|
Loan Terms and Definitions
| |
Select the
first letter of the word:
A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
- A
- Abandonment
- The voluntary relinquishment of
rights of ownership or other interest (such as an easement) by
failure to use the property, coupled with an intent to abandon
(give up the interest).
- Abatement
- A reduction or decrease. Usually
applies to a decrease of assessed valuation of ad valorem taxes
after the assessment and levy.
- Abstract
- A summary, an abridgement. Before
the use of photo static copying, public records were kept by abstracts
of recorded documents.
- Abstracter's
Certificate
- A certificate contained in an abstract
which shows the time period and scope of the search of public
records done by the abstracter.
- Abstract Of
Judgment
- A summary of the essential provisions
of a court judgment, which when recorded in the county recorder's
office, creates a lien upon the property of the defendant in that
county, both presently owned or after acquired.
- Abstract Of
Title
- A compilation of the recorded documents
relating to a parcel of land, from which an attorney may give
an opinion as to the condition of title. Still in use in some
states, but giving way to the use of title insurance.
- Acceleration
Clause
- Clause used in an installment note
and mortgage (or deed of trust), which gives the lender the right
to demand payment in full upon the happening of a certain event,
such as failure to pay an installment by a certain date, change
of ownership without the lender's consent, destruction of the
property, or other event which endangers the security of the loan.
- Accessibility
- The location of a site in terms
of how easily it may be reached by customers. employees, carriers,
and others necessary to the intended use of the property
- Accord
- An agreement by which one accepts
something different (usually less) from what is owed as full satisfaction
The amount owed may be in dispute or simply accepted as full satisfaction
by the creditor or claimant. The agreement and acceptance is called
"Accord and Satisfaction."
- Accretion
- The gradual addition to the shore
or bank of a waterway. The land generally becomes the property
of the owner of the shore or bank, except where statutes specify
otherwise.
- Accrued Depreciation
- (1) The amount reserved each year
in the accounting system for replacement of a building or other
asset. (2) The useful life of a property at any given time.
- Acknowledgement
- A written declaration by a person
executing an instrument, given before an officer authorized to
give an oath (usually a notary public), stating that the execution
is of his own volition.
- Acquisition
Costs
- Costs of acquiring property other
than purchase price: escrow fees, title insurance, lenders fees,
etc.
- Act Of God
- Damage caused by nature (floods.
winds. etc.) rather than destruction by man.
- Add on Interest
- A method of charging interest usually
used in the financing of automobiles, but not generally used in
real estate financing. Interest is computed on the total amount
borrowed and added on to the principal. Each payment is then deducted
from this total amount. Interest on real estate loans is usually
figured based on the balance owing after each payment is made
(declining balance).
- Adjusted Gross
Income
- Gross income of a building it fully
rented, less an allowance for estimated vacancies.
- Adjustable Rate
Mortgages (arm's)
- Mortgage loans under which the interest
rate is periodically adjusted to more closely coincide with current
rates. The amounts and times of adjustment are agreed to at the
inception of the loan. Also called: Adjustable Rate Loans, Adjustable
Mortgage Loans (AML'S), Flexible Rate Loans, Variable Rate Loans.
- Ad Valorem
- "According to value."
A method of taxation using the value of the thing taxed to determine
the amount of tax. Taxes can be either "Ad Valorem"
or "Specific." Example: A tax of $5.00 per $1000.00
of value per house is "Ad Valorem," A tax of S5.00 per
house (irrespective of value) is "Specific."
- Advance Fee
- A fee charged by a broker to a seller
to cover all or a portion of the broker's costs of promoting the
property. The fee is generally credited against commissions but
is not refunded if no commissions are received. Most frequently
used in connection with large offerings which require a substantial
outlay of funds for promotion.
- Agency
- A relationship created when one
person (the principal) delegates to another (the agent) the fight
to act on his or her behalf in business transactions.
- All inclusive Trust
Deed (wrap-around mortgage)
- A financing technique which involves
the creation of a new trust deed which includes the balance due
on the existing note plus any new funds advanced.
- American Land
Title Association (ALTA)
- A national association of title
insurance companies, abstractors, and agents. The association
adopts standard title policy forms.
- Amortization
- Payment of a debt in equal installments
of principal and interest, rather than interest only payments.
- Annual Percentage
Rate (a.p.r.)
- The yearly interest percentage of
a loan, as expressed by the actual rate of interest paid. For
example: 6% add-on interest would be much more than 6% simple
interest, even though both would say 6%. The A.P.R. is disclosed
as a requirement of federal truth in lending statutes and should
include all finance charges.
- Appel Loan (Accelerating
Payoff Progressive Equity Loan)
- A residential property loan which
calls for a payment increase over the first 6 years. Level payments
are made for the remaining years and the loan paid off during
the 15th year. There is no prepayment penalty and P.M.I. is required.
- Appraisal
- An opinion of value based upon a
factual analysis. Legally, an estimation of value by two disinterested
persons of suitable qualifications.
- Appraisal
Methods
- Generally, three major methods of
appraisal: Cost Approach, Income Approach, Market Value (comparables)
Approach.
- Arrears
- (1) Payment made after it is due
is in arrears. (2) Interest is said to be paid in arrears since
it is paid to the date of payment rather than in advance, as is
rent. Example: A rental payment made July 1 pays the rent to August
1. An interest payment made July 1 Pays the interest to July 1.
- Assumable
- A mortgage loan which can be transferred
to another person without a change in the terms of the loan. VA
and FHA loans are assumable, FHLMC and FNMA are not.
- Assumption
of Note
- Agreement by a buyer to assume the
liability under an existing note secured by a mortgage or deed
of trust. The lender usually must approve the new debtor in order
to release the existing debtor (usually the seller) from liability.
- Avigation
Easement
- An easement over private property
abut-ting an airport runway, which limits the height of crops,
trees, structures. etc., in the aircraft's take off and landing
path.
BACK
TO TOP
- B
- Balloon Note
- A note calling for periodic payments
which are insufficient to fully amortize the face amount of the
note prior to maturity, so that a principal sum known as a "balloon"
is due at maturity.
- Balloon Payment
- The unpaid principal amount of a
loan due on a specific date in the future. Usually the amount
that must be paid in a lump sum at the end of the term.
- Bankrupt
- One who is adjudicated a bankrupt
by a court having proper jurisdiction. The bankruptcy may be voluntary
(petitioned by the bankrupt) or involuntary (petitioned by the
creditors of the bankrupt).
- Bankruptcy
- Proceedings under federal bankruptcy
statutes to relieve a debtor (bankrupt) from insurmountable debt.
The bankrupt's property is distributed by the court to the creditors
as full satisfactions of the debts, in accordance with certain
priorities and exemptions. Voluntary bankruptcy is petitioned
by the debtor for, involuntary by the creditors.
- Before And After
Method
- An appraisal method used in both
condemnation and modernization. In condemnation the method is
used in a partial taking. The value of the total land owned by
A, for example, is $1.00 per sq. ft. After a partial taking, the
remaining land of A is worth $.75 per sq. ft. A should receive
$1.00 per sq. ft. for the property taken plus $.25 per sq. ft.
for the remaining parcel. In the event the remaining property
is worth $1.25 after the taking (increased value), the payment
to A could be less than the value of the property taken. In modernization,
an appraiser may take the value of property before and after remodeling
to determine if the value increased more than modernization costs.
- Beneficiary
- The Person who is entitled to receive
funds of property under the terms and provisions of a will, trust,
insurance policy or security instrument. In connection with a
mortgage loan the beneficiary is the lender.
- Bill Of Sale
- An instrument by which title to
personal property is transferred or conveyed.
- Biweekly
- Also known as accelerated mortgages.
Biweeklies reduce interest expense and build home equity faster
than monthly payments.
- Blanket Mortgage
- (1) A mortgage covering more than
one property of the mortgagor, such as a mortgage covering all
the lots of a builder in a subdivision. (2) A mortgage covering
all real property of the mortgagor, both present and future. When
used in this meaning it is also called a "general mortgage".
- Bona Fide Purchaser
- A purchaser in good faith. for valuable
consideration, without notice or knowledge of adverse claims of
others. Sometimes abbreviated B.F.P.
- Book Depreciation
- Depreciation reserved (on the books)
by an owner for future replacement or retirement of an asset.
- Borough
- A part of a city, having authority
over certain local matters. The best known boroughs are the five
boroughs of New York City.
- Breach Of Warranty
- In real property, the failure of
the seller to pass title as either expressed or implied (by law)
in the conveyancing document.
- Breast Height
- The height at which the diameter
of a tree is measured. A height of 4 1/2 feet above the ground
level. The abbreviation D.B.H. (diameter-breast-height) is usually
used.
