher would also check, for example, public records regarding probate, marriage, taxes and judgments. (See public records)
recording
The act of entering into the book of public records the written instruments affecting the title to real property, such as deeds, mortgages, contracts for sale, options and assignments. There is also a body of public records apart from the real estate recording system that has a bearing on the quality of title. A title searcher would also check, for example, public records regarding probate, marriage, taxes and judgments. (See public records)
recovery property
Property that can be depreciated for income tax purposes, with the cost of the property deducted from income over a stated period.
recreant
1. cowardly or craven. 2. unfaithful, disloyal, or traitorous.
recruiters
Screen candidates to find the person most suited to jobs that employers need filled and are paid by the hiring organization.
recruiting
The process of finding and hiring the best-qualified candidate for a job opening. The recruitment process includes analyzing the requirements of a job, attracting employees to that job, screening and selecting applicants, hiring, and integrating the new employee to the organization.
rectangle
rectangular (government) survey system
A system established in 1785 by the federal government, providing for surveying and describing land by reference to principal meridians and baselines. Also known as the government survey system. (See baselines, meridians)
red flag
A visual sign or indication of a defect. Something that warns a reasonably observant person of a potential problem, thus requiring further investigation. A broker who spots uneven floors or water-stained ceilings is on notice to inquire about soil settlement and roof leakage problems.
redeemed
redemption
The right of a defaulted property owner to recover his or her property by curing the default. (See equitable redemption, statutory redemption)
redemption period
A period of time established by state law during which a property owner has a right to redeem real estate after a foreclosure or tax sale by paying the sales price, interest and costs. Note that many states do not have such statutory redemption periods.
redisclosure
In an adjustable percentage rate loan, "redisclosure" is required if the APR changes by 0.125 percent.
redlining
A practice by some lending institutions that restricts the number of loans or the loan-to-value ratio in certain areas of a community. A redlining policy may be so severe that in effect the lending institution prohibits lending any money in certain areas of the city. The usual justification for redlining is that the lender wants to limit the risks in an area that is deteriorating. The lender discriminates against a whole class of risks rather than distinguishing among individual risks.
reduced documentation
A loan feature that is commonly referred to as "low doc/no doc," "no income/no asset," "stated income" or "stated assets." For mortgage loans with this feature, an institution sets reduced or minimal documentation standards to substantiate the borrower's income and assets.
reduction certificate (payoff statement)
The document signed by a lender indicating the amount required to pay a loan balance in full and satisfy the debt; used in the settlement process to protect both the seller's and the buyer's interests.
reference
To put in a form (as a table) adapted to easy reference; used or usable for reference especially constituting a standard for measuring or constructing.
refinance
To obtain a new loan to pay off an existing loan, or to pay off one loan with the proceeds from another. Properties are frequently refinanced when interest rates drop and/or the property has appreciated in value. Sometimes, a buyer will purchase a property by way of a contract for deed with the expectation of either selling the property before the balance under the contract for deed becomes due or refinancing at better terms and interest rates than exist at the time the agreement of sale is entered into. (See realized capital gains)
reflection
Thoughtful introspection that significantly affects and directs professional choices and directions. The portfolio process can prompt employees to reflect on themselves and their contributions to their workplace on a regular and continuing basis.
reflective coatings
A black tinted window coating. Reflective coatings greatly reduce the transmission of daylight through clear glass. Commonly used in hot climates in which solar control is critical.
reformation
An action by a court to revise a contract to read as it was intended by the parties to read rather than as stated.
regional market analysis
A regional market analysis is a comprehensive evaluation of the economic and market conditions within a specific geographical area. This analysis typically includes examining various factors such as demographic characteristics, economic indicators, consumer behavior, industry trends, and competitive dynamics within the region. It helps in identifying opportunities and challenges specific to the area, guiding strategic planning and decision-making to align with regional market demands and economic conditions.
regional multipliers
Adjustment factors by which standard cost figures can be multiplied to allow for regional price differences.
regional planning
Regional planning deals with the design and efficient placement of activities and infrastrucutre across a large geographic area. (See comprehensive zoning, general plan, master plan, urban planning)
registered domestic partner
One of two persons sharing a residence who have filed a Declaration of Domestic Partnership with the secretary of state.
registered mortgage loan originator
A registered mortgage loan originator is any individual who meets the definition of an MLO, is registered with and maintains a unique identifier through the NMLS&R, and is an employee of depository institution regulated by a federal banking agency or the Farm Credit Administration.
registry
The Registry is the Nationwide Mortgage Licensing System and Registry, which is the mortgage licensing system developed and maintained by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators for the licensing and registration of loan originators.
regression
An appraisal principle that states that between dissimilar properties the value of the better-quality property is affected adversely by the presence of the lesser-quality property. (See appraisal)
regressive tax
A tax such as a sales tax that applies equally to every purchaser but which results in taking a larger percentage of income from a low-income person than from a high-income person.
Regulation B
Regulation B generally provides that once the creditor has all information for the loan file and it has been submitted to underwriting, the creditor has 30 days to make a decision and notify the borrower. Regulation B requires that adverse actions are by written notification and must contain a description of the action, the complete name and address of the creditor, the complete name and address of the federal agency that administers compliance for the creditor, and specifically why the adverse action was taken. adverse action
Regulation X
Regulation X regulates and standardizes real estate settlement practices. Also known as the Real Estate Settlement Procedures Act. (See RESPA)
Regulation Z
Implements the Truth-in-Lending Act requiring credit institutions to inform borrowers of the true cost of obtaining credit. (See Truth-in-Lending Act)
Regulations of the Real Estate Commissioner
The Regulations of the Real Estate Commissioner are the rules that clarify and interpret the Real Estate Law and that are binding on real estate licensees. (See Real Estate Commissioner)
regulatory law
The rules, regulations, orders and decisions enacted by government agencies.
rehabilitation
1. The restoration of a property to satisfactory condition without drastically changing the plan, form or style of architecture. 2. The manipulation of the physical, chemical, or biological characteristics of a site with the goal of repairing natural/historic functions of a degraded habitat in order to improve ecological function.
reinstatement
Revival of defaulted mortgage by payment of all delinquencies, including court costs and fees, before foreclosure sale.
reinsurance fund
A financial reserve used by insurance companies to mitigate risk during catastrophic events.
rejection
Proposing any deviation from the terms of the offer constitutes a rejection of the original offer and becomes a new offer. (See counteroffer)
relative
A relative is any of the following, whether by the full or half blood or by adoption: A person's spouse, father, mother, children, brothers, and sisters; the father, mother, brothers, and sisters of the person's spouse; the spouses of the person's children, brothers, or sisters.
release
Any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, or disposing into the environment of a hazardous or toxic chemical or extremely hazardous substance.
release clause
A provision found in many blanket mortgages enabling the mortgagor, upon payment of a specific sum of money, to obtain a partial release of particular portions or parcels of the collateral.
release deed
A document, also known as a deed of reconveyance, that transfers all rights given a trustee under a deed of trust loan back to the grantor after the loan has been fully repaid.
release of liability
The release of an old borrower from further responsibility for repayment of an assumed loan.
reliction
An increase of the land by the permanent withdrawal of the ocean or a river.
relinquished property
The property given up in the exchange.
remainder
The right of future possession and use that goes to someone other than the grantor upon termination of a life estate.
remainder estate
A future interest in real estate created at the time and by the same instrument of the original estate, but limited its immediate authority upon the termination of the prior estate. For example, Hoe Phigg owns a property in fee simple and conveys the property "to Barry Clink and upon Clink's death, to Cora Quibb and her heirs." Cora Quibb has a remainder estate, which is vested because the estate automatically passes to Cora Quibb and her heirs upon the death of Barry Clink.
remainder interest
The remnant of an estate that has been conveyed to take effect and be enjoyed after the termination of a prior estate, such as when an owner conveys a life estate to one party and the remainder to another.
remaining economic life
The number of years of useful life left to a building from the date of appraisal.
remedies and penalties
Remedies and penalties strike an appropriate balance between retaining consumer protection and limiting a negative effect on the availability and cost of mortgage financing.
renegotiable-rate mortgage (RRM)
A financing instrument in which the interest rate is adjusted after an agreed-to period of time following origination, such as three or five years.
renewal
Renewal means a renewal policy by another policy contract or a renewal certificate.
renewal checklist
Will be available through the NMLS Resource Center in September of 2010.
renewal option
A lease provision that allows the lessee to renew the lease for the same term or some other stated period, usually with a rent increase at a stated percentage or based on an index or other formula.
rent
A fixed, periodic payment made by a tenant of a property to the owner for possession and use, usually by prior agreement of the parties.
rent = 1.0% of price rule
Take the monthly rental income and divide it by the price. If it is close to 1%, that might be a pretty good real estate deal. If there is an HOA, calculate it as the monthly rent, less the HOA fee, and then divide it by the purchase price.
rent control
Found mostly in urban areas, rent control laws limit the amount of rent a landlord may charge, subject to certain restrictions. Most rent control laws allow annual rent increases of a certain percentage.
rent factor
A multiplier used to establish the rental rate for industrial properties based on the owner's desired rate of return.
rent increases
A rent increase refers to the adjustment of the amount a tenant pays for leasing a property, typically enforced by the landlord or property management. This adjustment can occur at the end of a lease term or during its renewal, and is often subject to local regulations that may dictate the timing, notice requirements, and percentage limits of the increase. Rent increases are usually implemented due to various factors such as rising property values, inflation, or the need to cover increased costs of property maintenance and improvements.
rent or rentals
Rent or rentals are the charges paid by low- and moderate-income persons for occupancy in a project under the Housing Finance Agency Law, whether the project is operated on a landlord-tenant basis or as a condominium or cooperative.
rent roll
A list indicating the names of all tenants in a rental property, along with the amount of their individual rents and security deposits. A rent roll is customarily among the documents the escrow holder will obtain from a seller of income property to deliver to the buyer. (See Equal Credit Opportunity Act)
rent schedule
A statement of proposed rental rates, determined by the owner or the property manager or both, and based on a building's estimated expenses, market supply and demand and the owner's long-range goals for the property.
rent skimming
Rent skimming is a fraudulent real estate practice where an investor or a property owner collects rents from tenants of a property without having a legitimate ownership interest in the property. This often occurs when someone, typically a buyer or a speculator, purchases a property with the intent to turn a quick profit without making mortgage payments to the lender. The individual might rent out the property and collect rent from tenants, but fail to pay the mortgage to the lender. As a result, the property may go into foreclosure, leaving the tenants without a home and the mortgage lender without its expected income.
rent up
A requirement of a lender that a developer lease a stated amount of space in a building as a prerequisite to a permanent lender "taking out" the interim lender.
rental and credit application
The form a prospective renter fills out with information about him or herself, including name, current employment, current address, social security number, number and type of cars, pets, bank accounts, any legal or criminal issues, etc.
rental application deposit
A rental application deposit is a fee that potential tenants may be required to pay when they submit a rental application to a landlord or property management company. This deposit is intended to cover the costs of processing the application, such as running credit checks, background checks, and verifying rental history.
rental center
A special leasing office located in an apartment complex. Usually includes a furnished model and a closing area.
rental centers
A rental center in this context acts as a showcase for potential tenants or buyers, providing them with a tangible example of what they can expect in a residential or commercial complex. By presenting a fully furnished and well-appointed space, the rental center not only enhances the appeal of the property but also serves as a crucial marketing tool. It effectively communicates the lifestyle or professional environment that the complex promises, making it easier for prospects to make informed decisions.
rental history verification
When an owner/landlord verifies that the rental history a prospective renter/tenant provides is correct and that they were a good tenant and performed all the terms of their lease. The owner/landlord should call the past several landlords to discuss the renter's payment history and history as a resident.
rental income
The result when vacancies (uncollected rent) is subtracted from gross scheduled income.
rental statement
A summary of rental amounts paid and security deposits collected on a property used for rental purposes.
renunciation
An act or instance of relinquishing, abandoning, repudiating or sacrificing something, as a right, title, person, etc.
REO property
Real Estate Owned. Property which is in the possession and ownership of a lender as a result of foreclosure or forfeiture.
reorganization
Organizational re-structuring that allows companies to move existing employees into newly formed positions, saves on recruitment and replacement costs, and supports the development of a strong commitment to the company and its goals.
repair or corrective maintenance
Involves the actual repairs that keep the building's equipment, utilities and amenities functioning. Repairing a boiler, finding a leaky faucet and mending a broken air-conditioning unit are acts of corrective maintenance.
replacement cost
Replacement cost is the construction cost at current prices of a property that is not necessarily an exact duplicate of the subject property but serves the same purpose or function as the original. (See appraisal)
replacement property
The property acquired in the exchange.
representative
A representative is a person who, in any manner, solicits, induces, arranges, or causes any equity seller to transfer title or solicits any member of the equity seller's family or household to induce or cause any equity seller to transfer title to the residence in foreclosure or, where applicable, default to the equity purchaser.
reproduction cost
Reproduction cost is the cost of a new building of exactly the same design and materials as the subject property.
Request for Proposal (RFP)
An RFP is a document used in sealed-bid procurement procedures through which a City advises potential consulting firms of (1) statement and scope of work, (2) specifications, (3) schedules or timelines, (4) contract type, (5) data requirements, (6) terms and conditions, (7) description of goods and/or services to be procured, (8) general criteria used in evaluation procedure, (9) special contractual requirements, (10) technical goals, (11) instructions for preparation of technical, management, and/or cost proposals. RFPs are publicly advertised and suppliers respond with a detailed proposal, not with only a price quotation.
request for reconveyance
A beneficiary's notice to a trustee on payment of an underlying debt that title to property is to be returned to the trustor.
rescind
To annul, cancel.
rescission
1) An option in the discharge of a contract. If both parites agree, they may rescind a contract in a process called recission. 2) The legal remedy of canceling, terminating or annulling a contract and restoring the parties to their original positions; a return to the status quo. Contracts may be rescinded due to mistake, fraud or misrepresentation and, there is no need to show any money damage.
rescission
The legal remedy of terminating or annulling a contract and restoring the parties to their original positions; a return to the status quo. Contracts may be rescinded due to mistake, fraud or misrepresentation and, there is no need to show any money damage.
rescue scam
Rescue scams may be operated by those who seek to take advantage of homeowners in default.
reserve analyst
An expert hired to do a reserve study. Unfortunately there are few legal, construction, or experience requirements to be a reserve analysis and their skills can be all over the map. Determining if a reserve study analyst is competent to work for the community is an important item for the homeowners association (HOA) board of directors to decide.
reserve deficit per unit
Also known as "unfunded capital repairs per unit. For this calculation one would take the reserve deficit, for example $800,000, and divide it by the number of units in the complex, for example 100 units, which would give $8,000 reserve deficit per unit ($800,000 divided by 100 units = $8,000 per unit).
reserve fund
Monies a lender will often require a borrower to set aside as a cushion of capital for future payment of items such as taxes, insurance, furniture replacement and deferred maintenance. Sometimes a reserve fund is referred to as an impound account or customer's trust fund. Replacement reserves should be maintained especially when the owner is installing items having a short life expectancy-for example, appliances, furniture or carpeting in a furnished apartment.
reserve funds
An expense category in the operating budget. Monies that are set aside for replacement expenditures not covered by insurance such as roof or furnace repairs. (See operating budget)
reserve requirements
A flat percentage of deposits, required by the Federal Reserve, to be set aside by member banks as a precaution. (See Federal Reserve)
reserve requirements
All depository institutions (banks, savings and loans) in the United States are required to keep a percentage deposits as reserves. The percentages are established by law and regulated by the Federal Reserve Bank. These reserves are kept at regional Federal Reserve Banks. If the Fed believes inflation is increasing, it can raise the reserve requirements, forcing banks to restrict lending because funds are diverted to reserves. This action is designed to decrease the amount of money in circulation, drive up interest rates, and lessen inflation. (See easy monetary policy, open market operations, reserve requirements, tight monetary policy, The Federal Reserve System)
Federal Reserve Websitereserve requirements
Requirements regarding the amount of funds that banks must hold in reserve against customer deposits. This money must be in the bank's vaults or at the closest Federal Reserve bank.
reserve study
A study by an expert reserve analyst that looks at an homeowners association's (HOA) capital items - roofs, streets, exterior paint, elevators - and estimates how many years out they will need to be repaired or replaced and the cost to do that work. Then the expert estimates how much should be saved in the HOA reserves for these items, compares that to how much is actually saved to determine the percent funded.
reserves allocation
Reserves are funds set aside by the owner or property management company for capital improvements or unexpected maintenance expenses. Generally, with managed properties, the reserves are tracked separately from general property income.
reserves for replacement
Allowances set up for replacement of building and equipment items that have a relatively short life expectancy.
residence
Residence and residential real property is residential real property consisting of one- to four-family dwelling units, one of which the equity seller occupies or occupied at a time immediately prior to the equity sale as the equity seller’s primary residence
residence in foreclosure
A residence in foreclosure is residential real property consisting of not more than four family dwelling units, one of which the homeowner occupies as a principal place of residence, and against which there is recorded an outstanding notice of the pendency of an action for foreclosure or notice of sale pursuant to Section 33-808.
resident alien
A resident alien is a foreign national living on an official basis in a country of which they are not a citizen. Any person who is not a U.S. citizen and doing business in the U.S. is considered a nonresident alien unless that person meets either the green card test or the substantial presence test for the calendar year (January 1-December 31). See taxation status of resident aliens here:
resident apartment manager
Apartment manager who resides in one of the units; required of every California apartment building having at least 16 units.
residential leasing agent
"Residential leasing agents or managers" means natural persons employed by the owner or the owner's licensed management agent whose normal duties and responsibilities include any one or a combination of the following:
- preparing and presenting to any person a residential lease, application or renewal or any amendment of the lease;
- collecting or receiving a security deposit;a rental payment or any related payment for delivery to and made payable to a property, a property manager, an owner or the location;
- showing a residential rental unit to any prospective tenant;
- executing residential leases or rental agreements;
- acting on behalf of the owner or the owner's licensed management agent to deliver notice to tenants who are in breach of their rental agreement.
residential mortgage
A residential mortgage is an obligation to pay a sum of money in an original bona fide principal amount of the base figure or less, evidenced by a security document and secured by a lien on real property located within the commonwealth containing two or fewer residential units, or on which two or fewer residential units are to be constructed, and includes such an obligation on a residential condominium unit.
residential mortgage debtor
A residential mortgage debtor is a noncorporate borrower who is obligated to a residential mortgage lender to repay a residential mortgage and a successor record owner of the property, if any, who gives notice to the residential mortgage lender.
residential mortgage intermediary
A residential mortgage intermediary is a real estate broker, mortgage broker, or other person receiving a finder's fee, commission, placement fee, service charge, or other similar compensation, other than actual settlement costs, from a residential mortgage lender in conjunction with the issuance of a residential mortgage or mortgage commitment. This does not include an employee of a residential mortgage lender.
residential mortgage lender
A residential mortgage lender is any person who lends money or extends or grants credit and obtains a residential mortgage to assure payment of the debt. This also includes the holder of a residential mortgage obligation.
residential mortgage loan
A residential mortgage loan is any loan primarily for personal, family, or household use that is secured by a mortgage, deed of trust, or other equivalent consensual security interest on a dwelling, or on residential real estate upon which a dwelling is constructed or is intended to be constructed.
residential mortgage loan servicer
A residential mortgage loan servicer is any person who on behalf of the noteholder, collects or receives payments, including payments of principal, interest, escrow monies, and other monies due, on obligations due and owing to the noteholder pursuant to a residential mortgage loan. When the borrower is in default or in foreseeable likelihood of default, works on behalf of the noteholder with the borrower to modify the obligations, either temporarily or permanently, to avoid foreclosure or otherwise to finalize collection through the foreclosure process.
residential property
Residential property is real property located in the commonwealth having a dwelling house with accommodations for four or fewer separate households and occupied, or to be occupied, by the obligor on the mortgage debt.
Residential Purchase Agreement
A model purchase agreement form, initially developed in 1985 by the California Association of Realtors® in cooperation with the State Bar Association, that ensures a real estate purchase agreement will be complete and in compliance with state law.
residential real estate
Residential real estate is any real property located in Massachusetts upon which a dwelling is constructed or intended to be constructed.
residential real estate (Arizona)
Residential real estate is any property that is located in this state and on which a dwelling is constructed or intended to be constructed.
residential real estate (New Mexico)
Residential real estate is any real property located in New Mexico upon which a dwelling is constructed, or is intended to be constructed.
residential real property
Residential real property is real property located within the commonwealth containing up to two residential units, or on which up to two residential units are to be constructed. This includes a residential condominium unit.
residents
Individuals that rent property for their residence, sometimes termed "tenants."
resize window
Place your cursor at the bottom right of the window. You will see the cursor change appearance. Hold down the left mouse button and drag the window to the size you want. If you want the window to open this size everytime you open it, hold down the Ctrl key then click the x at the upper right to close the window.
resolution
The density/quality of the display on a monitor, usually measured in pixels per inch.
