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Real Estate Glossary

Real Estate is chock full of acronyms, jargon and obscure words. This glossary is designed to help shed some light on these. If you find something not here, please let me know so I can improve it for future users.

A.L.T.A. TITLE POLICY: (American Land Title Association) A type of title insurance policy issued by title insurance companies which expands the risks normally insured against under the standard type policy. It is a lender’s policy.

ABANDONMENT: To release a claim, as a Declaration of Abandonment, when a property has been homesteaded.

ABATEMENT OF NUISANCE: Extinction or termination of a nuisance.

ABSTRACT: A brief summary.

ABSTRACT OF JUDGMENT: A condensation of the essential provisions of a court judgment.

ABSTRACT OF TITLE: A summary or digest of the conveyances, transfers, and any other facts relied on as evidence of title, together with any other elements of record which may impair the title.

ABSTRACTION: A method of valuing land. The indicated value of the improvement is deducted from the sale price.

ACCELERATION CLAUSE: Clause in trust deed or mortgage giving lender right to call all sums owing him to be immediately due and payable upon the happening of a certain event.

ACCEPTANCE: When the seller or agent’s principal agrees to the terms of the agreement of sale and approves the negotiation on the part of the agent and acknowledges receipt of the deposit in subscribing to the agreement of sale, that act is termed an acceptance.

ACCESS RIGHT: The right of an owner to have ingress and egress to and from his property.

ACCESSION: Acquiring title by having property added to your property.

ACCOUNTS PAYABLE: Money owed by a business. They are considered liabilities.

ACCOUNTS RECEIVABLE: Money owed to a business. They are considered assets.

ACCRETION: An addition to land from natural causes as, for example, from gradual action of the ocean or river waters.

ACCRUED: Accumulated up to this point in time. Accrued interest, accrued depreciation.

ACCRUED DEPRECIATION: The difference between the cost of replacement new as of the date of the appraisal, and the present appraised value.

ACKNOWLEDGMENT: A formal declaration before a duly authorized officer by a person who has executed an instrument that such execution is his act and deed.

ACQUISITION: The act or process by which a person procures property.

ACRE: A measure of land equaling 160 square rods, or 4,840 square yards, or 43,560 square feet, or a tract about 208.71 feet square.

ACTUAL NOTICE: Knowledge of the existence of a thing or fact.

ADMINISTRATOR: A person appointed by the probate court to administer the estate of a person deceased.

ADJUSTED BOOK VALUE: Cost of acquisition minus depreciation (if allowed), plus capital improvements. Used when figuring profit for income tax.

ADJUSTED GROSS INCOME: Total rents received from income property, after an allowance for vacancies and bad debts.

ADJUSTED SELLING PRICE: Selling price minus expenses of sale. Used when figuring profit for income tax.

AD VALOREM: According to valuation.

ADVANCE FEE: A fee charged for advertising property or business opportunities in a publication other than a newspaper of general circulation.

ADVERSE POSSESSION: The open and notorious possession and occupancy under an evident claim or right, in denial or opposition to the title of another claimant.

AFFIANT: A person who makes a sworn or affirmed statement.

AFFIDAVIT: A statement or declaration reduced to writing, sworn to or affirmed before some officer who has authority to administer an oath or affirmation.

AFFIRM: To confirm, to aver, to ratify, to verify.

AFFIRMATION: A solemn declaration made by a person who objects to taking an oath.

A.F.L.B.: Accredited Farm and Land Broker.

AGENCY: The relationship between principal and agent which arises out of a contract, either expressed or implied, written or oral, wherein the agent is employed by the principal to do certain acts dealing with a third party.

AGENT: One who represents another from whom he has derived authority.

AGREEMENT FOR PURCHASE AND SALE: A land contract.

AGREEMENT OF SALE: A written agreement or contract between seller and purchaser in which they reach a meeting of minds on the terms and conditions of the sale.

AGREEMENT TO CONVEY: A land contract.

ALIENATION: The transferring of property to another; the transfer of property and possession of lands, or other things, from one person to another.

ALIENATION CLAUSE: Clause in a loan document providing for full payment if the property is sold.

ALLUVION (ALLUVIUM): Soil deposited by accretion. Increase of earth on a shore or bank of a river.

AMENITIES: Satisfaction of enjoyable living to be derived from a home; conditions of agreeable living or a beneficial influence arising from the location or improvements.

AMORTIZATION: The liquidation of a financial obligation on an installment basis; also, recovery, over a period, of cost or value.

AMORTIZED LOAN: A loan that is completely paid off, interest and principal, by a series of regular payments that are equal or nearly equal. Also called a level payments loan.

ANNUITY: A series of assured equal or nearly equal payments to be made over a period of time or it may be a lump sum payment to be made in the future. The installment payments due to the landlord under a lease is an annuity. So are the installment payments due to a lender.

ANTICIPATION, PRINCIPLE OF: Affirms that value is created by anticipated benefits to be derived in the future.

APPRAISAL: An opinion of the value of property.

APPRAISER: One qualified by education, training and experience who is hired to estimate the value of real and personal property based on experience, judgment, facts, and use of formal appraisal processes.

APPURTENANCE: Something annexed to another thing which may be transferred incident to it. That which belongs to another thing, as a barn, dwelling, garage, or orchard is incident to the land to which it is attached.

ARCHITECTURAL STYLE: Generally, the appearance and character of a building’s design and construction.

ASSEMBLAGE: Putting together two or more parcels to increase the total value.

ASSESSED VALUE: A value placed upon property by a public officer or board as a basis for taxation.

ASSESSMENT: The valuation of property for the purpose of levying a tax or the amount of the tax levied.

ASSESSOR: The official who has the responsibility of determining assessed values.

ASSETS: Everything of value, both real and personal property, owned by a business.

ASSIGNMENT: A transfer or making over to another of the whole of any property, real or personal, in possession or in action, or of any estate or right therein.

ASSIGNOR: One who assigns or transfers property.

ASSIGNS; ASSIGNEES: Those to whom property shall have been transferred.

ASSUMPTION AGREEMENT: An undertaking or adoption of a debt or obligation primarily resting upon another person.

ASSUMPTION FEE: A lender’s charge for changing over and processing new records for a new owner who is assuming an existing loan.

ASSUMPTION OF MORTGAGE: The taking of title to property by a grantee, wherein he assumes liability for payment of an existing note secured by a mortgage or deed of trust against the property, becoming a co-guarantor for the payment of a mortgage or deed of trust note.

ATTACHMENT: Seizure of property by court order, usually done to have it available in event a judgment is obtained in a pending suit.

ATTEST: To affirm to be true or genuine; an official act establishing authenticity.

ATTORNEY-IN-FACT: One who is authorized to perform acts for another under a power of attorney; power of attorney may be limited to a specific act or acts, or be general.

AUTHORIZATION TO SELL: A listing.

AVULSION: The sudden tearing away or removal of land by action of water flowing over or through it.

BAILMENT: The delivery of goods or money to another in trust.

BALANCE SHEET: Financial document used by a business showing the assets, liabilities and net worth at a specific time.

BALLOON PAYMENT: Where the final installment payment on a note is greater than the preceding installment payments, and it pays the note in full, such final installment is termed a balloon payment.

BAND OF INVESTMENT: A method of computing the capitalization rate by considering the return demanded by the holders of the various loans, and the owner.

BASE AND MERIDIAN: Imaginary lines used by surveyors to find and the location of private or public lands.

BEARING WALL OR PARTITION: A wall or partition supporting any vertical load in addition to its own weight.

BENCH MARK: A location indicated in a durable marker by surveyors.

BENEFICIARY: (1) One entitled to the benefit of a trust; (2) One who receives profit from an estate, the title which is vested in a trustee; (3) The lender on the security of a note and deed of trust.

BEQUEATH: To give or hand down personal property by will; to leave by will.

BEQUEST: That personal property which is given by the terms of a will.

BETTERMENT: An improvement upon property which increases the property value and is considered as a capital asset, as distinguished from repairs or replacements where the original character or cost is unchanged.

BILATERAL CONTRACT: A contract in which both parties agree to perform certain acts.

BILL OF SALE: A written instrument given to pass title of personal property from vendor to vendee.