- Broker, Real
Estate
- One who is licensed by the state
to carry on the business of dealing in real estate. A broker may
receive a commission for his or her part in bringing together
a buyer and seller, landlord and tenant, or parties to an exchange.
- Building And
Loan Association
- An organization for the purpose
of accumulating a fund by subscription and savings of its members,
to assist them with loans for building or purchasing real estate.
- Buydown
- A payment to the lender from the
seller, buyer, third party, or some combination of these, causing
the lender to reduce the interest rate during the early years
of a loan. The buydown is usually for the first 1 to 5 years of
the loan.
- Buy-Sell Offer
- An offer by one owner of a business
or real estate to buy out the interest of another owner of the
same business or real estate (a partner or other shareholder),
or to sell the offerer's interest at the same price or proportionate
price if unequal ownership. Example: A and B each own a 112 interest
in lot 1. A offers to buy B's interest for $10,000 or to sell
A's interest to B for $10,000. Theoretically very fair, since
B has the option to buy or sell. However, B's interest may be
worth $12,000, but B is financially unable to buy A's interest
(also worth $12,000).
BACK
TO TOP
- C
- Call
- In a metes and bounds description,
the angle and distance of a given line or arc. Each call is usually
preceded by the word then or thence. Example: N 220 E 100' (lst.
call), thence N 800 E 1W (2nd. call).
- Cancellation
Clause
- A clause in a lease or other contract,
setting forth the conditions under which each party may cancel
or terminate the agreement. The conditions may be as simple as
giving notice or complex and require payment by the party desiring
to cancel.
- Cap
- The maximum which an adjustable
rate mortgage may increase, regardless of index changes.
- Capital Assets
- Assets of a permanent nature used
to produce income, such as machinery, buildings, equipment, land,
etc. Must be distinguished from inventory. A machine which makes
pencils, for example, would be a capital asset to a pencil manufacturer,
but inventory to the company whose business is to sell such machines.
- Capital Gains
- Gains realized from the sale of
capital assets. Generally, the difference between cost and selling
price, less certain deductible expenses. Used mainly for income
tax purposes.
- Caravan
- An inspection of newly listed properties,
either by the entire sales staff of an office or by sales personnel
from more than one office in conjunction with a multiple listing
group. Generally conducted on a regular basis.
- Carrying Charges
- The costs involved in keeping a
property which is intended to produce income (either by sale or
rent) but has not yet done so.
- Caveat Emptor
- "Let the buyer beware."
Legal maxim stating that the buyer takes the risk regarding quality
or condition of the item purchased, unless protected by warranty
or there is misrepresentation. Modernly, consumer protection laws
have placed more responsibility for disclosure on the seller and
broker.
- CC and Rs (Covenants,
Conditions and Restrictions)
- Limitations placed on the use and
enjoyment of real property. These are found most often in condominiums
and planned unit developments.
- Certificate
Of Title
- In areas where attorneys examine
abstractor chains of title, a written opinion, executed by the
examining attorney, stating that title is vested as stated in
the abstract.
- Chain of Title
- A chronological list of recorded
instruments tracing title to land, from the original owner to
the present owner.
- Chains And Links
- Measurements. In real estate measurements
(surveying) a chain is 66' long or 100 links, each link being
7.92." The measurement may change when used in fields other
than surveying.
- Classified
Property Tax
- Property tax which varies in rate
depending on the use (zoning classification) of the property.
- Clear Title
- Title to property which is free
from liens, defects or other encumbrances.
- Closing
- (1) In real estate sales, the final
procedure in which documents are executed and/or recorded, and
the sale (or loan) is completed. (2) A selling term meaning the
point at which the client or customer is asked to agree to the
sale or purchase and sign the contract. (3) The final call in
a metes and bounds legal description which "closes"
the boundaries of the property.
- Closing Costs
- Expenses, beyond the selling price,
such as loan fees, title fees, etc. Paid when documents are executed
and/or recorded and the sale is complete.
- Closing
Statement
- A summary, in the form of a balance
sheet, showing the amounts of debits and credits to which each
party to a real estate transaction is entitled upon closing.
- Cloud On Title
- An invalid encumbrance on real property,
which, if valid, would affect the rights of the owner. For example:
A sells lot 1, tract 1. to B. The deed is mistakenly drawn to
read lot 2 by the recording of the erroneous deed. The cloud may
be removed by quitclaim deed, or, it necessary, by court action.
- Coinsurance
- A sharing of the risk of an insurance
policy by more than one insurer. Usually one insurer is liable
up to a certain amount, the other liable over that amount.
- Commercial
Property
- Property which is zoned "commercial"
(for business use). Property such as stores, restaurants, etc.,
falling between residential and industrial.
- Commingling
- To mix funds held in trust with
other funds. For example: A broker or builder mixes deposits (should
be in a trust account) with his funds by putting the deposits
in his general account. Although commingling is in itself a violation
for which a broker may lose his license, it does not mean that,
by commingling, the broker or builder intended to misappropriate
the funds.
- Commission
- Compensation due a real estate broker
for acting on behalf of the principal.
- Community
Property
- Property acquired during a marriage
by either a husband or wife, or both, which is not separate property.
- Comparables
(Comps)
- An abbreviation for comparable properties
used for comparative purposes in the appraisal process.
- Conditional
Sales Contract
- A sale in which the title to property
or goods remains with the seller until the purchaser has fulfilled
the terms of the contract, usually payment in full.
- Condominium
- A structure of two or more units,
the interior space of which are individually owned: the balance
of the property (both land and building) is owned in common by
the owners of the individual units. The size of each unit is measured
from the interior surfaces (exclusive of paint or other finishes)
of the exterior walls, floors, and ceiling. The balance of the
property is called the common area.
- Consideration
- A required element in all contracts
by which some-thing of value, including a promise, is exchanged
for the act or promise of another.
- Contingency
- Action conditioned upon a certain
event. Acceptance of the terms of a contract based on something
else happening or certain conditions being met.
- Conveyance
- The transfer of title or an interest
in real property by means of a written instrument such as a deed
of trust.
BACK
TO TOP
- D
- Declaration
Of Trust
- A written acknowledgement by one
holding legal title to property that the property is held in trust
for the benefit of another.
- Declining
Balance Method Of Depreciation
- Depreciation by a fixed annual percentage
of the balance after deducting each yearly depreciation amount.
- Deed
- Actually, any one of many conveyancing
or financing instruments, but generally a conveyancing instrument,
given to pass fee title to property upon sale.
- Deed Of Trust
- An instrument used in many states
in place of a mortgage. Property is transferred to a trustee by
the borrower (trustor) in favor of the lender (beneficiary), and
reconveyed upon payment in full.
- Defeasible
Title
- Title which is not absolute but
possibly may be annulled or voided at a later date. For example:
Title conveyed to A with condition that if A marries before age
30, title will go to B. A's title may be good (doesn't marry)
or may be defeated (marries before 30).
- Deficiency
Judgment
- Commonly the amount for which the
borrower is personally liable on a note and mortgage if the foreclosure
sale does not bring enough to cover the debt. Actually the judgment
is for the total amount and not for the deficiency, the recovery
from the foreclosure sale being deducted from this amount.
- Delivery
- In conveyancing, the placing of
the property in the actual or constructive possession of the grantee.
Usually accomplished by delivery of a deed to the buyer, or by
recording said deed.
- Demand
- The lender's statement of the amount
due to pay of a loan.
- Demand Note
- A note having no date for repayment,
but due on demand of the lender.
- Deposit
- (1) Money given by the buyer with
an offer to purchase. Shows good faith. Also called earnest money.
(2) A natural accumulation of resources (oil, gold, etc.) which
may be commercially recovered and marketed.
- Depreciation
- (1) Decrease in value to real property
improvements caused by deterioration or obsolescence. (2) A loss
in value as an accounting procedure to use as a deduction for
income tax purposes.
- Direct Reduction
Mortgage
- An amortized mortgage. One on which
principal and interest payments are paid at the same time (usually
monthly) with interest being computed on the remaining balance.
- Discount Points
- The fee associated with the note
rate for your loan, the more discount points you pay the lower
the rate you can buy, the fewer you pay, the higher your rate.
If the rate is high enough, the loan is priced above par and these
premium points are available to pay closing costs creating a no
or low fee loan.
- Disposition
of Real Estate Statement
- A statement that the buyer will
occupy the property being purchased even though the buyer owns
other property. The buyer states that the other property will
be sold or rented. Particulars must be given as to any loan on
the property and the equity or rent to payment amounts.