Resolution Trust Corporation
The organization created by FIRREA to liquidate the assets of failed savings and loan associations.
Resource Conservation and Recovery Act
Federal law administered by the EPA which regulates the generation, processing and transportation of hazardous waste.
Resource Conservation and Recovery Act Overviewresource decisions
Resource decisions involve the allocation of personnel or money.
resource-oriented industries
Resource-oriented industries are sectors that locate their operations close to natural resources to minimize transportation costs and ensure efficient access to raw materials. Examples include mining, logging, and certain types of agriculture, where proximity to resources like minerals, timber, or fertile land is crucial for production. By situating near these resources, these industries can reduce logistical challenges, lower production costs, and enhance their overall efficiency and profitability.
respiration
The physical and chemical processes by which an organism supplies its cells an tissues with the oxygen needed for metabolism and relieves them of the carbon dioxide formed in energy producing reactions.
respondeat superior
A legal doctrine that holds employers responsible for the actions of their employees, as long as the actions occur within the scope of the employment. The term comes from Latin and means "that the master must answer".
respondent
1. The party who makes an answer to a bill or other proceeding. 2. The party who contends against an appeal.
respondent (Arizona Fair Housing Act)
Either (1) The person accused of a violation of the Arizona Fair Housing Act in a complaint of a discriminatory housing practice. (2)Any person identified as an additional or substitute respondent or agent of an additional or substitute respondent.
response to complaint - What is Required?
According to Arizona Commissioner's Rule R4-28-1304.A, B and C: A response shall specifically admit, deny, or state that the party does not have, or is unable to obtain, sufficient information to admit or deny each allegation in the complaint. A statement of a lack of information shall have the effect of a denial.
responsibility
The state of being responsible; moral, legal, or mental accountability.
responsible individual
Refers to a resident of Arizona who lives in Arizona during the entire period of designation as the responsible individual on a license, is in active management of a licensee’s affairs, and meets the qualifications listed in A.R.S. sections 6-943, 6-973, and 6-976, and is an officer, director, member, partner, employee, or trustee of a licensed entity.
responsive pleading
A formal document that is filed with the court system and is the means by which a party to a legal proceeding responds to allegations or claims.
Restatement of Agency
The Restatement of the Law of Agency is a set of principles issued by the American Law Institute, intended to clarify the prevailing opinion on how the law of agency should be interpreted by courts. It covers principles of attribution, creation and termination of authority and agency relationships, ratification, and notifications and notice, the duration of fiduciary duty, and much more.
Restatement of Contracts
The Restatement of Contracts seeks to inform judges and lawyers about general principles of contract common law. It covers fundamental principles and provides a complete, coherent overview of contract law. It is relied on and adopted by courts nationwide; and is one of the most frequently cited legal publications.
restraining order
An order that may issue from filing for an injunction. Though the term is sometimes used as a synonym of injunction, it is distinguished from an injunction in that it is intended only as a restraint upon a defendant until the granting of a temporary or perpetual injunction. (See injunction)
restraint on alienation
An illegal condition that would prohibit a property owner from transferring title to real estate.
restricted license
A real estate license with a restricted license is one on which one or more conditions are imposed by the Real Estate Commissioner as the result of a disciplinary action. (See Real Estate Commissioner)
restricted use report
Property appraisal that will be limited in either the method of valuation used or the property interests valued.
restricted use report
A restricted use report is a property appraisal that will be limited in either the method of valuation used or the property interests valued.
restricted use report
A restricted use report is a property appraisal that will be limited in either the method of valuation used or the property interests valued.
restricted use report
A restricted use report is a property appraisal that will be limited in either the method of valuation used or the property interests valued.
restricted use report
A restricted use report is a property appraisal that will be limited in either the method of valuation used or the property interests valued.
restriction
A limitation on the use of real property; public restrictions imposed by government include zoning ordinances; private restrictions imposed by deed may require the grantee to do or refrain from doing some action. (See CC&R)
restrictive clauses
A restrictive clause in a lease includes provisions that limit the tenant's actions to protect the landlord's property and investment. These clauses often stipulate the acceptable uses of the premises, ensuring they comply with zoning laws and match the property’s intended purpose. They may also restrict tenants from making alterations or improvements without the landlord's approval to maintain the property's condition and aesthetic. Furthermore, such clauses typically control subleasing and assignment by requiring landlord approval before the tenant can transfer the lease to others. Overall, restrictive clauses help ensure the property is used in a way that aligns with the landlord’s strategic and legal objectives, safeguarding their investment.
restrictive covenants
A clause in a deed that limits the way the real estate ownership can be used. (See covenants, conditions & restrictions, deed restrictions)
resume
A document that provides potential employers a summary of a job applicant's job history, experience, skills and education. 2) brief account of one's professional or work experience and qualifications, often submitted with an employment application; often referred to as a "vita" (plural "vitae") (see chronological resume, combination resume, curriculum vita)
resume writers
Help job seekers direct their message to appropriate employers through networking, targeted mailings, the Internet, and associations from their own trade.
retail property
Income-producing property from which various types of retail products are sold.
retainer
Retainer is a professional relationship between an advisor and a client in which a client engages the services of a professional through payment of a fee. The professional's obligation is to provide advice or services as needed by the client.
retaining wall
A wall built to hold back or support a bank of earth.
retaliatory eviction
Retaliatory eviction refers to an eviction or attempted eviction by a landlord in response to a tenant's lawful actions, such as reporting housing code violations, seeking repairs for issues affecting habitability, joining a tenant's union, or exercising other tenant rights. Retaliatory evictions are illegal because they undermine tenants' rights and discourage tenants from reporting issues or asserting their legal protections. It is illegal for a landlord to decrease services, increase rent or evict the tenant within 180 days of such a report or complaint.
retention
1) Keeping the job once you have it. 2) The practice or policy of an organization to retain employees especially through identification and reward of valued employees, or the adaptive blend of technical and human relations skills necessary to keep a job within an organization.
retirement communities
Many of them in temperate climates, are often structured as PUDs. They may provide shopping, recreational opportunities and health care facilities in addition to residential units.
retirement skills
Education in financial planning and in managing the lifestyle changes coming in retirement.
retroactive liability
A liability is not limited to the current owner of a property, but includes people who have previously owned the property. (See liability)
retrofitting
Retrofitting, in relation to HVAC (Heating, Ventilation, and Air Conditioning), involves upgrading or modifying existing HVAC systems to improve energy efficiency, performance, and compliance with current standards. This process can include replacing outdated components, integrating advanced technologies, and enhancing system controls to optimize energy use and reduce operational costs. Retrofitting HVAC systems helps extend their lifespan and can result in significant energy savings and improved indoor air quality.
return on investment
The net annual income divided by the original cash investment equals a percentage return on investment.
reverse mentoring
Reverse mentoring is where an older manager meets with a younger subordinate to learn about technologies such as the Internet and e-commerce.
reverse mortgage
A reverse mortgage is a loan under which the homeowner receives payments based on his or her accumulated equity. The loan must be repaid at a prearranged date, upon the death of the owner, or upon the sale of the property. A reverse mortgage enables one to convert part of the equity in a home into tax-free income without having to sell the home, relinquish title, or assume a new monthly mortgage payment. (See home equity conversion mortgage)
reverse redlining
A practice in which lenders specifically market high cost or predatory loans to potential customers based on factors such as race or ethnicity. Reverse redlining is a form of discrimination not because it excludes minorities and other vulnerable populations, but because it targets and exploits them by offering loans with abusive terms and conditions.
reverse-annuity mortgage (RAM)
A loan under which the homeowner receives monthly payments based on his or her accumulated equity rather than a lump sum. The loan must be repaid at a prearranged date or upon the death of the owner or the sale of the property.
reversion
The right of future possession and use by the grantor of a life estate. (See life estate)
reversion (for non compliance with condition)
The estate that the grantor holds after conveying title to real property to a grantee subject to conditions. If the grantee does not fulfill the specified conditions (such as deed restrictions or CC&Rs), the title to the property is reverted to the grantor (either through court action or automatic reversion, depending on the nature of the deed).
reversion table
The amount that an investor should pay for the future value of land is computed by applying a reversion factor to the land's present estimated value. A reversion table lists the computed factors at specified interest rates for a specified investment term.
reversionary interest
The remnant of an estate that the grantor holds after granting a life estate to another person. (See life estate)
reversionary right
The return of the rights of possession and quiet enjoyment to the lessor at the expiration of a lease.
Review Committee (AZ)
A committee consisting of representatives from Licensing, Licensing Investigation, Enforcement and Compliance and, where appropriate, Education, that meets to consider applications in which the applicant is not clearly eligible for licensure. The review committee recommends that applications be approved, denied, or approved with a provisional license. The committee may also refer the application to the Licensing Investigation Division to obtain further information.
revitalization
Revitalization is a period of property renovation and rebuilding in which a neighborhood begins a new life cycle.
revocable transfer on death (TOD) deed
Deed that transfers real property on the death of its owner without a probate proceeding, provided it is lawfully created.
revocation
An offeree may fail to accept the offer before it expires. The offeror may revoke the offer at any time before receiving the acceptance. This revocation must be communicated to the offeree by the offeror, either directly or through the parties' agents.
Revocation without prejudice (Florida)
Revocation without prejudice in the context of the Florida Real Estate Commission (FREC) refers to the cancellation of a real estate license in a manner that does not bar the licensee from reapplying for a new license in the future. It typically occurs in situations where the licensee voluntarily surrenders their license or when revocation is not due to misconduct, allowing the individual to seek licensure again if they meet all necessary qualifications and requirements.
rezoning
Change in the land use designation of an area.
ridge board
Ridge boards are beams that run along top of roof.
right of appropriation
Right of appropriation is the right of the government to take, impound, or divert water flowing on the public domain from its natural course for some benefit to the public.
right of appropriation
Right of government to take, impound, or divert water flowing on the public domain from its natural course for some beneficial purpose.
right of correlative user
The right of a landowner to the reasonable use of underground percolating water. (See water rights)
right of entry
The legal right to take possession of real estate in a peaceable manner.
right of first refusal
The right to the first opportunity to lease or purchase real property. For example, apartment tenants might retain the right of first refusal when their units are being converted to condominiums.
right of prior appropriation
Prior appropriation is a legal doctrine that governs water rights in certain regions, particularly in the western United States. The doctrine operates on the principle of "first in time, first in right," which means that the first person or entity to take water from a source for a beneficial use (such as irrigation, municipal water supply, or industrial use) has the senior right to that water. Subsequent users have junior rights, which are subordinate to senior rights. (See water rights)
right of redemption
The right of a defaulted property owner to recover his or her property by curing the default. (See equitable redemption, statutory redemption)
right of reentry
Right of reentry is the legal right to resume possession (a right that was reserved when a former possession was parted with)
right of survivorship
The distinctive characteristic of a joint tenancy (also tenancy by entirety) by which the surviving joint tenant(s) succeeds to all rights, title and interest of the deceased joint tenant without the need for probate proceedings.
right to rescind
Consumer's three-day right to cancel a credit transaction involving a security interest in the consumer's principal dwelling, as provided by Regulation Z. (See rescission, Regulation Z)
right-of-way
The right given by one landowner to another to pass over the land, construct a roadway or use as a pathway, without actually transferring ownership.
rightsizing
Rightsizing is a term for what companies do to realign their operations. The major part of that involves workforce adjustments. Although there may be fewer personnel positions in the short term, especially if adjustments are dictated by a downturn in the economy, the long-term result is new jobs are created with different or refined skill requirements.
riparian rights
Riparian rights are the rights of a landowner whose land borders on a stream or watercourse to use and enjoy the water which is adjacent to or flows over the owners land, provided such use does not injure other adjacent land owners. The property boundary would be the center line of a non-navigable river or the low waterline of a navigable stream or river.
risk
The probability of getting your money back. High risk means low probability; low risk means high probability.
risk
1. The chance or likelihood of consequences that will have an impact upon objectives. 2. A measure of the probability that damage to life, health, property, and/or the environment will occur as a result of a given hazard. 3. The degree of uncertainty regarding the rate of return on and/or the principal value of an investment. The chance that an investment will drop in value can be caused by many factors including, inflation, interest rates, default, politics, liquidity, etc.
risk assessment
Qualitative and quantitative evaluation of the risk posed to human health and/or the environment by the actual or potential presence and/or use of specific pollutants.
risk management
Evaluation and selection of appropriate property and other Insurance. (See risk)
Risk Rating 2.0 System
Risk Rating 2.0 is a flood insurance pricing system that calculates premiums based on a property's individual flood risk, not just its location on a flood map. It uses actuarial modeling and modern technology to assess the real flood risk and expected damage to each structure.
risk return theory
The theory that states the more risk you take, the higher the investment returns you will achieve. In real estate, this theory doesn't work. The more risk you take, the lower returns you get. You want to target the safer, moderately priced cash flow investment deals. Skip the speculative and braggable prize properties for some nice lower risk, decent return income producing assets.
risk-based financing
When the lender sets loan terms based on potential risk. Borrowers that show little risk of default would be entitled to a better rate and terms than a borrower where a higher probablity of default is indicated.
robo-signing
When servicer staff sign affidavits stating they reviewed loan documents when they had not actually done so.
rolled roofing
An asphalt roofing material that is manufactured in rolls with granules on one side. Asphalt roofing is a relatively inexpensive and short-lived product, and should not be used as a roofing material over living spaces.
rollover loan
A loan that includes a call date earlier than its normal amortization period; also called a renegotiable rate loan or a bullet loan.
Roman Civil Law
Roman private property ownership codes enforced by Spain on early California land owners. (See civil law)
roof decking
The undersupport material which is typically wood for attaching shingles and other materials to the roof. (See shingles)
root directory
An area on a storage disk that lists where files are located on the disk.
root of the title
The original grant (or root) of the title.
rough proportionality test
A test that determines whether the nature and extent of the land dedication requirements fit the nature of the proposed development. Under this test, the exactions (or permit conditions) required of the land owner must be proportional to the harm caused by a development. In other words, the bandage must fit the wound.
router
A device or computer program that determines the next network point to which a packet should be forwarded toward its intended destination. (See packet)
routine maintenance
Includes such day-to-day duties as cleaning common areas, performing minor carpentry and plumbing adjustments and providing regularly scheduled upkeep of heating, air-conditioning and landscaping.
rules and regulations
Real estate licensing authority orders that govern licensees' activities; they usually have the same force and effect as statutory law.
Rumford Act
California's fair housing law. (See Fair Employment and Housing Act)
run with the land
A phrase describing rights or covenants that bind or benefit successive owners of a property. An example is a restrictive building covenant in a recorded deed that would affect all future owners of the property. Unlike an easement in gross, an easement appurtenant runs with the land and thus passes to a succeeding owner even if it is not specified in the deed. For example, if the grantee Sylvia Buckner agrees, as part of the consideration to a transaction, to repair a building located on land owned by grantor Leonard Musslewhite, such a covenant will not run with the land. This is because it merely places a duty on the grantee Buckner. The promise does not touch and concern the land granted from Musslewhite to Buckner--it is only a personal covenant for the grantor's benefit.
S corporation
Business owned by no more than 35 shareholders and incorporated following requirements of Subchapter S of the Internal Revenue Code, which then allows income to flow directly to shareholders, avoiding double taxation.
Safe Drinking Water Act
Enacted by Congress in 1974, this federal law administered by the EPA and equivalent state regulators to establish and enforce drinking water standards.
Safe Drinking Water ActSAFE Mortgage Licensing Act
The Secure and Fair Enforcement for Mortgage Licensing Act of 2008, commonly referred to as the "Safe Act," is designed to enhance consumer protection and reduce fraud through the setting of minimum standards for the licensing and registration of mortgage loan originators. Full text of the SAFE Mortgage Licensing Act of 2008
safe yield
The long-term balancing of groundwater withdrawals with the amount of water naturally and artificially recharged to AMA (active groundwater management area) aquifers. See The AMA fact Sheet for further information.
safety clause
A safety clause may be contained in a listing. It provides that a broker is still entitled to a commission for a set period of time after the listing has expired if the property is sold to a prospect, who was introduced to the property by the broker, during the period of the listing.
salable loans
Loans that are intended to be sold to investors such as Fannie Mae and Freddie Mac in the secondary mortgage market place. (See secondary mortgage market)
sale-leaseback
A transaction in which an owner sells his or her improved property and, as part of the same transaction, signs a long term lease to remain in possession of the premises.
sale-leaseback-buyback
A sale-leaseback-buyback arrangement is a financial transaction involving three primary steps: a sale, a leaseback, and a potential buyback:
- For the sale, the owner of an asset (often real estate or expensive equipment) sells the asset to another party. This transaction provides the original owner, now the seller, with an immediate influx of cash, which can be critical for improving liquidity or investing in business operations.
- The leaseback happens simulataneously with the sale. The seller leases the asset back from the buyer for a predetermined period and at agreed-upon terms. This allows the seller to continue using the asset without owning it.
- The buyback is a condition in the initial agreement for the original seller to buy the asset back at a future date or under certain conditions.
sales associate
A sales associate is a broker or salesperson who is employed by or in an independent contractor relationship with a real estate broker.
sales comparison approach
The process of estimating the value of a property by examining and comparing actual sales of comparable properties. (See appraisal)
sales price
The actual price that a buyer pays for a property.
sales tax
A tax imposed by the government at the point of sale on retail goods and services. It is collected by the retailer and passed on to the state.
sample
Some of the units, or variates, of a population that accurately represents the population.
Sample Key Exchange Verbiage
Listing agent shall place keys in an envelope with Buyer's name on it and place it at the front desk of [name of brokerage] no later than [DATE]. Buyer's agent shall thereafter retrieve keys from the front desk of [name of brokerage].
Sample Key Exchange Verbiage
Listing agent shall place keys in an envelope with Buyer's name on it and place it at the front desk of [name of brokerage] no later than [DATE]. Buyer's agent shall thereafter retrieve keys from the front desk of [name of brokerage].
Sample Net Listing Terminology
The net sales price to the seller shall be $ ______ or any other sum the seller shall agree to accept. Seller agrees to pay the broker, as compensation for services, any amount over the net sales price mentioned above. Any expenses payable by the seller are to be deducted from the net sales price. The seller acknowledges that the broker has made no warranties or guarantees to induce the seller to enter into this net listing.
sandwich lease
A leasing arrangement in which an entity leases property from one party and leases that same property to another party. In this arrangement, the entity is both a lessee and a lessor, so it both pays and collects rent on the same property. Another term used is "sublease."
satisfaction of debt/mortgage
Discharge of an obligation before the end of its term by payment of the total debt owed. When all mortgage loan payments or payments on a judgement have been made. When a note has been paid in full. Satisfaction of mortgage (also known as a release of mortgage or mortgage discharge) returns to the mortgagor all interest in the real estate, which was conveyed to the mortgagee by the original recorded mortgage document. It is an instrument given by the mortgagee to the mortgagor that releases the mortgage lien when recorded.
savings and loan association (S&L)
A financial institution whose principal function is to promote thrift and home ownership. Depositors earn interest on their deposits, often at a higher rate than is offered at commercial banks. The S&L invests some of these deposits in residential mortgage loans, enabling more people to purchase and/or repair their homes. Savings and loan associations are active participants in the home loan mortgage market. (See thrift)
scannable resume
Resume designed so that computers can easily scan information from your resume; used by job seekers who are applying for positions with large corporations, educational, and government institutions.
SCANS Report
Secretary's Commission on Achieving Necessary Skills (SCANS) Report for employability (June, 1991) U.S. Department of Labor. wdr.doleta.gov/SCANS/. This report describes skills needed by adults to be successful in their work.
scarcity
1. One of the four basic elements of market value. Demand, Utility, Scarcity and Transferability (DUST) 2. Insufficiency of amount or supply; shortage: a scarcity of food that was caused by drought. 3. Rarity of appearance or occurrence: antiques that are valued for their scarcity.