BINDER: A notation of coverage on an insurance policy, issued by an agent, and given to the insured prior to issuing of the policy.

BLANKET ENCUMBRANCE: An encumbrance which covers more than one parcel of property.

BLANKET MORTGAGE: A single mortgage which covers more than one piece of real estate.

BLIGHTED AREA: A declining area in which real property values are seriously affected by destructive economic forces, such as encroaching inharmonious property usages, infiltration of lower social and economic classes of inhabitants, and/or rapidly depreciating buildings.

BOARD FOOT: A unit of measurement of lumber; one foot wide, one foot long, one inch thick; 144 cubic inches.

BONA FIDE: In good faith; without fraud.

BOOK DEPRECIATION: The depreciation shown on the accounting books of the owner. Used for income tax.

BOOK VALUE: Value of the property as shown on the accounting books of the owner.

BOOT: Profit gained in exchange of properties on which income tax is not deferred. May be anything of value, including mortgage relief.

BOUNDS: Boundaries in a metes and bounds description.

BREACH: The breaking of a law, or failure of duty, either by omission or commission.

BROKER: A licensed person who does real estate acts for compensation or in expectation of compensation. He acts for himself and is paid directly by his client.

B.T.U.: British Thermal Unit. The quantity of heat required to raise the temperature of one pound of water one degree Fahrenheit.

BUILDING LINE: A line, set by law, a certain distance from a street line in front of which an owner cannot build on his lot (a setback line).

BUILDING RESIDUAL: A method of appraising. The value of the land is subtracted from the value of the property leaving the value of the building.

BULK SALE: The sale of merchandise in bulk rather than in the ordinary course of business.

BUNDLE OF RIGHTS: Beneficial interests or rights.

BUSINESS OPPORTUNITY: The sale or lease of a business. It includes personal property and it may include real property.

BYLAWS: The rules of an organization such as a corporation or partnership.

C.C.I.M.: Certified Commercial Investment Member.

C.C. & R.’S: Covenants, Conditions and Restrictions affecting the use of a property.

CAPACITY: Having legal competence to sign binding contracts.

CAPITAL ASSETS: Assets of a permanent nature used in the production of an income, such as land, buildings, machinery, equipment, etc.

CAPITAL GAIN: Profit from the sale of property. Used in computing income tax.

CAPITAL LOSS: Loss from the sale of property. Used in computing income tax.

CAPITALIZATION: In appraising, determining value of property by considering net income and percentage or reasonable return on the investment.

CAPITALIZATION RATE: The rate which is considered a reasonable return on the investment, and used in the process of determining value based upon net income.

CASH FLOW: Cash left at. the end of a period of time (usually a year) from the operation of income property or a business. Do not subtract depreciation when computing cash flow.

CAVEAT EMPTOR: Let the buyer beware. The buyer must examine the goods or property and buy at his own risk.

CERTIFICATE OF REASONABLE VALUE (CRV): The Federal Veterans Administration appraisal commitment of property value.

CERTIFICATE OF SALE: A certificate issued to a buyer at a judicial pale (e.g., foreclosure of a mortgage).

CERTIFICATE OF TITLE: A certification of the ownership of land. A forerunner to title insurance.

CHAIN OF TITLE: A history of conveyances and encumbrances affecting the title from the time the original patent was granted, or as far back as records are available.

CHANGE, PRINCIPLE OF: Holds that it is the future, not the past, which is of prime importance in estimating value.

CHATTEL: Personal property.

CHATTEL MORTGAGE: A personal property mortgage. (See Security Agreement and Security Interest.)

CHATTELS: Goods or every species of property movable or immovable which are not real property.

CHATTELS REAL: An estate related to real estate such as a lease on real property.

CHOSE IN ACTION: A personal right recoverable by a court suit.

CLIENT: Person with whom the broker has an agency interest.

CLOSING STATEMENT: The final accounting of a sale given by escrow to the buyer and seller.

CLOUD ON TITLE: Any conditions revealed by a title search which affect the title to property; usually relatively unimportant items which can be removed with a quitclaim deed or court action.

CODE: A group of laws.

CODE OF ETHICS: Rules of an organization used as a guideline by members of the organization (e.g., N.AR. Code of Ethics).

COLLATERAL: This is the property subject to the security interest, (See Security Interest.)

COLLATERAL SECURITY: A separate obligation attached to contract to guarantee its performance; the transfer of property or of other contracts or valuables to insure the performance of a principal agreement.

COLLUSION: An agreement between two or more persons to defraud another of his rights by the forms of law, or to obtain an object forbidden by law.

COLOR OF TITLE: That which appears to be good title but which is not title in fact.

COMMERCIAL ACRE: A term applied to the remainder of an acre of newly subdivided land after the area devoted to streets, sidewalks, curbs, etc., has been deducted from the acre.

COMMERCIAL PAPER: Bills of exchange used in commercial trade.

COMMINGLING: Mixing client’s money or property with the agent’s.

COMMISSION: An agent’s compensation for performing the duties of his agency; in real estate practice, a percentage of the selling price of property, percentage of rentals, etc.

COMMITMENT: A pledge or a promise or firm agreement.

COMMON LAW: The body of law that grew from customs and practices developed and used in England “since the memory of man runneth not to the contrary.”

COMMUNITY: A part of a metropolitan area that has a number of neighborhoods that have a tendency toward common interests and problems.

COMMUNITY APARTMENT PROJECT: A subdivision where the buyer receives a deed to the
whole property and the right to use an apartment. Each owner is a tenant in common.

COMMUNITY PROPERTY: Property accumulated through joint efforts of husband and wife.

COMPACTION: Whenever extra soil is added to a lot to fill in low places or to raise the level of the lot, the added soil is often too loose and soft to sustain the weight of the buildings. Therefore, it is necessary to compact the added soil so that it will carry the weight of buildings without the danger of their tilting, settling or cracking.

COMPARABLE SALES: Sales which have similar characteristics as the subject property and are used for analysis in the appraisal process.

COMPARISON APPROACH: A means of appraising by comparing recent sales prices of similar properties.

COMPETENT: Legally qualified.

COMPETITION, PRINCIPLE OF: Holds that profits tend to breed competition and excess profits tend to breed ruinous competition.

COMPOUND INTEREST: Interest paid on original principal and also on the accrued and unpaid interest which has accumulated.

CONDEMNATION: The act of taking private property for public use by a political subdivision; declaration that a structure is unfit for use.

CONDITION: A provision that the transfer of property depends upon another uncertain event.

CONDITION PRECEDENT: A condition that must be fulfilled before title can be transferred.

CONDITION SUBSEQUENT: A condition which provides that if the owner fails to do something, his title may be defeated and he may lose his property.

CONDITIONAL COMMITMENT: A commitment of a definite loan amount for some future unknown purchaser of satisfactory credit standing.

CONDITIONAL SALE CONTRACT: A contract for the sale of property stating that delivery is to be made to the buyer, title to remain vested in the seller until the conditions of the contract have been fulfilled.

CONDOMINIUM: A system of individual fee ownership of units in a multi-family structure, combined with joint ownership of common areas of the structure and the land.

CONFIRMATION OF SALE: A court approval of the sale of property by an executor, administrator, guardian or conservator.

CONFORMITY, PRINCIPLE OF: Holds that the maximum value is realized when a reasonable degree of homogeneity of improvements is present.

CONSENT: Agreement. Mutual consent is one of the four essential elements of a contract.

CONSIDERATION: Anything of value given to induce entering into a contract; it may be money, personal services, or even love and affection.

CONSTRUCTION LOANS: Loans made for the construction of homes or commercial buildings. Usually funds are disbursed to the contractor-builder during construction and after periodic inspections. Disbursements are based on an agreement between borrower and lender.

CONSTRUCTIVE EVICTION: A disturbance or a tenant’s possession by the landlord.

CONSTRUCTIVE NOTICE: Notice given by the public records or by possession.

CONSUMER GOODS: These are goods used or bought for use primarily for personal, family or household purposes.

CONTIGUOUS: Touching at any point. Contiguous lots.

CONTINGENT: Dependent upon an uncertain future event.

CONTOUR: The surface configuration of land.

CONTRACT: An agreement to do or not to do a certain thing.