- Documentary
Transfer Tax
- The tax, based on sales price, less
loans which are being assumed, which is charged by the city and/or
county on the transfer of real property.
- Double Declining
Balance Method Of Depreciation
- A use of the declining balance method,
but with double the depreciation allowable by straight line. An
accelerated method.
- Double Escrow
- Two concurrent escrows on the same
property, having the same party as buyer and seller of the property.
Example: Escrow 1 -A buys from B. Escrow 2 -A sells the same property
to C. A is using C's money to buy B's property. The process is
illegal in many states unless full disclosure is made.
- Dual Agency
- The representation of opposing principals
(buyer and seller) at the same time. In brokerage many states
get around this by saying that the agent aids the buyer but is
the agent of the seller only. A problem arises if both buyer and
seller pay the broker, Then full disclosure must be made. An escrow
agent is the agent of buyer and seller and usually paid by both.
This is why an escrow agent must be neutral.
- Due on-Sale-Clause
- A clause in a mortgage loan which
gives the lender the right to demand payment in full when the
property changes ownership. Not applicable to FHA or VA loans.
BACK
TO TOP
- E
- Easement
- A right created by grant, reservation,
agreement, prescription, or necessary implication, which one has
in the land of another. It is either for the benefit of land (appurtenant),
such as right to cross A to get to B. or "in gross,"
such as a public utility easement.
- Easement
of Necessity
- An easement granted by a court when
it is determined that said easement is absolutely necessary for
the use and enjoyment of the land. Commonly given to landlocked
parcels.
- Egress
- A term concerning a right to come
and go across the land (public or private) of another. Usually
part of the term ingress and egress.
- Eleemosynary
Corporation
- A corporation created for charitable
purposes. There are tax advantages accorded to such corporations.
The corporation may operate the same as a profit making corporation.
Commonly called a nonprofit corporation.
- Encumbrance,
Incumbrance
- A claim, lien, charge, or liability
attached to and binding real property. Any right to, or interest
in, land which may exist in one other than the owner, but which
will not prevent the transfer of fee title.
- Equitable
Conversion
- A legal fiction applied to a land
contract which treats the vendee's (buyer's) interest as a real
property interest even though the seller holds legal title, and
the seller's interest as a security interest (personal property).
This enables the buyer to act as the "owner" of the
property without having "legal" title.
- Equitable
Mortgage
- (1) A lien against real property
(mortgage)which is enforceable in a court of equity, but does
not legally constitute a mortgage. (2) A deed given as security
for a debt will be held to be a mortgage rather than a transfer
of title. Also called a constructive mortgage.
- Equity
- The value of a person's interest
in real property after all liens and charges have been deducted.
- Equity Line
Of Credit
- A combination of a line of credit
and equity loan. A maximum loan amount is established based on
credit and equity. A mortgage (deed of trust) is recorded against
the potential borrower's property for said maximum loan amount.
The potential borrower has the right to borrow, as needed, up
to the amount of the mortgage.
- Escalation
Clause
- A clause in a lease providing for
an increased rental at a future time. May be accomplished by several
types of clauses, such as (1) Fixed increase - A clause which
calls for a definite, periodic rental increase. (2) Cost of living
- A clause which ties the rent to a government cost of living
index, with periodic adjustments as the index changes. (3) Direct
expense - The rent is adjusted according to changes in the expenses
of the property paid by the lessor, such as tax increases. increased
maintenance costs, etc.
- Escrow
- Delivery of a deed by a grantor
to a third party for delivery to the grantee upon the happening
of a contingent event, Modernly, in some states, all instruments
necessary to the sale (including funds) are delivered to a third
(neutral) party, with instructions as to their use.
- Excess Condemnation
- Taking by right of eminent domain,
more property than actually necessary for the intended purpose.
This happens frequently, the excess property being sold at auction
after completion of the project.
- Exception
- A provision in a title insurance
binder or policy excludes liability for a specified title defect
or an outstanding encumbrance.
- Exclusive
Listing
- A written contract between a property
owner and a real estate broker, whereby the owner promises to
pay a fee or commission to the broker it certain real property
of the owner is sold during a stated period, regardless of whether
the broker is or is not the cause of the sale. The broker promises
to put forth his or her best efforts to sell the property, and
may make specific promises as to advertising or other promotion
in certain instances.
- Exemplary
Damages
- Damages to punish (make an example
of) the offender. This is done when the wrong is deliberate or
grossly negligent and compensatory damages do not appear to be
sufficient.
- Expert Testimony
- Testimony by one acknowledged to
have special training and knowledge in a particular subject. Only
testimony on the subject in which the witness is "expert"
is considered expert testimony.
- Exposure
- (1) The degree to which a property
for sale, lease, etc., is made noticeable (exposed) to potential
buyers, tenants, etc., through advertising, multiple listing groups,
etc. (2) The direction in which a property faces. For example:
Does a store depending on walk-in trade face the sun in the morning
when people walk in the sun to get warm (eastern exposure), or
face the sun in the afternoon when people walk in the shade to
keep cool (western exposure).
BACK
TO TOP
- F
- Fair Market Value
- An appraisal term for the price
which a property would bring in a competitive market given a willing
seller and willing buyer, each of whom has a reasonable knowledge
of all pertinent facts, with neither being under any compulsion
to buy or sell.
- Fee Simple
- An estate under which the owner
owns a contract interest in the property and is entitled to the
unrestricted enjoyment of the property, including the right to
dispose property.
- Federal Deposit
Insurance Corporation (f.d.i.c)
- The federal corporation which insures
against loss of deposits in banks, up to a maximum amount.
- Federal Home Loan
Banks
- Banks created under the Federal
Home Loan Bank Act of 1932, in order to keep a permanent supply
of money available for home financing. The banks are controlled
by the Federal Home Loan Bank Board. Savings and loans, insurance
companies, and other similar companies making long term mortgage
loans may become members of the Federal Home Loan Bank System,
and thus may borrow from one of the regional banks throughout
the country.
- Federal
National Mortgage Association
- (Fannie Mae): A tax paying corporation
created by Congress to support the secondary mortgage market.
It purchases and sells residential mortgages insured by FHA or
guaranteed by VA as conventional home mortgages.
- Fee
- (1) Modernly, and not in strict
legal terms, synonymous with fee simple or "ownership."
(2) A charge made by a landlord to a tenant, which is not refundable.
For example: A cleaning deposit would be refunded if the tenant
left the rented property reasonably clean. A cleaning fee would
be a charge by the landlord for cleaning the rented property and
would not be refunded regardless of the condition of the property.
- FHA (Federal Housing
Admininistration)
- A federal agency which insures first
mortgages, enabling lenders to loan a very high percentage of
the sale price.
- FHLMC (Freddie
Mac)
- Federal Home Loan Mortgage Corporation
- A federal agency purchasing first mortgages, both conventional
and federally insured, from members of the Federal Reserve System,
and the Federal Home Loan Bank System.
- Finance Charge
- A total of all costs imposed directly
or indirectly by the creditor and payable either directly or indirectly
by the customer, as defined by the federal Truth-In-Lending laws.
- Financial
Statement
- An accounting statement showing
assets and liabilities of a person or company. Used generally
for large loans or other instances when the credit report (history
of payment of debts) in itself is not sufficient.
- Finder's Fee
- A fee paid to someone who finds
a buyer or property for a broker, buyer, etc. The term is sometimes
used to attempt to pay a commission to an unlicensed person. Generally,
a finder's fee is considered a commission and may only be paid
to one who holds a real estate license.
- First
Mortgage
- A mortgage on property that is superior
in position to any other mortgage.
- First Refusal Right
- A right, usually given by an owner
to a lessee, which gives the lessee a first chance to buy the
property if the owner decides to sell. The owner must have a legitimate
offer which the lessee can match or refuse. It the lessee refuses,
the property can then be sold to the offeror.
- First User
- A tax term signifying the one who
builds or buys property and is the first one to put the buildings
to use. Certain tax (depreciation) advantages are given to a first
user. The term concerns only depreciable property (improvements)
and prior use of the land only (farming) would not be considered.
- Fixed
Rate Loan
- A loan on which the same rate of
interest is charged for the life of the loan.
- Fixture
- Personal property which is permanently
attached to the property, and, as such, becomes part of the real
property.
- FNMA Buydown
- FNMA (Federal National Mortgage
Association) accepts loans containing a buy down provision on
single family residential, owner occupied properties. A prepayment
(points) will buy a lower rate of interest during the first one
to five years of the loan. Restrictions apply as to the amount
of the buydown and rise in payment amount as the loan progresses.
- Forfeiture
- The taking of an individual's properly
by a government, because the individual has committed a crime.