Schedule A form
This form records all one's potential itemized deductions from the Mortgage Interest Deduction and property taxes, job related expenses, certain medical and dental expenses, gifts to charity and might roll up to the Standard or Itemized Deduction line on the 1040 Form if it is a larger amount than the Standard Deduction. (See 1040 Form, mortgage interest deduction (MID))
Schedule E form
This form records all a person's income and expenses from real estate rental property activity in his or her rental property business and rolls up to Line 17 on the 1040 Form. (See 1040 Form, depreciation deduction)
scheduled long-term monthly debt payments
Scheduled long-term monthly debt payments are the monthly payments of all installment debts, revolving charge accounts, open accounts, and lines of credit that would be used to determine a borrower's ability to repay per the current underwriting guidelines of the FHA, Fannie Mae, the Federal Home Loan Mortgage Corporation, or the DVA.
scheduled monthly payments
Scheduled monthly payments means minimum sums required to be paid with respect to all of the borrower's debts that are reported on any loan application completed by the borrower and a nationally recognized consumer credit bureau report and the monthly mortgage payment due under the high-cost home loan (ignoring any reduction arising from a lower introductory rate) plus 1/12 of the annualized cost of real estate tax and insurance premium payments during the immediately preceding 12 months. Scheduled monthly payments does not include any debts that are consolidated with, or paid off by, the high-cost home loan.
scheduled rent
Rent paid by agreement between lessor and lessee; also called contract rent.
scheme to defraud
A scheme to defraud is a plan a person employs that uses a statement, promise, misrepresentation, deception, or any other kind of falsehood designed to deprive a victim of something of value. For example, if a person offered to sell someone land that was not his/hers to sell in order to get the offeree to give him/her money is a scheme to defraud.
science
Possession of knowledge as distinguished from ignorance or misunderstanding; knowledge attained through study or practice; knowledge covering general truths or the operation of general laws especially as obtained and tested through scientific method.
scientific method
The systematic apporach of observation, hypothesis formation, hypothesis testing and hypothesis evaluation that forms the basis for modern science.
scientific method
Principles and procedures for the systematic pursuit of knowledge involving the recognition and formulation of a problem, collection of data through observation and experiment, and the formulation and testing of hypothesis.
scope of work
The amount and type of information researched and the analysis applied in an appraisal assignment.
Score report (AZ)
All candidates who pass the state administered licensing exam will be issued a passing score report by the testing center personnel. This report must be provided to the Arizona Department of Real Estate in the licensing application package.
search consultants/recruiters
Companies that arrange interviews for professional-level job seekers, generically referred to as "headhunters."
search engine
A program that systematically searches documents for specified keywords; A program that systematically searches the Internet for documents in response to specific inquiry by a user; A website where users can make specific inquiries and receive links to websites that are specifically relevant to those inquiries.
seasonal fluctuations
Short-term changes in business and economic activity that occur during the year resulting from weather or custom.
second mortgage
A mortgage (or trust deed) that is junior or subordinate to a first mortgage; typically, an additional loan imposed on top of the first mortgage, taken out when the borrower needs more money. Because the risk involved to the lender is greater with the second mortgage, the lender's conditions are usually more stringent, the term is shorter and the interest rate is higher than for the first mortgage. (See mortgage)
second-degree misdemeanor
A second-degree misdemeanor is a criminal offense less severe than a first-degree misdemeanor but more serious than minor infractions or violations. Penalties typically include a shorter jail sentence (often up to 60-90 days, depending on jurisdiction), smaller fines, or probation.
secondary financing
A loan taken out in addition to a first loan, usually obtained from an individual lender.
secondary mortgage market
A market for the purchase and sale of real estate promissory notes.
secret profit
Refers to a broker making an undisclosed profit at the seller's expense; for example, when the broker has an undisclosed relative buy the listed property and then resell it to a buyer whose earlier offer was never presented to the seller.
section 202
Section 202 is the Supportive Housing for the Elderly Program. This program provides federal funding to facilitate the development and operation of supportive rental housing for very low-income persons aged 62 years and older. Through capital advances and project rental assistance, the program enables elderly residents to live independently in an environment that offers supportive services such as cleaning, cooking, and transportation.
Section 265-a
Section 265-a provides homeowners with information and disclosures so they can make informed decisions when approached by persons deemed equity purchasers who are seeking a sale or transfer of the homeowner's property. When applicable, the law provides remedies for homeowners in transactions that involve deceit, lack of fair dealing, misleading representations, and unfair contract terms.
Section 595-a(1) of the Banking Law
Section 595-a(1) of the Banking Law was amended to prohibit mortgage bankers, mortgage brokers, and exempt organizations from making or arranging a loan to an equity purchaser if the mortgage banker, mortgage broker, or exempt organization (for example, banks, thrifts, and their consolidated subsidiaries) had knowledge that the equity purchaser was not complying with the provisions of Section 265-a of the Real Property Law with respect to such transactions.
section 8
Federally subsidized housing administered by HUD where the tenant pays up to thirty percent of his or her adjusted monthly income and HUD pays the difference between that amount and the market rent. Property owners are not required to participate. (See section 202)
section and township system
Sections and townships are part of the rectangular (government) survey system of land description. A township is a division of territory that is six miles square, and contains 36 sections, each of which is one square mile. A township consists of 23,040 acres. (See rectangular (government) survey system, section)
section(s)
As used in the government survey method, a section of land is the area of one square mile, or 640 acres. A section is 1/36 of a township, or each township contains 36 sections. Sections are numbered 1 through 36. Section 1 is always in the northeast, or upper right-hand, corner. The numbering proceeds right to left to the upper left-hand corner. From there, the numbers drop down to the next tier and continue from left to right, then back from right to left (See township)
Securities and Exchange Commission
The mission of the U.S. Securities and Exchange Commission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.
SEC Homepagesecuritization
The pooling of real estate mortgages and trust deeds to act as collateral for the sale of securities to public and private investors. (See secondary mortgage market)
security
Evidence of obligations to pay money or of rights to participate in earnings and distribution of corporate, trust or other property. A security is usually found where an investor subjects his or her money to the risks of an enterprise over which he or she exercises no managerial control.
security agreement
A real estate security agreement, also known as a mortgage or deed of trust depending on the jurisdiction, is a legal contract between a lender (the secured party) and a borrower (the debtor) that establishes a security interest in real estate (the collateral) to secure a loan or other obligation. This agreement allows the lender to have a legal claim against the property if the borrower fails to fulfill their financial obligations.
security deposit
Money deposited by or for the tenant with the landlord, to be held by the landlord for the following purposes: 1. to remedy tenant defaults for damage to the premises (be it accidental or intentional), for failure to pay rent due or for failure to return keys at the end of the tenancy; 2. to clean the dwelling so as to place it in as fit a condition as when the tenant commenced possession, considering normal wear and tear; and 3. to compensate for damages caused by a tenant who wrongfully quits the dwelling unit. (See landlord, tenant)
security instrument
A written document executed by a debtor by which the described property is made security for the underlying debt.
security interest
Security interest is an interest in personal property or fixtures.
segmentation
Consideration of a market area by division into specific categories of consumer preferences, such as the income, work, or leisure activities of the population.
seismic hazards zone
Area specified by the California Department of Conservation as being at high risk of severe earth movement.
selection panel
The selection panel could include the planning director, a planning commissioner, a council member or county supervisor, interested citizens, representatives of different departments that will be participating in plan development and non-staff individuals with planning knowledge and experience.
self-amortizing loans
Loans in which periodic payments of principal and interest are scheduled over the life of the loan. Self-amortizing loans provide more opportunity for homeownership by allowing these scheduled payments, as opposed to large balloon payments at maturity (the end of the loan term).
self-assessment
Techniques to increase self-awareness.
self-contained report
A self-contained report is a narrative report and the most comprehensive type of appraisal report, including a thorough statement of the background data supporting the opinion of value.
self-management
Being able to set goals and motivate oneself, taking charge of one's personal and career development.
Self-reporting (Florida)
Self-reporting refers to the requirement or voluntary action of a real estate licensee to inform the Florida Real Estate Commission (FREC) or the Department of Business and Professional Regulation (DBPR) about certain events or violations. These may include criminal convictions, disciplinary actions in other states, or violations of real estate laws or regulations. Self-reporting demonstrates accountability and may influence the severity of disciplinary actions taken by the regulatory body.
seller carryback financing
A sale of real property where the seller receives a portion of the sales price in the form of a promissory note secured by the real property purchased. An extension of credit by the seller.
seller financing
There are specific additional duties imposed upon the licensee who negotiates a sale of real property when the seller receives a portion of the sales price in the form of a promissory note secured by the real property purchased. This seller financing disclosure statement is required in a transaction for the purchase of a dwelling for not more than four families where the purchase includes an extension of credit by the seller and where the licensee is acting as an "arranger of credit." (See arranger of credit, promissory note)
seller financing
A loan made by the owner/seller of real estate to the purchaser to cover all or part of the sales price.
seller property disclosure statement
A statement from the transferor (seller) of real estate which provides information regarding the physical condition of the property.
seller's agent
An agent who represents the seller of real property. (See buyer's agent)
seller's market
A real estate marketplace where there are more buyers than sellers.
Seller's Permission to Disclose Terms
Arizona Commissioner's Rule R4-28-802.B: ...Upon receiving permission from the seller, the salesperson or broker acting on behalf of the seller may disclose to all offerors or their agents the existence and terms of all additional offers on the listed property...
Seller's Real Property Disclosure Form
As required by Nevada Real Estate Division Code NRS 113. 100-113.150, a transferee (buyer) of residential real property is entitled to a statement from the transferor (seller) which provides information regarding the physical condition of the property. Must be made by the seller at least 10 days before residential property is conveyed to a buyer.
senior loan
A real estate loan in the first priority position. (See junior mortgage)
sensitive information
Sensitive Information - Records or documents that contain an individual's first and last name or first initial and last name in combination with a corresponding complete:
social security number;
credit card, charge card or debit card number;
retirement account number;
savings, checking or securities entitlement account number;
driver license number or nonoperating identification license number.
separate property
Under community property law, property owned solely by either spouse before the marriage, acquired by gift or inheritance after the marriage or purchased with separate funds after the marriage. (See community property)
septic system
A system for collecting, treating and eliminating waste from a home waste drainage system.
sequence
A continuous or connected series; a succession of repetitions of harmonic pattern each in a new position; continuity of progression.
server
A computer on a network that supplies the network with applications, data and storage capacity.
service professionals
Lawyer, doctor, insurance agent, broker, accountant
Servicemembers Civil Relief Act (SCRA)
A law that helps alleviates some of the stress placed on a Servicemember's family when they are called into service. It allows the Servicemember to suspend or postpone certain civil obligations so they can devote their full attention to their military duties.
servicer
A servicer, which is defined in RESPA (12 U.S.C. § 2605(i)), does not include a licensed attorney who, in the practice of law or performing as a trustee, accepts payments related to a loan closing, default, foreclosure, or settlement of a dispute or legal claim related to a loan.
servicer
A servicer is a person who collects or receives payments, including principal, interest, and trust items, such as hazard insurance, property taxes, and other amounts due, on behalf of a note holder or investor in accordance with the terms of a residential mortgage loan. This includes working with a borrower on behalf of a note holder or investor, when the borrower is in financial hardship or default, to modify, either temporarily or permanently, the terms of an existing residential mortgage loan.
services
Activities perceived to have monetary or exchange value, such as legal advice, health care, repair work, entertainment, transportation, and business services. (See goods)
services actually performed
Does not include taking consideration in exchange for referrals. Payment by a lender to a real estate broker for loan origination services actually performed by the real estate broker (or the lender's splitting of a loan origination fee with such a real estate broker as compensation for such services actually performed) is a permitted exception under RESPA.
When a person in a position to refer settlement service business, such as . . . [a] real estate broker or agent . . . receives a payment for providing additional settlement services as part of a real estate transaction, such payment must be for services that are actual, necessary and distinct from the primary services provided by such person. . . .
servicing a mortgage loan
Servicing a mortgage loan means to receive, cause to be received, or transferred for another, installment payments of principal, interest, or other payments pursuant to a mortgage loan.
servicing agreement
Signed documentation as to who will service the loan.
servicing endorsement
A servicing endorsement authorizes a mortgage lender to service a loan for more than four months.
servicing endorsement *
A servicing endorsement authorizes a mortgage lender to service a loan for more than four months.
servient tenement
Land on which an easement exists in favor of an adjacent property (called a dominant tenement or estate); also called a servient estate. If property A has a right-of-way across property B, property B is the servient tenement. The servient owner may not use the property in such a way as to interfere with the reasonable use of the dominant owner. (See dominant tenement, easement)
set-up sheet
Also know as an "Annual Property Cash Flow Statement." Includes cash flow information about a listed rental property that is passed out to other real estate companies and/or given to prospective buyers.
setback
The amount of space local zoning regulations require between a lot line and a building line.
settlement services
Any service provided in connection with a real estate settlement including but not limited to title searches, title insurance, document preparation, property survey, appraisal, pest inspection, services rendered by a real estate agent or broker, and the origination of a federally related mortgage loan and closing services.
settlement statement
A document prepared for and presented to the borrower at the loan closing showing all disbursements to be made, such as payment to the seller.
severalty
Sole ownership of real property.
severance
Changing an item of real estate to personal property by detaching it from the land; for example, cutting down a tree.
sharecropping
In an agricultural lease, the agreement between the landowner and the tenant farmer to split the crop or the profit from its sale, actually sharing the crop. (See agricultural lease)
shared or collaborative evaluation
Employees, managers, and human resources personnel can work together in the portfolio process. Through their portfolios, employees can demonstrate the unique knowledge, skills, talents, and interests that they contribute to their workplace.
shared-appreciation mortgage (SAM)
A mortgage loan in which the lender, in exchange for a loan with a favorable interest rate, participates in the profits (if any) the borrower receives when the property is eventually sold. (See mortgage loan)
shareholder
The owners of a corporation are called shareholders.
sheathing
Sheathing is insulating and bracing material, such as plywood, applied to exterior walls of wood-frame structures, to which exterior finishing material, such as siding or masonry, is applied.
sheriff's deed
When real property is sold at a sheriff's sale (judicial sale) to satisfy a judgment lien, the winning bidder will eventually receive a a sheriff's deed after the statutory redemption rights have expired. Sheriff's deeds are bargain and sale deeds, and contain no express warranties. For the most part, sheriff's deeds are not insurable deeds, unless a particular title company has agreed to insure the title.
sheriff's sale
A sale that is conducted by the County sheriff and is for the purpose of selling real property which has been seized by the sheriff to satisfy judgment liens.
Sherman Anti-Trust Act
U.S. legislation enacted to curb concentrations of power that restrict trade and reduce economic competition. Prohibits price fixing, boycotting, and tie-in agreements.
shingles
Roofing material characterized by short, rectangular sections, nailed to the roof decking in an overlapping pattern. Asphalt shingles are the most common type. (See roof decking)
shopping chart
A shopping chart provides space to compare four different originators and their loan offerings.
short sale
A sale for less than is owed on a loan where the lender agrees to accept sale proceeds to extinguish the debt.
short term rate
A reduced rate for title insurance applicable in cases where the owner of a property has been insured previously or where any lender has been insured somewhat recently on the property.
short-lived items of depreciation
Depreciating building components that could be expected to be replaced at least several times over the structure's useful life, such as roofing.
shower pan
A waterproof "pan" placed beneath the floor tiles or concrete base of a shower that prevents leaking.
sick building syndrome
The term "sick building syndrome" (SBS) is used to describe situations in which building occupants experience discomforting health conditions that appear to be linked to time spent in a building, but no specific illness or cause can be identified. EPA Sick Building Syndrome Factsheet
siding
Siding is an exterior wall finishing, applied in horizontal boards that can be made of wood, aluminum, vinyl, or a composite material.
signatory
1. having signed or joined in signing a document. 2. a signer, or one of the signers, of a document.
sill
A sill is the wood member placed directly on a foundation; in California, state law requires anchor bolts to fasten a sill to the foundation for earthquake safety. (See anchor bolts, foundation)
simple interest
Interest computed on the principal balance, and disregards previously accumulated (upaid) interest.
simulation
The imitative representation of the functioning of one system or process by means of the functioning of another.
simultaneous second-lien loan
A lending arrangement where either a closed-end second-lien or a home equity line of credit (HELOC) is originated simultaneously with the first lien mortgage loan, typically in lieu of a higher down payment.
single agency
The practice of representing either the buyer or the seller but never both in the same transaction. The single-agency broker may be compensated indirectly through an authorized commission split or directly by the principal who employed the agent to represent him or her.
single-family, owner-occupied dwellings
A dwelling which will be owned and occupied by a signatory to the mortgage or deed of trust secured by such dwelling within 90 days of the execution of the mortgage or deed of trust.
sinking fund
1. A "sinking fund" is established to gradually amass enough money to satisfy a debt or to meet a specific requirement. 2. The sinking fund method of depreciation contemplates periodic investments of equal amounts of money in a compound-interest-bearing account whereby the investment plus the compound interest will be used to replace the improvement at the end of its economic life.
site value
Site value is the value of land exclusive of improvements.
situational analysis
The foundation of a business plan is a situational analysis of the past, present, and likely future. A plan is only as good as the information gathering and filtering processes in the situational analysis and the assumptions about future cause and effect. Planners must avoid underestimating the competition and overstating the company's abilities, including revenue capacity.
situs
The personal preference of people for one area over another, not necessarily based on objective facts and knowledge.
six functions of a dollar
The six compound interest factors used in the mathematics of finance to adjust present or future payments for the time value of money.
six-month rule
Time period in which a homeowner can sell one home and move into another, less costly one, in order to pay debts that would otherwise threaten a sale of the homestead.
skeleton
The bony or cartilaginous framework supporting the soft tissue and protecting the internal organs. (See musculoskeletal)
skewness
A measure of the lack of symmetry in a distribution of the variates of a population.
skills
Methods that improve your employability
slab
A flat piece of concrete, typically used as a walking surface, but may also serve as a load bearing device as in slab homes.
Small Business Liability Relief and Brownfields Revitalization Act
The law that provides for funds to assess and clean up brownfields, clarify liability protections, and provide tax incentives toward enhancing state and tribal response programs (also known as Brownfields Law).
smoke detectors
State law requires that residential properties be equipped with smoke detectors. Local ordinances may impose more rigid requirements. The specific requirements may vary depending on the type of property, the number of units, and the number of stories of the property.
smooth muscle
Muscle tissue that lacks cross striation; made up of elongated spindle shaped cells having a central nucleus; found in structures such as the stomach and bladder; performing involuntary functions. (See muscle)
social benefits
Social benefits are those that accrue to everyone in a society. (See social costs)
social costs
The costs of producing a good or service which are borne by society as a whole. (See social benfits)
social groups
Religious groups, service organizations, fraternal organizations, sororities, sports teams, recreational groups
Social Security Disability Insurance
Social Security Disability Insurance (SSDI) pays monthly benefits to workers who are no longer able to work due to a significant illness or impairment that is expected to last at least a year or to result in death within a year. It is part of the Social Security program that also pays retirement benefits to the vast majority of older Americans. Benefits are based on the disabled worker's past earnings and are paid to the disabled worker and to his or her dependent family members. To be eligible, a disabled worker must have worked in jobs covered by Social Security. In January 2014, 8.9 million disabled workers received benefits.
socialism
Economic system under which the ownership, management, and control of the means of production and distribution are held by the community or state; a command economy.
soffit
The finished underside of the eaves. A small ceiling like space, often out of doors, such as the underside of a roof overhang.
soft money loan
A loan where credit not cash is extended, usually by the seller carrying all or part of the financing.
soil banking
Land retired from crop cultivation and planted with soil-building crops; government subsidies are paid to farmers for their retired land.
soil moisture sensor
A soil moisture sensor is a device used to measure the amount of water present in the soil. It helps determine the moisture level by detecting changes in the electrical conductivity or resistance of the soil, which varies with water content. These sensors are crucial in precision agriculture as they provide real-time data, allowing farmers to optimize irrigation, reduce water waste, and ensure that crops receive the right amount of water for optimal growth.
solar heating
Solar heating is a system that uses the warmth of sun; passive when sunlight is allowed to warm tiles or other materials; active when water is passed through a solar collector, then recirculated.
