Real Estate Glossary
e-book
Books in digital form that can be read online or downloaded onto an electronic device.
e-commerce
Business activity carried out over the Internet.
e-mail
Messages that are transmitted between computers over the Internet.
e-networking
Allows you to create a community of virtual contacts who can provide critical information on job leads, industry trends and possible openings. These are people whom you might never have met in any other way.
e-portfolio
Personal digital collection of information describing and illustrating a person's learning, career, experience and achievements. e-portfolios are privately owned and the owner has complete control over who has access to what and when. See electronic portfolio
e-profile
1. Requiring job applicants to fill out an template on their website solves several problems simultaneously for organizations. All applicant data is received in a structured format suitable for a searchable talent pool/database (most applicant tracking systems enable this). Second, the information received on candidate experience is better. 2. Enables individuals or employees to perform their own profile maintenance; depending upon the confidentiality of the e-profile, sometimes it can be tracked on the Internet and used by others (i.e., advertisers) to track the profile and habits of an Internet user.
Early Closing Sample Contract Verbiage
Close of escrow may occur on a date earlier than the date specified on line 24 if (1) all parties are ready, willing and able to close escrow and (2) all parties have affirmed their readiness.
earned surplus
Earned surplus has the same meaning as in generally accepted accounting standards.
earnest money
Money deposited by a buyer under the terms of a contract, to be forfeited if the buyer defaults but applied to the purchase price if the sale is closed. The cash deposit (including initial and additional deposits) paid by the prospective buyer of real property as evidence of good-faith intention to complete the transaction; called bargain money, caution money, hand money, or a binder in some states. (See trust funds)
earnings
Earnings means compensation paid or payable to an individual or for the individual's account for personal services rendered or to be rendered by the individual, whether denominated as wages, salary, commission, bonus, or otherwise, including periodic payments pursuant to a pension, retirement, or disability program.
earthquake fault zone
As defined by the state geologist, the area in such close proximity to an earthquake fault that movement of the fault presents a property hazard; location within an earthquake fault zone must be disclosed to a prospective purchaser by the seller (or seller's agent, if there is one).
earthquake insurance
Typically a separate policy from homeowners insurance that covers damages caused by an earthquake.
earthquake safety disclosure
By California law, real estate agents or owners are required to prepare a "Residential Earthquake Hazards Report" disclosing the earthquake safety preparedness of all houses sold in the state.
California Seismic Safety Commission
easement
The right to a specific use of or right to travel over land owned by another. The land being used or traveled over is the servient tenement; the land that is benefited by the use is the dominant tenement. An easement appurtenant is a property interest belonging to the owner of dominant tenement and is transferred with the land; an easement in gross is a personal right that usually is not transferable by its owner. (See affirmative easement, dominant tenement, easement appurtenant, easement in gross, implied easement, negative easement, servient tenement
easement appurtenant
An easement that is annexed to the ownership of one parcel and allows the owner the use of the neighbor's land. (See easement)
easement by condemnation
An easement created by the government or government agency that has exercised its right under eminent domain. (See easement, eminent domain)
easement by estoppel
An easement created when a person's words or actions lead another to believe that an easement exists. If, in relying on those words or actions, the easement user acts to his or her detriment, they may not deny the existence of the easement. (See easement, estoppel)
easement by implication of law
An easement that will be created by law to provide access to a parcel of land that is otherwise landlocked. (See easement)
easement by necessity
An easement allowed by law as necessary for the full enjoyment of a parcel of real estate; for example, a right of ingress and egress over land owned by someone else. (See easement)
easement by prescription
An easement acquired by continuous, open and hostile use of property for the period of time prescribed by state law. (See easement)
easement in gross
An easement in gross is a type of easement that grants a specific individual or entity the right to use another person's property for a particular purpose. Unlike an easement appurtenant, which benefits a specific piece of land (known as the dominant estate), an easement in gross benefits a person or entity (the easement holder) rather than a specific parcel of land. The most common type of easement in gross is a utility easement, in which the utility company has the right to cross the landowner's property to access utilites equipment. (See easement)
Easton v. Strassburger
The duty of the licensee to make a reasonable investigation of the property evolved from the case of Easton v. Strassburger (1984). As the leading case on this issue, the courts decision sent the message "loud and clear" to all real estate licensees that their responsibility does not stop at a mere disclosure of material facts known to the licensee. Easton filed suit against Strassburger, the real estate agency and others for fraudulent concealment and intentional misrepresentation regarding potential soil problems and a resulting slide on the property. (See material fact)
easy-monetary policy
A central bank policy designed to stimulate economic growth by lowering short term interest rates, making money less expensive to borrow. Opposite of tight monetary policy. (See open market operations, reserve requirements, tight-monetary policy)
Federal Reserve Website
eave
The eave is the portion of a roof that extends over the exterior wall. (See construction terms)
econometrics
Econometrics combines economics, mathematics and statistics to express economic relationships in terms of mathematical equations.
economic base study
An economic base study gives detailed information about how a community earns its living. The study attempts to determine: the current sources of employment and income; which sources depend on markets outside the local economy and are affected by external forces, and which sources serve markets within the local economy.
economic cycle
The natural fluctuation of the economy between periods of expansion (growth) and contraction (recession). Factors such as gross domestic product (GDP), interest rates, levels of employment and consumer spending can help to determine the current stage of the economic cycle.
economic life
1. The estimated period over which an improved property may be profitably used so that it will yield a return over and above the economic rent attributable to the land itself; the period during which an improvement has value in excess of its salvage value. In the case of an older structure or improvement, economic life refers to the remaining period during which the improvements to the real property (not land) are depreciated for tax purposes. The economic lives of such improvements are normally shorter than their actual physical lives. Also called service life. 2. As applied to a structure, the years or age indicated by the condition and utility of the structure, as opposed to its actual or chronological age. (See improvement)
economic obsolescence
A loss in the value of a property due to outside forces over which the owner has no control. (See functional obsolescence, physical obsolescence)
economic oversupply
Economic oversupply occurs when the quantity of a product or service available in the market exceeds the demand for it. This situation often leads to downward pressure on prices and can result in excess inventory or unused services. Oversupply can be caused by several factors, including overproduction, technological advancements, sudden drops in consumer demand, or poor market forecasting. In real estate, for example, economic oversupply happens when more properties are built than are needed by buyers or renters, leading to vacant homes and declining property values. In broader economic terms, persistent oversupply can lead to economic inefficiencies, layoffs, and business closures if producers fail to adjust production levels to reflect actual market demand.
economic relationship
For example, if the agent's brother is going to be the buyer, or if the agent is going to represent both parties to the transaction.
economic rent
Currently referred to as market rent, it is the rental income that real estate can command in an open, competitive market at any given time, as contrasted with contract rent, or the income actually received under a lease agreement.
Economic Stimulus Act of 2008
Legislation passed by Congress in 2008 to bolster the economy by making payments of up to $1,200 to over 130 million households.
economics
A branch of science that deals with the production, distribution and consumption of goods and services, and their management.
economy
An economy is any system designed for the production, distribution, and consumption of necessary and desired goods and services.
EDD offices
State Employment Development Departments (EDD) provide direct links to job placement and referrals, unemployment insurance, disability insurance, employment and training, labor market information, payroll taxes, and more. (See One Stop Centers)
Education and Research Account
The Education and Research Account is a California fund financed by a fixed portion of real estate license fees, designed to encourage research in land use and real estate development.
education and training
Participation in degree and certificate programs, continuing education, non-traditional education to enhance your knowledge and skills.
educational information
Information about schools or financial aid.
effect
Something that inevitably follows an antecedent. (See cause)
effective age
The age of a building based on the actual wear and tear and maintenance, or lack of it, that the building has received.
effective date of the appraisal
Uniform Standards of Professional Appraisal Practice (USPAP) requires that each appraisal report specifies the effective date of the appraisal and the date of the report. The date of the report indicates the perspective from which the appraiser is examining the market.
effective date of the appraisal
Uniform Standards of Professional Appraisal Practice (USPAP) requires that each appraisal report specifies the effective date of the appraisal and the date of the report. The date of the report indicates the perspective from which the appraiser is examining the market.
effective gross income
Effective gross income is a property's income from all sources, less allowance for vacancy and collection losses.
effective gross income multiplier
A factor that can be applied to gross income less vacation and collection losses to determine market value. (See effective gross income)
effective interest rate
The actual rate or yield of a loan, regardless of the amount stated on the debt instrument. (See nominal interest rate)
efficiency
The ratio of usable energy delivered by a dynamic system to the energy supplied to it.
efflorescence
Efflorescence is the deposit of water soluble salts on the surface of masonry. It is caused by the dissolving of salts present in the masonry migrating to the surface and deposited as the water evaporates.
effluent water
Effluent water is defined by the United States Environmental Protection Agency as "Wastewater, treated or untreated, that flows out of a treatment plant, sewer, or industrial outfall. Generally refers to wastes discharged into surface waters."
ego
Egotism; conceit; self-importance; self-esteem or self-image. The part of the human psyche that experiences and reacts to the outside world and thus mediates between the primitive drives of the "id" and the demands of the social and physical environment.
egress
A way to exit from a property; the opposite of ingress.
elasticity
"Elasticity" is the measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which demand and supply change in response to changes in price or income.
elderly person
An elderly person is any individual who is qualified, by reason of age, to draw benefits from Federal Old Age and Survivors Insurance, or from any other pension or annuity in which the age of the recipient is the criterion for entitlement.
electrical system
Building components that provide adequate electrical service for the needs of occupants, meeting all safety requirements of the National Electrical Code (NEC).
electromagnetic fields (EMFs)
Fields generated by the movement of electrical currents.
electronic contract
An electronic contract (or e-contract) is an agreement created and "signed" in electronic form. No paper or other hard copies are used. E-contracts are formed in the course of e-commerce by the interaction of two or more individuals using electronic means, such as e-mail, a computer program, or the interaction of at least two electronic agents that are programmed to recognize the existence of a contract.
electronic data interchange
The exchange of business transaction information in a computer-processable format, used in online banking and e-commerse transaction processing. (See e-commerce)
electronic funds transfer
The transfer of money initiated through an electronic terminal, automated teller machine, computer, telephone, or magnetic tape. EFT also applies to credit card and automated bill payments.
electronic resume format
Resume in a variety of styles (such as chronological, functional, or combined) that is transferred electronically.
Electronic Signatures in Global and National Commerce Act
Congress enacted the Electronic Signatures in Global and National Commerce Act (P.L. 106-229; also known as E-SIGN) on June 30, 2000, and the law became effective on October 1, 2000. The main purpose of this statute is to create an equivalent legal status for electronic signatures and documents with the legal status of handwritten documents. This act enhances possibilities of e-commerce especially in legal transactions and the financial services industry. The act's purpose is "to facilitate the use of electronic records and signatures in interstate and foreign commerce by ensuring the validity and legal effect of contracts entered into electronically."