CONTRIBUTION, PRINCIPLE OF: An appraising principle used when considering proposed improvements. Considers the income that would be contributed by the proposed improvements.

CONVENTIONAL LOAN: A loan made without government backing.

CONVERSION: Change from one character or use to another.

CONVEYANCE: The transfer of the title of land from one to another. It denotes an instrument which carries from one person to another an interest in land.

CORNER INFLUENCE: The added value of a corner lot.

CORPORATION: A group or body of persons established and treated by law as an individual or unit with rights and liabilities of both, distinct and apart from those of the persons composing it.

CORRELATION: To bring the indicated values developed by the three approaches used in the appraisal process into mutual relationship with each other.

COST: The price a buyer pays for a property.

COST APPROACH: One of three methods in the appraisal process. An analysis in which a value estimate of a property is derived by estimating the replacement cost of the improvements, deducting there from the estimated accrued depreciation, then adding the market value of the land.

COST BASIS: The price a buyer pays for a property or its value at time of acquisition. Used in computing profit for income tax.

COVENANT: Agreements written into deeds and other instruments promising performance or nonperformance of certain acts or stipulating certain uses or non-uses of the property.

C.P.M.: Certified Property Manager; a member of the Institute of Real Estate Management (IREM) of the National Association of Realtors.

C.R.E.: Counselor of Real Estate. Member of American Society of Real Estate Counselors.

CUL-DE-SAC: A street open at one end only. It usually has a circular turnaround.

CURABLE DEPRECIATION: Items of physical and functional obsolescence which are customarily repaired or replaced by a prudent property owner.

CURTESY: The right which a husband has in a wife’s estate at her death.

CUSTOMER: Third party with whom the broker does not have an agency contract.

DAMAGES: The indemnity recoverable by a person who has sustained an injury, either in his person, property or relative rights, through the act or default of another.

DEALER PROPERTY: Property held for sale to customers. Profit is considered ordinary income for income tax.

DEBTOR: This is the party who “owns” the property which is subject to the security interest. Previously he was known as the mortgagor or the pledgor, etc.

DECIDUOUS TREES: Lose their leaves in the autumn and winter.

DECLARATION OF ABANDONMENT: Document recorded to terminate a homestead.

DECLARATION OF HOMESTEAD: Document recorded to establish a homestead to protect the owner against judgment liens.

DECLARATION OF RESTRICTIONS: Recorded list of restrictions imposed on a subdivision by a subdivider.

DECLINING BALANCE DEPRECIATION: Method of computing depreciation for income tax purposes.

DEDICATION: An appropriation of land by its owner for some public use accepted for such use by authorized public officials on behalf of the public.

DEED: Written instrument which, when properly executed and delivered, conveys title.

DEED OF TRUST: Document by which naked legal title is transferred to a trustee as security for a loan.

DEFAULT: Failure to fulfill a duty or promise or to discharge an obligation; omission or failure to perform any act.

DEFEASANCE CLAUSE: The clause in a mortgage that gives the mortgagor the right to redeem his property upon the payment of his obligations to the mortgagee.

DEFERRED MAINTENANCE: Existing but unfulfilled requirements for repairs and rehabilitation.

DEFICIENCY JUDGMENT: A judgment given when the security pledge for a loan does not satisfy the debt upon its default.

DEMAND: Desire for property. One of four elements which create value.

DEMISE: Transfer to another of an estate for years, for life, or at will.

DEPOSIT RECEIPT: Document used when accepting earnest money to bind an offer. Basic contract between buyer and seller.

DEPRECIATION: Loss of value in real property brought about by age, physical deterioration or functional or economic obsolescence. Broadly, a loss in value from any cause.

DEPTH TABLE: Table used by appraisers when appraising lots of varying depths.

DESCENT: Acquiring property by inheritance when the deceased dies intestate.

DESIST AND REFRAIN ORDER: An order directing a person to desist and refrain from committing an act in violation of the law.

DETERIORATION: Impairment of condition. One of the causes of depreciation and reflecting the loss in value brought by wear and tear, disintegration, use in service, and the action of the elements.

DEVISE: A gift of real property by will.

DEVISEE: One who receives real property by will.

DEVISOR: One who leaves real property by will.

DIRECTIONAL GROWTH: The location or direction toward which the residential section of a city is destined or determined to grow.

DISCOUNT: An amount deducted from the face amount of a loan.

DISCOUNT POINTS: Prepaid interest demanded by lender when loan is negotiated. A premium paid for the privilege of borrowing at the stated interest rate.

DOCUMENTARY TRANSFER TAX: A tax collected when a deed is recorded. Stamps are affixed to the deed.

DOMINANT TENEMENT: The land that is benefited by an easement appurtenant.

DONEE: A person to whom a gift is made.

DONOR: A person who makes a gift.

DOWER: The right which a wife has in her husband’s estate at his death.

DURESS: Unlawful constraint exercised upon a person whereby he is forced to do some act against his will.

EARNEST MONEY: Deposit accompanying an offer.

EASEMENT: Created by grant or agreement for a specific purpose, an easement is the right, privilege or interest which one party has in the land of another. (Example: Right-of-way.)

ECONOMIC LIFE: The period over which a property will yield a return on the investment, over and above the economic or ground rent due to land.

ECONOMIC OBSOLESCENCE: A loss in value due to factors outside the subject property but adversely affecting the value of the subject property.

ECONOMIC RENT: The reasonable rental expectancy if the property were available for renting at the time of its valuation. Earnings attributable to the ground itself.

EFFECTIVE AGE OF IMPROVEMENT: The number of years of age that is indicated by the condition of the structure.

EFFECTIVE GROSS INCOME: The maximum rent from income property minus the vacancies.

EFFECTIVE INTEREST RATE: The percentage of interest that is actually being paid by the borrower for the use of the money.

EGRESS: Means of leaving property.

EMBLEMENTS: Growing annual crops. The right of a tenant farmer to harvest his crop after his lease expires.

EMINENT DOMAIN: The right of the government to acquire property for necessary public or quasi-public use by condemnation; the owner must be fairly compensated.

ENCROACHMENT: Trespass; the building of a structure or construction of any improvements partly or wholly on the property of another.

ENCUMBRANCE: Anything which affects or limits the fee simple title to property, such as mortgages, easements or restrictions of any kind. Liens are special encumbrances which make the property security for the payment of a debt or obligation, such as mortgages and taxes.

ENDORSEMENT: The signature of the payee on the back of a negotiable instrument.

EQUITABLE TITLE: The title held by a vendee under a land contract.

EQUITY: The interest or value which an owner has in real estate over and above the liens against it; branch of remedial justice by and through which relief is afforded to suitors in courts of equity.

EQUITY OF REDEMPTION: The right to redeem property during the foreclosure period.

EROSION: The wearing away of land by the action of water, wind or glacial ice.

ESCALATION: The right reserved by the lender to increase the amount of the payments and/or interest upon the happening of a certain event.

ESCALATOR CLAUSE: A clause in a contract providing for the upward or downward adjustment of certain items to cover specified contingencies.

ESCHEAT: The reverting of property to the state when heirs capable of inheriting are lacking. ESCROW: The deposit of instruments and funds with instructions to a third neutral party to carry out the provisions of an agreement or contract; when everything is deposited to enable carrying out the instructions, it is called a complete or perfect escrow.

ESTATE: As applied to the real estate practice, the term signifies the quantity of interest, share, right and equity, of which riches or fortune may consist in real property. The degree, quantity, nature and extent of interest which a person has in real property.

ESTATE AT SUFFERANCE: Estate of a tenant after his right to possess the property has ended.

ESTATE FOR LIFE: A freehold estate, not of inheritance, but which is held by the tenant for his own life or the life or lives of one or more other persons.

ESTATE FOR YEARS: An interest in lands by virtue of a contract for the possession of them for a definite and limited period of time. A lease may be said to be an estate for years.

ESTATE IN FEE: A fee estate. The greatest degree of ownership of real property.

ESTATE OF INHERITANCE: An estate which may descend to heirs.

ESTATE OF WILL: The occupation of lands and tenements by a tenant for an indefinite period, terminable by one or both parties.

ESTIMATE: To form a preliminary opinion of value.