Soldiers and Sailors Civil Relief Act
A law prohibiting foreclosures while a person is serving in the military and within three months thereafter except by court order.
sole ownership
sole proprietorship
A method of owning a business in which one person owns the entire business and reports all profits and losses directly on his or her personal income tax return, as contrasted with corporate, joint or partnership ownership. A sole or individual proprietorship is easy to organize and flexible to operate. It is frequently used in real estate brokerage. An individual proprietor may run a brokerage company if he or she has a valid broker's license. The proprietor may use his or her own name or a fictitious name previously registered as required by state law. There is a growing tendency for sole proprietors to incorporate and thus take advantage of certain tax and fringe benefits, such as those provided by pension and profit-sharing plans.
sole tenancy
See tenancy in severalty
solemn form
The goal of the solemn form process is to ensure that the deed accurately reflects the wishes of the grantor, and that it was executed in accordance with the law.
solicitation
In contract law, there is a great difference between "solicitation of an offer" and "offer". An offer creates a power of acceptance in the other party (offeree) and a corresponding liability on the offeror. Solicitation of an offer is merely an invitation to negotiate. There is no power of acceptance with a solicitation.
solicitation materials
"Solicitation materials intended to be the first point of contact with consumers" includes business cards, stationery, advertising fliers, and other materials designed to solicit the creation of a professional relationship between the licensee and a consumer, and excludes an advertisement in print or electronic media and "for sale" signs.
solid core door
A door where the inner material (core) is made of solid wood. This type door is usually used for doors to the outside or garage.
solid waste
As defined under Resource Conservation and Recovery Act, any solid, semi-solid, liquid, or contained gaseous materials discarded from industrial, commercial, mining, or agricultural operations, and from community activities. Solid waste includes garbage, construction debris, commercial refuse, sludge from water supply or waste treatment plants or air pollution control facilities, and other discarded materials.
SONYMA (State of New York Mortgage Agency)
SONYMA is the acronym for State of New York Mortgage Agency.
SONYMA Achieving the Dream Program
The SONYMA Achieving the Dream Program provides lower interest rates to low-income, first-time homebuyers. The program provides qualified low-income, first-time homebuyers with low down payment mortgage financing on one- and two-family dwellings (including condominiums and cooperative apartments, as well as manufactured homes permanently attached to real property) at a low fixed interest rate.
SONYMA Construction Incentive Program
The SONYMA Construction Incentive Program allows qualified buyers to obtain financing for the purchase of newly constructed or rehabilitated one- and two-family homes. SONYMA's Construction Incentive Program was created in an effort to stimulate the construction of one- and two-family homes.
SONYMA Homes for Veterans Program
The SONYMA Homes for Veterans Program allows qualified veterans to apply for any currently available SONYMA program with more favorable terms. A change in federal law enables SONYMA to waive the first-time homebuyer requirement for any veterans (and their spouse or co-borrower) who served in active military, naval, or air service, or who have been discharged or released from their military duties under conditions other than dishonorable.
SONYMA Low Interest Rate Mortgage Program
The SONYMA Low Interest Rate Mortgage Program offers competitive interest rate mortgages to low- and moderate-income households that feature first-time homebuyers, except in target areas.
SONYMA Mortgage Insurance Fund (MIF)
The SONYMA Mortgage Insurance Fund (MIF) promotes the preservation and revitalization of communities across New York by providing insurance on mortgage loans that encourages investment of capital by commercial and public lenders.
SONYMA Remodel New York Program
The SONYMA Remodel New York Program provides competitive interest rate financing to qualified first-time homebuyers for the purchase and renovation of homes in need of improvements or repairs. Under Remodel New York, SONYMA will finance both the purchase and the renovation of the home with one mortgage.
SOP1-1
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Standard of Practice 1-1
REALTORS®, when acting as principals in a real estate transaction,
remain obligated by the duties imposed by the Code of Ethics. (Amended 1/93)
The duties imposed by the Code of Ethics encompass all real estate related
activities and transactions whether conducted in person,
electronically, or through any other means.
The duties the Code of Ethics imposes are applicable whether
REALTORS® are acting as agents or in legally recognized non-agency
capacities except that any duty imposed exclusively on agents by law
or regulation shall not be imposed by this Code of Ethics on
REALTORS® acting in non-agency capacities.
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sop1-1
|
Standard of Practice 1-1
REALTORS®, when acting as principals in a real estate transaction,
remain obligated by the duties imposed by the Code of Ethics. (Amended 1/93)
The duties imposed by the Code of Ethics encompass all real estate related
activities and transactions whether conducted in person,
electronically, or through any other means.
The duties the Code of Ethics imposes are applicable whether
REALTORS® are acting as agents or in legally recognized non-agency
capacities except that any duty imposed exclusively on agents by law
or regulation shall not be imposed by this Code of Ethics on
REALTORS® acting in non-agency capacities.
|
sop1-1
|
Standard of Practice 1-1
REALTORS®, when acting as principals in a real estate transaction,
remain obligated by the duties imposed by the Code of Ethics. (Amended 1/93)
The duties imposed by the Code of Ethics encompass all real estate related
activities and transactions whether conducted in person,
electronically, or through any other means.
The duties the Code of Ethics imposes are applicable whether
REALTORS® are acting as agents or in legally recognized non-agency
capacities except that any duty imposed exclusively on agents by law
or regulation shall not be imposed by this Code of Ethics on
REALTORS® acting in non-agency capacities.
|
source reduction
The design, manufacture, purchase, or use of materials (such as packaging) that reduce the amount or toxicity of garbage. Source reduction can reduce waste disposal and handling costs because the expense of recycling, composting, combustion and landfill are avoided. Source reduction conserves resources and reduces pollution.
spatial data
Spatial data, also known as geospatial data, refers to information about the physical location and shape of objects, features, and phenomena on the Earth's surface. This type of data is characterized by its association with geographic coordinates or other spatial identifiers.
spec building
Speculative, or "spec" buildings, are built by developers with the goal of attracting buyers during or shortly after construction. The builder acquires the funds and builds. Then when the property is sold, the builder receives the sales proceeds and hopes to make a profit.
special agent
One authorized by a principal to perform a particular act or transaction without contemplation of continuity of service as with a general agent. The real estate broker is ordinarily a special agent appointed by the seller to find a ready, willing and able buyer for a particular property. An attorney-in-fact under a limited power of attorney is a special agent.
special assessment
A tax or levy customarily imposed against only those specific parcels of realty that will benefit from a proposed public improvement, as opposed to a general tax on the entire community. Because the proposed improvement will enhance the value of the affected homes, only those affected owners must pay this special lien. Common examples of special assessments are water, sidewalk and sewer assessments, or other special improvements such as parks and recreational facilities.
special detainer action
The special detainer action is limited to residential leases and is part of the Arizona Residential Landlord and Tenant Act. After proper notice is given, a court proceeding is conducted. The result of the court hearing is either an order for the tenant to vacate the premises or a dismissal of the detainer action.
special limitation
A fee simple estate may also be qualified by a special limitation. The estate ends automatically upon the current owner's failure to comply with the limitation. The former owner retains a possibility of reverter. If the limitation is violated, the former owner (or his or her heirs or successors) reacquires full ownership, with no need to reenter the land or go to court. A fee simple with a special limitation is also called a fee simple determinable because it may end automatically. The language used to distinguish a special limitation-the words "so long as" or "while" or "during"-is the key to creating this estate.
special power of attorney
Authorization to act for someone else for a specific purpose, such as a real estate transaction. (See power of attorney)
special studies zone
A specific area where an investigation is taking place regarding seismic or geologic considerations.
special warranty deed
A deed in which the grantor warrants or guarantees the title only against defects arising during the period of his or her tenure and ownership of the property and not against defects existing before that time. Such a deed is usually identified by the language "by, through, or under the grantor, but not otherwise." A special warranty deed is often used when a fiduciary such as an executor or trustee conveys the property of his or her principal, because the fiduciary usually has no authority to warrant against acts of his or her predecessors in title.
special-purpose property
Hotels, resorts, nursing homes, theaters, schools, places of worship and other organizations whose specialized needs dictate the design and operation of the property.
specific denial
Any allegation not denied is deemed to be admitted. When a party intends in good faith to deny only a part of an allegation, the party shall admit so much of it as is true and shall deny the remainder.
specific field questions
Questions that you can ask about how to get a job in a specific field; i.e., branch of knowledge; "in what discipline is his doctorate?"; "teachers should be well trained in their subject"; "anthropology is the study of human beings" [syn: discipline, subject, subject area, subject field, field of study, study, branch of knowledge]
specific lien
A lien affecting or attaching only to a certain, specific parcel of land or piece of property. (See lien)
specific performance
An action brought in a court of equity in special cases to compel a party to carry out the terms of a contract. The basis for an equity court's jurisdiction in breach of a real estate contract is the fact that land is unique and mere legal damages would not adequately compensate the buyer for the seller's breach.
speculating
Speculating is buying real estate without doing much, if any, due diligence and simply hoping the value of the property will increase over time. It is not smart, prudent, nor likely to be a successful way to try to increase one's long term wealth. You may win big a few times and then think you are invincible‚ but soon enough it is more likely than not that you will lose it all on your next deal(s).
splash block
A small, specially designed portable concrete pad. Oriented downhill, splash blocks direct water from rain gutter down drains or under outside hose faucets to flow away from the house.
split-entry
A one-story house constructed on an elevated foundation, with the entry between the upper and lower floors, that allows additional living space in the lower level.
split-fee financing
A form of joint venture participation where the lender purchases the fee land under the proposed development project and leases it to the developer. The lender also finances the improvements to be constructed on this leasehold. (See joint venture)
split-level
A house that has three separate levels of space, with the entry to a single level that provides access to a second story that is over a garage space.
spot zoning
Zoning of parcels not in conformance with the general zoning of an area. (See zoning)
sprinkler system
In property management, a sprinkler system is an automated fire protection system designed to detect and extinguish fires by discharging water when a fire is detected. It consists of a network of pipes and sprinkler heads installed throughout a building. The system activates individually at the site of a fire, helping to control or extinguish it before it can spread, thereby protecting property and occupants.
square footage
square-foot method
A method of estimating a building's construction, reproduction or replacement costs; whereby the structure's square-foot floor area is multiplied by an appropriate construction cost per square foot. (See appraisal)
staff authority
Staff authority is given to the people responsible for providing administrative support. Staff managers do not command others. They have the power to provide advice, support, and service to line departments. Examples of staff authority are found in personnel, purchasing, engineering, and finance.
staging
Put simply, staging means preparing the home for a potential buyer — or "setting the stage,". It might involve redecorating, rearranging furniture, cleaning and other aesthetic strategies to present the home in the best possible light. The goal is to make the home as appealing as possible to the most potential buyers.
stakeholder
A person with an interest or concern in something.
Standard & Poor's 500 Index
Standard & Poor's 500 is an index of 500 stocks chosen for market size, liquidity and industry grouping, among other factors. The S&P 500 is designed to be a leading indicator of U.S. equities and is meant to reflect the risk/return characteristics of the large cap universe. Companies included in the index are selected by the S&P Index Committee, a team of analysts and economists at Standard & Poor's. The S&P 500 is a market value weighted index - each stock's weight is proportionate to its market value.
standard coverage policy
A standard coverage policy normally insures the title as it is known from the public records. In addition, the standard policy insures against such hidden defects as forged documents, conveyances by incompetent grantors, incorrect marital statements and improperly delivered deeds. (See extended coverage policy, title insurance)
standard deduction
Located on 1040 Form Line 40. This is a free deduction the government gives you take deduct against your income. This amount is compared to your Schedule A Itemized Deduction amount and the taxpayer takes the larger of the two as their deduction.
standard deviation
A measure of the difference between individual entities, called variates, and an entire population, in which the square root of the sum of the squared differences between each variate and the mean of all variates in the population is divided by the number of variates in the population.
standard of care
A statement of duties expressing the conduct expected of a professional such as a real estate Broker , Agent or Appraiser.
standard subdivision
Area of land divided into parcels intended for separate ownership, with no common (shared) ownership by all of the owners of any of the land.
standard terms/forms
1. Pre-written, pre-approved language, appropriate to various situations, that is ready to be inserted into contracts and documents. 2. Pre-written, pre-approved forms, appropriate to various situations.
standards of practice
A professional code of behavior for real estate professionals promulgated by the National Association of Realtors.
standby fee
Fee paid by builder to mortgage banker in exchange for agreement to make mortgage loans available at a stated price at a future time.
standby takeout commitment
An agreement by an interim lender to advance funds to take out a construction lender. (See interim financing)
stare decisis
The reliance of courts on previous decisions when judging disputes. (See common law)
starting time
Date on which a construction project begins (work starts or materials are provided).
state
Any state of the United States, the District of Columbia, Puerto Rico, the Northern Mariana Islands, and any territory or possession of the United States.
State Coastal Conservancy Act
The State Coastal Conservancy Act, officially known as the State Coastal Conservancy Act of 1976, is a piece of California legislation codified in Division 21 (commencing with Section 31000) of the California Public Resources Code. This act established the State Coastal Conservancy and provides its powers and responsibilities related to the preservation, restoration, and enhancement of California's coastal resources.
State Home Foreclosure Prevention Project
The State Home Foreclosure Prevention Project was authorized by the Commissioner of Banks to seek solutions to avoid foreclosures for home loans in North Carolina.
State of New York Municipal Bond Bank Agency (MBBA)
The State of New York Municipal Bond Bank Agency (MBBA) provides access to the capital markets for special programs and purposes that benefit the municipalities of New York.
state-licensed loan originator
A state-licensed loan originator is an individual who is an MLO or engages in the activities of an MLO, not an employee of a depository institution or a subsidiary that is owned and controlled by a depository institution or regulated by a federal banking agency, licensed or required to be licensed pursuant to the Mortgage Loan Originator Licensing Act, and registered as a state-licensed loan originator with, and maintains a unique identifier through, the NMLS&R.
stated income loan
A stated income loan is a mortgage where the lender does not verify the borrower's income. Borrowers are asked to state their income, and taken at their word. Often called the liar loan.
statement of information
Also called a "Statement of Identity." Statements provided to the escrow agent verifying pertinent data identifying the grantor, grantee, or borrower.
statement of reasons
The Federal Equal Credit Opportunity Act (ECOA) (Title VII of the Consumer Protection Act) requires that a lender/creditor who denies an application for credit must provide the applicant with a statement of reasons, or written notification of the applicant's right to obtain a statement of reasons, within thirty days after receipt of a completed application for credit. (See Equal Credit Opportunity Act)
static random access memory (SRAM)
A type of memory that does not need to be refreshed. (See DRAM, RAM, ROM, SDRAM)
statute of frauds
State law that requires certain contracts to be in writing and signed by the party to be charged (or held) to the agreement in order to be legally enforceable.
statute of limitations
That law pertaining to the period of time within which certain actions must be brought to court. The law is intended to protect the vigilant against stale claims by requiring the prompt assertion of claims; thus an action must be brought (i.e., the complaint filed) within a specified time of the occurrence of the cause of action. After the time period expires, the claim is said to be "outlawed" and may not be enforced in court. The theory behind the statute of limitations is that there must be some end to the possibility of litigation. It is said that stale witnesses and stale records produce little truth and result in accidental justice, if any.
statutory dedication
Dedication of an easement for public use under the provisions of the California Subdivision Map Act. (See easement)
statutory definition
A statutory definition is one that is enacted and required by statute. It requires the word (where used in any statute) to be interpreted in only one way - the statutorily mandated way.
statutory independent contractors
Federal tax law prescribes a three-part test for a salesperson to be considered a statutory independent contractor (described in the federal tax code as statutory nonemployee): (1) a properly issued real estate license; (2) a written independent contractor agreement with the company/broker; and (3) substantially all of the compensation must be based on output or production, not hours worked. Statutory nonemployee or independent contractor status is established when all three requirements are satisfied, at least for federal tax purposes.
statutory law
The laws, rules and regulations enacted by legislatures and other governing bodies. (See civil law, common law, constitutional law)
statutory lien
A lien imposed on property by statute—a tax lien, for example—in contrast to an equitable lien, which arises out of common law. (See lien)
statutory redemption
The right of a defaulted property owner to recover the property after its sale by paying the appropriate fees and charges. (See equitable redemption)
statutory time period
A required period of time legally alloted and documented for a certain procedure or situation.
stay of proceedings
The stoppage of an entire case or a specific proceeding within a case. This type of stay is issued to postpone a case until a party complies with a court order or procedure. A court may stay a proceeding for a number of reasons. One common reason is that another action is under way that may affect the case or the rights of the parties in the case.
steering
Steering is the illegal practice of showing potential buyers homes located only in certain neighborhoods. This practice makes certain homes unavailable to some buyers on the basis of race or national origin and on these grounds is prohibited by provisions of the federal fair housing act. Steering is often difficult to detect, however, because the steering tactics can be so subtle that the home buyer is unaware that his or her choice has been limited. Steering could be a licensee's use of a word, phrase or act that is intended to influence the choice of a prospective property buyer on a discriminatory basis.
stigmatized property
A property that has acquired an undesirable reputation due to an event that occurred on or near it, such as violent crime, gang-related activity, illness or personal tragedy. Because of the potential liability to a licensee for inadequately researching and disclosing material facts concerning a property's condition, licensees should seek competent counsel when dealing with a stigmatized property. Some states restrict the disclosure of information about stigmatized properties. In other states, the licensee's responsibility may be difficult to define because the issue is not a physical defect, but merely a perception that a property is undesirable.
stipend
A fixed and regular payment, such as a salary for services rendered or an allowance.
stipulation
An agreement made by parties or by their attorneys in a judicial proceeding before the court or presiding entity. A stipulation is basically, an acknowledgement that the stipulating party does not intend to produce evidence to dispute a matter.
Stipulation (Florida)
In the context of the Florida Real Estate Commission (FREC), a stipulation is a legally binding agreement between a licensee and the Commission to resolve a disciplinary case without proceeding to a formal hearing. It typically includes the licensee's admission to certain facts or violations and outlines agreed-upon penalties or corrective actions, such as fines, probation, or additional education requirements. Stipulations help streamline the resolution process and avoid prolonged litigation.
stock cooperative
Ownership of real property by a corporation where each stockholder is entitled to occupancy of a unit under a lease. (See cooperative)
stop date
Date on a term loan when the balloon payment is due. (See balloon payment)
stop notice
A notice given to a lender that a subcontractor has not been paid. Unless bond is posted, the lender must withhold moneys due a prime contractor.
storage device
A computer device designed to accept, process, store data. The storage device receives data from RAM, where it is written to a storage medium (CD, disk, tape).
storage device
A computer device designed to accept, process, store data. The storage device receives data from RAM, where it is written to a storage medium (CD, disk, tape). (See CD, RAM)
straight (term) loan
A loan in which only interest is paid during the term of the loan, with the entire principal amount due with the final interest payment.
straight note
A promissory note evidencing a loan in which payments of interest only are made periodically during the term of the note, with the principal payment due in one lump sum upon maturity. A straight note is usually a non-amortized note made for a short term, such as three to five years, and is renewable at the end of the term. (See promissory note)
straight-line funding model
The straight-line funding model, also known as the component method, is a reserve funding approach where the association sets aside an equal amount of money each year for each individual reserve item. This amount is based on the estimated cost of replacement or repair divided by the remaining useful life of the component. For each reserve component (e.g., roof, painting, paving):
- Estimate the total replacement cost
- Estimate how many years remain until replacement is needed
- Divide the cost by the remaining years to calculate the annual contribution
straight-line method
A method of depreciation, also called the age-life method, that is computed by dividing the adjusted basis of a property by the number of years of estimated remaining useful life. The cost of the property is thus deducted in equal annual installments. For example, if the depreciable basis is $ 100,000 and the estimated useful life is 25 years, the annual depreciation deduction is $4,000 for each year during the useful life of the asset. Prior to 1986, taxpayers sometimes used a form of accelerated depreciation such as 175 percent of straight line. The IRS had rules to recapture the amount of depreciation that was in excess of the straight-line rate. (See adjusted basis, depreciation)
strategies
Strategies are plans of action or policy designed to achieve major or overall aims.
stratified marketplace
The real estate market is a marketplace that is stratified based on price.
straw borrower
A straw borrower is an individual whose identity and credit history are used to obtain loans in mortgage fraud schemes.
straw buyer
A straw buyer is a person who buys property in order to conceal the actual owner. The straw buyer does not intend to occupy the property or make payments and often deeds the property to the other individual immediately after closing. The straw buyer is usually compensated for use of his identity.
straw buyer
A straw buyer is a person who buys property in order to conceal the actual owner. The straw buyer does not intend to occupy the property or make payments and often deeds the property to the other individual immediately after closing. The straw buyer is usually compensated for use of his identity. (See equity skimming)
stress
A force exerted on a body that tends to strain or deform its shape; the intensity of such force, usually measured in pounds per square inch.
striated muscle
Muscle tissue marked by traverse dark and light bands, that is made up of elongated multinuclear fibers that is found in the muscles under voluntary control clothing the vertebrate skeleton. (See muscle)
strict foreclosure
In a strict foreclosure procedure, after a delinquent borrower has been notified and the proper papers have been filed, the court designates a specific period during which the balance of the default must be paid in full. If the payment is not made, the borrower's equitable and statutory redemption rights are waived and the court awards full legal title to the lender. There is no deficiency judgement in strict foreclosure cases. (See foreclosure, judicial foreclosure, nonjudicial foreclosure)
strict liability
An owner of a property is responsible to an injured party without excuse. (See liability)
stripped mortgage-backed securities (SMBS)
Securities created by "stripping" or separating the principal and interest payments from the underlying pool of mortgages into two classes of securities, with each receiving a different proportion of the principal and interest payments.
structural density
Structural density refers to the concentration of buildings or structures within a specific area, typically measured in terms of floor area ratio (FAR), buildings per acre, or units per acre. This metric helps assess how intensively land is being used for development and can indicate the level of urbanization in an area. Higher structural density often correlates with more efficient land use, supporting a greater number of residences, businesses, or facilities within a given space, and can influence infrastructure planning, transportation needs, and zoning regulations.