In the United States, private property cannot be taken, except
by eminent domain upon payment of just compensation, or for nonpayment
of taxes.
- Franchise
- (1) A statutory right which could
not be exercised in the absence of the statute, such as the statutes
enabling persons to form a corporation. Since a corporation is
created by the statute, it could not be formed except by the grant
of the legislature. (2) A combination of individual ownership
and central control. One may own a fast food restaurant, hotel,
hardware store, etc., yet use the name of a national company.
Each individual owner pays for the name use, advertising, and
may be required to make certain purchases (napkins, buns, etc.)
from the national company. The real estate brokerage business
was slow to use the franchise method, but now has many companies
operating in this manner.
- Front Foot Cost
- A determination of the value of
real property based on a value per foot as measured along the
frontage of a parcel. Usually used with commercial property or
waterfront.
- Full Disclosure
- In real estate, revealing all the
known facts which may affect the decision of a buyer or tenant.
A broker must disclose known defects in the property for sale
or lease. A builder must give to a potential buyer the facts of
his new development (are there adequate school facilities?"
sewer facilities? (an airport nearby?, etc.). A broker cannot
charge a commission to buyer and seller unless both know (disclosure)
and agree.
- Future
Acquired Property
- Property acquired after a loan or
sale. For example: A loan agreement may state that the loan is
a lien on all property presently owned or which the borrower may
acquire in the future.
- Future Interest
- A present interest, but only a future
right to possession and enjoyment of the land, such as a remainder
interest, reversionary interest, etc.
BACK
TO TOP
- G
- Garnishment
- A legal proceeding under which a
person's money in control of another (such as salary) is taken
for payment of a debt. The amount which may be taken is set by
statute (usually as a percentage), and, in most states, a judgment
is necessary before garnishment.
- General Lien
- (1) A lien such as a tax lien or
judgment lien which attaches to all property of the debtor rather
than the lien of, for example, a trust deed, which attaches only
to specific property. (2) The right of a creditor to hold personal
property of a debtor for payment of a debt not associated with
the property being held. Must be done under an agreement since
against general precepts of law.
- General Membership
- A partnership made up of general
partners, without special (limited) partners.
- Georgian Architecture
- A colonial style of architecture
dating back to the eighteenth century. Characterized by first
floor windows extending to the ground, its exterior placements
(windows, doors. etc.) are simple and well balanced yet formal
in appearance.
- Gerrymander
- To divide an area into districts,
against the obvious natural divisions, in order to accomplish
an unlawful purpose. For example: To divide a school district
to keep out certain people for reasons of race or religion, to
divide a political voting district so as to give power to a political
party.
- Gnma (government
National Mortgage Association) Options
- A method of purchasing GNMA securities
through "puts" and calls." A GNMA Call Option is
the right to buy GNMA securities at a specific yield for a specified
time, A Put Option is the right to sell GNMA securities at a specific
yield for a specified time. The buyer pays for the option and
may exercise it, not exercise it, or sell it.
- Graduated
Payment Mortgage
- A mortgage or deed or trust calling
for increasingly higher payments over the term of the loan. This
allows the buyer low beginning payments. The payments then increase
as (theoretically) the buyer's earnings increase.
- Grantee
- One to whom a grant is made. The
purchaser of real property.
- Grantor
- One who has made a grant. The seller
of real property.
- Grantor Grantee
Index
- The record of the passing of title
to all the properties in a county as kept by the county recorder's
office. Property is checked by tracing the names of the sellers
and buyers (chain of title). Title companies usually have more
efficient methods by keeping records according to property description,
rather than peoples names.
- Gross Income
- The scheduled (total) income, either
actual or estimated, derived from a business or property.
- Gross
Income Multiplier
- A figure which, when multiplied
by the annual gross income, will theoretically determine the market
value. A general rule of thumb which varies with specific properties
and areas.
- Gross Lease
- A lease which obligates the lessor
to pay all or part of the expenses of the leased property, such
as taxes, insurance, maintenance. utilities, etc.
- Grout
- (1) Thin mortar used in masonry
work to fill joints between bricks, blocks, tiles. etc. (2) A
variety of plaster used to finish ceilings of superior quality.
- Growing Equity
Mortgage (g.e.m.)
- A fixed rate, graduated payment
loan allowing low beginning payments and a shorter term because
of higher payments as the loan progress. Based on the theory of
increasing income by the buyer and, therefore. ability to make
higher future payments. When state law applies, usury laws in
some states may not presently allow such loans when less than
interest only payments create interest on interest.
- Guaranty
- Agreement to pay the debt or perform
the obligation of another in the event the debt is not paid or
obligation not performed. Differs from a surety agreement in that
there must be a failure to pay or perform before the guaranty
can be in effect.
BACK
TO TOP
- H
- Hard
Money Mortgage
- A mortgage given in return for cash,
rather than to secure a portion of the purchase price, as with
a purchase money mortgage.
- Heir
- One who by law, rather than by will,
receives the estate of a deceased person.
- Hereditaments
- (1) Anything which could be considered
real property. (2) Anything which may be inherited.
- Hidden Defect
- An encumbrance on a title that is
not apparent in the public records; for example, unknown heirs,
secret marriages and forged instruments.
- Holdback
- Portion of a loan held back by the
lender until a contingency is met. In the sale of a home insured
by V.A. or F.H.A., funds may be held back to make necessary improvements
to bring the property to V.A. or F.H.A. standards. The money to
make "these" repairs may not be available until closing.
One and one halt to double the estimated amount necessary is held
back. If repairs are not made in the time allowed. these funds
are used to make the repairs. In construction financing, funds
are held back until, for example, a certain percentage of a subdivision
has been sold, or a certain portion of a building has been constructed.
- Holder In Due
Course
- A holder of a check or note who
takes, for value and in good faith, the note before it is overdue
or the check without knowledge that it has bounced, if, in fact
it has.
- Holding Period
- The time period used by the IRS
to determine along or short term capital gain. The period during
which the taxpayer owns the capital asset.
- Homestead
- The dwelling (house and contiguous
land) of the head of a family. Some states grant statutory exemptions,
protecting homestead property (usually to a set maximum amount)
against the rights of creditors. Property tax exemptions (for
all or part of the tax) are also available in some states. Statutory
requirements to establish a homestead may include a formal declaration
to be recorded.
- Home Warranty
Insurance
- Private insurance insuring a buyer
against defects (usually in plumbing, heating, and electrical)
in the home he has purchased. The period of insurance varies and
both new and used homes may be insured.
- Housing Starts
- Number of houses on which construction
has begun. The figures are used to determine the availability
of housing, need for real estate loans, need for labor and materials,
etc.
- Hypothecate
- To mortgage or pledge without delivery
of the security to the lender.
BACK
TO TOP
- I
- Impound Account
- Account held by a lender for payment
of taxes, insurance, or other periodic debts against real property.
The mortgagor or trustor pays a portion of, for example, the yearly
taxes, with each monthly payment. The lender pays the tax bill
from the accumulated funds.
- Improvements
- Generally, buildings, but may include
any permanent structure or other development. such as a street,
utilities. etc.
- Inchoate Instrument
- An unrecorded instrument (such as
a deed) which is valid only between the parties and those having
actual notice: but not against "the world" as it would
be after recording.
- Income Averaging
- A method of figuring income tax
by paying tax on the average income per year for the past five
years. For example: A, a real estate salesperson, earns $10,000
taxable income for 4 years. In the fifth year, A sells a shopping
center and earns $100,000 taxable income. A-could take the total
income for 5 years ($140,000), divide by 5 ($28,000), and pay
tax on $28,000 for the past 5 years, less what A has already paid.
- Increasing
And Diminishing Returns
- An economic theory that an increase
in capital or manpower will not increase production proportionately
(five workers may do less than five times the work of one worker;
and two workers may do more than twice the work of one worker).
When the increase in production is proportionately greater than
the addition, there is an increasing return, when production is
proportionately less than the addition. the return diminishes.
- Industrial
Tax Exemption
- An exemption from local property
taxes granted to encourage industries to come into an area. Has
been used successfully in the South. Usually granted for a definite
period.
- Inheritance
Tax
- A tax on the transfer of property
from a deceased person: based on the right to acquire the property
rather than the property itself.
- Installment
Contract
- A method of purchasing by installment
(usually monthly) payments. When referring to real property, it
is usually called a land contract.
- Institutional
Lenders
- Banks, savings and loan associations
and other businesses which make loans to the public in the ordinary
course of business, rather than individuals, or companies which
may make loans to employees.