ESTIMATED REMAINING LIFE: The period of time (years) it takes for the improvements to become valueless.

ESTOPPEL: A doctrine which bars one from asserting rights which are inconsistent with a previous position or representation.

ET AL: And others.

ET UX: And wife.

ETHICS: That branch of moral science, idealism, justness, and fairness, which treats of the duties which a member of a profession or craft owes to the public, to his clients or patrons, and to his professional brethren or members.

EVICTION: Putting out a tenant when his right to possess the property has ended.

EXCEPTION: Withholding part of a property when it is conveyed.

EXCLUSIVE AGENCY LISTING: A written instrument giving one agent the right to sell property for a specified time but reserving the right of the owner to sell the property himself without the payment of a commission.

EXCLUSIVE RIGHT TO SELL LISTING: A written agreement between owner and agent giving agent the right to collect a commission if the property is sold by anyone during the term of his agreement.

EXCULPATORY CLAUSE: A clause which releases the landlord from liability due to injuries.

EXECUTE: To complete, to make, to perform, to do, to follow out; to sign a deed, to make a deed, including especially signing, sealing, and delivery, to execute a contract is to perform the contract, to follow out to the end, to complete.

EXECUTED CONTRACT: A contract where both parties have completely performed.

EXECUTOR: A person named in a will to carry out its provision as to the disposition of the estate of a person deceased.

EXECUTORY CONTRACT: A contract where something remains to be done by one or both parties.

EXPRESSED: Stated in words.

EXTENDED COVERAGE: A broad form title insurance policy which protects the owner against additional risks.

FEDERAL HOME LOAN BANK BOARD: Federal agency which controls most savings and loan associations.

FEDERAL HOUSING ADMINISTRATION: Federal agency which insures lenders making F.H.A. loans.

FEDERAL NATIONAL MORTGAGE ASSOCIATION: “Fannie Mae.” Provides a secondary market by buying and selling existing loans.

FEE: An estate of inheritance in real property.

FEE SIMPLE: In modern estates, the terms “fee” and “fee simple” are substantially synonymous.

FEE SIMPLE ABSOLUTE: Fee simple ownership with no qualifications or limitations.

FEE SIMPLE DEFEASIBLE: Fee simple ownership with a condition which, if broken, could result in loss of title to the property.

FICTITIOUS NAME: “Made up” name for a business.

FIDUCIARY: A person in a position of trust and confidence, as between principal and broker; broker, as fiduciary, owes certain loyalty which cannot be breached under rules of agency.

FINANCING STATEMENT: The instrument which is filed in a loan on personal property in order to give public notice of the security interest and thereby protect the interest of the secured parties in the collateral.

FINDER’S FEE: Fee paid to a person for information helpful to a broker for information that doesn’t require a license.

FIXTURES: Items attached to the land or improvements, which usually cannot be removed without agreement, and therefore, they become real property; examples: plumbing fixtures built into the property, etc.

FLOOD WATERS: Water which overflows a regularly defined channel.

FORECLOSURE: Procedure whereby property pledged as security for a debt is sold to pay the debt in event of default in payments or terms.

FORFEITURE: Loss of money or anything of value due to failure to perform.

FRAUD: The intentional and successful employment of any cunning, deception, collusion, or artifice, used to circumvent, cheat or deceive another person whereby that person acts upon it to the loss of the property and to his legal injury.

FREEHOLD ESTATE: A fee simple or life estate.

FRONTAGE: Land bordering a street.

FRONT FOOT: Property measurement for sale or valuation purposes; the property measured by the front foot on its street line — each front foot extending the depth of the lot.

FUNCTIONAL OBSOLESCENCE: Loss of value due to adverse factors from within the structure which affect the utility of the structure,

FUTURE BENEFITS: The anticipated benefits the present owner will receive from his property in the future.

GENERAL LIEN: A lien which affects all property of a person.

GENERAL PARTNERSHIP: A partnership where all partners can participate in management and liability.

GIFT DEED: A deed for which the consideration is love and affection and where there is no material consideration.

GOODWILL: The expectation of continued public patronage of a business.

GRADUATED LEASE: Lease which provides for a varying rental rate, often based upon future determination; sometimes rent is based upon result of periodical appraisals; used largely in long-term leases.

GRANT: A technical term made use of in deeds of conveyances of lands to impart a transfer.

GRANT DEED: A deed conveying the title. It has two implied warranties.

GRANTEE: The purchaser; a person to whom a grant is made.

GRANTING CLAUSE: The action clause of a grant deed,

GRANTOR: Seller of property; one who signs a deed.

G.R.I.: Graduate, Realtors Institute.

GRID: A chart used in rating the borrower risk, property, and the neighborhood.

GROSS INCOME: Total income before any expenses are deducted.

GROSS RENT MULTIPLIER: A figure which, times the gross income of a property, produces an estimate of value of the property.

GROUND LEASE: An agreement for the use of the land only, sometimes secured by improvements placed on the land by the user.

GROUND RENT: Earnings of improved property credited to earnings of the ground itself after allowance is made for earnings of improvements; often termed economic rent.

GUARANTEE OF TITLE: Opinion of title condition backed by a fund to compensate in case of negligence. A forerunner. of title insurance.

GUARDIAN: A person appointed by a court to care for the person or property of a minor or incompetent person.

HARD MONEY LOAN: The borrower receives actual cash and not just credit.

HEAD OF FAMILY: A person responsible for dependents.

HEIRS: Those who inherit property either by will or succession.

HEREDITAMENTS: Anything capable of being inherited.

HIGHEST AND BEST USE: An appraisal phrase meaning that use which, at the time of an appraisal, is most likely to produce the greatest net return to the land and/or buildings over a given period of time; that use which will produce the greatest number of amenities or profit.

HOLDER IN DUE COURSE: One who has taken a note, check or bill of exchange in due course: (1) Before it was overdue; (2) In good faith and for value; (3) Without knowledge that it has been previously dishonored and without notice of any defect at the time it was negotiated to him.

HOLOGRAPHIC WILL: A will entirely handwritten and signed by the testator.

HOMESTEAD: A home upon which the owner or owners have recorded a Declaration of Home­stead, protects home against judgments up to specified amounts.

HUNDRED PERCENT LOCATION: A city retail business location which is considered the best available for attracting business.

HYPOTHECATE: To give a thing as security without the necessity of giving up possession of it.

IMPLIED: Presumed or inferred rather than expressed.

IMPOUNDS: A trust-type account established by lenders for the accumulation of funds to meet taxes, FHA mortgage insurance premiums, and/or future insurance policy premiums required to protect their security. Impounds are usually collected with the note payment.

IMPROVEMENTS: Things built on land which become a part of the real property.

INCOME APPROACH: One of the three methods in the appraisal process; an analysis in which the estimated income from the subject residence is used as a basis for estimating value.

INCOME PROPERTY: Property that produces rent.

INCOMPETENT: One who is incapable; any person who is, by reason of age, disease, weakness of mind or any other cause, unable, unassisted to properly manage and take care of himself or his property, and by reason thereof, would be likely to be deceived or imposed upon by artful or designing persons.

INCREMENT: An increase. Most frequently used to refer to the increase of value of land that accompanies population growth and increasing wealth in the community. The term “unearned increment” is used in this connection since values are supposed to have increaser’ without effort on the part of the owner.

INGRESS: Means of entering property.

INHERIT: To acquire property by will or succession.

INJUNCTION: A writ or order issued under the seal of a court to restrain one or more parties to a suit or proceeding from doing an act which is deemed to be inequitable or unjust in regard to the rights of some other party or parties in the suit or proceeding.

INSTALLMENT NOTE: A note which provides that payments of a certain sum or amount be paid on the dates specified in the instrument.

INSTALLMENT SALES CONTRACT: A land contract.

INSTRUMENT: A written legal document created to effect the rights of the parties.

INTANGIBLE VALUE: An asset which is not physical. Goodwill, patent rights.

INTEREST RATE: The percentage of a sum of money charged for its use.

INTESTATE: A person who dies having made no will, or one which is defective in form, in which case his estate descends to his heirs at law or next of kin.

INTESTATE SUCCESSION: Inheriting property when the deceased had no will or a defective will.