Structural pest control clearance
Estimated cost the seller will incur for fumigation or to correct damage from an infestation or conditions supporting an infestation. (If this is not applicable, or if buyer will pay this fee as a condition of the loan, enter '00.00'.)
Structural pest control report
The fee a pest control operator will charge to conduct a physical inspection and submit a report on his findings. (If this is not applicable, or if buyer will pay this fee as a condition of the loan, enter '00.00'.)
structured query language (SQL)
A programming language for creating database queries. (See query)
stucco
Stucco is a type of plaster used for exterior wall finishing.
studs
Studs are vertical wall supports; wood studs are used in a wood-frame structure and steel studs are used in a steel-frame structure.
subagent
An agent of a person who is already acting as an agent for a principal. The original agent can delegate authority to a subagent where such delegation is either expressly authorized or customary in the trade. For example, it is customary for listing brokers to delegate certain functions of a ministerial nature to subagents, such as to show property and solicit buyers.
Subdivided Land Law
A disclosure law enacted to protect buyers of subdivided parcels. A public report is required for subdivisions of five or more parcels. This law ensures that subdivided land transactions in California are conducted transparently and with consumer protection in mind. (See public report, subdivision) Further information about the Subdivided Lands Law is available at www.ceres.ca.gov/planning/planning_guide/plan_index.html.
subdivider
One who buys undeveloped land, divides it into smaller, usable lots and sells the lots to potential users. (See subdivision)
subdivider (Arizona Definition)
A person who owns six or more lots, parcels, units or interests and has an intention to sell, lease or exchange the parcels.
subdivision
Any land that is divided or is proposed to be divided for the purpose of disposition into two or more lots, parcels, units or interests. Subdivision refers to any land, whether contiguous or not, of two or more lots, parcels, units or interests are offered as part of a common promotional plan of advertising and sale. (See subdivider)
subdivision (Arizona Definition)
Any land that is divided or is proposed to be divided for the purpose of sale lease or exchange into six or more lots, parcels, units or interests. Subdivision refers to any land, whether contiguous or not, of six or more lots, parcels, units or interests are offered as part of a common promotional plan of advertising and sale.
subdivision and development ordinances
Municipal ordinances that establish requirements for subdivisions and development.
subdivision development method
A method of valuing land to be used for subdivision development. It relies on accurate forecasting of market demand, including both forecast absorption (the rate at which properties will sell) and projected gross sales (total income that the project will produce); also called the land development method.
subdivision map
A subdivision map is a document showing a division of land into two or more parcels, required before a subdivision can be approved. (See subdivision)
Subdivision Map Act
An act providing for local control of subdivisions. Cities and counties are required by state law to adopt an ordinance to regulate subdivisions. (See subdivision) Information on subdivisions can be found at www.ceres.ca.gov/planning/planning_guide/plan_index.html.
subdivision system
A method of describing real property that identifies a parcel of land by reference to lot and block numbers within a subdivision, as specified on a recorded subdivision plat. (See subdivision)
subjacent support
The support provided to a surface property from the underlying land or structures. This concept is particularly relevant in situations involving mineral rights or underground construction such as basements, tunnels, or subsurface parking. (See also lateral support)
subject property
A reference to the real property under discussion, or the real property under appraisal. (See appraisal)
subject to
When a grantee takes title to real property "subject to" a mortgage or trust deed, the grantee makes payments on the loan, but is not personally obligated to pay the debt in full. The original maker of the note retains primary responsibility for the underlying debt.
subject to defect
When title to a property is accepted subject to a defect, the owner accepts responsibility and liability for the defect, whether the defect is an easement, encroachment, or lien(either recorded lien or potential lien).
sublease
A lease given by a lessee for a portion of the leasehold interest, while the lessee retains some reversionary interest. The sublease may be for all or part of the premises, for the whole term or part of it, as long as the lessor retains some interest in the property. Leases normally contain a clause prohibiting subletting without prior consent of the lessor. The lessee remains directly liable to the lessor for the rent, which is usually paid by the sublessee to the lessee and then from the lessee to the lessor. The sublessee does not have a contractual obligation to pay rent to the original lessor.
sublet
The partial transfer of a tenant's right in a rental property to a third party. (See sublease)
subordination
Subordination is the act of yielding priority. In a mortgage, a clause in which the holder of a mortgage permits a subsequent mortgage to take priority. This clause provides that if a prior mortgage is paid off or renewed, the junior mortgage will continue in its subordinate position and will not automatically become a higher or first mortgage. A subordination clause is usually standard in a junior mortgage, because the junior mortgagee gets a higher interest rate and is often not concerned about the inferior mortgage position. (See junior mortgage)
subordination agreement
A written agreement between lienholders to change the priority of mortgage, judgment and other liens. Under a subordination agreement, the holder of a superior or prior lien agrees to permit a junior lienholder's interest to move ahead of his or her lien. (See junior mortgage, lien)
Subpoena (Florida)
A subpoena is a legal document issued by the Florida Real Estate Commission (FREC) or a court that requires an individual to either appear at a hearing or provide specific documents, records, or evidence related to an investigation or disciplinary action. Failure to comply with a subpoena can result in legal penalties or sanctions. It ensures the availability of crucial information or testimony for resolving regulatory or legal matters.
subpoena duces tecum
A Latin word meaning literally, "under penalty you shall bring with you." A writ or subpoena directing a person to appear in court and to bring some document or evidence in a person's possession described in the writ.
subprime lending
Subprime mortgage loans are made to borrowers who have weakened credit histories and reduced repayment capacity and, therefore, are a higher risk of default than prime borrowers. Subprime lenders specialize in B, C, or D category paper. (See B, C, or D paper)
subprime statement
Used to refer to the Statement on Subprime Mortgage Lending.
subrogation
The substitution of one creditor for another, with the substituted person succeeding to the legal rights and claims of the original claimant. Subrogation is used by title insurers to acquire from the injured party rights to sue in order to recover any claims they have paid.
subscribe
1) to give, pay, or pledge (a sum of money) as a contribution, investment, etc. 2) to append one's signature or mark to (a document), as in approval or attestation of its contents.
subsequent adjustment cap
The cap that indicates how much the interest rate can increase in the adjustment periods that follow the initial adjustment cap.
subsequent owner exemption
As a subsequent owner of lots located in a single platted subdivision for which there is a current and accurate public disclosure report ISSUED WITHIN THE PAST 5 YEARS, the subsequent owner might be able to use the public disclosure report or last amended public disclosure report if no material changes other than ownership and financing have been made.
substantial fault of the borrower
Substantial fault of the borrower occurs when the borrower fails to provide information or documentation required by the lender or broker in a timely manner; provides information in the application or elsewhere that proves to be significantly inaccurate, causing the need for review or further investigation by the lender or broker; fails to produce by the date specified by the lender all documentation required for closing; or fails to be ready, willing, or able to close the loan by the date specified by the lender or broker.
For purposes of this definition, a borrower who provides information or documentation within seven days after requested is not liable to a charge of substantial fault of the borrower. Also, the information provided by the borrower is considered significantly inaccurate if the correct information affects the borrower's eligibility for the loan for which application is made.
substantial presence test
The Substantial Presence Test (SPT) is a criterion used by the Internal Revenue Service (IRS) in the United States to determine whether an individual who is not a citizen or lawful permanent resident in the recent past qualifies as a "resident for tax purposes" or a "nonresident for tax purposes". For further information, see the I.R.S. website, here:
substantive policy
Substantive policy statements are written expressions which inform the general public of an agency's current approach to rule or regulation practice. These are the 'prescriptions' as laid down by the agency heads. Future agency heads can choose to adopt these same policies or prescribe new ones.
substitution
An appraisal principle that states that the maximum value of a property tends to be set by the cost of purchasing an equally desirable and valuable substitute property, assuming that no costly delay is encountered in making the substitution. (See appraisal)
substitution of entitlement
Replaces one eligible veteran with another on an existing Veterans Administration loan. The entitlement is restored to the original veteran. (See Veterans Administration loan)
subsurface rights
Ownership rights in a parcel of real estate to the water, minerals, gas, oil and so forth that lie beneath the surface of the property. (See surface rights)
subterfuge
A clever trick or strategy used to evade a rule, escape a consequence, hide something, etc.
subterranean termites
A type of termite that nests underground. (See termite inspection)
succession planning
Succession planning is the identification and development of potential successors for key positions in an organization, through a systematic evaluation process and training.
successor trustee
successors
Those who succeed to or to whom the corporation's rights in the property are transferred. (See heirs)
suit for possession
A court suit initiated by a landlord to evict a tenant from leased premises after the tenant has breached one of the terms of the lease or has held possession of the property after the lease's expiration.
suit for specific performance
If a seller breaches a real estate contract, the buyer may sue for specific performance. The buyer asks the court to force the seller to go through with the sale and convey the property as previously agreed. The buyer may choose to sue for damages, in which case the buyer asks that the seller pay for costs and hardships suffered as a result of the seller's breach.
suit to quiet title
A court action intended to establish or settle the title to a particular property, especially when there is a cloud on the title.
summary judgment
A judgment granted on a claim or defense upon which the movant for the summary judgment is entitled to prevail. It is basically judgment that is issued without a court hearing.
summary report
A summary report is an appraisal report using a standardized form, such as the Uniform Residential Appraisal Report (URAR) developed by Fannie Mae and Freddie Mac.
summary suspension
Summary suspension means the immediate suspension of either a real estate license the ADRE pending administrative proceedings for suspension, revocation, or other actions deemed necessary by the department. The summary suspension happens even before a hearing.
summation method
Another name for the cost approach to appraising.
summons
Writ or process commencing the plaintiff's (complainant's) action and requiring the defendant to appear and answer.
sump
A reservoir that collects and holds water or some other liquid, which is subsequently disposed of by using a pump.
superadequancy
A structural feature that is not fully valued by the marketplace; an item in which its cost exceeds its value.
supercomputer
A supercomputer is a computer that performs at or near the current highest operational rate for computers. A supercomputer is typically used for scientific and engineering applications that must handle very large databases or do a large amount of computation (or both).
Superfund
Popular name of the hazardous waste cleanup fund established by the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) as amended by the Superfund Amendment and Reauthorization Act of 1986 (SARA). Superfund focuses on the cleanup of releases of hazardous substances on property. It creates significant legal exposure based on strict liability for owners, landlords and, sometimes lenders.
EPA—Superfund HomepageSuperfund Amendments and Reauthorization Act (SARA)
An amendatory statute that contains stronger cleanup standards for contaminated sites, increased funding for Superfund and clarifications of lender liability and innocent landowner immunity. (See Comprehensive Environmental Response, Compensation and Liability Act)
  EPAâ€â€SARA Overviewsuperintendent
The chief officer of the AZDFI, who is appointed by the governor and sits on the Governor's Executive Cabinet.
Superintendent
The chief officer of the AZDFI, who is appointed by the governor and sits on the Governor's Executive Cabinet.
supersedeas
Supersedeas is a legal term referring to a court order that temporarily suspends the enforcement of a judgment or decision while an appeal is pending. The purpose of a supersedeas is to preserve the status quo until the higher court reviews the case and issues a final ruling.
supplemental assessment
Additional "catch-up" property tax assessment following a sale or other reassessment event. (See assessment)
supplemental instructions
In a purchase transaction, the escrow holder usually prepares only instructions referred to as supplemental instructions if the purchase agreement used is one provided by the California Association of REALTORS® (CAR). The CAR form already includes joint escrow instructions (joint meaning instructions prepared on one form for both the buyer and the seller) and therefore do not need to be prepared again by the escrow holder.
supplier model
The supplier controls the selection of products and services offered in the marketplace, essentially a take-it-or-leave-it model.
supply
The amount of goods available in the market to be sold at a given price. The term is often coupled with supply and demand The appraisal principle that follows the interrelationship of the supply of and demand for real estate. As appraising is based on economic concepts, this principle recognizes that real property is subject to the influences of the marketplace just as is any other commodity. (See appraisal, demand)
supply and demand
The principle of supply and demand takes into account the effect on market value of the relationship between the number of properties on the market at a given time and the number of potential buyers.
surety bond
An agreement by an insurance or bonding company to be responsible for certain possible defaults, debts or obligations contracted for by an insured party; in essence, a policy insuring one's personal and/or financial integrity. In the real estate business a surety bond is generally used to ensure that a particular project will be completed at a certain date or that a contract will be performed as stated.
surface rights
Ownership rights in a parcel of real estate that are limited to the surface of the property and do not include the air above it (air rights) or the minerals below the surface (subsurface rights).
surface water
Waters of all sources, flowing in streams, canyons, ravines or other natural channels, or in definite underground channels, whether perennial or intermittent, floodwaters, wastewaters, or surplus water, and of lakes, ponds and springs on the surface.
surplus productivity
Amount remaining after expenses of property ownership (capital, labor, and management) are deducted from net income, representing the investor's return on the use of the land.
surrender
Giving up leasehold rights by a tenant in exchange for a release from future obligations under a lease.
survey
The process by which boundaries are measured and land areas are determined; the on-site measurement of lot lines, dimensions and position of a house on a lot, including the determination of any existing encroachments or easements.
Suspicious Activity Report (SAR)
A Suspicious Activity Report (SAR) is a document financial institutions must file with the Financial Crimes Enforcement Network (FinCEN) following a suspected incident of money laundering or fraud. SARs are required under the United States Bank Secrecy Act (BSA) of 1970. (See Bank Secrecy Act)
SWAP Program
A Freddie Mac program where lower yield mortgages are exchanged for Participation Certificates. (See participation certificates)
symmetry
The correspondence in size, shape, and relative positions of parts on opposite sides of a dividing line or plain or about a center of axis.
synchronous dynamic random access memory (SDRAM)
A type of DRAM that can run at a much higher clock speed than conventional computer memory. (See RAM, ROM, DRAM)
syndicate
A combination of people or firms formed to accomplish a business venture of mutual interest by pooling resources. In a real estate investment syndicate the parties own and/or develop property, with the main profit generally arising from the sale of the property.
syndication
A descriptive term for a group of two or more people united for the purpose of making and operating an investment. A syndication may operate in the form of a REIT, corporation, general partnership, limited partnership or even as tenancy in common. (See syndicate)
synthetic
Produced artificially; man made; devised or fabricated for special situations to imitate or replace reality.
system
A regularly interacting or interdependent group of items forming a unified whole; such a group under the influence of related forces (a gravitational system) or that tends to equilibrium (a thermodynamic system).
system theory
System theory is the interdisciplinary study of systems in general. Systems engineering seeks to use systems theory to combine various disciplines into an integrated whole.
systemic
Of, relating to, or common to a system as in affecting the body generally or in supplying those parts of the body that receive blood from the aorta rather than through the pulmonary artery.
Systemic bias
The inherent tendency of a particular system, process, or policy to support particular outcomes even while there is no intention to do so.
systems
The process of studying an activity; typically by mathematical means in order to define its goals and purposes and to discover operations and procedures for accomplishing them most efficiently.
T-1
A dedicated phone connection supporting data rates of 1.544 Mbits per second. A T-1 consists of 24 individual channels, each supporting 64 Kbits per second. Each channel can be configured to carry voice or data traffic. It is possible to obtain fractional T-1 access by purchasing just some of the channels.
table funding
Simultaneous conveyance of purchase price and title as well as all loan papers at a closing.
tack
Adding together successive periods of adverse possession. (See adverse possession)
tacking
Adding or combining successive periods of continuous occupation of real property by adverse possessors. This concept enables someone who has not been in possession for the entire statutory period to establish a claim of adverse possession.
tactics
Procedures or maneuvers engaged in to achieve a desired end, aim, or goal.
take sheet
The initial worksheet of the escrow holder. It includes information regarding the property, the buyer and the seller (marital status, address, vesting, and other personal information), the new loan of the buyer (amount, terms, rate, lender, and other details), prorating property taxes based on the anticipated closing date, identifying the title company (policy number, officer, and any special consideration, coverage, or exclusions), and information regarding any existing loans of the seller that will be paid off. (See closing, escrow, escrow holder)
take-out financing
Long-term permanent financing. In the usual large construction project, the developer obtains two types of financing. The first is the interim loan, a short-term loan to cover construction costs. Before lending any money, however, the interim lender normally requires a commitment by a permanent lender to agree to "take out" the interim lender in which the lender pays off the construction loan and leaves the developer with a permanent long-term loan when the building has been completed.
takes a residential mortgage loan application
Takes a residential mortgage loan application means any communication, regardless of form, from a mortgage loan originator to a borrower soliciting a loan application, or requesting information typically required in an application for the purpose of deciding whether to extend the offer of a loan to a borrower.
taking
The concept of taking comes from the Takings Clause of the fifth amendment of the United States Constitution. The clause reads, "nor shall private property be taken for public use, without just compensation." This means that when land is taken for public use through the government's power of eminent domain or condemnation, the owner must be compensated. (See eminent domain)
talking sign
A radio transmitter with a range of up to 250 feet that broadcasts a description of a property to prospects listening to a radio tuned to the transmitter's frequency.
tandem plan
A mortgage subsidy program offered from time to time by the United States Congress. The Government National Mortgage Association (GNMA) purchases certain mortgages at below market interest rates, granting borrowers low-interest loans. GMNA sells the loans on the secondary market at a discount, the discount being the amount of the subsidy. These programs are offered "in tandem" with local mortgage lenders. (See GNMA, secondary mortgage market)
tax base
The value of taxable properties in a region.
tax bill
A property owner's tax bill is computed by applying the tax rate to the assessed valuation of the property.
tax bracket
Tax rate applicable to a taxpayer's taxable income.
tax credit
An amount by which tax owed is reduced directly.