Electronic Signatures in Global and National Commerce Act
Enacted by Congress in 2000 to facilitate the use of electronic records and signatures in interstate and foreign commerce by ensuring the validity and legal effect of contracts entered into electronically.
electronic-portfolio
Portfolio on the web that includes such categories as career vision, career highlights, professional links, references, activities and interests, resume and work samples, contacts in academic situations. Electronic-portfolios are privately owned and the owner has complete control over who has access to what and when.
elevations
1. Elevations show the exterior sides of a building as it appears after all structural work has been completed. Views are often identified as front, rear, left, and right elevation. Symbols on elevation drawings indicate the kind of exterior materials, their placement and the height of their construction. 2. Just as surface rights must be identified, surveyed and described, so must rights to the property above the earth's surface. In the same way land may be measured and divided into parcels, the air itself may be divided. An owner may subdivide the air above his or her land into air lots. Air lots are composed of the airspace within specific boundaries located over a parcel of land. (See construction terms)
eligible borrower
AN eligible borrower is a credit applicant who has an ownership interest in the security property, signs the security instrument, and signs the mortgage note.
eligible renovations
Eligible renovations include repair or replacement of plumbing, electrical, and heating systems, structural repairs, additions, modernization of kitchens and bathrooms, new siding, and windows.
emancipated minor
A legal mechanism by which a person below the age of majority ("adulthood") gains certain rights, generally identical to those of adults. An emancipated minor is free of any authority from his or her parent or other legal guardian. The extension of these rights, as well as the remaining prohibitions, vary according to the jurisdiction.
emancipated minor (Arizona)
embezzlement
The fraudulent appropriation for one's own use or benefit of property or money, by a clerk, agent, trustee, public officer, or other person acting in a fiduciary capacity for another. (See fiduciary)
emblements
1. Growing crops produced by the labor of the cultivator. 2. The right to the profits from such crops. (See fructus industriales)
emergency spokesperson
In property management, an emergency spokesperson is responsible for communicating on behalf of the management team during emergencies. They inform residents, coordinate with emergency services, and handle media relations to ensure accurate and timely information is disseminated. Their role is crucial in managing the crisis and maintaining order and safety.
Emergency Suspension Order
An Emergency Suspension Order (ESO) is an immediate, temporary suspension of a professional license issued by a regulatory agency when the licensee's actions or conduct are deemed to pose a serious and immediate threat to public health, safety, or welfare. This order is enforced without prior notice or hearing to prevent further harm while the underlying case is investigated or adjudicated.
eminent domain
The right of the government to acquire title to property for public use by condemnation; the property owner receives compensation which is generally fair market value. (See taking)
FindLaw® eminent domain
empathy
The intellectual identification with or experiencing of the feelings, thoughts, or attitudes of another.
employability skills
1) Job search strategies and placement techniques. 2) Transferable core skills that are necessary for career success at all levels of employment and for all levels of education. Specialized skills (such as computer programming), critical thinking, social, and problem-solving skills. (see basic competency skills)
employee
Person who is hired by someone else to perform work; for purposes of the Real Estate Law, a real estate salesperson is always considered an employee under the supervision of the employing broker; for tax purposes, a real estate salesperson working for a real estate broker can be hired as an employee or as an independent contractor, if the requirements of the Internal Revenue Service are met. (See employer, independent contractor)
employee (Arizona definition)
A natural person who has an employment relationship with a licensee that is acknowledged by both the person and the licensee, and
employee handbook
An employee handbook is a compilation of the policies, procedures, working conditions, and behavioral expectations that guide employee actions in a particular workplace. Employee handbooks generally also include information about the company, employee compensation and benefits, and additional terms and conditions of employment.
employer
An individual or company that pays people to work for them. Employers are obligated to withhold income taxes and social security taxes from the compensation of employees. (See employee)
employer information
Information about a specific employer (i.e., financial condition, product or service development, staffing).
employment
The condition of having paid work; an individual's trade or profession; the action of providing work to a person. (See employment contract, employment-at-will, employer)
employment and income verification
When an owner/landlord verifies that the employment and income information provided by a prospective renter/tenant is accurate and correct. The owner/landlord should probably call the prospective renter/tenant's past two employers and verify income.
employment contract
A document evidencing formal employment between employer and employee or between principal and agent. In the real estate business this generally takes the form of a listing agreement or management agreement. (See listing agreement)
employment-at-will
Employment-at-will is the common-law rule where an employment contract of indefinite duration can be terminated by either the employer or the employee at any time for any reason; also known as terminable-at-will.
enabling acts
Congressional act that confers powers onto the states.
encapsulation
A method of controlling environmental contamination by sealing off a dangerous substance (such as asbestos). The treatment of asbestos containing material with a liquid that covers the surface with a protective coating or embeds fibers in an adhesive matrix to prevent the release of asbestos fibers into the air. (See asbestos)
encroachment
An unauthorized invasion or intrusion of an improvement or other real property onto another's property, thus reducing the size and value of the invaded property. For example, a roof of a building that extends over a neighbor's property. (Most encroachments happen unintentially.)
encryption
The process of scrambling data so that it can not be deciphered; encrypted data can only be unscramble by using the key necessary to decrypt the data.
encumbrance
Any claim, lien, charge or liability attached to and binding on real property that may lessen its value or burden, obstruct or impair the use of a property but not necessarily prevent transfer of title; a right or interest in a property held by one who is not the legal owner of the property.
There are two general classifications of encumbrances: those that affect the title, such as judgments, mortgages, mechanics' liens and other liens, which are charges on property used to secure a debt or obligation; and those that affect the physical condition of the property, such as restrictions, encroachments and easements. (See easement, encroachment, judgment, lien, mechanics' lien, mortgage)
Endangered Species Act
Passed by the United States Congress in 1973. The Act was originally intended to protect endangered species on federal lands. Since passage, the Act has been used to prohibit development or other land use in habitats of protected species. Endangered Species Act of 1973
endless chain
A method of prospecting where agents asks each prospect to recommend other prospects. (See prospecting)
endorsement
A method of transferring title to a negotiable instrument, such as a check or promissory note, by signing the owner's name on the reverse side of such instrument. A blank endorsement guarantees payment to subsequent holders. An endorsement that states that it is without recourse does not guarantee payment to subsequent holders. A special endorsement specifies the person to whom or to whose order the instrument is payable.
endowment funds
Many commercial banks and mortgage bankers handle investments for endowment funds. The endowments of hospitals, universities, colleges, charitable foundations and other institutions provide a good source of financing for low-risk commercial and industrial properties.
energy audit
An inventory and description of all the features and products in a home or building that effect the use of energy.
energy efficient mortgage (EEM)
A home mortgage in which the qualifying debt-to-income and housing expense-to-income ratios have been increased by 2% because the home meets or exceeds model standards for energy efficiency.
energy improvement mortgage (EIM)
A loan secured by real property that is made to an owner for the specific purpose of making energy efficient improvements to a home or building.
Energy Star® Home
A home that has been certified and labeled by the U.S. Environmental Protection Agency as having a 30% higher energy efficiency rating than the national residential standards for energy efficiency. Energy Star® is a registered trademark of the U.S. EPA.
ENERGY STAR®-labeled homes
ENERGY STAR®-labeled homes are typically 20-30 percent more energy efficient than a standard home.
energy-efficiency ratio (EER)
A measure of an electrical appliance's energy consumption found by dividing its capacity measured in British Thermal Units (BTUs) by the number of watts of electricity needed to run it. Information on the EER in a variety of applications can be found at www.eere.energy.gov/consumer
enjoin
1. to direct or order (someone) to do something. 2. to prescribe (a course of action) with authority or emphasis. 3. to prohibit or restrain by an injunction. (See injunction)
entitlement
The portion of a VA-guaranteed loan that protects a lender from defaults. (See certificate of eligibility)
entity rule
Three entities can hold property: individuals, partnerships and corporations. In the case of a property exchange, the way an exchanger holds property going into an exchange is the way they must hold the property coming out of the exchange.
entrepreneurial decisions
Entrepreneurial decisions involve significant strategic directions, policies, or fundamental systems within the organization.
entrepreneurial profit
The amount of profit attributable to the development function.
environment
The circumstances, objects, or conditions by which one is surrounded; the complex of climatic, edaphic, and biotic factors that act on an organism and ultimately determine its form and survival.
environmental hazards disclosure
By California law (AB 983) a real estate agent or owner is required to inform prospective buyers of environmental hazards located on a residental property.
environmental impact report
A report required by the California Environmental Quality Act that projects the impact a project may have on the environment. The report includes relevant data and an analysis of its effects on the environment.
environmental impact statement
Required by the National Environmental Policy Act and applies to federal government actions or legislation, it includes relevant data about an action and an analysis of its effect on the environment. (See Environmental Protection Agency)
Environmental Protection Agency (EPA)
A federal agency created in 1970 by bringing together various federal pollution control activities that had been scattered among a number of federal departments and agencies. The EPA is involved with environmental problems of air and water pollution, solid-waste management, pesticides, radiation and noise.
The EPA sets standards, determines how much pollution is tolerable, establishes timetables to bring polluters into line with its standards and enforces environmental laws. The EPA conducts an extensive environmental research program; provides technical, financial, and managerial help to state, regional and municipal pollution control agencies; and allocates funds for sewage-treatment facilities.
The original authority of the EPA was broadened by passage of the Clean Air Amendments and the Resource Recovery Act in 1970; the Federal Water Pollution Control Act Amendments, the Federal Environmental Pesticide Control Act, the Noise Control Act and the Marine Protection Research and Sanctuaries Act in 1972; the Safe Drinking Water Act in 1974; and the Comprehensive Environmental Response Compensation and Liability Act (CERCLA) in 1980. (See CERCLA, hazardous waste) Environmental Protection Agency Website
environmental site assessment
An independent investigation and assessment of a property to determine if any existing or potential environmental problems or hazards exist on property. It is usually done to determine if any environmental problems exist on a property that might effect the use or market value of the property. It is sometimes referred to as the "due diligence" audit since it can be done to establish the "innocent landowner" defense in a Superfund suit. Usually done by an outside environmental engineering firm.
environmentalism
The philosophy of living in harmony with the global ecosystem. A broad term incorporating the concerns and actions in aid of the protection and preservation of the environment.
Equal Credit Opportunity Act (ECOA)
The Equal Credit Opportunity Act is Federal legislation passed in 1974 to ensure that the various financial institutions and other firms engaged in the extension of credit exercise their responsibility to make credit available with fairness and impartiality, and without discrimination on the basis of race, color, religion, national origin, sex or marital status, age, receipt of income from public assistance programs (food stamps, social security), and to ensure good-faith exercise of any right under the Consumer Credit Protection Act (creditor must state reasons for denial of credit).
equal dignities rule
A rule of agency law that stipulates that when a contract is required by law to be in writing, the authority of an agent to enter into such a contract on behalf of the principal must also be in writing.
Equal Employment Opportunity Unit (EEOU)
The Equal Employment Opportunity Unit (EEOU) monitors Division of Housing and Community Renewal's (DHCR) personnel policies and practices and its implementation of hiring goals to ensure appropriate representation of women, minority groups, disabled persons, and Vietnam veterans in employment. It advises managers and supervisors on equal opportunity in hiring, training, promotion, and other personnel actions, and monitors such activities in light of the agency's affirmative action goals and objectives. The EEOU conducts special recruitment for certain DHCR job titles and engages in SCOPE conferences with the Department of Civil Service to ensure that civil service examinations are relevant and fair.
equal housing opportunity
The U.S. national policy/concept that all people should have an equal opportunity to purchase or lease housing, without regard to race, color, sex, disability, religion, familial status, or national origin.