INVENTORY: A list of the stock and fixtures of a business.

INVERSE CONDEMNATION: When the government damages property and the owner sues the government for damages.

INVESTMENT PROPERTY: Vacant land held for an expected increase in value.

INVOLUNTARY CONVEYANCE: A transfer of title without the owner’s permission.

INVOLUNTARY LIEN: A lien imposed against property without consent of an owner; taxes, special assessments, federal income tax liens, etc.

IRREVOCABLE: Incapable of being recalled or revoked; unchangeable.

IRRIGATION DISTRICTS: Quasi-political districts created under special laws to provide for water services to property owners in the district; an operation governed to a great extent by law.

JOINT AND SEVERAL NOTE: A note signed by two or more persons in which they are liable jointly and individually for the full amount of the loan.

JOINT NOTE: A note signed by two or more persons who each have liability for payment of part of the loan.

JOINT TENANCY: Joint ownership by two or more persons with right of survivorship; all joint tenants own equal interest and have equal rights in the property.

JOINT VENTURE: A syndicate formed for a single purpose.

JUDGMENT: The final determination of a court of competent jurisdiction of a matter presented to it; money judgments provide for the payment of claims presented to the court, or are awarded as damages, etc.

JUNIOR LIEN: A lien that does not have first priority.

JUNIOR TRUST DEED: A trust deed that does not have first priority.

JURISDICTION: The authority by which judicial officers take cognizance of and decide causes; the power to hear and determine a cause; the right and power which a judicial officer has to enter upon the inquiry.

KEY LOT: A lot which has adjoining on its side the rear of another lot. It is least desirable.

LACHES: Delay or negligence in asserting one’s legal rights.

LAND: Material of the earth, including the soil, rock and other substances.

LAND CONTRACT: A contract ordinarily used in connection with the sale of a property in cases where the seller does not wish to convey title until all or a certain part of the purchase price is paid by the buyer, often used when property is sold on small down payment.

LAND DESCRIPTIONS: Necessary to definitely determine boundaries. Certain methods are recognized by law and called legal descriptions.

LAND RESIDUAL: A method of appraising. The value of the building is subtracted from the value of the property, leaving the value of the land.

LAND SALES CONTRACT: A land contract.

LATERAL SUPPORT: The support which the soil of an adjoining owner gives to his neighbor’s land.

LAWFUL OBJECT: Legal purpose. One of the four essential elements of a contract.

LEASE: A contract between the owner and tenant setting forth conditions upon which tenant may occupy and use the property, and the term of the occupancy.

LEASEHOLD: The interest of one who leases property. A less-than-freehold estate.

LEGACY: A gift of personal property by will.

LEGAL DESCRIPTION: A description recognized by law; a description by which property can be definitely located by reference to government surveys or approved recorded maps.

LEGATEE: A person to whom personal property is given by will.

LESS-THAN-FREEHOLD ESTATE: The interest of one who leases property. The right of exclusive possession. A leasehold.

LESSEE: One who contracts to rent property under a lease contract.

LESSOR: An owner who enters into a lease with a tenant.

LEVERAGE: Making money with borrowed money.

LIABILITIES: The debts owed by a business.

LICENSE: Personal, revocable, non-assignable permission to do some act on the land of another.

LIEN: A form of encumbrance which usually makes property security for the payment of a debt or discharge of an obligation; example: judgments, taxes, mortgages, deeds of trust, etc.

LIFE ESTATE: An estate limited in duration to the life or lives of one or more designated persons.

LIMITED PARTNERSHIP: A partnership composed of some partners whose contribution and liabilities are limited.

LIQUID ASSETS: Assets readily convertible to cash.

LIQUIDATE: Selling property to secure cash.

LIQUIDATED DAMAGES CLAUSE: A clause in a contract specifying the damages in the event of a breach of contract.

LIS PENDENS: Suit pending, usually recorded so as to give constructive notice of pending litigation.

LISTING: An employment contract between principal and agent authorizing the agent to perform services for the principal involving the latter’s property; listing contracts are entered into for the purpose of securing persons to buy, lease or rent property. Employment of an agent by a prospective purchaser or lessee to locate property for purchase or lease may be considered a listing.

LOAN APPLICATION: The loan application is a source of information on which the lender bases his decision to make the loan.

LOAN BROKER: A person who negotiates the loans.

LOAN CLOSING: When all conditions have been met, the loan officer authorizes the recording of the trust deed or mortgage and disbursal of funds.

LOAN COMMITMENT: Lender’s contractual commitment to a loan based on the appraisal and underwriting.

LOAN-TO-VALUE RATIO: The amount of the loan expressed as a percentage of the appraised value.

M.A.I.: Member of the Appraisal Institute. Designates a person who is a member of the American Institute of Real Estate Appraisers of the National Association of Realtors.

MARGIN OF SECURITY: The difference between the amount of the mortgage loan(s) and the appraised value of the property.

MARGINAL LAND: Land which barely pays the cost of working or using.

MARKET DATA APPROACH: One of the three methods in the appraisal process, A means of comparing similar type residential properties, which have recently sold, to the subject property.

MARKET PRICE: The price paid, regardless of pressures, motives or intelligence.

MARKET VALUE: (1) The price at which a willing seller would sell and a willing buyer would buy, neither being under abnormal pressure; (2) As defined by the courts, is the highest price estimated in terms of money which a property will bring if exposed for sale in the open market allowing a reasonable time to find a purchaser with knowledge of property’s use and capabilities for use.

MARKETABLE TITLE: Merchantable title; title free and clear of objectionable liens or encum­brances.

MARKUP: A percentage of the cost of an item added to the cost to compute the selling price. Includes expenses and profit.

MASTER PLAN: General plan for the future development of a community.

MATERIAL FACT: A fact is material if it is one which the agent should realize would be likely to affect the judgment of the principal in giving his consent to the agent to enter into the particular transaction on the specified terms.

MECHANIC’S LIEN: A lien placed on property by laborers and material suppliers who have contributed to a work of improvement.

MEGALOPOLIS: A large geographical area composed of a group of adjacent cities.

MENACE: A threat to commit duress.

MERIDIANS: Imaginary north-south lines which intersect base lines to form a starting point for the measurement of land.

METES AND BOUNDS: A term used in describing the boundary lines of land, setting forth all the boundary lines together with their terminal points and angles.

MILE: 5,280 lineal feet.

MINORS: All persons under the age of majority, usually 18.

MISPLACED IMPROVEMENTS: Improvements on land which do not conform to the most profitable use of the site.

MONUMENT: A fixed object and point established by surveyors to establish land locations.

MORATORIUM: The temporary suspension, usually by statute, of the enforcement of liability for debt.

MORTGAGE: An instrument recognized by law by which property is hypothecated to secure the payment of a debt or obligation; procedure for foreclosure, in event of default, is established by statute.

MORTGAGE GUARANTY INSURANCE: Insurance against financial loss available to mortgage lenders from a private company.

MORTGAGE LOAN CORRESPONDENT: A person or company who negotiates and services loans for others.

MORTGAGEE: One to whom a mortgagor gives a mortgage to secure a loan or performance of an obligation; a lender.

MORTGAGOR: One who gives a mortgage on his property to secure a loan or assure performance of an obligation; a borrower.

MULTIPLE LISTING: A listing, usually an exclusive right to sell, taken by a member of an organization composed of real estate brokers, with the provision that all members will have the opportunity to find an interested client; a cooperative listing.

MUTUAL CONSENT: Agreement. Usually evidenced by an offer and an acceptance. One of four essential elements of a contract.

MUTUAL SAVINGS BANK: A bank owned by the savers. Located primarily in the Northeastern states.

MUTUAL WATER COMPANY: A water company organized by or for water users in a given district with the object of securing an ample water supply at a reasonable rate; stock is issued to users.

N.A.R.: National Association of Realtors.

NAKED LEGAL TITLE: The right to sell the property if the trustor defaults. This right is given by the trustor to the trustee in a trust deed.

NARRATIVE APPRAISAL: A summary of all factual materials, techniques and appraisal methods used by the appraiser in setting forth his value conclusion.

NEGOTIABLE: Capable of being negotiated; assignable or transferable in the ordinary course of business.