Tax Cuts and Jobs Act of 2017 (TCJA)
Tax Cuts and Jobs Act (TCJA) Law passed in 2017 that significantly modified the tax code. It reduced tax rates for individuals and businesses, increased the standard deductions, and eliminated or reduced common itemized deductions.
tax deduction/write-off
This is an expense, loss, or negative amount/number that goes on one of you tax forms and will reduce the amount of income one earns and hence taxes one pays.
tax deed
An instrument, similar to a certificate of sale, given to a purchaser at a tax sale. (See certificate of sale)
tax deferred exchange (1031 exchange)
Under Section 1031 of the Internal Revenue Code, some or all of the realized gain from the exchange of property may not need to be immediately recognized for tax purposes. Both properties in an exchange must be held for productive use in trade or business or for investment and must be of a like-kind. (See like-kind, realized capital gain)
tax increment funding
Payments on bonds through collection of increased taxes on improvements financed by the bonds.
tax levy
The amount to be raised from the general real estate tax is then imposed on property owners through a tax levy. A tax levy is the formal action taken to impose the tax, usually a vote of the taxing district's governing body.
tax lien
An involuntary lien that arises from a taxpayer's obligation to pay real property taxes, state income and estate taxes, or federal income, gift, and estate taxes. (See assessments, lien)
IRS on Federal Tax Lienstax participation clauses
Tax participation clauses, often found in commercial lease agreements, require tenants to pay a portion of the property taxes in addition to their base rent. These clauses typically stipulate that tenants will share the burden of any increases in property taxes based on their proportionate share of the leased space. This arrangement helps landlords cover rising property tax costs while ensuring that tenants contribute fairly to the expenses associated with maintaining the property.
tax rate
The tax rate for each taxing body is computed separately. To arrive at a tax rate, the total monies needed for the coming fiscal year are divided by the total assessments of all real estate located within the taxing body's jurisdiction.
tax rate tables
These are IRS published figures that help you easily calculate how much you owe in Federal Income Taxes based on how much income you earned and your filing status. They match what you would calculate if you used a computer tax program or calculated them based on marginal tax rates and brackets.
tax rate tables
These are IRS published figures that help you easily calculate how much you owe in Federal income taxes based on how much income you earned and your filing status. They match what you would calculate if you used a computer tax program or calculated them based on marginal tax rates and brackets. (See Federal income taxes)
Tax Reform Act of 1986 (TRA 86)
Sweeping revisions to the income tax laws, enacted by the United State Congress in 1986, that lowered tax rates and eliminated many tax shelters.
tax sale
A court-ordered sale of real property to raise money to cover delinquent taxes.
tax shelter
A phrase often used to describe some of the tax advantages of real estate or other investments, such as noncash deductions for cost recovery (depreciation), interest, taxes and postponement or even elimination of certain taxes. A tax shelter not only may offset the investor's tax liability relevant to the real estate investment but also may reduce the investor's other ordinary income, which reduces overall tax liability.
tax-free gifts
Gifts that are free from federal gift taxes.
tax-stop clause
A clause in a lease providing that the lessee will pay any increase in taxes over a base or an initial year's taxes.
taxable income
Income that remains after allowed deductions from adjusted gross income. (See adjusted gross income
taxation
1. The process by which a government or municipal quasi-public body raises monies to fund its operation. 2. The impact an investment has on the investor's liability for the payment of federal, state, and local taxes.
Taxpayer Advocate's Office
California state office that assists taxpayers in explaining and resolving tax issues.
Taxpayer Relief Act of 1997 (TRA 97)
Enacted by the United State Congress and effective May 7, 1997, TRA '97 provides for broader exemption from capital gains taxes on the profits on the sale of a personal residence. Replaces the old provision for a "one-time" exemption of $125,000 for sellers over age 55.
team building
Team building refers to a wide range of activities designed for improving team performance.
teaser rate
Teaser rates are those rates that have an initial or introductory rate with a duration of less than six months.
teleconferencing
Conference held among people in different locations by means of telecommunications equipment, such as telephone.
telemarketer
Any person who, in connection with telemarketing, initiates or receives telephone calls to or from a customer or donor.
telemarketing
A plan, program, or campaign which is conducted to induce the purchase of goods or services or a charitable contribution, by use of one or more telephones and which involves more than one interstate telephone call. The term does not include the solicitation of sales through the mailing of a catalog which: contains a written description or illustration of the goods or services offered for sale; includes the business address of the seller; includes multiple pages of written material or illustrations; and has been issued not less frequently than once a year, when the person making the solicitation does not solicit customers by telephone but only receives calls initiated by customers in response to the catalog and during those calls takes orders only without further solicitation. For purposes of the previous sentence, the term "further solicitation" does not include providing the customer with information about, or attempting to sell, any other item included in the same catalog which prompted the customer's call or in a substantially similar catalog.
Telephone Consumer Protection Act (TCPA)
The Telephone Consumer Protection Act (TCPA) was passed in 1991. From a telephone marketer's viewpoint, the most significant part of the TCPA regulations concern commercial solicitation calls made to residences. Companies making those calls are required to limit calls to between 8 A.M. and 9 P.M.; have a clearly written call policy, available to anyone upon request; have a clearly defined training program for personnel making the telephone solicitations; and honor any request to not be called again.
temporal data
Temporal data refers to any data that is associated with time. This type of data captures changes and events over a period, allowing for the analysis of trends, patterns, and variations that occur over time.
temporary designated broker (AZ)
A temporary designated broker is person who holds a broker's license, and temporarily accepts the responsibilities and liabilities of the designated broker. This is a requirement if the designated broker will be unavailable and unable to act for more than 24 hours, such as when a designated broker goes on vacation or needs medical care.
tenancy at sufferance
A tenancy (or estate) in which a person wrongfully holds or occupies a property after the expiration of a lease without the consent of the landlord. No notice of termination is required for the landlord to evict the tenant.
tenancy at will
A tenancy (or estate) in which a person holds or occupies real estate with the permission of the owner, for a term of unspecified or uncertain duration: i.e., there is no fixed term to the tenancy.
tenancy by the entirety
Some states allow husbands and wives to use a special form of co-ownership called tenancy by the entirety. In this form of ownership, each spouse has an equal, undivided interest in the property. (The term entirety refers to the fact that the owners are considered one indivisible unit because early common law viewed a married couple as one legal person).
tenancy for years
A tenancy for a definite period of time. The tenant must vacate the property at the end of the lease unless an extension or new lease has been agreed upon.
tenancy in common
A form of concurrent ownership of property between two or more persons, in which each has an undivided interest in the whole property. This form is frequently found when the parties acquire title by descent or by will. Each cotenant is entitled to the undivided possession of the property, according to his or her proportionate share and subject to the rights of possession of the other tenants. No cotenant can exclude another cotenant, or claim ownership of a specific portion of the property. Each cotenant holds an estate in land by separate and distinct titles, but with unity of possession. Their interests may be equal, as in joint tenancy, or unequal. Where the conveyance document does not specify the extent of interest of each cotenant, there is a rebuttable presumption that the shares are equal. Unlike a joint tenancy, there is no right of survivorship in a tenancy in common. Therefore when one of the cotenants dies, the interest passes to his or her heirs or beneficiaries and not to the surviving tenants in common. The property interest of a tenant in common is thus subject to probate. Also, unlike joint tenancy, dower rights may exist in property held in common.
tenancy in partnership
Ownership by two or more persons, acting as partners, of property held for partnership purposes.
tenant
In general, one who exclusively holds or possesses property, such as a life tenant or a tenant for years; commonly used to refer to a lessee under a lease. A tenant's occupancy, although exclusive, is always subordinate to the rights of the owner. Tenant refers to an occupant, not necessarily a renter.
tenant emergency procedures manual
A printed manual outlining emergency procedures, including evacuation plans and contact information for emergency personnel. The manual is used by building managers in the event of accident, illness, fire, natural disaster or other emergency situation.
tenant improvements
A commercial or an industrial property manager often is called on to make tenant improvements. These are alterations to the interior of the building to meet a tenant's particular space needs. Such construction alterations range from simply repainting or recarpeting to completely gutting the interior and redesigning the space by erecting new walls, partitions and electrical systems.
tenant remedies
Tenant remedies are legal actions tenants can take if a landlord fails to fulfill their obligations, such as maintaining a habitable property. Options include repairing issues themselves and deducting costs from rent, withholding rent to force compliance, or terminating the lease if the property is uninhabitable. These remedies vary by jurisdiction and typically require tenants to follow specific legal procedures, like providing notice, to exercise these rights legally.
tenant screening
Reviewing tenant information, rental and credit application, performing a credit check, employment and income verification, rental history verification, criminal and civil lawsuit verification; all to determine if the prospective resident will be a good tenant.
tenant wardens
In property management, tenant wardens are designated individuals within a building who assist in emergency preparedness and response. They are responsible for ensuring that evacuation procedures are followed, accounting for occupants, and communicating with emergency responders. Tenant wardens play a crucial role in maintaining safety and order during emergencies.
tender
A formal offer of money or service in payment of an obligation. A written offer to contract goods or services at a specified cost or rate; a bid. Something, especially money, offered in payment.
tenement
A common law real estate term that describes those real property rights of a permanent nature. These rights relate to the land and pass with conveyance of the land, such as buildings and improvements.
tenting fumigation
Termite fumigation is a long used treatment for the control and elimination of termites, specifically drywood termites. Sometimes called "tenting", due to the large tents used in the process, fumigating essentially administers a pest killing gas directly into the home in order to kill and/or repel a large number of termites at one time.
term loan
A short-term loan requiring interest-only payments until maturity, at which time the entire principal is due and payable.
term of transaction
Any right or obligation of the parties to a credit transaction.
termite inspection
A visable check of a property for the presence of termites. Usually performed by a licensed exterminator. Buyers often make a termite inspection a condition of a sales contract, and require a pest control report or a clearance letter showing the property to be clear of any live, visable infestation. The VA, FHA and Fannie Mae all require a termite inspection as a condition of a loan.
Test Proctoring Fees
Mohave County Test Proctoring sites charge $50 per proctored exam. Maricopa County Test Proctoring sites charge $25 per proctored exam.
testamentary trust
A trust established by a will.
testate
Having made and left a valid will.
testator
A person who has made a valid will. A woman often is referred to as a testatrix, although testator can be used for either gender.
thank-you letter
A letter written by you after the interview that allows you to re-iterate your qualifications for the job and discuss any point that you may have missed during the interview, or wish to emphasize.
the rule of lenity
This rule is one of the most famous substantive canons for real estate licensing law. It provides that any ambiguity in a real estate licensing statute must be resolved in favor of the accused (or, in the case of a civil trial, in favor of the defendant)
theory of consistent use
Refers to the concept that land cannot be valued on the basis of one use while the improvements are valued on the basis of another.
There are no glossary terms for this chapter.
thermal mass
Thermal mass is a property that enables building materials to absorb, store, and later release significant amounts of heat. Buildings constructed of concrete and masonry have a unique energy savings advantage because of their inherent thermal mass.
thinking skills
Skills that require thinking, such as decision-making, problem-solving, creativity, seeing things in the mind's eye, knowing how to learn, and reasoning.
third party originator
Third-party originators prepare loan applications for borrowers and submit the applications to lenders.
third-degree felony
A third-degree felony is a serious criminal offense that is less severe than first- and second-degree felonies but more serious than misdemeanors. Penalties typically include prison time (often ranging from 2 to 10 years, depending on jurisdiction), significant fines, and sometimes probation or other court-ordered conditions.
Thirteenth Amendment to the United States Constitution (1868)
Section 1. Neither slavery nor involuntary servitude, except as a punishment for crime whereof the party shall have been duly convicted, shall exist within the United States, or any place subject to their jurisdiction.
Section 2. Congress shall have power to enforce this article by appropriate legislation.
thirty-day notice
Notice to vacate a premises under a periodic tenancy. Notice must be for the rent period, but not more than 30 days. (See periodic tenancy)
three-day notice
Notice to quit, quit or cure, or quit or pay rent. Three-day notice must be given before an unlawful detainer action. (See unlawful detainer action)
three-way switch
A light switch that allows a person to turn the light on or off from either end of a hallway or stairway.
threshold
A level, point, or value above which something is true or will take place and below which it is not or will not.
threshold notification
Notification by brokers that they have met the threshold requirements for filing status and fiscal year reports on trust fund activities.
thrift
Another name for a savings and loan association; a financial institution established to promote "thrift" by accepting savings deposits, and to make home mortgage loans. (See savings and loan association)
Tie-in agreement
A tie-in agreement (also known as a tying arrangement) is an illegal antitrust practice in which a seller requires a buyer to purchase one product or service as a condition for obtaining another, restricting consumer choice and limiting market competition in violation of the Sherman Antitrust Act.
tier
A strip of land six miles wide, extending east and west and numbered north and south according to its distance from the baseline in the rectangular (government) survey system of legal description. Also known as a township strip. (See baseline)
tight-monetary policy
A central bank policy designed to curb inflation by reducing the reserves of commercial banks (and consequently the money supply, through open market operations). Also called tight monetary policy. Opposite of easy monetary policy. (See easy monetary policy, reserve requirements, certificate of title)
Federal Reserve Websitetime
time is of the essence
A contract clause that emphasizes punctual performance as an essential requirement of the contract. Thus, if any party to the instrument does not perform within the specified time period (the drop-dead date), that party is in default, provided the nondefaulting party has made a valid tender of performance. If no tender is made, then the clause may be waived. The clause may also be waived by the subsequent acts of the parties such as accepting tardy payments or signing escrow instructions that allow for extensions of time in which to perform.
time value of money
The principle that money received in the present is worth more than the same amount of money received in the future. The concept that cash received earlier is worth more than a similar sum received later, because a sum received earlier can be invested to earn interest in the intervening period. Conversely, cash paid out later is worth less than a similar sum paid earlier.
time-share project
A form of subdivision of real property into rights to the recurrent, exclusive use or occupancy of a lot or unit of the property on an annual or other periodic basis, for a specified period of time. (See subdivision)
timeshare plan (Arizona statutory definition)
A timeshare plan means any arrangement in which a purchaser, in exchange for consideration, receives ownership rights in or the right to use accommodations for a period of time less than a full year during any given year, but not necessarily for consecutive years.
timesharing
A modern approach to communal ownership and use of real estate that permits multiple purchasers to buy undivided interests in real property (usually in a resort condominium or hotel) with a right to use the facility for a fixed or variable time period. Under time-sharing forms of ownership, potential purchasers of property buy fixed or floating time periods for use of a specific apartment within a project.
timing
Refers to the length of time one must wait to receive cash flow from an investment.
title
1. The right to or ownership of land. 2. The evidence of ownership of land. (See ownership)
title company
A company that specializes in examining and insuring titles to real estate.
title defects
An unresolved claim against the ownership of property, which prevents presentation of a marketable title. Such claims may arise from failure of the owner's spouse or former partner to sign a deed, current liens against the property or an interruption in the title records to a property.
title insurance
A 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 liens or encumbrances thereon. Unlike other types of insurance, which protect a policyholder against loss from some future occurrence (such as a fire or auto accident), title insurance in effect protects a policyholder against loss from some occurrence that has already happened, such as a forged deed somewhere in the chain of title.
Needless to say, a title company will not insure a bad title any more than a fire insurance company would insure a burning building. However, if upon investigation of the public records and all other material facts, the title company feels that it has an insurable title, it will issue a policy. Title insurance protects the lender against any claims that arise from arguments about ownership of the property; also available for home buyers. An insurance policy guaranteeing the accuracy of a title search protecting against errors. Most lenders require the buyer to purchase title insurance protecting the lender against loss in the event of a title defect. This charge is included in the closing costs. A policy that protects the buyer from title defects is known as an owner's policy and requires an additional charge. (See extended coverage policy, mortgagee's title insurance, standard coverage policy)
title insurance company
Business licensed by the state to insure buyers and lenders against losses due to defects in title to real estate. (See title insurance)
title insurance fees
The costs involved in purchasing title insurance. May include title insurance policy and search fees.
title insurance fund
Specified amount of premiums collected by a licensed California title insurance company that must be set aside each year. (See title insurance)
title insurance surplus fund
The California Insurance Code requires every title insurer to annually set apart a sum equal to 10 percent of its premiums collected during the year. The resulting "title insurance surplus fund" shall be maintained as a further security to holders and beneficiaries of the title policies issued by the insurer.
title plant
A title plant is the storage facility of a title insurance company in which it has accumulated complete title records of properties in its area. Many of the larger title insurance companies maintain their own title plants containing copies of all recorded instruments.
title report
The title report includes information found in a title search (an examination of the public record for matters affecting title to the property). It lists any problems with the title revealed by the physical inspection and all defects and encumbrances of record.
title search
The examination of public records relating to real estate to determine the chain of title and the current state of the ownership.
title service
Any service involved in the provision of title insurance (lender's or owner's policy), including but not limited to: title examination and evaluation; preparation and issuance of title commitment; clearance of underwriting objections; preparation and issuance of a title insurance policy or policies; and the processing and administrative services required to perform these functions. The term also includes the service of conducting a settlement.
title theory
Some states interpret a two-party mortgage to mean that the lender is the owner of mortgaged land. Upon full payment of the mortgage debt the borrower becomes the landowner. These states are called title theory states. In a title-theory state, the lender has actual title, and the buyer has possession.
tolerance
The maximum amount by which the charge for a category or categories of settlement costs may exceed the amount of the estimate for such category or categories on a GFE.
tolled
To delay, suspend, or hold off the effect of a statute or a clause in a contract.
topography
The physical features of a property. The shape of a surface area including relative elevations and the position of natural and man-made features.
Torrens system
A method of evidencing title by registration with the proper public authority, generally called the registrar, named for its founder, Sir Robert Torrens, an Australian who developed the system in 1857. Torrens took the idea from the system of registering title to shipping vessels.
A legal system for the registration of land, used to verify the ownership and encumbrances (except tax liens), without the necessity of an additional search of the public records. The purpose of the Torrens Act pertaining to registration of title to land is to conclusively establish an indefeasible title to the end that anyone may deal with such property with the assurance that the only rights or claims of which he or she need take notice are those so registered. The Torrens system of registration is the title itself; it differs from a title insurance policy, which is only evidence of title. In other words, a person does not acquire title to Torrens-registered real property unless that person registers the title.
The distinctive feature of registered property is that title does not pass, and encumbrances (such as mortgages) are not effective against the property until such encumbrances or conveyances are noted on the registered certificate of title. A party who suffers loss through an error made by the governmental registrar can recover damages from the state through an assurance fund. The registrar, however, will not personally defend against litigation or reimburse the landowner for litigation expenses, which is one reason why most mortgagees require title insurance even for Torrens-registered titles.
Under the Torrens system, the landowner initially petitions a state court to register his or her property, giving notice to all interested parties. After a search of title is filed with the court, there is generally a hearing to determine the status of the title and the court's determination is made in the form of a court decree. The procedure is similar to a quiet title suit. The initial use of the Torrens system is optional. But once property is registered, all subsequent transfers must follow the registration procedures.
Approximately 10 states have adopted the Torrens system. It is also popular in Canada, Australia and Great Britain. In some states, Torrens-registered property is not subject to a general judgment lien, nor can title be lost through adverse possession.
tort
A wrongful act; a violation of a legal right.
total loan amount
The total loan amount is the principal of the loan minus those points and fees that are included in the principal amount.
total principal loan amount
The term total principal loan amount refers to the total principal loan amount as stated in the promissory note.
total project cost
The total project cost is the sum total of all costs incurred in the development of a project, which are approved by the Housing Finance Agency as reasonable and necessary. The costs include land acquisition and any buildings; site preparation, demolition, and development; architect, engineer, legal, agency, and other fees paid or payable in connection with the planning, execution, and financing of the project; necessary studies, surveys, plans, and permits; insurance, interest, financing, tax and assessment costs, and other operating and carrying costs during construction; construction, reconstruction, fixtures, and equipment related to the real property; cost of land improvements; necessary expenses in connection with initial occupancy of the project; reasonable profit or fee to the builder and developer; an allowance established by the agency for working capital and contingency reserves, and reserves for any anticipated operating deficits during the first two years of occupancy; other items, including tenant relocation, as the agency determines to be reasonable and necessary for the development of the real and personal property on the project site during construction.
All costs are subject to approval and audit by the agency, which may adopt rules and regulations specifying in detail the types and categories of cost that will be allowable if actually incurred in the construction or reconstruction of a project, less any and all net rents and other net revenues received from the operation of the real and personal property on the project site during construction. All costs will be subject to approval and audit by the agency, which may adopt rules and regulations specifying in detail the types and categories of cost that will be allowable if actually incurred in the construction or reconstruction of a project.
town house
A type of dwelling unit normally having two floors, with the living area and kitchen on the base floor and the bedrooms located on the second floor; a series of individual houses having architectural unity and a common wall between each unit.
township
Townships are part of the rectangular (government) survey system of land description. A township is a division of territory that is six miles square, and contains 36 sections, each of which is one square mile. A township consists of 23,040 acres. (See rectangular (government) survey system, section)
township line
Lines running east and west, parallel to the base line and six miles apart. (See base line)
township squares
When the horizontal township lines and the vertical range lines intersect, they form squares. These township squares are the basic units of the rectangular survey system. Townships are 6 miles square and contain 36 square miles (23,040 acres).
township tiers
Township lines form strips of land called township tiers. These township tiers are designated by consecutive numbers north or south of the base line. (See base line, township line)
Toxic Substance Control Act
Enacted by Congress in 1976, the act authorizes EPA to secure information on all new and existing chemical substances and to control any of these substances determined to cause an unreasonable risk to public health or the environment. The act was established to ensure that the human health and environmental effects of chemical substances were identified and properly controlled prior to placing these materials into commerce.