Equal Housing Opportunity logo
The Equal Housing Opportunity logo is a visual symbol used in the United States to indicate compliance with the Fair Housing Act. It features a simple design of a house with an equal sign inside, signifying that housing opportunities are provided without discrimination based on race, color, religion, sex, disability, familial status, or national origin. This logo is commonly displayed by real estate agencies, rental offices, and on advertisements to affirm a commitment to fair housing practices.
equalibrium point
The point at which the number of buyers willing to purchase a good or service equals the number of sellers willing to sell that good or service. (See supply, demand)
equalization
In some jurisdictions, when it is necessary to correct inequalities in state wide tax assessments, an equalization factor is used to achieve uniformity. An equalization factor may be applied to raise or lower assessments in a particular district or county. The assessed value of each property in the area is multiplied by the equalization factor, and the tax rate is then applied to the equalized assessment.
equalization factor
A factor (number) by which the assessed value of a property is multiplied to arrive at a value for the property that is in line with statewide tax assessments. The ad valorem tax would be based on this adjusted value.
equilibrium
A state of rest due to the action of forces that counteract each other; equal balance between any powers or influences; mental balance.
equilibrium
Period of stability in the life cycle of a building or neighborhood in which little change is evident.
equitable estoppel
The doctrine of equitable estoppel prevents fraud by the present owner of a property and prohibits their refusal to transfer the property.
equitable lien
A lien arising out of common law or the court system —in contrast to a statutory lien, which is imposed on property by statute. (See common law, statutory lien)
equitable redemption
A defaulted property owner recovering his or her property prior to its sale by curing the default. (See statutory redemption)
equitable right of redemption
The right of a defaulted property owner to recover the property prior to its sale by paying the appropriate fees and charges.
equitable rights
Equitable rights are rights that are based on principles of fairness, justice, and equity, as opposed to strict legal rules. Equitable rights are often used in situations where the law does not provide a specific remedy or where enforcing strict legal rights would result in unfairness.
equitable title
The interest held by a vendee under a contract for deed or an installment contract; the equitable right to obtain absolute ownership to property when legal title is held in another's name.
equitable title
Title to the equity. Equity is the difference between what a borrower owes and what the property is worth. Therefore, when a borrower has equitable title (or ownership of the equity), if the property if the property has positive equity (worth more than is owed), the borrower holds title to equity as an asset. If the property has negative equity, the borrower holds a liability.
equitably estop
The doctrine of equitable estoppel prevents fraud by the present owner of a property and prohibits their refusal to transfer a property.
equity
The interest or value that an owner has in property over and above any indebtedness.
equity capitalization rate
A rate that reflects the relationship between a single year's before-tax cash flow and the equity investment in the property. The before-tax cash flow is the net operating income less the annual debt service payment, and the equity is the property value less any outstanding loan balance. The equity capitalization rate, when divided into the before-tax cash flow, gives an indication of the value of the equity. Also called cash on cash rate, case flow rate, or equity dividend rate.
equity financing
Equity financing is the act of raising money for company activities by selling common or preferred stock to individual or institutional investors. In return for the money paid, shareholders receive ownership interests (equity) in the corporation.
equity invested
The actual amount you will invest to buy a property. Typically it is your downpayment (20% - 30% cash plus closing costs) plus rehabilitation monies you invest to get the property into rentable shape.
equity loans
A loan based on a percentage of the equity a borrower holds in a collateral property.
equity participation loan
A lender obtains or has the right to obtain an ownership interest in the project being financed.
equity purchaser
An equity purchaser is any person or entity who acquires title to a residence in foreclosure.
equity seller
An equity seller is any natural person who is the property owner at the time of an equity sale.
equity skimming
In equity skimming, a subject may use a straw buyer, false income documents, false satisfaction of lien, or false credit reports to obtain a mortgage loan in the straw buyer's name. Subsequent to closing, the straw buyer signs the property over to the investor in a quit claim deed, which relinquishes all rights to the property. The investor does not make any mortgage payments and rents the property until foreclosure takes place many months later. (See straw buyer)
equity trust
An investment trust dealing with ownership rather than financing. (See investment group financing)
erosion
The gradual loss of soil due to the operation of currents, tides or winds.
errors and omissions insurance
A type of professional liability insurance that protects businesses and professionals, including real estate agents, from legal claims made by clients for inadequate work or negligent actions. In the context of real estate, E&O insurance covers real estate brokers and agents against potential lawsuits related to errors, omissions, or negligence in the services they provide, such as failure to disclose a property defect or mistakes in documentation. It typically covers legal defense costs and any resulting settlements or judgments, excluding intentional misconduct or fraudulent acts.
escalator clause
An escalator clause in a lease provides for an increase in payments based on an increase in an index such as the consumer price index (CPI) or the wholesale price index (WPI).
escape clause
1. A contract provision relieving a party of liability for failure to perform, as where a stated contingency does not occur. If such a clause allows the party to cancel the contract for no reason whatsoever, there really is no enforceable contract, for mutuality of obligation is lacking. 2. A clause in a proprietary lease of a tenant-stockholder that permits the tenant to surrender the stock and lease back to the cooperative association and thereby terminate continuing liability for payments due under the lease. Essential elements of a valid contract: 1. Offer and acceptance; 2. Consideration; 3. Legally competent parties; 4. Consent
escheat
The reversion of property to the state or county, as provided by state law, in cases where a decedent dies intestate and there are no heirs capable of inheriting or when the property is abandoned. In some states, bank accounts that are unused for more than seven years will escheat to the government. (See intestate)
escrow
The process by which money and/or documents are held by a disinterested third person (a stakeholder) until satisfaction of the terms and conditions of the escrow instructions (as prepared by the parties to the escrow) have been achieved. Once these terms have been satisfied, delivery and transfer of the escrowed funds and documents takes place. Although in some states a real estate broker is authorized to handle escrow functions, the common practice is to employ the services of a licensed escrow company, title company or lending institution. (See bilateral instructions, final escrow instructions, joint escrow instructions, lender's escrow instructions, supplemental instructions)
escrow account
The trust account established by a broker under the provisions of the license law for the purpose of holding funds on behalf of the broker's principal or some other person until the consummation or termination of a transaction. (See trust fund bank account)
escrow agent/officer
An individual qualified to perform all the steps necessary to prepare and carry out escrow instructions. Tasks include obtaining title insurance; securing payoff demands; prorating taxes, interest, rents, etc.; and distributing the funds held in escrow. (See escrow instructions, prorations, title insurance)
Escrow Disbursement Order (EDO)
An Escrow Disbursement Order (EDO) is a directive issued by a regulatory authority, such as a real estate commission, to resolve a dispute over funds held in escrow. It provides legally binding instructions on how the escrowed funds should be disbursed to the appropriate parties, ensuring compliance with applicable laws and agreements.
escrow fee
A fee covering all the usual escrow services except for title insurance. The fee is normally determined by the amount of money involved in the transaction.
escrow holder
An escrow holder is essentially the same as an escrow agent in terms of function. The term "holder" emphasizes the role of holding the funds or documents until the transaction conditions are satisfied. This term might be used to highlight the physical or fiduciary responsibility of holding the assets in escrow. Like escrow agents, escrow holders can be companies, law firms, or other entities, and they are responsible for safeguarding the escrowed items.
escrow instructions
In a sales transaction, a writing signed by buyer and seller that details the procedures necessary to close a transaction and directs the escrow agent how to proceed. Sometimes the buyer and seller execute separate instructions and sometimes the contract of sale itself serves as the escrow instructions. (See bilateral instructions, final escrow instructions, joint escrow instructions, lender's escrow instructions, escrow, supplemental instructions)
escrow officer
An individual qualified to perform all the steps necessary to prepare and carry out escrow instructions. Tasks include obtaining title insurance; securing payoff demands; prorating taxes, interest, rents, etc.; and distributing the funds held in escrow. Also known as an escrow agent. (See escrow instructions, prorations, title insurance)
essentials of a valid lease
A lease is a form of contract. To be valid, a lease must meet essentially the same requirements as any other contract:
established business relationship
A relationship between a seller and a consumer based on: (1) the consumer's purchase, rental, or lease of the seller's goods or services or a financial transaction between the consumer and seller, within the eighteen (18) months immediately preceding the date of a telemarketing call; or (2) the consumer's inquiry or application regarding a product or service offered by the seller, within the three (3) months immediately preceding the date of a telemarketing call.
estate
The interest held by the owner of property.
estate (tenancy) at sufferance
The tenancy of one who continues to occupy the premises improperly and against the will of the landlord. Sufferance because someone is "suffering".
estate (tenancy) at will
An estate (or tenancy) in which a person holds or occupies real estate with the permission of the owner, for a term of unspecified or uncertain duration; i.e., there is no fixed term to the tenancy.
estate (tenancy) for years
An interest in property for a certain, exact period of time, and leased for a specified consideration.
estate (tenancy) from period to period
An interest in leased property that continues from period to period—week to week, month to month or year to year. This type of tenancy auto-renews indefinitely at the end of each period, unless the auto-renewal is stopped by one of parties giving notice to the other.
estate in land
The degree, quantity, nature and extent of interest a person has in real property.
estate taxes
Federal estate taxes and state inheritance taxes (as well as the debts of decedents) are general, statutory, involuntary liens that encumber a deceased person's real and personal property. These are normally paid or cleared in probate court proceedings. (See inheritance taxes, lien)
estates of tenancy
The right to hold or use property for a fixed period of time at a given price, without transfer of ownership, on the basis of a lease contract. (See lease)
estimated buyer's costs
An estimate of the buyer's total cash requirements to purchase real property. A realistic estimate of all costs and payments based on the buyer's offer.
estimated remaining economic life
The estimated time period over which a structure is expected to add value above the value of the land as if vacant and valued at its highest and best use.
estimated seller's proceeds
An estimate of the net amount an owner will receive from the sale of his or her property. An "Estimated Seller's Proceeds" form is filled out by the listing broker and calculates the proceeds based on the listing price and seller's costs.
estoppel
Method of enforcing an agency relationship in which someone stated incorrectly that another person is his or her agent, and a third person relied on that representation.
estoppel certificate
A document in which a borrower certifies the amount owed on a mortgage loan and the rate of interest.
ethics
Refers to a set of moral principles or values that govern individual or group behavior, guiding individuals and organizations in distinguishing between what is considered morally right and wrong.
ethnicity
A grouping of people sharing a common and distinctive racial, national, religious, linguistic, or cultural heritage.
evacuation drills
In property management, an evacuation drill is a planned exercise to practice the safe and orderly evacuation of a building in case of an emergency, such as a fire or natural disaster. It involves coordinating with tenants and staff to follow predefined escape routes and procedures. The goal is to ensure everyone knows how to exit the building quickly and safely, minimizing potential injuries or casualties.
evaluate
To determine or fix the value of; to quantify and to qualify information about.
evaporative coolers (swamp cooler)
An economical method of cooling a home in a dry climate. An evaporative cooler is a large box-like unit, four sides of which are removable panels with vents that let air flow through. Inside of each panel is a "cooler pad," usually made of wood fibers. The unit contains a large fan and a water pump. At the bottom of the unit is a water reservoir. Water is pumped from the reservoir, continually soaking the cooler pads. The fan draws hot outside air through the pads. As the warm air evaporates water from the pads, heat is carried away, cooling the air by up to 20 degrees-F. The water-cooled air is then pumped into the house through an air duct.
event
The fundamental entity of observed physical reality represented by coordinates of place and time in the space-time continuum.
eviction
1. The legal process of removing a tenant from the premises as a result of a breach of a lease. 2. The distrubance of a tenant's enjoyment of any material part of a leased premises by an act of the landlord, or by a claim of superior title by a third party. (See actual eviction, constructive eviction, lease, retaliatory eviction)
eviction suit
An eviction suit, also known as an eviction proceeding, is a legal process initiated by a landlord to remove a tenant from rental property due to violations of the lease agreement, such as non-payment of rent or other breaches. This legal action is filed in a court, and it requires the landlord to provide proof of the alleged lease violations and follow specific legal procedures outlined by local tenant-landlord laws. If the court rules in favor of the landlord, it will issue an order that legally compels the tenant to vacate the property by a specified date, and if necessary, law enforcement may be involved to enforce the eviction.
evidence of title
Proof of ownership of property; commonly a certificate of title, an abstract of title with lawyer's opinion, title insurance or a Torrens registration certificate.
exaction
A concept in real property law where a condition for development is imposed on a parcel of land that requires the developer to mitigate anticipated negative impacts of the development.
exception to the title policy
An exception is a specific item that is not covered by the policy. Generally, most of the exceptions are listed on the Schedule B-II. The first few exceptions are called "standard exceptions".