- Insured Mortgage
- A mortgage insured against loss
to the mortgagee in the event of default and a failure of the
mortgaged property to satisfy the balance owing plus costs of
foreclosure. May be insured by F.H.A., V.A., or by private mortgage
insurance companies.
- Interest Cap
- The maximum interest rate increase
of an Adjustable Mortgage Loan. For example: a 120% loan with
a 5% interest rate cap would have maximum interest for the life
of the loan which would not exceed 17%.
- Interpleader
- A court action which may be filed
in an existing case to be the initial action. One holding funds
which are in dispute, but not having an interest in the funds,
would file an inter- pleader. For example: An escrow agent is
holding a deposit of a buyer which funds both buyer and seller
claim to be entitled. Escrow is willing to give the funds to either
buyer or seller but does not want to be liable for giving the
funds to the wrong party. The interpleader filed by the escrow
agent asks the court to determine to whom the funds should be
awarded.
- Interstate
Land Sales
- Sales of land to a buyer in another
state. Because the buyer is usually totally dependent on the seller
for information regarding the property, federal disclosure laws
have been passed to aid the buyer. The buyer also has a period
(now 3 days) after singing a purchase agreement, in which to rescind.
The laws were passed because of the large promotional land sales
of the 50's and early 60's, some of which sold worthless desert
and swamp land.
- Involuntary
Conversion
- Conversion of real property to personal
property (money) without the voluntary act of the owner. This
occurs when property is taken by eminent domain (condemnation).
The owner is allowed to convert back to real property (buy another
property) without paying tax on the gain from the condemnation.
This must be done within a set time (3 years) and the prices of
the old and new property are considered to form a new tax base.
- IRA (individual
Retirement Account)
- Savings programs available to individuals.
The plans allow for a certain amount to be deposited each year.
This money is not subject to income tax for that year or following
years as long as it is not withdrawn. The money is taxed as withdrawn
upon retirement, usually when the depositor is in a lower tax
bracket. During the life of the account, the money may be put
into various interest bearing investments. Securities dealers
as well as banking institutions now offer IRA'S.
BACK
TO TOP
- J
- Jetty
- (1) A pier or other structure (usually
of stones), built out into a body of water to hinder the currents
and so protect a harbor. (2) A part of a building which projects
out beyond the exterior walls, such as an overhanging second story,
a balcony, etc.
- Joint Appraisal
- An appraisal by more than one appraiser,
but one which states common conclusions of all.
- Joint
Tenancy
- An undivided interest in property,
taken by two or more joint tenants. The interests must be equal,
accruing under the same conveyance, and beginning at the same
time. Upon the death of a joint tenant, the interest passes to
the surviving joint tenants, rather than to the heirs of the deceased.
- Judgment (judgement)
- The decision of a court of law.
Money judgments, when recorded, become a lien on real property
of the defendant.
- Judgment
Lien
- A lien against the property of a
judgment debtor. An involuntary lien.
- Judgment
Proof
- One against whom a judgment creditor
cannot collect (no assets). If one can show he was defrauded by
a "judgment proof" real estate licensee, he may recover
from the state fund in states having such a fund,
- Jumbo Va Loan
- A loan for an amount greater than
the allowable100% financed amount. It is determined by subtracting
the maximum allowable 100% financed amount from the purchase price
and financing 75% of the difference. Example: maximum allowable
VA Loan-$110,000. Sale price-$130.000. Difference $20,000: 75%
of the difference is $15,000. Total jumbo loan-$110,000 plus $15.000
= $125,000. Required down payment-$5,000.
- Just Compensation
- In condemnation the amount paid
to the property owner. The theory is that in order to be "just,"
the property owner should be no richer or poorer than before the
taking.
BACK
TO TOP
- K
- Keene's Cement
- An unusually tough and durable gypsum
plaster to which alum has been added. Used primarily for walls
of commercial buildings.
- Keogh Plan
- A retirement plan whereby a self-employed
person may set aside a certain portion of income (tax deferred)
into a retirement account. The money is taxable upon withdrawal
at retirement when the person's tax bracket is often lower.
- Keyman Insurance
- Insurance through loss (through
death or disability) of a "key" (important) person in
a company. The liability is the estimated cost of the loss (in
business lost, and replacement of the individual). Some lenders
require this insurance before lending to small companies which
rely on one or a few "key" people.
- Knock Down
- Any parts of a building which can
be easily assembled, installed, or removed, such as certain types
of window frames, partitions, etc.
- Knot
- (1)The hard, irregular shaped defects
in boards, caused by cutting at the point where the branch of
the tree meets the trunk. (2) A measure of speed, equal to one
nautical mile (approximately 6,076 ft.) per hour.
BACK
TO TOP
- L
- Laches
- An unreasonable delay by a party
making a claim or bringing an action, so that the rights of said
party are waived. Laches are not controlled by a statute of limitations.
- Landowner's
Royalty
- In oil and gas leases, the portion
of the value of each barrel of oil which goes to the property
owner.
- Land Residual
Technique
- An appraisal technique by which
land value is determined by first determining the net return attributable
to the building only, and deducting it from the total return to
the property (may be estimated), the residual amount is capitalized
to find the land value. The building value may be determined by
construction costs (new building), depreciated construction costs
(it only a few years old), or estimated present construction costs
(if an older building).
- Late Charge
- A penalty for failure to pay an
installment payment on time. Usually not allowed as interest for
tax deductions. May or may not be included as usury. If not, the
amount of late charge is either set by statute or must be "reasonable."
- Lateral Support
- The right of a landowner to the
natural support of his land by adjoining land. The adjoining owner
has the duty not to change his land (such as lowering it) so as
to cause this support to be weakened or removed.
- Lease With Option
To Purchase
- A lease under which the lessee has
the right to purchase the property. The price and terms of the
purchase must be set forth for the option to be valid. The option
may run for the length of the lease or only for a portion of the
lease period. Legal Description: A description by which property
can be definitely located by reference to surveys or recorded
maps. Sometimes referred to simply as the legal.
- Legal Owner
- The term has come to be used as
a technical difference from the equitable owner, and not as opposed
to an illegal owner. The legal owner has title to the property,
although the title may actually carry no rights to the property
other than a lien.
- Lessee's Interest
- In appraising the value of a lessees
interest to determine the value of a potential sublease of assignment
(sale) of the lease, the value is the market value of the property,
less the interest of the lessor. The lessor's interest would be
largely determined by the ratio of the return on the lease to
the market value without the lease. Lien: A recorded document
which claims an interest in real property as security for a debt
owed. Such liability may be created by contract, such as a deed
of trust, or by a court judgment.
- Lien Waiver (waiver
Of Liens)
- For our purposes, a waiver of mechanic's
lien rights, signed by subcontractors so that the owner or general
contractor can receive a draw on a construction loan.
- Liquidated
Damages
- A definite amount of damages, set
forth in a contract, to be paid by the party breaching the contract.
A predetermined estimate of actual damages from a breach.
- Lis Pendens
- Legal notice that a lawsuit is pending.
Also called a notice of action.
- Loan Constant
- The yearly percentage of interest
which remains the same over the life of an amortized loan, based
on the monthly payment in relation to the principal originally
loaned. For example: A $1000 loan at 9% interest for 20 years
can be amortized at $9.00 per month. The constant interest rate
is figured by finding one year's payments ($9.00 x 12 months =
$108,00), and expressing this amount as a percentage of the principal
originally borrowed (10.8% of $1000).
- Loan Policy
- A title insurance policy insuring
a mortgagee, or beneficiary under a deed of trust, against loss
caused by invalid title in the borrower, or loss caused by invalid
title in the borrower, or loss of priority of the mortgage or
deed of trust.
- Loan Ratio
- The ratio, expressed as a percentage,
of the amount of a loan to the value or selling price of real
property. Usually, the higher the percentage, the greater the
interest charged. Maximum percentages for banks, savings and loans,
or government insured loans, is set by statute.
- Loan to Value Ratio
- The ratio of the mortgage loan's
principal to the property's appraised value or its sales price,
whichever is lower.
- Long Term Capital
Gain
- Gain on the sale of a capital asset
which has been held for a specified time or longer. Long term
capital gain is taxed at a special rate and not as ordinary income.
BACK
TO TOP
- M
- Made Land
- Artificially formed land, either
by filling or dredging.
- Marketable
Title
- Title which can be readily marketed
(sold) to a reasonably prudent purchaser aware of the facts and
their legal meaning concerning liens and encumbrances.
- Market
Value
- The highest price a willing buyer
would pay and a willing seller accept, both being fully informed,
and the property exposed for a reasonable period of time. The
market value may be different from the price a property can actually
be sold for at a given time (market price),
- Market
Value Approach
- Appraising the value of a property
by comparing the price of similar properties (comparables) recently
sold. The degree of similarity of the properties and circumstances
of the sale are the important characteristics to consider,
- Maturity
- (1) Termination period of a note.