NET INCOME: The gross income of income property minus the vacancies and allowable expenses equals the net income. Also, the net profit of a business.

NET LISTING: A listing which provides that the agent may retain as compensation for his services all sums received over and above a net price to the owner.

NET WORTH: The assets of a business minus the liabilities equals the net worth. The value of a business as of a given date.

NOTARIZE: To witness a signature on a document and to place a notary public’s seal on that document.

NOTARY PUBLIC: An official of the state who witnesses an acknowledgment by a person who has signed a document.

NOTE: A signed written instrument acknowledging a debt and promising payment.

NOTICE OF COMPLETION: A document which is recorded when an improvement is completed on a property.

NOTICE OF DEFAULT: A document that is recorded and delivered to the borrower when a default has occurred under a deed of trust.

NOTICE OF INTENT TO SELL IN BULK: A document which is recorded and published when merchandise is sold in bulk rather than in the ordinary course of business.

NOTICE OF NON RESPONSIBILITY: A notice provided by law designed to relieve a property owner from responsibility for the cost of work done on property or materials furnishes’ therefore; notice must be verified, recorded and posted.

NOTICE TO QUIT: A notice to a tenant to vacate rented property.

NOVATION: The substitution of a new obligation for an existing one with the intent to extinguish the original contract. A new contract which takes the place of an existing one.

NUNCUPATIVE WILL: An oral statement made in anticipation of immediate and pending death.

OBSOLESCENCE: Loss in value due to reduced desirability and usefulness of a structure because its design and construction become obsolete; loss because of becoming old-fashioned and not in keeping with modern needs, with consequent loss of income.

OFFSET STATEMENT: Statement by owner of property or owner of lien against property setting forth the present status of liens against said property.

OPEN-END MORTGAGE: A mortgage containing a clause which permits the mortgagor to borrow additional money after the loan has been reduced without rewriting the mortgage.

OPEN LISTING: An authorization given by a property owner to a real estate agent wherein said agent is given the nonexclusive right to secure a purchaser; open listings may be given to any number of agents without liability to compensate any except the one who first secures a buyer ready, willing and able to meet the terms of the listing, or secures the acceptance by the seller of a satisfactory offer.

OPTION: A right given for a consideration to purchase or lease a property upon specified terms within a specified time.

OPTIONEE: Receiver of an option. Usually a potential buyer.

OPTIONOR: Giver of an option. Usually a potential seller.

OR MORE CLAUSE: A clause in a loan document allowing the borrower to pay additional sums at any time.

ORAL CONTRACT: A verbal agreement; one which is not reduced to writing.

ORDINANCE: A city or county law.

ORIENTATION: Placing a house on its lot with regard to its exposure to the rays of the sun, prevailing winds, privacy from the street and protection from outside noises.

OUTLAWED CLAIM: A claim which the claimant cannot pursue in court because he delayed beyond the time allowed by the Statute of Limitations.

OVER-IMPROVEMENT: An improvement which is not the highest and best use for the site on which it is placed by reason of excess size or cost.

OWNERSHIP: The right to the use of property to the exclusion of others.

PACKAGE MORTGAGE: A loan where the security is both real and personal property.

PAR VALUE: Market value, nominal value.

PAROL: Oral, verbal.

PARTIAL RELEASE CLAUSE: A clause in a blanket mortgage or trust deed allowing for recon­veyance of title of part of the property when part of the loan is paid off.

PARTITION ACTION: Court proceedings by which co-owners seek to sever their joint ownership.

PARTNERSHIP: A contract of two or more persons to unite their property, labor or skill, or some of them, in prosecution of some joint or lawful business and to share the profits in certain proportions.

PARTICIPATION: In addition to interest on mortgage loans on income properties, a small percentage of gross income is required, sometimes predicated on certain conditions being fulfilled, such as minimum occupancy or a percentage of net income after expenses, debt service and taxes.

PARTY WALL: A wall erected on the line between two adjoining properties, which are under different ownership, for the use of both properties.

PATENT: Instrument used to convey title to government land.

PERCENTAGE LEASE: Lease on property, the rental for which is determined by amount of business done by the lessee; usually a percentage of gross receipts from the business with provision for a minimum rental.

PERIODIC TENANCY: A leasehold estate continuing from period-to-period until the landlord or the tenant gives notice.

PERSONAL PROPERTY: Any property which is not real property.

PHYSICAL DETERIORATION: Impairment of condition. Loss in value brought about by wear and tear, disintegration, use and actions of the elements.

PLAINTIFF: The party who brings a court suit.

PLANNED DEVELOPMENT PROJECT: A type of subdivision similar to a standard subdivision except there is an area owned in common by all owners of the subdivision.

PLANNING COMMISSION: An agency of the city or county appointed to study and recommend steps for orderly growth of the community.

PLAT: A map or plan of parcels of land.

PLEDGE: The depositing of personal property by a debtor with a creditor as security for a debt or obligation.

PLOTTAGE INCREMENT: The appreciation in unit value created by joining similar owner­ships into one large single ownership.

POINTS: Prepaid interest demanded by lender when loan is negotiated. A premium for the privilege of borrowing at the stated interest rate.

POLICE POWER: The right of the state to enact laws and enforce them for the order, safety, health, morals and general welfare of the public.

POWER OF ATTORNEY: An instrument authorizing a person to act as the agent of the person granting it.

POWER OF SALE: A right given to the trustee to sell the property under a deed of trust if the borrower defaults. A mortgage can also contain a power of sale clause.

PREPAYMENT: Provision can be made for the loan payments to be larger than those specified in the note. The controlling language is usually “$ a month or more.” If the payments state a definite amount, then one must look to the prepayment privilege in the trust deed.

PREPAYMENT PENALTY: Penalty for the payment of a mortgage or trust deed note before it actually becomes due.

PRESCRIPTION: The securing of an easement on property by using it under certain conditions for a given period of time.

PRESUMPTION: A rule of law that courts and judges shall draw a particular inference from a particular fact, or from particular evidence, unless and until the truth of such inference is disproved.

PRICE: What an owner asks for his property or what one pays for the property.

PRIMA FACIE: Presumptive on its face.

PRIMARY MORTGAGE MARKET: Place where the loan is originated.

PRINCIPAL: The employer of an agent.

PRIORITY: The order in which liens are paid when property is sold to satisfy debts.

PRIVATE RESTRICTION: A limitation placed on the use of the property by the seller.

PRIVITY: Mutual relationship to the same rights of property, contractual relationship.

PROBATE: A court hearing to dispose of the property of the deceased person.

PROCURING CAUSE: That cause originating from series of events that, without break in continuity, results in the prime object of an agent’s employment producing a final buyer.

PROFIT AND LOSS STATEMENT: A financial document showing the profit or loss of a business during a given period of time.

PROGRESSION, PRINCIPLE OF: The worth of a lesser valued residence tends to be enhanced by association with many higher valued residences in the same area.

PROMISSORY NOTE: Following a loan commitment from the lender, the borrower signs a note promising to repay the loan under stipulated terms. The promissory note establishes personal liability for its repayment.

PROPERTY: Anything of which there may be ownership.

PRORATION: To divide or prorate equally or proportionately to time of use.

PUBLIC RESTRICTION: A limitation placed on the use of property by the government, usually zoning laws.

PURCHASE AND INSTALLMENT SALEBACK: Involves purchase of the property upon
completion of construction and immediate sale back on a long-term installment contract.

PURCHASE OF LAND, LEASEBACK AND LEASEHOLD MORTGAGES: An arrangement whereby land is purchased by the lender and leased back to the developer with a mortgage negotiated on the resulting leasehold of the income property constructed. The lender receives an annual ground rent, plus a percentage of income from the property.

PURCHASE AND LEASEBACK: Involves the purchase of property and immediate leaseback to the seller.

PURCHASE-MONEY MORTGAGE OR TRUST DEED: A trust deed or mortgage given as part or all of the purchase consideration for property.

QUANTITY SURVEY: A highly technical process in arriving at cost estimate of new construction. It is usually used by contractors and experienced estimators.

QUIET ENJOYMENT: Right of an owner to the use of property without interference of possession.

QUIET TITLE: A court action brought to establish title; to remove a cloud on the title.