Exceptions to AZ License Laws
Arizona has provisions that unlicensed person may receive a commission, if that person lives in an apartment complex and refers a prospective tenant who ultimately signs a lease. However, the payment cannot be in cash. It must be in the form of a credit on the monthly rent. Also, an unlicensed person who owns a timeshare property can receive a finder's fee for referring another person to the timeshare development, but the finder's fee cannot be in the form of cash.
excess rent
The amount by which scheduled rent exceeds market rent.
exchange
A transaction in which all or part of the consideration for the purchase of real property is the transfer of property of "like kind" (i.e., real estate for real estate). (See like kind, realized capital gains)
exchange period
The period during which the exchanger must acquire replacement property in the exchange. The exchange period starts on the date the exchanger transfers the first relinquished property and ends on the earlier of the 180th day thereafter or the due date (including extensions) of the exchanger's tax return for the year of the transfer of the relinquished property.
exchanger
The property owner seeking to defer capital gain tax by utilizing an IRS 1031 tax deferred exchange. (See tax deferred exchange)
excluded capital gain
The part of the realized gain that is "excluded" from taxes. (See capital gains, deferred capital gain, realized capital gain (loss), recognized capital gain)
exclusion
Exclusions include recreational vehicles, such as boats or campers, which are not dwellings for purposes of the HMDA. Also excluded are transitory residences such as hotels, hospitals, and college dormitories—whose occupants have principal residences elsewhere.
exclusionary zoning
Zoning that excludes stated uses. (See zoning)
exclusive agency listing
A written listing agreement giving a sole agent the right to sell a property for a specified time, but reserving to the owner the right to sell the property himself without owing a commission. The exclusive agent is entitled to a commission if he or she personally sells the property or if it is sold by anyone other than the seller. It is exclusive in the sense that the property is listed with only one broker. The multiple-listing service must accept exclusive-agency listings submitted by participating brokers. (See listing agreement)
exclusive authorization to acquire real property
A contract providing for the exclusive representation of a buyer by a broker. It authorizes a broker to act as the exclusive agent of the buyer. Similar to an exclusive-authorization-and-right-to-sell listing. (See exclusive-authorization-and-right-to-sell listing)
exclusive buyer representation agreement
Agreement in which the buyer works with only one broker, although the broker is free to represent other buyer clients.
exclusive-agency-buyer-agency-agreement
Similar to the exclusive buyer agency agreement, this is an exclusive contract between the buyer and the agent. However, this agreement limits the broker's right to payment. The broker is entitled to payment only if he or she locates the property the buyer ultimately purchases. The buyer is free to find a suitable property without obligation to pay the agent.
exclusive-buyer-agency-agreement
This is a completely exclusive agency agreement. The buyer is legally bound to compensate the agent whenever the buyer purchases a property of the type described in the contract. The broker is entitled to payment regardless of whether he or she locates the property. Even if the buyer finds the property independently, the agent is entitled to payment.
exclusive-right-to-sell listing
A written listing agreement appointing a broker as the exclusive agent for the sale of property for a specified period of time. The listing broker is entitled to a commission if the property is sold by the owner, by the broker or by anyone else. The phrase "right-to-sell" really means the right to find a buyer; it does not mean that the agent has a power of attorney from the owner to sell the property. (See listing agreement)
exculpatory clause
An exculpatory clause, also known as a liability waiver, is a contract provision that relieves one party of liability for damages or injuries that might be caused during the performance of the contract. These clauses are typically included in contracts to limit the responsibility of one party for certain risks or unforeseen events.
execute
The act of making a document legally valid, such as formalizing a contract by signing or acknowledging and delivering a deed. In some cases, execution of a document may refer solely to the act of signing, in other cases it may refer to complete performance of the document's terms.
executed contract
Written agreement that has been signed by all parties; agreement that has been completed according to its terms. (See contract)
executive officer
An executive officer is the chief executive officer, the president, the principal financial officer, the principal operating officer, each vice president with responsibility involving policy-making functions for a significant aspect of a person's business, the secretary, the treasurer, or any other person performing similar managerial or supervisory functions with respect to any organization, whether incorporated or unincorporated.
executive recruiters
Recruiters who represents candidate in all phases of job placement including salary negotiations; search fees may be paid by candidate.
executive summary
An executive summary is a short document or section of a document that summarizes a longer report or proposal in such a way that readers can rapidly become acquainted with the larger body of material without having to read it all. It usually contains a brief statement of the proposal covered in the full document, along with concise background information, analysis and conclusions.
executor
A person appointed by a testator to carry out the directions and requests in his or her last will and testament, and to dispose of his or her property according to the provisions of the will. State probate laws generally refer to this person as a "personal representative of the decedent."
executory contract
A contract under which some future contract obligation remains to be done by one or more of the parties.
executory contract
Agreement with terms that have not yet been completed.
executrix
A female person appointed by a testator to carry out the directions and requests in his or her last will and testament, and to dispose of his or her property according to the provisions of the will. State probate laws generally refer to this person as a "personal representative of the decedent."
exemplary damages
Monetary damages that go beyond the actual compensatory damages. They are awarded to punish a wrongdoer for fraudulent, malicious and wrongful conduct. (See compensatory damages, nominal damages)
exercise
Systematic voluntary behavior performed in a controlled environment for the purpose of improving metabolic function. (See behavior, environment, metabolism, performance, systemic, voluntary)
expansion
The phase of the economic or business cycle when the economy moves from a trough to a peak. It is a period when business activity surges and gross domestic product expands until it reaches a peak. (See peak, recession, recovery, trough)
expansion option
An expansion option in leasing is a provision that grants a tenant the right to expand their leased space under specified conditions, typically within the same building or complex. This option is particularly valuable for businesses that anticipate growth and may need additional space in the future. It allows the tenant to secure additional space without having to relocate, providing a convenient and cost-effective solution for expanding their operations.
expansionism
A government policy of the economic or territorial expansion of a nation.
expansive soil
Expansive soils are soils that expand when water is added, and shrink when they dry out. This continuous change in soil volume can cause homes built on this soil to move unevenly and crack.
expectation
Wishing with confidence of fulfillment; the feeling that something is about to happen; same as expected value.
expense-stop clause
A lease provision to pass increases in building maintenance expenses on to tenants on a pro rata basis.
experience
Direct participation in events; the state or result of being engaged in an activity.
Explicit bias
Bias that is a function of the conscious mind, such as a purposeful targeting of a certain group of people because of a openly held belief that the particular group is bad.
exponential growth
Change in a population that is proportional to the size of the population; population growth in which population size expands by ever-increasing increments.
exposure time
As defined in Uniform Standards of Professional Appraisal Practice (USPAP), the estimated length of time the property interest being appraised would have been offered on the market prior to the hypothetical consummation of a sale at market value on the effective date of the appraisal. Exposure time is always presumed to precede the effective date of the appraisal. Exposure time is a function of price, time, and use—not an isolated opinion of time alone.
express agency
A stated (written or verbal) agency agreement.
express agreement/contract
An oral or written contract in which the parties state the contract's terms and express their intentions in words.
express authority
The stated (written or verbal) authority of an agent. (See express agency)
express grant
An easement created by an owner expressly granting in a deed a specific right to another to use the owner’s property.
express reservation
Property interest identified in a deed as retained by grantor.
extended coverage policy
A title insurance policy that covers risks normally excluded by most standard coverage policies. The standard policy normally insures the title only as shown by the public records. It does not cover unrecorded matters that might be discovered during an inspection of the premises. Most lenders require extended coverage mortgage title insurance policies. Extended coverage indemnifies the insured against such things as mechanic's liens, tax liens, miscellaneous liens, encumbrances, easements, rights of parties in possession and encroachments, which may not be disclosed by the public records. (See standard coverage, title insurance)
extender clause
1. A condition, once found in most listing forms, providing that the listing would continue for a set period of time, such as 90 days, and then would be automatically renewable until the parties agreed to terminate it. Use of such clauses in listing contracts is frowned on by the courts and violates many state license laws. The use of such a clause by an organization may be a violation of the antitrust laws. Such clauses, however, do not violate antitrust laws if inserted by individual brokers in their own exclusive listing forms, though the clause must state a final termination date.
2. A "carryover" clause (often referred to as a safety clause) may be contained in a listing. It provides that a broker is still entitled to a commission for a set period of time after the listing has expired if the property is sold to a prospect of the broker introduced to the property during the period of the listing. A clause stating such conditions for payment might read: "If within 90 days after expiration of the listing agreement, the property is sold to or exchanged with any person who physically inspected the property with the broker or any cooperating broker during the listing period and if the broker gave the seller the name of such a person in writing within five days after the stated expiration date of the listing agreement." The owner should disclose to any broker seeking a listing whether there are any expired listings. Unless careful disclosure is made of any extender clauses in such expired listings, the owner could be faced with a claim for commissions from both the former broker who showed the buyer the property and the new broker. In many states the extender clause is revoked once the owner relists the property with another broker.
external depreciation
Reduction in a property's value caused by outside factors (those that are off the property). (See depreciation)
external obsolescence
A type of incurable depreciation caused by negative factors not on the subject property, such as environmental, social or ecomomic forces. The loss in value can not be reversed by spending money on the property. (See depreciation)
external sources of support for job and employment networking
Sources of support from other people, including the following: a) personal, b) professional, c) organizational and community, and d) opportunistic.
externalities
The principle that states that outside influences may have a positive or negative effect on property value.
extraction method
A method of finding land value in which all improvement costs (less depreciation) are deducted from the sales price; also called abstraction method.
Books in digital form that can be read online or downloaded onto an electronic device.
e-commerce
Business activity carried out over the Internet.
Messages that are transmitted between computers over the Internet.
e-networking
Allows you to create a community of virtual contacts who can provide critical information on job leads, industry trends and possible openings. These are people whom you might never have met in any other way.
e-portfolio
Personal digital collection of information describing and illustrating a person's learning, career, experience and achievements. e-portfolios are privately owned and the owner has complete control over who has access to what and when. See electronic portfolio
e-profile
1. Requiring job applicants to fill out an template on their website solves several problems simultaneously for organizations. All applicant data is received in a structured format suitable for a searchable talent pool/database (most applicant tracking systems enable this). Second, the information received on candidate experience is better. 2. Enables individuals or employees to perform their own profile maintenance; depending upon the confidentiality of the e-profile, sometimes it can be tracked on the Internet and used by others (i.e., advertisers) to track the profile and habits of an Internet user.