For example: A 30 year mortgage has maturity of 30 years. (2)
In sales law, the date a note becomes due.
- Mechanic's
Lien
- A lien created by statute for the
purpose of securing priority of payment for the price or value
of work performed and materials furnished in construction or repair
of improvements to land, and which attaches to the land as well
as the improvements.
- Merger Of Title
- A lesser interest in real property
being merged (absorbed) into a greater interest. For example:
A lessee purchases the property being leased. The interest as
a lessee is merged into the interest as an owner, thus ending
the leasehold interest.
- Metes and Bounds
- A form of land description in which
boundaries are described by courses, directions, distances and
monuments.
- Mile
- A linear measurement equal to 5280
feet on land and 6076 feet across water (nautical mile).
- Money Market
Mutual
- Funds which invest in the "Money
Market," a variety of interest bearing securities such as
treasury bills and bank certificates of deposit. None is invested
directly into real property or real property securities.
- Month To Month
Tenancy
- A tenancy where no written lease
is involved, rent being paid monthly. Some obligations as to notice
of moving or eviction may exist by statute.
- Mortgage
- (1) To hypothecate as security,
real property for the payment of a debt. The borrower (mortgagor)
retains possession and use of the property. (2) The instrument
by which real estate is hypothecated as security for the repayment
of a loan.
- Mortgage
Banker
- A company providing mortgage financing
with its own funds rather than simply bringing together lender
and borrower, as does a mortgage broker. Although the mortgage
banker used its own funds, these funds are generally borrowed
and the financing is either short term or, it long term, the mortgages
are sold to investors (many times insurance companies) within
a short time.
- Mortgage
Bonds
- Bonds issued by corporations, which
offer first mortgages on real property of the corporation as security
for the payment of the bonds.
- Mortgage
Broker
- One who, for a fee, brings together
a borrower and lender, and handles the necessary applications
for the borrower to obtain a loan against real property by giving
a mortgage or deed of trust as security. Also called a loan broker.
- Mortgage
Company
- A company authorized to service
real estate loans, charging a fee for this service.
- Mortgagee
- The party lending the money and
receiving the mortgage. Some states treat the mortgagee as the
"legal" owner, entitled to rents from the property.
Other states treat the mortgagee as a secured creditor, the mortgagor
being the owner. The latter is the more modern and accepted view.
- Mortgage
Insurance
- Insurance written by a private mortgage
insurance company (referred to as an 'PIC') protecting the mortgage
lender against loss incurred by a mortgage default, thus enabling
the lender to lend a higher percentage of the sale price. The
Federal Government writes this form of insurance through the FHA
and the VA.
- Mortgage
Life Insurance
- A term life insurance policy for
the amount of the declining balance of a loan secured by a mortgage
or deed of trust. The beneficiary under the policy is the mortgagee.
In the event of death (some policies also cover disability) of
the insured (mortgagor), the mortgage is paid in full.
- Mortgage
Servicing
- Controlling the necessary duties
of a mortgagee, such as collecting payments, releasing the lien
upon payment in full, foreclosing if in default, and making sure
the taxes are paid, insurance is in force, etc. Servicing may
be done by the lender or a company acting for the lender, for
a servicing fee.
- Mutual Savings
Bank
- An institution owned by its depositors,
as evidenced by certificates of deposit rather than stock. These
institutions are active in long term real estate financing, as
opposed to commercial banks, which concentrates more on short
term loans.
BACK
TO TOP
- N
- Negative Amortization
- A condition created when a loan
payment is less than interest alone. Even though payments are
made on time, the amount owing increases.
- Negotiable
Instrument
- According to the Uniform Negotiable
Instruments Act, an instrument is negotiable when it is in writing
and signed, containing an unconditional promise or order to pay
a certain amount of money, on demand, or at a definite future
date, to the bearer, to order, or to a named or certain drawee.
- Net Lease
- A lease requiring the tenant to
pay, in addition to a fixed rental, the expenses of the property
leased, such as taxes, insurance, maintenance, etc. In some states
the terms net net, net net net, triple net, and other such repetitions
are used.
- Net Worth
- The difference between total assets
and liabilities of an individual, corporations, etc.
- No Bonus Clause
- A clause under the eminent domain
section of a lease, giving the lessee the right to recover only
the value of his physical improvements in the event of a taking,
and not the value of the leasehold interest (the difference between
the fixed rent of the lease and current market rental value).
Not applicable in all states.
- Nonbearing
Wall
- A wall used only to separate areas,
and which carries only its own weight
- Nonexclusive
Listing
- A listing under which the real estate
broker has an exclusive listing as opposed to other agents, but
the owner may sell the property without using an agent, and not
be liable to pay a commission. Also called an agency agreement.
- Nonrecourse
Loan
- A loan not allowing for a deficiency
judgment. The lender's only recourse in the event of default is
the security (property) and the borrower is not personally liable.
- Notarization
- The certification by a Notary Public
that a person signing a document has been properly identified.
Notarization does not certify the content of a document, only
validity of signature.
- Notice Of Cessation
- A notice stating that work has stopped
on a construction project. Done to accelerate the period for filing
a mechanic's lien.
- Notorious
Possession
- A requirement for adverse possession.
Possession so open (notorious) that the owner is presumed to have
notice of it and its extent.
- Nuncupative
Will
- An oral will, usually in a deathbed
situation, before witnesses who later testify to its authenticity.
BACK
TO TOP
- O
- Oath
- An attestation by a person which
binds him or her legally and morally. Usually attesting to the
truth of something, as an affidavit, or the validity of one's
signature. A promise to tell the truth. Also, a promise to carry
out a duty with high morality (oath of office), An oath has religious
connotations and usually involves the word "swear,"
and may contain the phrase "so help me God," or require
the one taking the oath to put his or her hand on a bible. An
affirmation (see which) is still legally binding.
- Office
- A zoning designation allowing businesses
to carry on their paperwork rather than manufacturing of sale
of inventory to the public on the site. Some businesses may be
conducted entirely out of such space, when only paperwork is involved,
such as insurance companies, law firms, accounting firms, etc.
- Offset Statement
- (1) A statement given to a buyer
of rental property by a tenant, setting forth the amount of rent
and terms of the rental agreement. (2) A statement by an owner
or lien-holder to a buyer, setting forth the balance due on existing
liens against the property being purchased.
-
"Once in a Lifetime" Tax Exclusion
- A forgiveness of a portion of the
tax due on the sale of a residence by a senior citizen. As the
term denotes, the exclusion can be taken only once.
- "One, Two,
Three" Financing
- A method of creative financing by
which the buyer (1) assumes an existing loan, (2) secures a second
loan from a third party lender, (3) takes a third loan from the
seller.
- Open End Mortgage
- A mortgage permitting the mortgagor
to borrow additional money under the same mortgage, with certain
conditions, usually as to the assets of the mortgage.
- Origination
Fee
- The fee that the lender charges
to originate the loan, this fee is typically 1 point.
- Override
- A rental amount paid due to sales
of the tenant. For example: A lease for a service station may
contain a provision for a certain addition to the rent for every
gallon of gasoline over a certain amount sold each month. The
amount over is called the override, such as two cents per gallon
for every gallon over fifty thousand sold each month.
- Ownership
- Rights to the use, enjoyment, and
alienation of property, to the exclusion of others. Concerning
real property, absolute rights are rare, being restricted by zoning
laws, restrictions, liens, etc.
- Owner
Will Carry Mortgage
- A term used to indicate that the
seller is willing to take back a purchase money mortgage.
BACK
TO TOP
- P
- Partial Release
- A release of a portion of property
covered by a mortgage. A subdivider will obtain a partial release
as each lot is sold, upon payment of an agreed upon amount. In
areas where the subdivider is not usually the builder, it may
be necessary to sell groups of lots to obtain a partial release.
In areas where deeds of trust are used instead of mortgages, a
"partial reconveyance" is the document used.
- Participation
Certificates
- Mortgage securities, rather than
mortgages. The advantage of the certificate is that it is readily
marketable or pledgeable.
- Partition
- (1) Any division of real or personal
property between co-owners, resulting in individual ownership
of the interests of each. (2) A wall, sometimes moveable, and
not load-bearing, used to divide a room or building.
- Patent Defect
- A defect plainly visible or as would
be discovered by the exercise of ordinary care. A patent defect
in a legal description is one which cannot be corrected on its
face, and a new description must be used.