QUITCLAIM DEED: A deed to relinquish any interest in property which the grantor may have.

RANGE: A strip of land six miles wide determined by a government survey, running in a north-south direction.

RATIFICATION: The adoption or approval of an act performed on behalf of a person without previous authorization.

REAL ESTATE: Real property.

REAL ESTATE TRUST: A special arrangement under federal and state law whereby investors may pool funds for investments in real estate and mortgages and yet escape corporation taxes.

REAL PROPERTY: Property that consists of land, that which is affixed, and that which is appurtenant to it. Generally considered immovable.

REALTIST: A member of the National Association of Real Estate Brokers.

REAL PROPERTY SALES CONTRACT: A land contract.

REALTOR: A real estate broker holding active membership in a real estate board affiliated with the National Association of Realtors.

REBUTTABLE PRESUMPTION: That which a court will hold to be true until contradicted by evidence.

RECAPTURE: The rate of interest necessary to provide for the return of an investment. Not to be confused with interest rate which is a rate of interest on an investment.

RECONVEYANCE: The transfer of the title of land from one person to the immediate preceding owner. This particular instrument or transfer is commonly used when the performance or debt is satisfied under the terms of a deed of trust, when the trustee conveys the title he has hold on condition back to the owner.

RECORDING: Filing for record in the office of the county recorder or other proper government official.

REDEMPTION: Buying back one’s property after a judicial sale.

REHABILITATION: The restoration of a property to satisfactory condition without drastically changing the plan, form or style of architecture.

RELEASE CLAUSE: This is a stipulation that upon the payment of a specific sum of money to the holder of a trust deed or mortgage, the lien of the instrument as to a specifically d lot or area shall be removed from the blanket lien on the whole area involved.

RELEASE STATEMENT: A document filed to release the encumbrance when personal property is used for security for a loan.

RELICTION: Gaining title to land by the gradual receding of water.

REMAINDER: An estate which takes effect after the termination of the prior estate, such as a life estate.

RENT: Consideration paid for the use of property.

REPLACEMENT COST: The cost to replace the structure with one having utility equivalent to that being appraised, but constructed with modern materials, and according to current standards, design and layout.

REPRODUCTION COST: The cost of replacing the subject improvement with one that is the exact replica, having the same quality of workmanship, design and layout.

REQUEST FOR NOTICE OF DEFAULT: Document which is recorded by the holder of a junior loan so he may be notified if buyer defaults on other loans.

RESCISSION OF CONTRACT: The abrogation or annulling of contract; the revocation or repealing of contract by mutual consent by parties to the contract, or for cause by either party to the contract.

RESERVATION: A right retained by a grantor when conveying property.

RESIDENT PROPERTY MANAGER: A manager of income property who resides on the premises.

RESTRICTION: The term as used relating to real property means the owner of real property is restricted or prohibited from doing certain things relating to the property, or using the property for certain purposes.

RETURN OF THE INVESTMENT: Principal paid on a loan. The return demanded on income property for the depreciation of the improvements.

RETURN ON THE INVESTMENT: The interest paid on a loan. The profit received on investment on income property.

REVERSION: The right to future possession or enjoyment by the person, or his heirs, creating the preceding estate.

REVERSIONARY INTEREST: The interest which a person has in lands or other property, upon the termination of the preceding estate.

RIDER: An amendment to a contract.

RIGHT OF SURVIVORSHIP: Right to acquire the interest of a deceased joint owner; distinguishing feature of a joint tenancy.

RIGHT-OF-WAY: A privilege operating as an easement upon land whereby the owner does by grant, or by agreement, give to another the right to pass over his land, to construct a roadway, or use as a roadway, a specific part of his land, or the right to construct through and over his land, telephone, telegraph, or electric power lines, or the right to place underground water mains, gas mains, or sewer mains.

RIPARIAN RIGHTS: The right of a landowner to water, on, under, or adjacent to his land.

SALES CONTRACT: A contract by which buyer and seller agree to terms of sale.

SALESMAN: A natural person employed by a broker to do real estate acts for compensation or in expectation of compensation.

SALE-LEASEBACK: A situation where the owner of a piece of property wishes to sell the property and retain occupancy by leasing it from the buyer.

SANDWICH LEASE: A leasehold interest which lies between the primary lease and the operating lease.

SATISFACTION: Discharge of mortgage, trust deed or judgment lien from the records upon payment of the evidenced debt.

SCARCITY: The number of properties in relation to the demand. One of the four essential elements which create value.

SEAL: An impression made to attest the execution of an instrument.

SEASONED LOAN: A loan that has been in existence long enough to show a pattern of payments.

SECONDARY FINANCING: A loan secured by a junior mortgage or trust deed on real property.

SECONDARY MORTGAGE MARKET: Place where existing loans are bought and sold.

SECURED PARTY: This is the party having the security interest. Thus, the mortgagee, the conditional seller, the pledgee, etc., are all now referred to as the secured party.

SECURITY AGREEMENT: An agreement between the secured party and the debtor which creates the security interest.

SECURITY DEVICE: Document used when property is used as security for a loan. Trust deed, mortgage, land contract.

SECURITY INTEREST: A term designating the interest of the creditor in the property of the debtor in all types of credit transactions. It, thus, replaces such terms as the following: chattel mortgage, pledge, trust receipt, chattel trust, equipment trust, conditional sale, inventory lien, etc.

SECTION: Section of land is established by government survey and contains 640 acres.

SEPARATE PROPERTY: Property owned by a husband and wife which is not community property; property acquired by either spouse prior to marriage or by gift or devise after marriage.

SERVIENT TENEMENT: Property burdened by an easement.

SETBACK ORDINANCE: An ordinance prohibiting the erection of a building or structure between the curb and setback line.

SEVERALTY OWNERSHIP: Owned by one person only. Sole ownership.

SHERIFF’S DEED: Deed given by court order in connection with the sale of property to satisfy a judgment.

SINKING FUND: Fund set aside from the income from property which, with accrued interest, will eventually pay for replacement of the improvements.

S.I.R.: Society of Industrial Realtors.

SITUS: Location, Land.

SOCIAL OBSOLESCENCE: Economic obsolescence.

SPECIAL ASSESSMENT: Legal charge against real estate by a public authority to pay cost of public improvements such as street lights, sidewalks, street improvements, etc.

SPECIFIC LIEN: A lien which affects only a particular parcel of property.

SPECIFIC PERFORMANCE: An action to compel performance of an agreement (e.g., sale of land).

SPOUSE: A husband or wife.

S.R.A.: Designates a person who is a member of the Society of Real Estate Appraisers.

STANDARD DEPTH: Generally, the most typical lot depth in the neighborhood.

STANDARD SUBDIVISION: A subdivision composed of improved or unimproved lots or parcels.

STANDBY COMMITMENT: The mortgage banker frequently protects a builder by a “standby” agreement under which he agrees to make mortgage loans at an agreed price for many months in the future. The builder deposits a “standby fee” with the mortgage banker for this service. Frequently, the mortgage banker protects himself by securing a “standby” from a long-term investor for the same period of time, paying a fee for this privilege.

STATUTE: A law enacted by a legislative body.

STATUTE OF FRAUDS: State law which provides that certain contracts be in writing in order to be enforceable by law.

STATUTE OF LIMITATIONS: A state law which prevents court action by an injured party in a contract if not taken within specific time limits.

STOCK COOPERATIVE PROJECT: A subdivision where title to the property is held by a corporation. Stockholders receive a right of possession of a particular apartment.

STRAIGHT LINE DEPRECIATION: When a structure is depreciated at a constant rate throughout its useful life.

STRAIGHT NOTE: A note where the principal is paid in a lump sum at the end of the term.

SUBDIVISION: Real property divided for the purpose of sale, lease or finance whether now or in the future.

SUBJECT TO MORTGAGE: When a grantee takes a title to real property subject to mortgage, he is not responsible to the holder of the promissory note for the payment of any portion of the amount due. The most that he can lose in the event of a foreclosure is his equity in the property. See also “assumption of mortgage.” In neither case is the original maker of the note released from his responsibility.

SUBLEASE: A lease given by a lessee.