Early Closing Sample Contract Verbiage
Close of escrow may occur on a date earlier than the date specified on line 24 if (1) all parties are ready, willing and able to close escrow and (2) all parties have affirmed their readiness.
earned surplus
Earned surplus has the same meaning as in generally accepted accounting standards.
earnest money
Money deposited by a buyer under the terms of a contract, to be forfeited if the buyer defaults but applied to the purchase price if the sale is closed. The cash deposit (including initial and additional deposits) paid by the prospective buyer of real property as evidence of good-faith intention to complete the transaction; called bargain money, caution money, hand money, or a binder in some states. (See trust funds)
earnings
Earnings means compensation paid or payable to an individual or for the individual's account for personal services rendered or to be rendered by the individual, whether denominated as wages, salary, commission, bonus, or otherwise, including periodic payments pursuant to a pension, retirement, or disability program.
earthquake fault zone
As defined by the state geologist, the area in such close proximity to an earthquake fault that movement of the fault presents a property hazard; location within an earthquake fault zone must be disclosed to a prospective purchaser by the seller (or seller's agent, if there is one).
earthquake insurance
Typically a separate policy from homeowners insurance that covers damages caused by an earthquake.
earthquake safety disclosure
By California law, real estate agents or owners are required to prepare a "Residential Earthquake Hazards Report" disclosing the earthquake safety preparedness of all houses sold in the state.
California Seismic Safety Commissioneasement
The right to a specific use of or right to travel over land owned by another. The land being used or traveled over is the servient tenement; the land that is benefited by the use is the dominant tenement. An easement appurtenant is a property interest belonging to the owner of dominant tenement and is transferred with the land; an easement in gross is a personal right that usually is not transferable by its owner. (See affirmative easement, dominant tenement, easement appurtenant, easement in gross, implied easement, negative easement, servient tenement
easement appurtenant
An easement that is annexed to the ownership of one parcel and allows the owner the use of the neighbor's land. (See easement)
easement by condemnation
An easement created by the government or government agency that has exercised its right under eminent domain. (See easement, eminent domain)
easement by estoppel
An easement created when a person's words or actions lead another to believe that an easement exists. If, in relying on those words or actions, the easement user acts to his or her detriment, they may not deny the existence of the easement. (See easement, estoppel)
easement by implication of law
An easement that will be created by law to provide access to a parcel of land that is otherwise landlocked. (See easement)
easement by necessity
An easement allowed by law as necessary for the full enjoyment of a parcel of real estate; for example, a right of ingress and egress over land owned by someone else. (See easement)
easement by prescription
An easement acquired by continuous, open and hostile use of property for the period of time prescribed by state law. (See easement)
easement in gross
An easement in gross is a type of easement that grants a specific individual or entity the right to use another person's property for a particular purpose. Unlike an easement appurtenant, which benefits a specific piece of land (known as the dominant estate), an easement in gross benefits a person or entity (the easement holder) rather than a specific parcel of land. The most common type of easement in gross is a utility easement, in which the utility company has the right to cross the landowner's property to access utilites equipment. (See easement)
Easton v. Strassburger
The duty of the licensee to make a reasonable investigation of the property evolved from the case of Easton v. Strassburger (1984). As the leading case on this issue, the courts decision sent the message "loud and clear" to all real estate licensees that their responsibility does not stop at a mere disclosure of material facts known to the licensee. Easton filed suit against Strassburger, the real estate agency and others for fraudulent concealment and intentional misrepresentation regarding potential soil problems and a resulting slide on the property. (See material fact)
easy-monetary policy
A central bank policy designed to stimulate economic growth by lowering short term interest rates, making money less expensive to borrow. Opposite of tight monetary policy. (See open market operations, reserve requirements, tight-monetary policy)
Federal Reserve Websiteeave
The eave is the portion of a roof that extends over the exterior wall. (See construction terms)
econometrics
Econometrics combines economics, mathematics and statistics to express economic relationships in terms of mathematical equations.
economic base study
An economic base study gives detailed information about how a community earns its living. The study attempts to determine: the current sources of employment and income; which sources depend on markets outside the local economy and are affected by external forces, and which sources serve markets within the local economy.
economic cycle
The natural fluctuation of the economy between periods of expansion (growth) and contraction (recession). Factors such as gross domestic product (GDP), interest rates, levels of employment and consumer spending can help to determine the current stage of the economic cycle.
economic life
1. The estimated period over which an improved property may be profitably used so that it will yield a return over and above the economic rent attributable to the land itself; the period during which an improvement has value in excess of its salvage value. In the case of an older structure or improvement, economic life refers to the remaining period during which the improvements to the real property (not land) are depreciated for tax purposes. The economic lives of such improvements are normally shorter than their actual physical lives. Also called service life. 2. As applied to a structure, the years or age indicated by the condition and utility of the structure, as opposed to its actual or chronological age. (See improvement)
economic obsolescence
A loss in the value of a property due to outside forces over which the owner has no control. (See functional obsolescence, physical obsolescence)
economic oversupply
Economic oversupply occurs when the quantity of a product or service available in the market exceeds the demand for it. This situation often leads to downward pressure on prices and can result in excess inventory or unused services. Oversupply can be caused by several factors, including overproduction, technological advancements, sudden drops in consumer demand, or poor market forecasting. In real estate, for example, economic oversupply happens when more properties are built than are needed by buyers or renters, leading to vacant homes and declining property values. In broader economic terms, persistent oversupply can lead to economic inefficiencies, layoffs, and business closures if producers fail to adjust production levels to reflect actual market demand.
economic relationship
For example, if the agent's brother is going to be the buyer, or if the agent is going to represent both parties to the transaction.
economic rent
Currently referred to as market rent, it is the rental income that real estate can command in an open, competitive market at any given time, as contrasted with contract rent, or the income actually received under a lease agreement.
Economic Stimulus Act of 2008
Legislation passed by Congress in 2008 to bolster the economy by making payments of up to $1,200 to over 130 million households.
economics
A branch of science that deals with the production, distribution and consumption of goods and services, and their management.
economy
An economy is any system designed for the production, distribution, and consumption of necessary and desired goods and services.
EDD offices
State Employment Development Departments (EDD) provide direct links to job placement and referrals, unemployment insurance, disability insurance, employment and training, labor market information, payroll taxes, and more. (See One Stop Centers)
Education and Research Account
The Education and Research Account is a California fund financed by a fixed portion of real estate license fees, designed to encourage research in land use and real estate development.
education and training
Participation in degree and certificate programs, continuing education, non-traditional education to enhance your knowledge and skills.
educational information
Information about schools or financial aid.
effect
Something that inevitably follows an antecedent. (See cause)
effective age
The age of a building based on the actual wear and tear and maintenance, or lack of it, that the building has received.
effective date of the appraisal
Uniform Standards of Professional Appraisal Practice (USPAP) requires that each appraisal report specifies the effective date of the appraisal and the date of the report. The date of the report indicates the perspective from which the appraiser is examining the market.
effective date of the appraisal
Uniform Standards of Professional Appraisal Practice (USPAP) requires that each appraisal report specifies the effective date of the appraisal and the date of the report. The date of the report indicates the perspective from which the appraiser is examining the market.
effective gross income
Effective gross income is a property's income from all sources, less allowance for vacancy and collection losses.
effective gross income multiplier
A factor that can be applied to gross income less vacation and collection losses to determine market value. (See effective gross income)
effective interest rate
The actual rate or yield of a loan, regardless of the amount stated on the debt instrument. (See nominal interest rate)
efficiency
The ratio of usable energy delivered by a dynamic system to the energy supplied to it.
efflorescence
Efflorescence is the deposit of water soluble salts on the surface of masonry. It is caused by the dissolving of salts present in the masonry migrating to the surface and deposited as the water evaporates.
effluent water
Effluent water is defined by the United States Environmental Protection Agency as "Wastewater, treated or untreated, that flows out of a treatment plant, sewer, or industrial outfall. Generally refers to wastes discharged into surface waters."
ego
Egotism; conceit; self-importance; self-esteem or self-image. The part of the human psyche that experiences and reacts to the outside world and thus mediates between the primitive drives of the "id" and the demands of the social and physical environment.
egress
A way to exit from a property; the opposite of ingress.
elasticity
"Elasticity" is the measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which demand and supply change in response to changes in price or income.
elderly person
An elderly person is any individual who is qualified, by reason of age, to draw benefits from Federal Old Age and Survivors Insurance, or from any other pension or annuity in which the age of the recipient is the criterion for entitlement.
electrical system
Building components that provide adequate electrical service for the needs of occupants, meeting all safety requirements of the National Electrical Code (NEC).
electromagnetic fields (EMFs)
Fields generated by the movement of electrical currents.
electronic contract
An electronic contract (or e-contract) is an agreement created and "signed" in electronic form. No paper or other hard copies are used. E-contracts are formed in the course of e-commerce by the interaction of two or more individuals using electronic means, such as e-mail, a computer program, or the interaction of at least two electronic agents that are programmed to recognize the existence of a contract.
electronic data interchange
The exchange of business transaction information in a computer-processable format, used in online banking and e-commerse transaction processing. (See e-commerce)
electronic funds transfer
The transfer of money initiated through an electronic terminal, automated teller machine, computer, telephone, or magnetic tape. EFT also applies to credit card and automated bill payments.
electronic resume format
Resume in a variety of styles (such as chronological, functional, or combined) that is transferred electronically.
Electronic Signatures in Global and National Commerce Act
Congress enacted the Electronic Signatures in Global and National Commerce Act (P.L. 106-229; also known as E-SIGN) on June 30, 2000, and the law became effective on October 1, 2000. The main purpose of this statute is to create an equivalent legal status for electronic signatures and documents with the legal status of handwritten documents. This act enhances possibilities of e-commerce especially in legal transactions and the financial services industry. The act's purpose is "to facilitate the use of electronic records and signatures in interstate and foreign commerce by ensuring the validity and legal effect of contracts entered into electronically."
Electronic Signatures in Global and National Commerce Act
Enacted by Congress in 2000 to facilitate the use of electronic records and signatures in interstate and foreign commerce by ensuring the validity and legal effect of contracts entered into electronically.
electronic-portfolio
Portfolio on the web that includes such categories as career vision, career highlights, professional links, references, activities and interests, resume and work samples, contacts in academic situations. Electronic-portfolios are privately owned and the owner has complete control over who has access to what and when.
elevations
1. Elevations show the exterior sides of a building as it appears after all structural work has been completed. Views are often identified as front, rear, left, and right elevation. Symbols on elevation drawings indicate the kind of exterior materials, their placement and the height of their construction. 2. Just as surface rights must be identified, surveyed and described, so must rights to the property above the earth's surface. In the same way land may be measured and divided into parcels, the air itself may be divided. An owner may subdivide the air above his or her land into air lots. Air lots are composed of the airspace within specific boundaries located over a parcel of land. (See construction terms)
eligible borrower
AN eligible borrower is a credit applicant who has an ownership interest in the security property, signs the security instrument, and signs the mortgage note.
eligible renovations
Eligible renovations include repair or replacement of plumbing, electrical, and heating systems, structural repairs, additions, modernization of kitchens and bathrooms, new siding, and windows.
emancipated minor
A legal mechanism by which a person below the age of majority ("adulthood") gains certain rights, generally identical to those of adults. An emancipated minor is free of any authority from his or her parent or other legal guardian. The extension of these rights, as well as the remaining prohibitions, vary according to the jurisdiction.
emancipated minor (Arizona)
In Arizona, a person under the age of 18 years is said to be an emancipated minor if the person: (1) has entered into a valid marriage (case law: [Crook vs. Crook, 80 Ariz 275, 296 P.2d 951 (1956)) ; or (2)is on active duty in any armed forces; or (3)willingly lives apart from his/her parents with the parents' consent and manages his/her own financial affairs regardless of the source of income; or has had an official court ruling stating that the minor is emancipated.
