Real Estate Glossary
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 Website
accretion
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 Taxes
ad 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:
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 Homepage
American Land Title Association (ALTA) policy
There are two primary types of ALTA policies:
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:
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
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.
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.
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