SUBORDINATE: To make subject to or junior to,

SUBORDINATION CLAUSE: Clause in a junior or a second lien permitting retention of priority. A subordination clause may also be used in a first deed of trust permitting it to be subordinated to subsequent liens, as for example, the liens of construction loans.

SUBPOENA: A process to cause a witness to appear and give testimony.

SUBROGATION: The substitution of another person in place of the creditor to whose rights he succeeds in relation to the debt. The doctrine is used very often where one person agrees to stand surety for the performance of a contract by another person.

SUBSTITUTION, PRINCIPLE OF: Affirms that the maximum value of a property tends to be set by the cost of acquiring an equally desirable and valuable substitute property assuming no costly delay is encountered in making the substitution.

SUCCESSION: Acquiring property of a deceased person who died intestate.

SUM-OF-THE-YEARS-DIGITS DEPRECIATION: An accelerated method of computing depreciation.

SUPPLY AND DEMAND, PRINCIPLE OF: Affirms that price or value varies directly, but not necessarily proportionally, with demand, and inversely, but not necessarily proportionally, with supply.

SURETY: One who guarantees the performance of another; guarantor.

SURFACE WATER: Water not contained in a regularly defined channel.

SURPLUS PRODUCTIVITY, PRINCIPLE OF: Affirms that the net income that remains after the proper costs of labor, organization and capital have been paid, is imputable to the land and tends to fix the value thereof.

SURVEY: The process by which a parcel of land is measured and its area is ascertained.

SYNDICATE: A group of investors who pool their money for a common investment.

TAKE-OUT LOAN: The loan arranged by the owner or builder-developer for a buyer. The construction loan made for construction of the improvements is usually paid from the proceeds of this loan.

TANGIBLE PERSONAL PROPERTY: Personal property having substance that can be delivered from one person to another.

TAX-FREE EXCHANGE: An exchange of “like for like” properties for the purpose of deferring income tax.

TAX SALE: Sale of property after a period of nonpayment of taxes.

TENANCY AT SUFFERANCE: An estate held by a tenant when his right to possess the property has expired.

TENANCY AT WILL: An estate for an indefinite period that may be terminated at the will of either the landlord or the tenant.

TENANCY FROM PERIOD TO PERIOD: A leasehold estate continuing from period to period until the landlord or the tenant gives notice.

TENANCY IN COMMON: Ownership by two or more persons who hold undivided interest, without right of survivorship; interests need not be equal.

TENANCY IN PARTNERSHIP: A title vesting which can be used by partners of a business when a business owns real property.

TENDER: An offer of performance. If it is unjustifiably refused, it places the other party to a contract in default.

TENEMENT: All rights in land which pass with a conveyance of the land.

TENURE IN LAND: The mode or manner by which an estate in lands is held.

TESTAMENT: A person’s will.

TESTATOR: One who leaves a will in force at his death.

TIER: A row of townships running from east to west.

TIME IS OF THE ESSENCE: One of the essential requirements to forming of a binding contract; contemplates a punctual performance.

TITLE: Evidence that owner of land is in lawful possession thereof; an instrument evidencing such ownership.

TITLE INSURANCE: Insurance written by a title company to protect property owner against loss if title is imperfect.

TITLE VESTING: The way that title is held by the owner.

TOPOGRAPHY: Nature of the surface of land; topography may be level, rolling, mountainous. TORRENS TITLE: A system of land registration operated by a state.

TORT: A wrongful act; wrong, injury; violation of a legal right.

TOWNSHIP: A territorial subdivision six miles long, six miles wide and containing 36 sections, each one mile square.

TRADE FIXTURES: Articles of personal property annexed to real property, but which are necessary to the carrying on of a trade and are removable by the owner.

TRADE-IN: An increasingly popular method of guaranteeing an owner a minimum amount of cash on sale of his present property to permit him to purchase another. If the property is not sold within a specified time at the listed price, the broker agrees to arrange financing to purchase the property at an agreed-upon discount.

TRANSFERABILITY: Owner of a property is able to convey title or use of property to another. One of the four essential elements which create value.

TRESPASS: An invasion of an owner’s rights in his property.

TRUST ACCOUNT: A neutral bank account maintained by a broker for the deposit of money entrusted with him.

TRUST DEED: Deed given by borrower to beneficiary to be held pending fulfillment of an obligation, which is ordinarily repayment of a loan to a beneficiary.

TRUSTEE: One who holds property in trust for another to secure the performance of an obligation.

TRUSTEE’S DEED: A deed given by trustee when property is foreclosed and sold at a trustee’s sale.

TRUSTOR: One who deeds his property to a trustee to be held as security until he has performed his obligation to a lender under terms of a deed of trust.

TURNOVER: Number of times an inventory sells during a given period of time.

UNDERIMPROVEMENT: An improvement which because of its deficiency in size or cost is not the highest and best use of the site.

UNDERWRITING: The technical analysis by a lender to determine the borrower’s ability to repay a contemplated loan.

UNDIVIDED INTEREST: The interest of a co-owner in real property. His interest cannot be separated without court action.

UNDUE INFLUENCE: Taking any fraudulent or unfair advantage of another’s weakness of mind or distress or necessity.

UNEARNED INCREMENT: An increase in value of real estate due to no effort on the part of the owner; often due to increase in population.

UNENFORCEABLE: A contract that cannot be sued upon in a court of law. One which cannot be enforced in a court of law.

UNIFORM COMMERCIAL CODE: Effective January 1, 1965. Establishes a unified and comprehensive scheme for regulation of security transactions in personal property, superseding the existing statutes on chattel mortgages, conditional sales, trust receipts, assignment of accounts receivable and others in this field.

UNILATERAL CONTRACT: An exchange of a promise for an act. Only one party is bound to perform.

UNIT-IN-PLACE METHOD: The cost of erecting a building by estimating the cost of each component part, i.e., foundations, floors, walls, windows, ceilings, roofs, etc. (including labor and overhead).

UNLAWFUL DETAINER ACTION: A court suit to evict a tenant.

URBAN PROPERTY: City property; closely settled property.

USE TAX: A tax charged on goods purchased from out-of-state and used within a state, like a sales tax.

USURY: On a loan, claiming a rate of interest greater than that permitted by law.

UTILITY: The ability to give satisfaction and/or excite desire for possession. Usefulness.

VALID: Having force, or binding force; legally sufficient and authorized by law.

VALUATION: Estimated worth or price. Estimation. The act of valuing by appraisal.

VALUE: What a property is worth.

VARIABLE INTEREST RATE: An interest rate in a loan which can be changed upon the happening of a certain event.

VARIANCE: A rezoning of a single parcel.

VENDEE: A purchaser; buyer.

VENDOR: A seller; one who disposes of a thing in consideration of money.

VERIFICATION: Sworn statement before a duly qualified officer to correctness of contents of an instrument.

VESTED: Bestowed upon someone; secured by someone, such as title to property.

VETERANS ADMINISTRATION: The federal agency who administers G.I. loans.

VOID: To have no force or effect; that which is unenforceable.

VOIDABLE: That which is capable of being adjudged void, but is not void unless action is taken to make it so.

VOLUNTARY LIEN: Any lien placed on property with consent of, or as a result of, the voluntary act of the owner.

WAIVE: To relinquish, or abandon; to forego a right to enforce or require anything.

WAIVER: Relinquishing a right.

WAREHOUSING: Using existing loans as security for another loan. Warehousing involves mortgage portfolios.

WARRANTY DEED: A deed used to convey real property which contains warranties of title and quiet possession, and the grantor, thus, agrees to defend the premises against the lawful claims of third persons.

WASTE: The destruction, or material alteration of, or injury to premises by a tenant for life or years.

WATER TABLE: Distance from surface of ground to a depth at which natural groundwater is found.

WILL: A document that provides for the disposition of property upon a person’s death.

WRAPAROUND MORTGAGE: Involves the borrower entering into a second mortgage. This arrangement represents the means by which he can add to his development without refinancing the first mortgage at substantially higher current rates.

WRIT OF EXECUTION: A court order used to sell property to satisfy a debt.

YIELD: The interest earned by an investor on his investment. Also, called return.

ZONE: The area set off by the proper authorities for specific use; subject to certain restrictions or restraints.

ZONING: Act of city or county authorities specifying type of use to which property may be put in specific areas.