  Toxic Substance Control Act WebsiteTRACS
TRACS, or Tenant Rental Assistance Certification System, is a computerized data management system used by the U.S. Department of Housing and Urban Development (HUD). It is designed to help improve the subsidy payment process and to maintain data concerning the certification and recertification of tenants in multifamily housing projects that receive subsidies. TRACS facilitates the accurate and timely processing of tenant data and subsidy vouchers, ensuring compliance with HUD’s regulations and aiding in the efficient management of housing assistance payments.
trade balance
Also known as balance of trade. The trade balance is the difference between a country's imports and its exports. A country has a trade deficit if it imports more than it exports. The opposite is a trade surplus. The trade balance is the largest component of a country's balance of payments. Debit items include domestic investments abroad, domestic spending abroad, foreign aid, and imports. Credit items include exports, foreign investments in the domestic economy, and foreign spending in the domestic economy.
trade fixture
An article of personal property annexed or affixed to leased premises by the tenant as a necessary part of the tenant's trade or business. At the termination of a lease, a tenant must leave most fixtures in the premises; however, trade fixtures are removable by the tenant before expiration of the lease, and the tenant is responsible for any damages caused by their removal. However, a tenant cannot usually remove replacement fixtures, that is, improvements installed to replace worn-out ones. For instance, if a tenant installs a new bar to replace an old bar in a tavern the tenant leases, the tenant cannot remove the bar upon termination of the lease. If the tenant fails to remove trade fixtures within a reasonable time of lease expiration, the fixtures will be considered abandoned and will become the property of the landlord.
tradeoff table
A tradeoff table shows the borrower the conflicting effects of adjusting the settlement charges and the interest rate.
trading on the equity
The practice of agreeing to buy real estate and then assigning the purchase agreement to another buyer before closing takes place; thus turning a profit by "selling the paper."
tranche
A series of bonds issued for a CMO. (See CMO)
transaction broker
A transaction broker (also referred to as a nonagent, facilitator, coordinator or contract broker) is not an agent of either party. A transactional broker's job is simply to help both the buyer and the seller with the necessary paperwork and formalities involved in transferring ownership of real property. The buyer and the seller negotiate the sale without representation.
transaction outline
A basic outline of the transaction after obtaining the initial information from the parties. When the preliminary title report is received, the escrow officer will update the information, correcting anything that differs from what the parties provided (after confirming with them first that the preliminary title report is correct). Outlining the details of the transaction in narrative form helps establish the objective of the principals.
Transactionally-based payment
A payment for services rendered is transactionally based if the amount of the payment is determined by whether the real estate broker/agent's services resulted in a successful transaction.
transfer tax
A state tax imposed on the transfer or conveyance of realty or any realty interest by means of deed, lease, sublease, assignment, contract for deed or similar instrument. One purpose of the tax is to acquire reliable data on the fair market value of property to help establish more accurate real property tax assessments.
transferability
High transferability is linked with high value.
Transit element
A transit element is an aspect of a general plan showing a proposed system of rail or transit lines or such other mode of transportation as may be appropriate.
Transportation Element
A Transportation Element is an aspect of the general plan that shows a comprehensive transportation system, including locations of rights-of-way, terminals, viaducts and grade separations. This element of the plan may also include aviation and related facilities.
Treasury bill, note, bond
Treasury bill issued for less than a year; Treasury note issued from one to five years; Treasury bond issued from five to ten years.
Treaty of Guadalupe Hidalgo
The Treaty of Guadalupe Hidalgo (Tratado de Guadalupe Hidalgo in Spanish) is the peace treaty, largely dictated by the United States to the government of Mexico, that ended the Mexican-American War (1846—1848). In the treaty, Mexico ceded 525,000 square miles to the United States in exchange for US$15 million ($313 million in 2006 dollars) and recognized pre-existing property rights of Mexican citizens in the transferred territories, the latter of which the United States in a significant number of cases failed to honor. The United States also agreed to take over $3.25 million ($68 million in 2006 dollars) in debts Mexico owed to American citizens.
Treble damages
Treble damages are a legal remedy that allows a court to award a plaintiff three times the actual damages suffered as a result of a violation, commonly used in antitrust cases to deter unlawful conduct and compensate victims for anti-competitive practices.
trend
"Trends" are changes that have a long-term, consistent direction. In appraisal, a series of related changes brought about by a chain of causes and effects.
trespass
Unlawful entry or injury to the property of another.
trial de novo
A form of appeal in which the appeals court makes a decision and holds a trial as if no prior decision has been made.
TRID
Disclosures that came about as a result of the Dodd-Frank Act. The disclosures integrate the requirements of the Truth in Lending Act (TILA) and Real Estate Settlement Procedures Act (RESPA). TRID is an acronym that stands for TILA and RESPA Integrated Disclosures.
trigger terms
Terms in an advertisement which trigger additional disclosure of all credit terms.
trip hazard
Any situation where there is an increased likelihood of tripping (e.g. stairs that do not have a uniform tread or riser height all the way along the stairs).
triple-net lease
A net-net-net lease where, in addition to the stipulated rent, the lessee assumes payment of all expenses associated with the operation of the property. This includes both fixed expenses, such as taxes and insurance, and all operating expenses, including costs of maintenance and repair. In some cases, the triple-net tenant even pays the interest payments on the lessor's mortgage on the property leased.
Strictly speaking, the term triple-net lease is redundant because "net lease" adequately describes the situation. Rather than rely on labels, however, the parties must examine the provisions of the lease to discover the extent of the tenant's responsibilities.
triplex
A building comprised of three dwelling units, each having a front and rear (or side) door and yard; similar to row houses.
trophy buildings
Trophy buildings are prestigious, high-quality commercial properties that stand out due to their prime location, superior design, construction, and amenities. These iconic buildings often attract high-profile tenants and command premium rental rates due to their desirability and status as landmarks. Trophy buildings are typically characterized by their architectural excellence, state-of-the-art facilities, and strategic positioning in major urban centers or financial districts.
trough
The stage of the economic or business cycle that marks the end of a period of declining business activity and the transition to expansion.
true easement
The fundamental characteristic of a true easement is that it benefits another particular piece of land, referred to as the dominant estate. The land that is encumbered by the easement, that which gives up a right for the benefit of the dominant estate, is called the servient estate. (See Equal Credit Opportunity Act)
truss
A roof structural support system made up from "2 by" wood components that are attached using press-on metal plates (as opposed to rafters that are nailed together). (See rafter)
trust
An arrangement whereby some form of title (either full title or partial or naked title) to property is transferred by the grantor (or trustor) to a person called a trustee, to be held and managed by that person for the benefit of another, called a beneficiary. (See trustor, trustee, beneficiary)
trust deed
Also called a deed of trust. A legal document in which title to property is transferred to a third-party trustee as security for an obligation owed by the trustor (borrower) to the beneficiary (lender). A trust deed is similar to a mortgage; the main difference is that it involves three parties. When a borrower repays the note secured by a trust deed, the trustee must reconvey title back to the borrower by way of a deed of reconveyance. (See deed of reconveyance)
trust deed lien
A lien on the property of a truster that secures a deed of trust loan. (See lien)
trust fund bank account
An account set up by a broker, attorney or other agent at a bank or other recognized depository, into which the broker deposits all funds entrusted to the agent by the principal or others; also called an earnest money or escrow account. (See earnest money, escrow account)
trust funds
Money or other things of value that are received by a broker or salesperson on behalf of a principal or any other person, and which are held for the benefit of others in the performance of any act(s) for which a real estate license is required.
trust ledger
Ledger where a property manager records monies paid out on behalf of an owner.
trustee
One who holds property interest in trust for the benefit of another as a fiduciary (See fiduciary)
trustee
The person who controls the trust funds, and is responsible for the handling of the trust funds.
trustee sale guarantee
The trustee sale guarantee (TSG) report provides the foreclosing trustee with the information necessary to process the trustee's foreclosure and guarantees the correctness of that information. (See foreclosure)
trustee's deed
A deed executed by a trustee when property is sold at a trustee's sale. The trustee's deed is a bargain and sale deed, which contains only implied warranties and no express warranties. Generally, a trustee's deed is not an insurable deed without separate documentation.
trustee's sale
Sale of property held as security for payment of a loan on default of the trustor.
trustor
The person who creates a trust and places the property into the trust.
trustor
The person who pays into the trust account.
Truth-in-Lending Act
A body of federal law effective July 1969 as part of the Consumer Credit Protection Act, and implemented by Regulation Z that is now subject to the Consumer Financial Protection Bureau. It was amended in 1982 by the Truth-in-Lending Simplification and Reform Act and later amendments. The main purpose of this law is to ensure that borrowers and customers in need of consumer credit are given meaningful information with respect to the cost of credit. In this way consumers can more readily compare the various credit terms available to them and thus avoid the uninformed use of credit. This law creates a disclosure device only, and does not establish any set maximum or minimum interest rates or require any charges for credit. TILA can be found in 15 U.S. Code section 1601, et seq. (See Regulation Z) (Truth-in-Lending Act)
truth-in-lending disclosure statement
A document a buyer/borrower receives around closing time that specifies annual percentage rate (APR) on the loan. That APR includes all costs, not just lender costs. (See dissecting a GFE)
turnkey project
The term describes a rental property in which the supplier or provider is responsible to the client for the entire result of the project and presents it to the client completely finished and ready to use. Another term would be "all inclusive rental property".
twitch
A short spastic contraction of the muscle fibers.
two-step mortgage
A two-step mortgage has two distinct phases. In the first phase, the interest rate is fixed for a specified period, typically for one to seven years. This initial period is known as the "fixed-rate period" and provides borrowers with a stable interest rate and monthly payment. After the fixed-rate period ends, the loan enters the second phase, where the interest rate becomes adjustable and is typically tied to a specific financial index, such as the prime rate or the Treasury bill rate. The interest rate can then fluctuate periodically based on changes in the index, which can result in changes to the borrower's monthly payment amount. (See hybrid financing)
type of access
The most common types of access are:
u-value
A measure used to indicate the insulating value of a window. The U-value measures the heat flow. The smaller the U-value, the better a material can stop heat flow.
U.S. Department of Housing and Urban Development
A federal cabinet department officially known as the U.S. Department of Housing and Urban Development, HUD is active in national housing programs. Among its many programs are urban renewal, public housing, model cities, rehabilitation loans, FHA-subsidy programs and water and sewer grants. The Office of Interstate Land Sales Registration is under HUD's jurisdiction, as are the Federal Housing Administration (FHA) and the Government National Mortgage Association (GNMA).
  HUD Website  HUDâ€â€Office of Interstate Land Salesultimate equitable owner
An ultimate equitable owner is an individual who, directly or indirectly, owns or controls an ownership interest in a corporation, a foreign corporation, an alien business organization, or any other form of business organization, regardless of whether the individual owns or controls the interest through one or more individuals or one or more proxies, powers of attorney, nominees, corporations, associations, partnerships, trusts, joint stock companies, or other entities or devices, or any combination thereof.
Unauthorized practice of law
In real estate, unauthorized practice of law (UPL) occurs when a real estate agent or broker performs tasks that should be handled by an attorney. UPL is illegal in all states and can result in penalties, including fines, license suspension, or legal action.
uncollected rent
Uncollected rent or vacancy is subtracted from gross scheduled income. Uncollected rent is an estimate expressed as a percentage then converted to dollars. (See gross scheduled income)
unconscionable contracts
An agreement that is so unfair and one-sided that the courts will refuse to honor it.
underground storage tanks (USTs)
USTs are commonly used for storing petroleum products, chemicals or process wastes. Sites which use USTs include airports, gas stations, industrial locations and military bases. Over time neglected tanks may leak hazardous substances into the environment, contaminating groundwater. State and federal laws impose strict requirements on landowners where USTs are located to detect and correct leaks to protect groundwater.
EPA Office of Undergound Storage Tanksunderground water rights
The generally accepted theory of underground water rights in the United States is known as the American rule, where landowners may withdraw as much underground water as they like as long as it is not done in a malicious or wasteful manner. This theory applies in a majority of jurisdictions in the United States.
In California the theory of underground water rights is known as the correlative theory. The correlative theory provides landowners with equal rights to use underground water for beneficial purposes. Landowners are restricted from seriously depleting a neighbor's water supply. In the event of a water shortage, courts may apportion an underground supply among landowners. Many states facing acute or chronic shortages have adopted the correlative theory of underground water rights.
underwriter
A person who evaluates the risk of default by a mortgage loan applicant, and grants approval or denial of the loan.
underwriting
The process of evaluating a mortgage loan applicant's credit, collateral value and the risks in making a loan. It includes a review of the potential borrower's credit history and a judgment of the property value.
undisclosed dual agency
A broker may not intend to create a dual agency. However, like any other agency, it may occur unintentionally or inadvertently. Sometimes the cause is carelessness, and other times a salesperson does not fully understand his or her fiduciary responsibilities. Some salespersons lose sight of other responsibilities when they focus intensely on bringing buyers and sellers together. For instance, a salesperson representing the seller might suggest to a buyer that the seller will accept less than the listing price, or that same salesperson might promise to persuade the seller to accept an offer that is in the buyer's best interests. Giving a buyer any specific advice on how much to offer can lead him or her to believe that the salesperson represents the buyer's interests and is acting as the buyer's advocate.
undivided subdivision
An area of land divided into parcels where each owner is a tenant in common with all other owners; for example, a campground with shared facilities.
undue influence
Strong enough persuasion to completely overpower the free will of another and prevent him or her from acting intelligently and voluntarily, as in a case where a broker guilty of blockbusting has induced someone to sell in fear of a change in the racial character of the community. Undue influence usually requires a close or confidential relationship like parent-child, broker-seller, attorney-client, or trustee-beneficiary. When a person has been unduly influenced to sign a contract, that person can void the contract.
unenforceable contract
A contract which is considered unenforceable either because it cannot be proven or will not be enforced by a court. In addition to being considered void or illegal, other reasons for unenforceable contracts may be because they were not presented in writing which may have been a requirement under state statutes of frauds or the statutes of limitations period has elapsed.
unequivocal
Unambiguous; clear; having only one possible meaning or interpretation.
unicode
Unicode worldwide character standard. A scheme for encoding characters using 16 bits per character. Unicode includes scripts for all major languages, including symbols.
Uniform Appraisal Dataset (UAD)
Fannie Mae and Freddie Mac requirements intended to standardize all data elements necessary to complete their residential and condominium appraisal report forms.
Uniform Building Code
A national building code published by the International Conference of Building Officials. It has been adopted in part by municipalities throughout the United States, but used mostly in the western states. (See building code)
Uniform Commercial Code
The Uniform Commercial Code is the codification of commercial law, adopted in most states, that attempts to make uniform all laws relating to commercial transactions, including chattel mortgages and bulk transfers. Security interests in chattels are created by an instrument known as a security agreement. To give notice of the security interest, a financing statement must be recorded. Article 6 of the code regulates bulk transfers—the sale of a business as a whole, including all fixtures, chattels and merchandise.
Uniform Condominium Act (UCA)
Many states have adopted the Uniform Condominium Act (UCA). Under its provisions, a condominium is created and established when the owner of an existing building (or developer of unimproved property) executes and records a declaration of condominium.
  Uniform Condominium Act  Full TextUniform Electronic Transactions Act (UETA)
The Uniform Electronic Transactions Act (UETA), which was adopted by the National Conference of Commissioners on Uniform State Laws (NCCUSL) in 1999, guarantees that electronic transactions are just as enforceable as their paper counterparts. UETA provides that "a contract may not be denied legal effect or enforceability solely because an electronic record was used in its formation." The act states that any law that requires a physical record will be satisfied by an electronic record and that any signature requirement can be met by an electronic signature. UETA rules are primarily for "electronic records and electronic signatures relating to transactions" that are not subject to the Uniform Commercial Code (UCC).
Uniform Partnership Act (UPA)
Most states have adopted the "Uniform Partnership Act" (UPA), which permits real estate to be held in the partnership name. The "Uniform Limited Partnership Act" (ULPA) has also been widely adopted. It establishes the legality of the limited partnership entity and provides that realty may be held in the limited partnership's name. Profits and losses are passed through the partnership to each partner, whose individual tax situation determines the tax consequences.
  Uniform Partnership Act  Full Text  Uniform Limited Partnership Act  Full TextUniform Residential Appraisal Report (URAR)
A Uniform Residential Appraisal Report is a summary form of appraisal report developed and required by Fannie Mae and Freddie Mac.
Uniform Residential Landlord and Tenant Act (URLTA)
A uniform act intended to provide some consistency in regulating the relationship of landlord and tenant in residential leases. A number of states have adopted all or parts of the URLTA, or have enacted similar legislation.
Uniform Residential Landlord and Tenant Act uniform residential loan application
An application provided by the lender for potential borrowers of home loans to complete and return to the lender. A loan application form required by Freddie Mac and Fannie Mae.
uniform resource locator (URL)
A URL (Uniform Resource Locator), usually pronounced by sounding out each letter, is the unique address for a file that is accessible on the Internet. A common way to get to a Web site is to enter the URL into a Web browser's address line. However, any file within that Web site can also be specified with a URL. Such a file might be any Web (html) page other than the home page or an image file. The URL contains the name of the protocol (http - hypertext transfer protocol) to be used to access the file resource, a domain name that identifies a specific computer on the Internet (www.prou.net), and a pathname, a hierarchical description that specifies the location of a file in that computer (courses/coursename/filename.html).
Uniform Settlement Statement
The standard HUD Form 1 required to be given to the borrower, lender and seller at the time or before settlement by the settlement agent in a transaction covered under the Real Estate Settlement Procedures Act. The lender must retain its copy for at least two years. The document can be found at www.hud.gov/offices/adm/hudclips/forms/files/1.pdf.
Uniform Standards of Professional Appraisal Practice (USPAP)
USPAP identifies the minimum set of standards that apply in all appraisal, appraisal review, and appraisal consulting assignments. These standards are promulgated by the Appraisal Standards Board of the Appraisal Foundation and are incorporated as a minimum appraisal standard in the Agencies' appraisal regulations.
unilateral contract
A one-sided contract wherein one party makes a promise so as to induce a second party to do something. The second party is not legally bound to perform; however, if the second party does comply, the first party is obligated to keep the promise.
unimproved lot
An unimproved lot is defined as one that does NOT have a structure on it, and no contract is written for a structure to be built on it within two years.
unique identifier
1) A unique identifier is usually a string of characters (letters or numbers) that uniquely identifies a wide variety of items; guaranteeing uniqueness across multiple individuals, countries, sites, vendors and equipment. 2) A unique identifier is a number or other identifier assigned by protocols established by the Nationwide Mortgage Licensing System and Registry.
unique situation
For example, a recent death, suicide, homicide on the property, or a death as a result of chronic disease.
uniqueness
The quality of being one of a kind. Remarkable; extraordinary.
unit-in-place method
The appraisal method of estimating building costs by calculating the costs of all of the physical components in the structure with the cost of each item including its proper installation, connection, etc. Also called the segregated cost method. (See appraisal)
United States Access Board
The USAB is an independent federal agency dedicated to accessibility for people with disabilities.
United States Department of the Treasury
The Department of the Treasury operates and maintains systems that are critical to the nation's financial infrastructure, such as the production of coin and currency, the disbursement of payments to the American public, revenue collection, and the borrowing of funds necessary to run the federal government. The Department works with other federal agencies, foreign governments, and international financial institutions to encourage global economic growth. www.ustreas.gov
unity of ownership
The four unities that are traditionally needed to create a joint tenancy-unity of title, time, interest and possession.
unity of possession
One of the four "unities" required to create a joint tenancy. All joint tenants hold an undivided right to possession. (See joint tenancy, four unities)
universal agent
A person empowered to do anything the principal could do personally. The universal agent's authority to act on behalf of the principal is virtually unlimited.
Unix
Unix (often spelled "UNIX," especially as an official trademark) is an operating system developed at Bell Labs in 1969 as an interactive time-sharing system. In 1974, Unix became the first operating system written in the C language. Unix has evolved as a kind of large freeware product, with many extensions and features provided in a variety of versions of Unix by different companies, universities, and individuals.
unlawful detainer action
A legal action that provides a method of evicting a tenant who is in default under the terms of the lease; a summary proceeding to recover possession of property.
Unlawful License Activity (AZ Definition)
Any act, in consideration or expectation of compensation, which is included in the definition of a real estate, cemetery or membership camping broker, whether the act is an incidental part of a transaction or the entire transaction.