- Payment Cap
- A maximum amount for a payment under
an Adjustable Mortgage Loan, regardless of the increase in the
interest rate. If the payment is less than the interest alone,
negative amortization is created.
- Payoff
- The payment in full of an existing
loan or other lien.
- Payoff
Escrow
- An escrow, specifically for the
purpose of paying off an existing lien. Usually part of an existing
escrow, and called a sub escrow.
- Perfecting
Title
- Process involving the elimination
of any adverse claims against a title.
- Personal Property
Loan
- A loan which is secured by both
real and personal property. The minimum ratio of personal to real
property is set by law. The credit of the borrower is a major
consideration in making the loan.
- PITI
- Refers to principal, interest, taxes
and insurance, the four major components of a usual monthly mortgage
payment.
- PITI Ratio
- The principal, interest, tax and
insurance payment to income ratio. Used in mortgage lending decisions.
- Plaintiff
- The party bringing a civil action
against a defendant.
- Planned (unit)
Development (PUD)
- A subdivision of five or more individually
owned lots with one or more other parcels owned in common or with
reciprocal rights in one or more other parcels. The lots are generally
small, being the exact size of the improvements, or slightly larger.
- Point
- One percent. When referring to mortgages
or deeds of trust, the term is used to describe the percentage
of discount rather than interest (for which the word "percent"
is used). The points are paid by the seller in F.H.A. and V.A.
insured loans, and by either buyer or seller (or both) in conventional
loans.
- Points
- A fee charged by the lender to fund
a loan, in addition to and separate from other fees charged. One
Point equals one percent of the amount of the loan. Discount points
are charged or are received based on the note rate the borrower
selects. Additionally a one point origination fee is typically
charged by a lender to underwrite a residential loan.
- Possibility
of Reverter
- The term shows no estate (interest)
in property, but only the chance that an estate will exist at
a future time. If a property were sold on the condition that it
be used for a park, and, it not used for a park, would revert
back to the seller, the seller would have a possibility of reverter.
- Power of Attorney
- An authority by which one person
(principal) enables another (attorney in fact) to act for him.
(1) General power - Authorizes sale, mortgaging, etc. of all property
of the principal. Invalid in some jurisdictions. (2) Special power
- Specifies property, buyers, price and terms. How specific it
must be varies in each state.
- Prescriptive
Easement
- The granting of an easement by a
court, based on the presumption that a written easement was given
(although none existed), after a period of open and continuous
use of land.
- Principal
- The sum of money outstanding upon
which interest is payable. Also refers to one who is served by
an agent. Private Mortgage Insurance (PMI): Insurance written
by a private mortgage insurance company protecting the mortgage
lender against loss occasioned by a mortgage default and foreclosure.
- Private Mortgage
Insurance
- Insurance against a loss by a lender
in the event of default by a borrower (mortgagor). The insurance
is similar to insurance by a governmental agency such as FHA,
except that it is issued by a private insurance company. The premium
is paid by the borrower and is included in the mortgage payment.
- Property Management
- The branch of the real estate business
dealing with the management of property. The property may be a
rented house or a large office or industrial complex. The duties
may range from merely collecting rents to complete management
of all maintenance and may also include being leasing agent or
sales agent.
- Proration
- The method used in dividing charges
into that portion which applies only to a party's ownership up
to particular date.
BACK
TO TOP
- Q
- Quadrant
- (1) A quarter section of a circle.
(2) One of the quarters created by two intersecting roads or streets.
- Qualification
- The process of reviewing a prospective
borrower's credit and payment capacity prior to approving a loan.
- Quantity Survey
Method
- Also called "price take-off"
method. A process of arriving at an estimate of new construction
costs by a detailed estimate of quantities of necessary building
materials plus labor costs.
- Quarter Section
- One quarter of a section. A quarter
section (commonly called a quarter) contains 160 acres.
- Question Of
Law
- Given the facts, what laws, it any,
are applicable - decided by a judge, even in a jury trial.
- Quietus
- Final disposition of a claim or
debt.
- Quitclaim
Deed
- A deed operating as a release, intended
to pass any title, interest, or claim which the grantor may have
in the property, but not containing any warranty of a valid interest
or title in the grantor.
BACK
TO TOP
- R
- Rate Index
- An index used to adjust the interest
rate of an adjustable mortgage loan. For example: the change in
U.S. Treasury securities (T-Bills) with a 1 year maturity. The
weekly average yield on said securities, adjusted to a constant
maturity of one year, which is the result of weekly sales, may
be obtained weekly from the Federal Reserve Statistical Release
H.15 (519). This change in interest rates is the "index"
for the change in the specific Adjustable Mortgage Loan.
- Rate Of
Return
- The annual percentage of return
on investment on income property.
- Ratification
- Affirming a prior act which was
not legally binding; the affirmation gives the act legal effect.
Occurs when an unauthorized agent acts, and the principal later
affirms the action, giving authority retroactively.
- Real Estate
- (1) Land and anything permanently
affixed to the land. such as buildings, fences, and those things
attached to the buildings, such as light fixtures, plumbing and
heating fixtures, or other such items which would be personal
property it not attached. The term is generally synonymous with
real property, although in some states a fine distinction may
be made. (2) May refer to rights in real property as well as the
property itself.
- Real Estate Settlement
Procedures Act (RESPA)
- A federal statute requiring disclosure
of certain costs in the sale of residential, improved property
which is to be financed by a federally insured lender.
- Rebate
- A discount or reduction in price
of a product or interest, not given in advance, but handed back
because of prompt payment or other reason. Many states regulate
gifts and educational aids given to real estate brokers by supporting
companies such as title companies, calling these in effect, a
price discount (rebate).
- Recapture
Of Depreciation
- Taxing as ordinary income, upon
the sale of property, the amount of depreciation taken above straight
line depreciation.
- Reconveyance
- The conveyance to the landowner
of the title, held by a trustee under a deed of trust, when the
performance of the debt is satisfied.
- Recordation
- Involves filing for record in the
office of the county recorder for the purpose of giving constructive
notice of title, claim or interest in real property.
- Record Owner
- The owner of property as shown by
an examination of the public record.
- Redemption
- The process of canceling a defeasible
title to land, such as is created by a mortgage foreclosure or
tax sale.
- Redemption
Period
- A time period during which a mortgage,
land contract, deed of trust, etc., can be redeemed. Usually set
by statute, and after judicial foreclosure.
- Refinance
- (1) The renewing of an existing
loan with the same borrower and lender. (2) A loan on the same
property by either the same lender or borrower. (3) The selling
of loans by the original lender.
- Reinstatement
- (1) Payment of a note, mortgage,
deed of trust, etc., to bring it from default to good standing.
(2) Restoring the previously used entitlement of a veteran to
enable the veteran to purchase property under a VA program. (Also
called Restoration of Eligibility).
- Reinsurance
- The transferring of a portion of
the liability to other insurers. Example: Insurer A insures for
$200,000, A insures for $100,000 and reinsures the "second"
$100,000 through B insurer, The "first" $100,000 is
called "primary liability."
- Renegotiable
Rate Mortgage
- A real property loan calling for
an adjustment in the interest rate at a given time. Example: A
loan with a 15 year amortization is adjusted to current interest
rates after 2 years. The lender agrees to make the adjusted loan
at the new rate as long as the old loan is not in default. The
Federal Reserve Board allows the original loan to be treated either
as a balloon payment loan or a variable rate loan. However, points
must be figured into the A.P.R. based on the time or renegotiation
(2 years rather than 15).
- Reservation
- (1) A right created and retained
by a grantor. The reservation may be temporary (such as a life
estate) or permanent (such as an easement running with the land).
(2) Public land reserved for a special purpose, such as an Indian
reservation.
- Restraint
of Alienation
- Restrictions placed against the
transfer (vesting) or sale of property. Certain restrictions are
allowed but must conform to the rule against perpetuities and
free right of an owner to sell. For example: Selling on the condition
that the grantee could resell only to members of a certain family
would be too restrictive and not valid.
- Right Of
Way
- A strip of land which is used as
a roadbed, either for a street or railway. The land is set aside
as an easement or in fee, either by agreement or condemnation.
May also be used to describe the right itself to pass over the
land of another.
BACK
TO TOP
- S
- Safety Clause
- A clause in a listing protecting
the broker from having buyer and seller wait until the listing
expires to make a deal, thereby avoiding the payment of commission.
The clause states that if the property is sold during a specified
period after the expiration of the listing (or any extension thereof)
to a buyer provided during the listing period by the broker, the
commission shall be paid.