In Arizona, emancipated minors are considered competent contractual parties. Occasionally, you will see the term infant used when referring to a unemancipated minor. These two terms are used interchangeably in most situations.
embezzlement
The fraudulent appropriation for one's own use or benefit of property or money, by a clerk, agent, trustee, public officer, or other person acting in a fiduciary capacity for another. (See fiduciary)
emblements
1. Growing crops produced by the labor of the cultivator. 2. The right to the profits from such crops. (See fructus industriales)
emergency spokesperson
In property management, an emergency spokesperson is responsible for communicating on behalf of the management team during emergencies. They inform residents, coordinate with emergency services, and handle media relations to ensure accurate and timely information is disseminated. Their role is crucial in managing the crisis and maintaining order and safety.
Emergency Suspension Order
An Emergency Suspension Order (ESO) is an immediate, temporary suspension of a professional license issued by a regulatory agency when the licensee's actions or conduct are deemed to pose a serious and immediate threat to public health, safety, or welfare. This order is enforced without prior notice or hearing to prevent further harm while the underlying case is investigated or adjudicated.
eminent domain
The right of the government to acquire title to property for public use by condemnation; the property owner receives compensation which is generally fair market value. (See taking)
FindLaw® eminent domainempathy
The intellectual identification with or experiencing of the feelings, thoughts, or attitudes of another.
employability skills
1) Job search strategies and placement techniques. 2) Transferable core skills that are necessary for career success at all levels of employment and for all levels of education. Specialized skills (such as computer programming), critical thinking, social, and problem-solving skills. (see basic competency skills)
employee
Person who is hired by someone else to perform work; for purposes of the Real Estate Law, a real estate salesperson is always considered an employee under the supervision of the employing broker; for tax purposes, a real estate salesperson working for a real estate broker can be hired as an employee or as an independent contractor, if the requirements of the Internal Revenue Service are met. (See employer, independent contractor)
employee (Arizona definition)
A natural person who has an employment relationship with a licensee that is acknowledged by both the person and the licensee, and
- the person is entitled to payment, or is paid, by the licensee;
- the licensee withholds and remits, or is liable for withholding and remitting, payroll deductions for all applicable federal and state payroll taxes;
- the licensee has the right to hire and fire the employee and the employee's assistants;
- the licensee directs the methods and procedures for performing the employee's job;
- the licensee supervises the employee's business conduct and the employee's compliance with applicable laws and rules.
employee handbook
An employee handbook is a compilation of the policies, procedures, working conditions, and behavioral expectations that guide employee actions in a particular workplace. Employee handbooks generally also include information about the company, employee compensation and benefits, and additional terms and conditions of employment.
employer
An individual or company that pays people to work for them. Employers are obligated to withhold income taxes and social security taxes from the compensation of employees. (See employee)
employer information
Information about a specific employer (i.e., financial condition, product or service development, staffing).
employment
The condition of having paid work; an individual's trade or profession; the action of providing work to a person. (See employment contract, employment-at-will, employer)
employment and income verification
When an owner/landlord verifies that the employment and income information provided by a prospective renter/tenant is accurate and correct. The owner/landlord should probably call the prospective renter/tenant's past two employers and verify income.
employment contract
A document evidencing formal employment between employer and employee or between principal and agent. In the real estate business this generally takes the form of a listing agreement or management agreement. (See listing agreement)
employment-at-will
Employment-at-will is the common-law rule where an employment contract of indefinite duration can be terminated by either the employer or the employee at any time for any reason; also known as terminable-at-will.
enabling acts
Congressional act that confers powers onto the states.
encapsulation
A method of controlling environmental contamination by sealing off a dangerous substance (such as asbestos). The treatment of asbestos containing material with a liquid that covers the surface with a protective coating or embeds fibers in an adhesive matrix to prevent the release of asbestos fibers into the air. (See asbestos)
encroachment
An unauthorized invasion or intrusion of an improvement or other real property onto another's property, thus reducing the size and value of the invaded property. For example, a roof of a building that extends over a neighbor's property. (Most encroachments happen unintentially.)
encryption
The process of scrambling data so that it can not be deciphered; encrypted data can only be unscramble by using the key necessary to decrypt the data.
encumbrance
Any claim, lien, charge or liability attached to and binding on real property that may lessen its value or burden, obstruct or impair the use of a property but not necessarily prevent transfer of title; a right or interest in a property held by one who is not the legal owner of the property.
There are two general classifications of encumbrances: those that affect the title, such as judgments, mortgages, mechanics' liens and other liens, which are charges on property used to secure a debt or obligation; and those that affect the physical condition of the property, such as restrictions, encroachments and easements. (See easement, encroachment, judgment, lien, mechanics' lien, mortgage)
Endangered Species Act
Passed by the United States Congress in 1973. The Act was originally intended to protect endangered species on federal lands. Since passage, the Act has been used to prohibit development or other land use in habitats of protected species. Endangered Species Act of 1973
endless chain
A method of prospecting where agents asks each prospect to recommend other prospects. (See prospecting)
endorsement
A method of transferring title to a negotiable instrument, such as a check or promissory note, by signing the owner's name on the reverse side of such instrument. A blank endorsement guarantees payment to subsequent holders. An endorsement that states that it is without recourse does not guarantee payment to subsequent holders. A special endorsement specifies the person to whom or to whose order the instrument is payable.
endowment funds
Many commercial banks and mortgage bankers handle investments for endowment funds. The endowments of hospitals, universities, colleges, charitable foundations and other institutions provide a good source of financing for low-risk commercial and industrial properties.
energy audit
An inventory and description of all the features and products in a home or building that effect the use of energy.
energy efficient mortgage (EEM)
A home mortgage in which the qualifying debt-to-income and housing expense-to-income ratios have been increased by 2% because the home meets or exceeds model standards for energy efficiency.
energy improvement mortgage (EIM)
A loan secured by real property that is made to an owner for the specific purpose of making energy efficient improvements to a home or building.
Energy Star® Home
A home that has been certified and labeled by the U.S. Environmental Protection Agency as having a 30% higher energy efficiency rating than the national residential standards for energy efficiency. Energy Star® is a registered trademark of the U.S. EPA.
ENERGY STAR®-labeled homes
ENERGY STAR®-labeled homes are typically 20-30 percent more energy efficient than a standard home.
energy-efficiency ratio (EER)
A measure of an electrical appliance's energy consumption found by dividing its capacity measured in British Thermal Units (BTUs) by the number of watts of electricity needed to run it. Information on the EER in a variety of applications can be found at www.eere.energy.gov/consumer
enjoin
1. to direct or order (someone) to do something. 2. to prescribe (a course of action) with authority or emphasis. 3. to prohibit or restrain by an injunction. (See injunction)
entitlement
The portion of a VA-guaranteed loan that protects a lender from defaults. (See certificate of eligibility)
entity rule
Three entities can hold property: individuals, partnerships and corporations. In the case of a property exchange, the way an exchanger holds property going into an exchange is the way they must hold the property coming out of the exchange.
entrepreneurial decisions
Entrepreneurial decisions involve significant strategic directions, policies, or fundamental systems within the organization.
entrepreneurial profit
The amount of profit attributable to the development function.
environment
The circumstances, objects, or conditions by which one is surrounded; the complex of climatic, edaphic, and biotic factors that act on an organism and ultimately determine its form and survival.
environmental hazards disclosure
By California law (AB 983) a real estate agent or owner is required to inform prospective buyers of environmental hazards located on a residental property.
environmental impact report
A report required by the California Environmental Quality Act that projects the impact a project may have on the environment. The report includes relevant data and an analysis of its effects on the environment.
environmental impact statement
Required by the National Environmental Policy Act and applies to federal government actions or legislation, it includes relevant data about an action and an analysis of its effect on the environment. (See Environmental Protection Agency)
Environmental Protection Agency (EPA)
A federal agency created in 1970 by bringing together various federal pollution control activities that had been scattered among a number of federal departments and agencies. The EPA is involved with environmental problems of air and water pollution, solid-waste management, pesticides, radiation and noise.
The EPA sets standards, determines how much pollution is tolerable, establishes timetables to bring polluters into line with its standards and enforces environmental laws. The EPA conducts an extensive environmental research program; provides technical, financial, and managerial help to state, regional and municipal pollution control agencies; and allocates funds for sewage-treatment facilities.
The original authority of the EPA was broadened by passage of the Clean Air Amendments and the Resource Recovery Act in 1970; the Federal Water Pollution Control Act Amendments, the Federal Environmental Pesticide Control Act, the Noise Control Act and the Marine Protection Research and Sanctuaries Act in 1972; the Safe Drinking Water Act in 1974; and the Comprehensive Environmental Response Compensation and Liability Act (CERCLA) in 1980. (See CERCLA, hazardous waste) Environmental Protection Agency Website
environmental site assessment
An independent investigation and assessment of a property to determine if any existing or potential environmental problems or hazards exist on property. It is usually done to determine if any environmental problems exist on a property that might effect the use or market value of the property. It is sometimes referred to as the "due diligence" audit since it can be done to establish the "innocent landowner" defense in a Superfund suit. Usually done by an outside environmental engineering firm.
environmentalism
The philosophy of living in harmony with the global ecosystem. A broad term incorporating the concerns and actions in aid of the protection and preservation of the environment.
Equal Credit Opportunity Act (ECOA)
The Equal Credit Opportunity Act is Federal legislation passed in 1974 to ensure that the various financial institutions and other firms engaged in the extension of credit exercise their responsibility to make credit available with fairness and impartiality, and without discrimination on the basis of race, color, religion, national origin, sex or marital status, age, receipt of income from public assistance programs (food stamps, social security), and to ensure good-faith exercise of any right under the Consumer Credit Protection Act (creditor must state reasons for denial of credit).
equal dignities rule
A rule of agency law that stipulates that when a contract is required by law to be in writing, the authority of an agent to enter into such a contract on behalf of the principal must also be in writing.
Equal Employment Opportunity Unit (EEOU)
The Equal Employment Opportunity Unit (EEOU) monitors Division of Housing and Community Renewal's (DHCR) personnel policies and practices and its implementation of hiring goals to ensure appropriate representation of women, minority groups, disabled persons, and Vietnam veterans in employment. It advises managers and supervisors on equal opportunity in hiring, training, promotion, and other personnel actions, and monitors such activities in light of the agency's affirmative action goals and objectives. The EEOU conducts special recruitment for certain DHCR job titles and engages in SCOPE conferences with the Department of Civil Service to ensure that civil service examinations are relevant and fair.
equal housing opportunity
The U.S. national policy/concept that all people should have an equal opportunity to purchase or lease housing, without regard to race, color, sex, disability, religion, familial status, or national origin.