Unruh Civil Rights Act
Forbids discrimination as to sex, race, color, religion, ancestry or national origin in accommodations and business establishments. Under this law there can be no arbitrary eviction, rent increase or withholding of services by virtually any landlord, including the owner of a nonowner-occupied single-family dwelling that is sold or leased for income or gain.
unsecured
Describes a debt instrument, such as a debenture, that is backed only by the debtor's promise to pay.
unsubdivided land (AZ definition)
Land that is 36 acres or more, but less than 160 acres.
untenantable dwelling
Property lacking one or more necessary utilities, such as water, or in such poor condition that it falls below minimum property standards; uninhabitable.
upside-down borrower
An upside-down borrower is someone who might have bought a house at the top of what that borrower could afford and then suffered some sort of financial setback due to health, work, or family issues.
urban planning
Urban, city, or town planning, deals with managing and directing urban growth. (See comprehensive zoning, general plan, master plan, regional planning)
Urban Systems Research & Engineering
urea-formaldehyde
First used in building materials, particularly insulation, in the 1970s. Gases leak out of the urea-formaldehyde foam insulation (UFFI) as it hardens and become trapped in the interior of a building. It is no longer used because emissions were found to be a health hazard. (See formaldehyde)
National Safety Council on FormaldehydeUSA PATRIOT Act
The USA PATRIOT Act, commonly known as the "Patriot Act", is a statute enacted by the United States Congress and signed into law by President George W. Bush on October 26, 2001. The full title of the act is "Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001." The Act requires financial institutions to verify the identity of any person who intends to open an account with the institution. Full text of the Patriot Act
USDA Rural Development Program
The USDA Rural Development Program is a government initiative that aims to improve the economy and quality of life in rural America. It offers a variety of programs and services to help rural communities with infrastructure, housing, and economic development.
The Single Family Housing Programs provide loans, loan guarantees, and grants to help low- to moderate-income individuals and families in rural areas buy, repair, or renovate homes.
Multi-Family Housing Programs provide loans and grants to develop affordable rental housing for low-income individuals and families in rural areas.
Community Facilities Programs provide loans, grants, and loan guarantees to help develop essential community facilities in rural areas, such as hospitals, schools, libraries, and community centers.
And much more.
use tax
A charge imposed on the use or possession of personal property. Governments employ use taxes to accomplish two purposes. A use tax may be imposed to prevent someone from evading a sales tax by buying goods in a nontaxing state and shipping them into the state that imposes the sales tax. Use taxes are also used to help defray the cost of public services associated with particular types of personal property.
Use the glossary located at the back of your textbook
useful life
Also known as economic life. 1. The estimated period over which an improved property may be profitably used so that it will yield a return over and above the economic rent attributable to the land itself; the period during which an improvement has value in excess of its salvage value. In the case of an older structure or improvement, economic life refers to the remaining period during which the improvements to the real property (not land) are depreciated for tax purposes. The economic lives of such improvements are normally shorter than their actual physical lives. Also called service life. 2. As applied to a structure, the years or age indicated by the condition and utility of the structure, as opposed to its actual or chronological age. (See improvement)
usury
Charging interest at a higher rate than the maximum rate established by state law.
utility
The quality or condition of being useful; usefulness.
utility liens
Municipalities often have the right to impose a specific, equitable, involuntary lien on the property of an owner who refuses to pay bills for municipal utility services. (See lien)
utility value
The value in use to an owner-user, which includes a value of amenities attaching to a property; also known as subjective value.
VA loan
A government-sponsored mortgage assistance program administered by the Department of Veterans Affairs. Under the Servicemen's Readjustment Act of 1944, eligible veterans and widows or widowers (who have not re-married) of veterans who died in service or from service-connected causes may obtain partially guaranteed loans for the purchase or construction of a house or to refinance existing mortgage debt. VA Home Loan Guaranty Home page
vacancy rate
The vacancy rate is a numerical value calculated as the percentage of all available units of rental property, such as a hotel or apartment complex, that are vacant or unoccupied at a particular time. It is the opposite of the occupancy rate, which is a calculation based on the percentage of units in a rental property that are occupied.
valid contract
A contract that complies with all the essentials of a contract and is binding and enforceable with all associated parties. (See contract)
value
The measure of the monetary equivalent of a property. The four essential elements of value are utility, scarcity, demand and transferability. Cost does not equal value nor does equity.
There are various types of value, such as market value, tax assessed value, book value, insurance value, use value, par value, rental value and replacement value. By far, the type of value used for the largest number of real estate transactions is market value.
value in context
The value of real estate is determined only partly by its intrinsic qualities (condition, square footage, finish, fixtures, etc.). The location (or context) within which a the property exists determines part of its value. A fine home in a decaying neighborhood may lose value, while a modest home in a desirable location appreciates in value.
value in exchange
The market value of a property.
value in use
Value in use is the subjective value of property to its present owner, as opposed to market value, which should be objective.
vapor barrier
A type of polyethylene or foil sheeting used to stop the movement of soil gas or water vapor into crawl spaces and walls, and retard moisture from damaging a building or structure.
vapor retarders
Special materials used in the installation of thermal insulation to reduce the passage of water vapor. These materials include treated papers, plastic sheets, and metallic foils.
variable
A quality that may vary or which is subject to changes.
variable cost
Operating expenses that fluctuate with occupancy, such as utilities and maintenance costs.
variable expenses
Property expenses for management, wages, and benefits of building employees, fuel, utility services, decorating, and other ongoing costs of individual building ownership, as opposed to permanent expenses, such as property taxes.
variable lease
Allows for increases in the rental charges during the lease period. One of the more common is the graduated lease which provides for specified rent increases at set future dates. Another is the index lease, which allows rent to be increased or decreased periodically based on changes in the consumer price index or some other indicator. (See lease)
variable pay plan
A variable pay plan is a pre‐determined bonus plan based on a performance and reward schedule. This plan should include a schedule with specific targets to be achieved, goals, pre‐established criteria and payout schedule.
variance
Permission obtained from governmental zoning authorities to build a structure or conduct a use that is expressly prohibited by the current zoning laws; an exception from the zoning laws. A variance gives some measure of elasticity to the zoning game.
variate
A single item in a group.
vehicle license fee
vendee
The purchaser of realty; the buyer. The buyer under a land contract.
vendor
The seller of realty. The seller under a land contract. In some cases, the vendor may not be the owner—he or she might be the holder of an option.
venue
The proper place for a lawsuit to be filed because it has authority over events that have occurred.
verification
Confirmation under oath of the truthfulness of a statement.
Verification of deposit (VOD)
Verification of deposit (VOD) is a form listing each of the institutions where a loan applicant has savings or checking accounts.
Verification of employment (VOE)
Verification of employment (VOE) is a form sent to an loan applicant's employer(s) to verify employment and earnings information.
vertical growth
Vertical growth is growth within existing service areas through product diversification and expanded customer base.
vesting of title
Time at which title to real estate is transferred to a new owner.
veteran's entitlement
The amount of loan guarantee available to eligible veterans.
veteran's exemption
California war veterans may receive a $4,000 exemption on the full cash value of their homes.
vicarious liability
When one person is liable for the negligent actions of another person, even though the first person was not directly responsible for the injury. For instance, a parent sometimes can be vicariously liable for the harmful acts of a child and an employer sometimes can be vicariously liable for the acts of an employee.
video and audio webcast
Video and audio communication delivered over the Internet (streaming) or downloadable onto handheld devices.
videoconferencing
Conference held among people in different locations by means of video communications equipment, such as closed-circuit television.
videotape
Tape recording of visual images and associated sound for subsequent playback or broadcasting.
virtual job club
A job club in which the participants communicate electronically, such as by telephone or computer. (See job club)
virtual office
A virtual office is a business location that exists only in cyberspace. This setup allows business owners and employees to work from any location by using technology such as laptop computers, cell phones and internet access. A virtual office can provide significant savings and flexibility compared to renting a traditional office space.
vitamins
Any of various organic substances that are essential in minute quantities to the nutrition of most animals and some plants, act in the regulation of metabolic processes but do not provide energy or serve as building units, and are present in natural foodstuffs or sometimes produced within the body. (See nutrient)
vocabulary links
Vocabulary links are integrated throughout the content. Review terms as you read the course material. A pop-up display opens and provides the definition of the term in text and (in some cases) audio. Click the CLOSE button in the lower left corner to close the pop-up.
void
Having no legal force or binding effect; a nullity; not enforceable. A void agreement is no contract at all. A void contract need not be disaffirmed, nor can it be ratified. A contract for an illegal purpose (for example, gambling) is void. A voidable contract is one that is able to be voided. Voidable implies a valid act that may be rejected by an act of disaffirmance, rather than an invalid act that may be confirmed. For example, if a minor contracts to buy a diamond ring, the contract can be voided by the minor because of lack of sufficient age. If, however, the minor elects to enforce the contract, the contract is valid and the other party cannot assert the minor's lack of age as a defense.
voidable contract
A contract that seems to be valid on the surface but may be rejected or disaffirmed by one or both of the parties.
volatile organic compounds
Carbon compounds that tend to be emitted as gases into the air. Organic chemicals are widely used as ingredients in household products. Paints, varnishes, and wax all contain organic solvents, as do many cleaning, disinfecting, cosmetic, degreasing, and hobby products. Fuels are made up of organic chemicals. All of these products can release organic compounds while in use or in storage.
EPA Volatile Organic Compounds Websitevoluntary
Proceeding from the will; unconstrained; self-determining.
voluntary conveyance
Voluntarily signing over to a lender the property pledged as collateral on a defaulted loan. (See deed in lieu of foreclosure)
voluntary lien
A lien placed on property with the knowledge and consent of the property owner. (See lien)
waiver
To give up a right voluntarily. (See workout)
walk-through
A final inspection of a property just before closing. This assures the buyer that the property has been vacated, that no damage has occurred and that the seller has not taken or substituted any property contrary to the terms of the sales agreement. If damage has occurred, the buyer might ask that funds be withheld at the closing to pay for the repairs.
wallboard
Interior wall finishing material.
warehouseman's lien
A warehouseman's lien is a legal claim that a warehouse operator can place on goods stored in their facility to secure payment for storage fees or other related services rendered. This lien gives the warehouseman the right to retain possession of the goods until the outstanding charges are paid by the owner of the goods. If the charges are not paid within a specified period, the warehouseman may have the right to sell the goods to recover the owed amount, subject to the laws and regulations governing such actions in their jurisdiction.
warehousing
Warehousing is the assembly of mortgage loans into "pools." Securities that represent shares in these pools are then sold to investors. Examples of warehousing "agencies" include Fannie Mae/Federal National Mortgage Association and Ginnie Mae/Government National Mortgage Association.
warranty
A promise that certain stated facts are true. A guaranty by the seller, covering the title as well as the physical condition of the property. A warranty is different from a representation in that a representation is a statement made in the course of negotiations leading up to the sale, but not incorporated into the contract. A warranty, on the other hand, is a statement in the contract asserting the truth of certain things about the property.
warranty deed
A deed in which the grantor fully warrants good clear title to the premises; also called a general warranty deed. The usual covenants of title are covenant of seisin (possession), covenant of quiet enjoyment, covenant against encumbrances, covenant of warranty forever and covenant of further assurance. A warranty deed warrants the title, not the quality of construction of the real property. A warranty deed is used in most real estate deed transfers and offers the greatest protection of any deed.
warranty of habitability
An implied assurance given by a Landlord that an apartment offered for rent is free from safety and health hazards.
warranty of habitability
A warranty that a dwelling is fit for human habitation. (See implied warranty)
waste
An improper use or an abuse of a property by a possessor who holds less than fee ownership, such as a tenant, life tenant, mortgagor or vendee. Such waste ordinarily impairs the value of the land or the interest of the person holding the title or the reversionary rights.
water rights
Water rights are the legal right to use water from a water course or body of water on a property. See appropriative water rights, correlative water rights, littoral rights, right of correlative user, right of prior appropriation, riparian rights
water table
The natural level at which water is located in a particular area, be it above or below the surface of the earth.
water well
An excavation where the intended use is for location, acquisition, development, or artificial recharge of ground water.
wealth
Wealth is anything valued by more than one person. Something that is perceived by others as having value. Anything potentially subject to exchange. Wealth is the measure of the value of assets owned by an entity. Wealth is found by taking the total market value of the physical and intangible assets of a person, community, company or country and then subtracting all debts. (See market value, value)
web browser
A web browser is a software application used to locate, retrieve and display content from the World Wide Web including web pages, photographs, video and other content.
As a client/server application, the browser runs on a client computer and contacts the web server over the Internet to request information. The web server sends the information back to the web browser that displays the results on the client computer.
The most popular browsers are Google Chrome, Firefox, Microsoft Edge, and Safari.
web-based portfolio
Portfolio on the web that includes such categories as career vision, career highlights, professional links, references, activities and interests, resume and work samples, contacts in academic situations. Electronic-portfolios are privately owned and the owner has complete control over who has access to what and when.
web-based professional portfolio
Portfolio on the Internet that records goals, growth, achievement, and professional attributes developed over time and in collaboration with others. Professional portfolios can be used to help an individual make career decisions, demonstrate that one has met program or certification requirements, present skills and accomplishments for employment, and review professional development for career advancement.
webinar
Online meeting and presentation tools used for conferencing on the Internet.
weekly activity report
A weekly written report given to an owner by a listing broker reviewing the sales activities conducted by the broker to sell the listed property.
weighted average technique
When reconciling appraisal approaches, the application of a weight to each approach for averaging. (See appraisal)
weighted rate
The "weighted rate" is a way for investors to calculate their expected earnings from a property by considering all the different factors that affect those earnings. This method includes thinking about the use of borrowed money (or leverage) to help buy the property. Borrowing money to help pay for the property affects the returns. The interest rate on borrowed money and how much of the purchase is funded by loans versus the investor's own money are key factors in figuring out the total earnings. Each factor (earnings, costs, borrowed money) is given a certain importance or "weight" based on how much it impacts the overall earnings. For example, if a lot of the property is bought with borrowed money, the cost of that debt is highly important in calculating the overall earnings.
wetlands
Areas that are inundated or saturated by surface or ground water at a frequency and duration sufficient to support vegetation typically adapted for life in saturated soils. Also referred to as bogs, marshes, sloughs and swamps.
wholesale agreements
An agreement of a loan originator to work exclusively with a single lender.
will
A written document, properly witnessed, providing for the transfer of title to property owned by the deceased, called the testator.
will-buy buyers
Will-buy buyers are bargain-hunters looking for motivated "must-sell" sellers. (See must-sell sellers)
will-sell sellers
Unmotivated sellers who put their property on the market at an above-market price. Sellers who do not need to sell but will if the price is right.
window well
The dugout area just outside of a basement window that can be used to escape in the event of a fire.
withholding certificate
A withholding certificate is a certificate issued by the I.R.S. It certifies that the dollar amount that must be withheld from the disposition of a U.S. real property interest has been adjusted. The buyer, buyer's agent, or the seller may request a withholding certificate. The IRS will generally act on these requests within 90 days after receipt of a complete application including the Taxpayer Identification Numbers (TIN’s) of all the parties to the transaction. A seller that applies for a withholding certificate must notify the buyer in writing that the certificate has been applied for on the day of or the day prior to the transfer. For further information, see: Withholding Certificate
without prejudice
A case dismissed 'without prejudice' is removed from the court's docket in such a way that the plaintiff may refile the same suit on the same claim.
witnessed will
A witnessed will is a written document, normally prepared by an attorney, witnessed by a third party, and signed by the testator.
work
Activity in which one exerts strength or faculties to create measurable change; sustained physical or mental effort to overcome obstacles and achieve an objective or result; the transference of energy that is produced by the motion of the point of application of a force and is measured by multiplying the force and the displacement of its point of application in the line of action.
work order bid
A work order bid is a proposal submitted by a contractor or maintenance vendor outlining the terms, costs, and timeline for completing a specific job or project. The bid is reviewed by the property manager or project manager, who compares it against other bids and decides which contractor is best suited for the job based on factors like price, experience, and proposed approach.
workers' compensation
Workers' compensation is a state-sponsored system that pays monetary benefits to workers who become injured or disabled in the course of their employment.
workers' compensation act
Laws that require an employer to obtain insurance coverage to protect his or her employees who are injured in the course of their employment.
workfolio
Web-based portfolio
working level (WL)
A unit of measurement for documenting exposure to radon decay products. One working level is equal to approximately 200 picoCuries per liter.
workout
In terms of a mortgage or other loan, a workout is a negotiated arrangement between the borrower and the lender to restructure the terms of the loan to avoid default and foreclosure. A workout can take many forms, depending on the specific circumstances of the borrower and the lender's willingness to negotiate. Common types of workouts include loan modification, forbearance, repayment plan, deed in lieu of foreclosure, and short sale.
workplace affiliation
"a workplace in which each person is respected, in which partnerships are built and in which local and global communities are strengthened"
WQARF site
WQARF stands for Water Quality Assurance Revolving Fund. It's a program established by the Arizona Department of Environmental Quality (ADEQ) to address and clean up contaminated sites in Arizona. WQARF sites are locations within Arizona that have been identified as contaminated with hazardous substances or pollutants that pose a risk to human health or the environment. These sites may include abandoned industrial facilities, landfills, or other areas where hazardous substances have been released into the environment.
wraparound
A wraparound, also known as a wraparound mortgage or wraparound loan, is a type of real estate financing arrangement where the seller retains an existing mortgage on the property while providing a new mortgage to the buyer. The new mortgage, which "wraps around" the existing mortgage, allows the buyer to make payments to the seller instead of a traditional lender.
wraparound mortgage
A method of financing in which the new mortgage is placed in a secondary or subordinate position; the new mortgage includes both the unpaid principal balance of the first mortgage and whatever additional sums are advanced by the lender. Sometimes called an all-inclusive loan, an overriding loan or an overlapping loan. In essence, it is an additional mortgage in which another lender refinances a borrower by lending an amount over the existing first mortgage amount, without cashing out or disturbing the existence of the first mortgage. The entire loan combines two or more debts and is treated as a single obligation, and the wrap, or secondary, mortgagee pays the obligations of the first mortgage from the total payments received. While the wraparound lender makes the debt service payments on the first mortgage, the lender does not assume liability for this first lien. A default on the wraparound mortgage would usually result in a default on the underlying mortgage.
wraparound trust deed
A trust deed written for the amount of the existing encumbrances plus the seller’s equity.
writ
A form of written command in the name of a court or other legal authority to act, or abstain from acting, in some way.
writ of attachment
A document ordered by the court to have a sheriff enter a leased property to give possession back to the owner.
writ of execution
A court order authorizing and directing an officer of the court (sheriff, police officer) to levy and sell property of a defendant to satisfy a judgment.
writ of execution
A court order authorizing and directing an officer of the court (sheriff, police officer) to forcibly remove a trespasser (or defaulted tenant) from property.
writ of possession
A writ of possession is a legal document that authorizes the lawful eviction of a person or persons from a property. It is typically issued by a court after a landlord or property owner has obtained a judgment for possession in an eviction case. The writ instructs law enforcement officers to physically remove the occupants and their belongings from the property if they do not vacate voluntarily by a specified date.
yield
The return on an investment or the amount of profit, stated as a percentage of the amount invested; the rate of return. In real estate, yield refers to the effective annual amount of income that is being accrued on an investment. The yield on income property is the ratio of the annual net income from the property to the cost or market value of the property. The yield, or profit, to a lender is the spread or differential between the cost of acquiring the funds lent and the interest rate charged.
yield capitalization
Method used to estimate value from annual net operating income by applying a capitalization rate derived by analyzing each of rate's component parts to provide both return on and return of the investment.
yield spread premium
A yield spread premium (YSP) is the money or rebate paid to a mortgage broker for giving a borrower a higher interest rate on a loan in exchange for lower up front costs, generally paid in origination fees, broker fees or discount Points.
zero coupon bonds
A single-payment bond that grows to its face value over a prescribed time period at a specific interest rate. All compound interest is tax-deferred until the bond is cashed.
zero-based budgeting
Zero-based budgeting (ZBB) is a budgeting approach in which the property management company starts the budgeting process from scratch for each budgeting period, rather than simply adjusting the previous budget.
zones
Defined land areas with designated land uses and building specifications. (See zoning)
zoning
The regulation of structures and uses of property within designated districts or zones. Zoning regulates and affects such things as use of the land, lot sizes, types of structure permitted, building heights, setbacks and density (the ratio of land area to improvement area). (See aesthetic zoning, bulk zoning, comprehensive zoning, cumulative zoning, downzoning, exclusionary zoning, incentive zoning, noncumulative zoning, partial zoning, spot zoning)
zoning ordinance
An exercise of police power by a municipality to regulate and control the character and use of property. (See zoning)
zoning variance
A zoning variance permits a change in the specifications required by the zoning ordinance. (See zoning)
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