Equal Housing Opportunity logo
The Equal Housing Opportunity logo is a visual symbol used in the United States to indicate compliance with the Fair Housing Act. It features a simple design of a house with an equal sign inside, signifying that housing opportunities are provided without discrimination based on race, color, religion, sex, disability, familial status, or national origin. This logo is commonly displayed by real estate agencies, rental offices, and on advertisements to affirm a commitment to fair housing practices.
equalibrium point
The point at which the number of buyers willing to purchase a good or service equals the number of sellers willing to sell that good or service. (See supply, demand)
equalization
In some jurisdictions, when it is necessary to correct inequalities in state wide tax assessments, an equalization factor is used to achieve uniformity. An equalization factor may be applied to raise or lower assessments in a particular district or county. The assessed value of each property in the area is multiplied by the equalization factor, and the tax rate is then applied to the equalized assessment.
equalization factor
A factor (number) by which the assessed value of a property is multiplied to arrive at a value for the property that is in line with statewide tax assessments. The ad valorem tax would be based on this adjusted value.
equilibrium
A state of rest due to the action of forces that counteract each other; equal balance between any powers or influences; mental balance.
equilibrium
Period of stability in the life cycle of a building or neighborhood in which little change is evident.
equitable estoppel
The doctrine of equitable estoppel prevents fraud by the present owner of a property and prohibits their refusal to transfer the property.
equitable lien
A lien arising out of common law or the court system —in contrast to a statutory lien, which is imposed on property by statute. (See common law, statutory lien)
equitable redemption
A defaulted property owner recovering his or her property prior to its sale by curing the default. (See statutory redemption)
equitable right of redemption
The right of a defaulted property owner to recover the property prior to its sale by paying the appropriate fees and charges.
equitable rights
Equitable rights are rights that are based on principles of fairness, justice, and equity, as opposed to strict legal rules. Equitable rights are often used in situations where the law does not provide a specific remedy or where enforcing strict legal rights would result in unfairness.
equitable title
The interest held by a vendee under a contract for deed or an installment contract; the equitable right to obtain absolute ownership to property when legal title is held in another's name.
equitable title
Title to the equity. Equity is the difference between what a borrower owes and what the property is worth. Therefore, when a borrower has equitable title (or ownership of the equity), if the property if the property has positive equity (worth more than is owed), the borrower holds title to equity as an asset. If the property has negative equity, the borrower holds a liability.
equitably estop
The doctrine of equitable estoppel prevents fraud by the present owner of a property and prohibits their refusal to transfer a property.
equity
The interest or value that an owner has in property over and above any indebtedness.
equity capitalization rate
A rate that reflects the relationship between a single year's before-tax cash flow and the equity investment in the property. The before-tax cash flow is the net operating income less the annual debt service payment, and the equity is the property value less any outstanding loan balance. The equity capitalization rate, when divided into the before-tax cash flow, gives an indication of the value of the equity. Also called cash on cash rate, case flow rate, or equity dividend rate.
equity financing
Equity financing is the act of raising money for company activities by selling common or preferred stock to individual or institutional investors. In return for the money paid, shareholders receive ownership interests (equity) in the corporation.
equity invested
The actual amount you will invest to buy a property. Typically it is your downpayment (20% - 30% cash plus closing costs) plus rehabilitation monies you invest to get the property into rentable shape.
equity loans
A loan based on a percentage of the equity a borrower holds in a collateral property.
equity participation loan
A lender obtains or has the right to obtain an ownership interest in the project being financed.
equity purchaser
An equity purchaser is any person or entity who acquires title to a residence in foreclosure.
equity seller
An equity seller is any natural person who is the property owner at the time of an equity sale.
equity skimming
In equity skimming, a subject may use a straw buyer, false income documents, false satisfaction of lien, or false credit reports to obtain a mortgage loan in the straw buyer's name. Subsequent to closing, the straw buyer signs the property over to the investor in a quit claim deed, which relinquishes all rights to the property. The investor does not make any mortgage payments and rents the property until foreclosure takes place many months later. (See straw buyer)
equity trust
An investment trust dealing with ownership rather than financing. (See investment group financing)
erosion
The gradual loss of soil due to the operation of currents, tides or winds.
errors and omissions insurance
A type of professional liability insurance that protects businesses and professionals, including real estate agents, from legal claims made by clients for inadequate work or negligent actions. In the context of real estate, E&O insurance covers real estate brokers and agents against potential lawsuits related to errors, omissions, or negligence in the services they provide, such as failure to disclose a property defect or mistakes in documentation. It typically covers legal defense costs and any resulting settlements or judgments, excluding intentional misconduct or fraudulent acts.
escalator clause
An escalator clause in a lease provides for an increase in payments based on an increase in an index such as the consumer price index (CPI) or the wholesale price index (WPI).
escape clause
1. A contract provision relieving a party of liability for failure to perform, as where a stated contingency does not occur. If such a clause allows the party to cancel the contract for no reason whatsoever, there really is no enforceable contract, for mutuality of obligation is lacking. 2. A clause in a proprietary lease of a tenant-stockholder that permits the tenant to surrender the stock and lease back to the cooperative association and thereby terminate continuing liability for payments due under the lease. Essential elements of a valid contract: 1. Offer and acceptance; 2. Consideration; 3. Legally competent parties; 4. Consent
escheat
The reversion of property to the state or county, as provided by state law, in cases where a decedent dies intestate and there are no heirs capable of inheriting or when the property is abandoned. In some states, bank accounts that are unused for more than seven years will escheat to the government. (See intestate)
escrow
The process by which money and/or documents are held by a disinterested third person (a stakeholder) until satisfaction of the terms and conditions of the escrow instructions (as prepared by the parties to the escrow) have been achieved. Once these terms have been satisfied, delivery and transfer of the escrowed funds and documents takes place. Although in some states a real estate broker is authorized to handle escrow functions, the common practice is to employ the services of a licensed escrow company, title company or lending institution. (See bilateral instructions, final escrow instructions, joint escrow instructions, lender's escrow instructions, supplemental instructions)
escrow account
The trust account established by a broker under the provisions of the license law for the purpose of holding funds on behalf of the broker's principal or some other person until the consummation or termination of a transaction. (See trust fund bank account)
escrow agent/officer
An individual qualified to perform all the steps necessary to prepare and carry out escrow instructions. Tasks include obtaining title insurance; securing payoff demands; prorating taxes, interest, rents, etc.; and distributing the funds held in escrow. (See escrow instructions, prorations, title insurance)
Escrow Disbursement Order (EDO)
An Escrow Disbursement Order (EDO) is a directive issued by a regulatory authority, such as a real estate commission, to resolve a dispute over funds held in escrow. It provides legally binding instructions on how the escrowed funds should be disbursed to the appropriate parties, ensuring compliance with applicable laws and agreements.
escrow fee
A fee covering all the usual escrow services except for title insurance. The fee is normally determined by the amount of money involved in the transaction.
escrow holder
An escrow holder is essentially the same as an escrow agent in terms of function. The term "holder" emphasizes the role of holding the funds or documents until the transaction conditions are satisfied. This term might be used to highlight the physical or fiduciary responsibility of holding the assets in escrow. Like escrow agents, escrow holders can be companies, law firms, or other entities, and they are responsible for safeguarding the escrowed items.
escrow instructions
In a sales transaction, a writing signed by buyer and seller that details the procedures necessary to close a transaction and directs the escrow agent how to proceed. Sometimes the buyer and seller execute separate instructions and sometimes the contract of sale itself serves as the escrow instructions. (See bilateral instructions, final escrow instructions, joint escrow instructions, lender's escrow instructions, escrow, supplemental instructions)
escrow officer
An individual qualified to perform all the steps necessary to prepare and carry out escrow instructions. Tasks include obtaining title insurance; securing payoff demands; prorating taxes, interest, rents, etc.; and distributing the funds held in escrow. Also known as an escrow agent. (See escrow instructions, prorations, title insurance)
essentials of a valid lease
A lease is a form of contract. To be valid, a lease must meet essentially the same requirements as any other contract:
- Offer and acceptance—The parties must reach a mutual agreement on all the terms of the contract.
- Consideration—The lease must be supported by valid consideration. Rent is the normal consideration given for the right to occupy the leased premises. However, the payment of rent is not essential as long as consideration was granted in creating the lease itself, sometimes, for instance, this consideration is labor performed on the property. Because a lease is a contract, it is not subject to subsequent changes in the rent or other terms unless these changes are in writing and executed in the same manner as the original lease.
- Capacity to contract—The parties must have the legal capacity to contract.
- Legal objectives—The objectives of the lease must be legal.
established business relationship
A relationship between a seller and a consumer based on: (1) the consumer's purchase, rental, or lease of the seller's goods or services or a financial transaction between the consumer and seller, within the eighteen (18) months immediately preceding the date of a telemarketing call; or (2) the consumer's inquiry or application regarding a product or service offered by the seller, within the three (3) months immediately preceding the date of a telemarketing call.
estate
The interest held by the owner of property.
estate (tenancy) at sufferance
The tenancy of one who continues to occupy the premises improperly and against the will of the landlord. Sufferance because someone is "suffering".
estate (tenancy) at will
An estate (or tenancy) in which a person holds or occupies real estate with the permission of the owner, for a term of unspecified or uncertain duration; i.e., there is no fixed term to the tenancy.
estate (tenancy) for years
An interest in property for a certain, exact period of time, and leased for a specified consideration.
estate (tenancy) from period to period
An interest in leased property that continues from period to period—week to week, month to month or year to year. This type of tenancy auto-renews indefinitely at the end of each period, unless the auto-renewal is stopped by one of parties giving notice to the other.
estate in land
The degree, quantity, nature and extent of interest a person has in real property.
estate taxes
Federal estate taxes and state inheritance taxes (as well as the debts of decedents) are general, statutory, involuntary liens that encumber a deceased person's real and personal property. These are normally paid or cleared in probate court proceedings. (See inheritance taxes, lien)
estates of tenancy
The right to hold or use property for a fixed period of time at a given price, without transfer of ownership, on the basis of a lease contract. (See lease)
estimated buyer's costs
An estimate of the buyer's total cash requirements to purchase real property. A realistic estimate of all costs and payments based on the buyer's offer.
estimated remaining economic life
The estimated time period over which a structure is expected to add value above the value of the land as if vacant and valued at its highest and best use.
estimated seller's proceeds
An estimate of the net amount an owner will receive from the sale of his or her property. An "Estimated Seller's Proceeds" form is filled out by the listing broker and calculates the proceeds based on the listing price and seller's costs.
estoppel
Method of enforcing an agency relationship in which someone stated incorrectly that another person is his or her agent, and a third person relied on that representation.
estoppel certificate
A document in which a borrower certifies the amount owed on a mortgage loan and the rate of interest.
ethics
Refers to a set of moral principles or values that govern individual or group behavior, guiding individuals and organizations in distinguishing between what is considered morally right and wrong.
ethnicity
A grouping of people sharing a common and distinctive racial, national, religious, linguistic, or cultural heritage.
evacuation drills
In property management, an evacuation drill is a planned exercise to practice the safe and orderly evacuation of a building in case of an emergency, such as a fire or natural disaster. It involves coordinating with tenants and staff to follow predefined escape routes and procedures. The goal is to ensure everyone knows how to exit the building quickly and safely, minimizing potential injuries or casualties.
evaluate
To determine or fix the value of; to quantify and to qualify information about.
evaporative coolers (swamp cooler)
An economical method of cooling a home in a dry climate. An evaporative cooler is a large box-like unit, four sides of which are removable panels with vents that let air flow through. Inside of each panel is a "cooler pad," usually made of wood fibers. The unit contains a large fan and a water pump. At the bottom of the unit is a water reservoir. Water is pumped from the reservoir, continually soaking the cooler pads. The fan draws hot outside air through the pads. As the warm air evaporates water from the pads, heat is carried away, cooling the air by up to 20 degrees-F. The water-cooled air is then pumped into the house through an air duct.
event
The fundamental entity of observed physical reality represented by coordinates of place and time in the space-time continuum.
eviction
1. The legal process of removing a tenant from the premises as a result of a breach of a lease. 2. The distrubance of a tenant's enjoyment of any material part of a leased premises by an act of the landlord, or by a claim of superior title by a third party. (See actual eviction, constructive eviction, lease, retaliatory eviction)
eviction suit
An eviction suit, also known as an eviction proceeding, is a legal process initiated by a landlord to remove a tenant from rental property due to violations of the lease agreement, such as non-payment of rent or other breaches. This legal action is filed in a court, and it requires the landlord to provide proof of the alleged lease violations and follow specific legal procedures outlined by local tenant-landlord laws. If the court rules in favor of the landlord, it will issue an order that legally compels the tenant to vacate the property by a specified date, and if necessary, law enforcement may be involved to enforce the eviction.
evidence of title
Proof of ownership of property; commonly a certificate of title, an abstract of title with lawyer's opinion, title insurance or a Torrens registration certificate.
exaction
A concept in real property law where a condition for development is imposed on a parcel of land that requires the developer to mitigate anticipated negative impacts of the development.
exception to the title policy
An exception is a specific item that is not covered by the policy. Generally, most of the exceptions are listed on the Schedule B-II. The first few exceptions are called "standard exceptions".
Exceptions to AZ License Laws
Arizona has provisions that unlicensed person may receive a commission, if that person lives in an apartment complex and refers a prospective tenant who ultimately signs a lease. However, the payment cannot be in cash. It must be in the form of a credit on the monthly rent. Also, an unlicensed person who owns a timeshare property can receive a finder's fee for referring another person to the timeshare development, but the finder's fee cannot be in the form of cash.
excess rent
The amount by which scheduled rent exceeds market rent.
exchange
A transaction in which all or part of the consideration for the purchase of real property is the transfer of property of "like kind" (i.e., real estate for real estate). (See like kind, realized capital gains)
exchange period
The period during which the exchanger must acquire replacement property in the exchange. The exchange period starts on the date the exchanger transfers the first relinquished property and ends on the earlier of the 180th day thereafter or the due date (including extensions) of the exchanger's tax return for the year of the transfer of the relinquished property.
exchanger
The property owner seeking to defer capital gain tax by utilizing an IRS 1031 tax deferred exchange. (See tax deferred exchange)
excluded capital gain
The part of the realized gain that is "excluded" from taxes. (See capital gains, deferred capital gain, realized capital gain (loss), recognized capital gain)
exclusion
Exclusions include recreational vehicles, such as boats or campers, which are not dwellings for purposes of the HMDA. Also excluded are transitory residences such as hotels, hospitals, and college dormitories—whose occupants have principal residences elsewhere.
exclusionary zoning
Zoning that excludes stated uses. (See zoning)
exclusive agency listing
A written listing agreement giving a sole agent the right to sell a property for a specified time, but reserving to the owner the right to sell the property himself without owing a commission. The exclusive agent is entitled to a commission if he or she personally sells the property or if it is sold by anyone other than the seller. It is exclusive in the sense that the property is listed with only one broker. The multiple-listing service must accept exclusive-agency listings submitted by participating brokers. (See listing agreement)
exclusive authorization to acquire real property
A contract providing for the exclusive representation of a buyer by a broker. It authorizes a broker to act as the exclusive agent of the buyer. Similar to an exclusive-authorization-and-right-to-sell listing. (See exclusive-authorization-and-right-to-sell listing)
exclusive buyer representation agreement
Agreement in which the buyer works with only one broker, although the broker is free to represent other buyer clients.
exclusive-agency-buyer-agency-agreement
Similar to the exclusive buyer agency agreement, this is an exclusive contract between the buyer and the agent. However, this agreement limits the broker's right to payment. The broker is entitled to payment only if he or she locates the property the buyer ultimately purchases. The buyer is free to find a suitable property without obligation to pay the agent.
exclusive-buyer-agency-agreement
This is a completely exclusive agency agreement. The buyer is legally bound to compensate the agent whenever the buyer purchases a property of the type described in the contract. The broker is entitled to payment regardless of whether he or she locates the property. Even if the buyer finds the property independently, the agent is entitled to payment.
exclusive-right-to-sell listing
A written listing agreement appointing a broker as the exclusive agent for the sale of property for a specified period of time. The listing broker is entitled to a commission if the property is sold by the owner, by the broker or by anyone else. The phrase "right-to-sell" really means the right to find a buyer; it does not mean that the agent has a power of attorney from the owner to sell the property. (See listing agreement)
exculpatory clause
An exculpatory clause, also known as a liability waiver, is a contract provision that relieves one party of liability for damages or injuries that might be caused during the performance of the contract. These clauses are typically included in contracts to limit the responsibility of one party for certain risks or unforeseen events.
execute
The act of making a document legally valid, such as formalizing a contract by signing or acknowledging and delivering a deed. In some cases, execution of a document may refer solely to the act of signing, in other cases it may refer to complete performance of the document's terms.
executed contract
Written agreement that has been signed by all parties; agreement that has been completed according to its terms. (See contract)
executive officer
An executive officer is the chief executive officer, the president, the principal financial officer, the principal operating officer, each vice president with responsibility involving policy-making functions for a significant aspect of a person's business, the secretary, the treasurer, or any other person performing similar managerial or supervisory functions with respect to any organization, whether incorporated or unincorporated.
executive recruiters
Recruiters who represents candidate in all phases of job placement including salary negotiations; search fees may be paid by candidate.
executive summary
An executive summary is a short document or section of a document that summarizes a longer report or proposal in such a way that readers can rapidly become acquainted with the larger body of material without having to read it all. It usually contains a brief statement of the proposal covered in the full document, along with concise background information, analysis and conclusions.
executor
A person appointed by a testator to carry out the directions and requests in his or her last will and testament, and to dispose of his or her property according to the provisions of the will. State probate laws generally refer to this person as a "personal representative of the decedent."
executory contract
A contract under which some future contract obligation remains to be done by one or more of the parties.
executory contract
Agreement with terms that have not yet been completed.
executrix
A female person appointed by a testator to carry out the directions and requests in his or her last will and testament, and to dispose of his or her property according to the provisions of the will. State probate laws generally refer to this person as a "personal representative of the decedent."
exemplary damages
Monetary damages that go beyond the actual compensatory damages. They are awarded to punish a wrongdoer for fraudulent, malicious and wrongful conduct. (See compensatory damages, nominal damages)
exercise
Systematic voluntary behavior performed in a controlled environment for the purpose of improving metabolic function. (See behavior, environment, metabolism, performance, systemic, voluntary)
expansion
The phase of the economic or business cycle when the economy moves from a trough to a peak. It is a period when business activity surges and gross domestic product expands until it reaches a peak. (See peak, recession, recovery, trough)
expansion option
An expansion option in leasing is a provision that grants a tenant the right to expand their leased space under specified conditions, typically within the same building or complex. This option is particularly valuable for businesses that anticipate growth and may need additional space in the future. It allows the tenant to secure additional space without having to relocate, providing a convenient and cost-effective solution for expanding their operations.
expansionism
A government policy of the economic or territorial expansion of a nation.
expansive soil
Expansive soils are soils that expand when water is added, and shrink when they dry out. This continuous change in soil volume can cause homes built on this soil to move unevenly and crack.
expectation
Wishing with confidence of fulfillment; the feeling that something is about to happen; same as expected value.
expense-stop clause
A lease provision to pass increases in building maintenance expenses on to tenants on a pro rata basis.
experience
Direct participation in events; the state or result of being engaged in an activity.
Explicit bias
Bias that is a function of the conscious mind, such as a purposeful targeting of a certain group of people because of a openly held belief that the particular group is bad.
exponential growth
Change in a population that is proportional to the size of the population; population growth in which population size expands by ever-increasing increments.
exposure time
As defined in Uniform Standards of Professional Appraisal Practice (USPAP), the estimated length of time the property interest being appraised would have been offered on the market prior to the hypothetical consummation of a sale at market value on the effective date of the appraisal. Exposure time is always presumed to precede the effective date of the appraisal. Exposure time is a function of price, time, and use—not an isolated opinion of time alone.
express agency
A stated (written or verbal) agency agreement.
express agreement/contract
An oral or written contract in which the parties state the contract's terms and express their intentions in words.
express authority
The stated (written or verbal) authority of an agent. (See express agency)
express grant
An easement created by an owner expressly granting in a deed a specific right to another to use the owner’s property.
express reservation
Property interest identified in a deed as retained by grantor.
extended coverage policy
A title insurance policy that covers risks normally excluded by most standard coverage policies. The standard policy normally insures the title only as shown by the public records. It does not cover unrecorded matters that might be discovered during an inspection of the premises. Most lenders require extended coverage mortgage title insurance policies. Extended coverage indemnifies the insured against such things as mechanic's liens, tax liens, miscellaneous liens, encumbrances, easements, rights of parties in possession and encroachments, which may not be disclosed by the public records. (See standard coverage, title insurance)
extender clause
1. A condition, once found in most listing forms, providing that the listing would continue for a set period of time, such as 90 days, and then would be automatically renewable until the parties agreed to terminate it. Use of such clauses in listing contracts is frowned on by the courts and violates many state license laws. The use of such a clause by an organization may be a violation of the antitrust laws. Such clauses, however, do not violate antitrust laws if inserted by individual brokers in their own exclusive listing forms, though the clause must state a final termination date.
2. A "carryover" clause (often referred to as a safety clause) may be contained in a listing. It provides that a broker is still entitled to a commission for a set period of time after the listing has expired if the property is sold to a prospect of the broker introduced to the property during the period of the listing. A clause stating such conditions for payment might read: "If within 90 days after expiration of the listing agreement, the property is sold to or exchanged with any person who physically inspected the property with the broker or any cooperating broker during the listing period and if the broker gave the seller the name of such a person in writing within five days after the stated expiration date of the listing agreement." The owner should disclose to any broker seeking a listing whether there are any expired listings. Unless careful disclosure is made of any extender clauses in such expired listings, the owner could be faced with a claim for commissions from both the former broker who showed the buyer the property and the new broker. In many states the extender clause is revoked once the owner relists the property with another broker.
external depreciation
Reduction in a property's value caused by outside factors (those that are off the property). (See depreciation)
external obsolescence
A type of incurable depreciation caused by negative factors not on the subject property, such as environmental, social or ecomomic forces. The loss in value can not be reversed by spending money on the property. (See depreciation)
external sources of support for job and employment networking
Sources of support from other people, including the following: a) personal, b) professional, c) organizational and community, and d) opportunistic.
externalities
The principle that states that outside influences may have a positive or negative effect on property value.
extraction method
A method of finding land value in which all improvement costs (less depreciation) are deducted from the sales price; also called abstraction method.
|
|
|