- Savings And
Loan Association
- Originally an association chartered
to hold savings and make real estate loans. Federally insured
and regulated. Active in long term financing rather than construction
loans. Recent changes in federal controls have enabled these associations
to offer checking accounts, consumer loans, and other services
traditionally offered by banks.
- Secondary
Financing
- A loan secured by a mortgage or
trust deed, which lien is junior (secondary) to another mortgage
or trust deed.
- Secondary
Mortgage Market
- The buying and selling of first
mortgages of trust deeds by banks, insurance companies, government
agencies, and other mortgagees. This enables lenders to keep an
adequate supply of money for new loans. The mortgages may be sold
at full value (par) or above, but are usually sold at discount.
The secondary mortgage market should not be confused with second
mortgage.
- Second Mortgage
- A mortgage which ranks after a first
mortgage in priority. Properties may have two, three, or more
Mortgages, deeds of trust, or land contracts, as liens at the
same time. Legal priority would determine whether they are called
a first, second, third, etc. lien.
- Sequestration,
Writ Of
- The taking custody of one's property
(real or personal) to force compliance with a court order.
- Shared Appreciation
- The gaining or retaining of equity
in a property by someone other than the buyer. For example: the
seller retains a 25% interest in the property. This makes the
buyer responsible for only 75% of the purchase price and, therefore,
lowers the necessary financing by 25%. This obviously makes the
property more affordable. By agreement, expenses are shared as
well as any increase in value when the property is sold. Statement
of Information (SI): A confidential information statement completed
by the buyer, seller and borrower in every transaction where a
policy or policies of title insurance are requested. Allows the
title company to competently search documents affecting the property
to be insured, documents which may not refer to said property.
Allows title companies to differentiate between parties with similar
names when searching matters such as liens and court decrees.
- "Subject
To" Clause
- A clause in a deed, stating that
the grantee takes title "subject to" an existing mortgage.
The original mortgagor is alone responsible for any deficiency,
should there be foreclosure of the mortgage. Differs from an "assumption"
clause, whereby the grantee "assumes" and agrees to
pay the existing mortgage.
- Surface Rights
- The rights (easements) to use the
surface of land, including the right to drill or mine through
the surface when subsurface rights are involved.
- Sweat Equity
- A program which allows a purchaser
to do work on the property in place of all or part of the down
payment and other costs of purchase.
- Subordination
Agreement
- An agreement under which a prior
or superior lien is made inferior or subject to an otherwise junior
lien.
- Survey
- The measurement of the boundaries
of a parcel of land, its area, and sometimes its topography.
- Syndicate
- An association of individuals, formed
for the purpose of carrying on some particular business venture
in which the members are mutually interested.
BACK
TO TOP
- T
- Tacking
- (1) Annexing a lien to one superior
to it in order to gain the priority of the superior lien and defeat
an intermediate lien. Generally not allowed. (2) Annexing periods
of possession to add up to enough time for successful adverse
possession. For example; A begins adverse possession, A dies and
A's son takes up possession, adding A's time to his own. Not always
allowed.
- Take Out Commitment
- Agreement by a lender to place a
long term (take out) loan on real property after completion of
construction.
- Tax Base
- The assessed valuation of real property,
which is multiplied by the tax rate to determine the amount of
tax due.
- Tax Deed
- (1) Deed from tax collector to governmental
body after a period of non-payment of taxes according to statute.
(2) Deed to a purchaser at a public sale of land taken for delinquent
taxes. The purchaser receives only such title as the former owners
had and strict procedures must be followed to prevent attachment
of prior liens.
- Tax Lien
- A statutory lien imposed against
real property for nonpayment of taxes.
- Tenancy In
Common
- An undivided ownership in real estate
by two or more persons. The interests need not be equal. and,
in the event of the death of one of the owners, no right of survivorship
in the other owners exists.
- Tenant At Will
- One who holds possession of premises
by permission of the owner or landlord, but without agreement
for a fixed term of possession.
- Terra Cotta Lumber
- Very porous earthenware which can
hold a nail and be cut without breaking or shattering.
- Title Plant
- The information warehouse of a fide
company in which it has accumulated and is constantly updating
the records of properties in its area which it can use to search
title to real property.
- Time Sharing
- A concept of ownership increasing
in popularity as real estate prices rise. The purchase of an undivided
interest (usually in a resort area condominium) for a fixed or
variable time period. For example: Fifty-two different purchasers
buy one condominium: each agrees to possession for one week per
year. Costs (taxes, insurance, maintenance, etc.) are shared equally.
Possession may be fixed, or by reservation, by lease, license,
etc. Some developers provide several projects in different parts
of the world, so that a person owning one week in a project in
Hawaii could elect to spend that week in a connected project in
France or other area.
- Ton
- (1) A measure of weight; two thousand
pounds. (2) A measure of capacity of an air conditioner. One ton
equally twelve thousand British thermal units (B.T.U.'s).
- Townhouse
- Originally a house in a city as
opposed to a country estate. More recently the term is applied
to certain types of row houses, whether planned unit developments
or condominiums.
- Transfer Tax
- State tax on the transfer of real
property. Based on purchase price or money changing hands. Check
statutes for each state. Also called documentary transfer tax.
- Treasury Bills
- Interest bearing U.S. Government
obligations sold at a weekly sale. The change in interest rates
paid on these obligations is frequently used as the Rate Index
of Adjustable Mortgage Loans.
- Trustee
- A person who holds title in trust
for the benefit of another. In a deed of trust, the trustee is
the person named to hold title in trust for the benefit of the
lender until the loan is paid off.
- Trustee
In Bankruptcy
- One appointed by a bankruptcy court,
and in whom the property of the bankrupt vests. The trustee holds
the property in trust, not for the bankrupt, but for the creditors.
- Trustor
- The borrower under a deed of trust.
One who deeds their property to a trustee as security for repayment
of a loan.
BACK
TO TOP
- U
- Unavoidable
Cause
- A cause which reasonable prudence
and care could not have prevented, such as death, illness, papers
lost in the mail, etc.
- Underlying
Financing
- A mortgage, deed of trust, etc.,
prior to (underlying) a land contract, mortgage, etc , on the
same property.
- Undisclosed
Principal
- A principal whose identity is not
revealed by an agent.
- Uniform Laws
- Laws approved by the National Conference
of Commissioners on Uniform State Laws. Many have been adopted
in one or more states. Among these are the Uniform Commercial
Code, Uniform Negotiable Instruments Act, Uniform Partnership
Act, Uniform Residential Landlord and Tenant Act, etc.
- Uniform
Settlement Statement
- The Standard HUD Form 1 required
to be given to the borrower, lender and seller at, or prior to,
settlement.
- Unilateral
Contract
- A contract under which one party
expressly makes a promise, the other party, although making no
reciprocal promise, may be obligated by law or may have already
given consideration.
- Unity Of Possession
- In joint tenancy, the joint tenants
must have equal rights to posesion.
- Unmarketable
Title
- Title which contains defects that
would allow a purchaser to be released from his obligation to
purchase.
- Unrecorded
Instrument
- A deed, mortgage, etc., which is
not recorded in the county recorder's office and, therefore, not
protected under recording statutes. Valid between the parties
involved, but not against innocent third parties.
- Useful Life
- (1) In appraisal for sale purposes,
the true economic value of a building in terms of years of use
to the owner. (2) For tax purposes, the life set for depreciation.
At any time during that period, a new life could begin for a new
owner.
BACK
TO TOP
- V
- Vacancy Factor
- The estimated percentage of vacancies
in a rental project. May be based on past records of the property,
or a professional guess if a new project. Surrounding area buildings,
it similar, may be used for comparison.
- Variable Interest
Rate
- An interest rate which fluctuates
as the prevailing rate moves up or down. In mortgages there are
usually maximums as to the frequency and amount of fluctuation.
Also called "flexible interest rate."
- Veneered Construction
- The placing of a facing material
over the external surface of a structure.
- Venue
- (1) The county (or other geographical
division) in which an action or prosecution is brought for trial
and which is to furnish the panel of jurors. (2) The county in
which an acknowledgement (notorization) is made.
- Vesting
- Denotes the manner in which title
is held. Examples of common vestings are: Community Property,
Joint Tenancy and Tenancy in Common.
- Vital Statistics
- Data regarding births, deaths, marriages,
health records, etc., and usually kept by a governmental bureau.
Federally, the Bureau of Vital Statistics.
- Volt
- A term in electronics, being the
force necessary to cause one ampere to flow through a conductor
with a resistance of one ohm. Common household current is 110
volts, with a 220 volt circuit used for some heavy appliances.
Industrial uses may require higher voltage.
- Voluntary
Lein
- A lien placed against real property
by the voluntary act of the owner. Most commonly, a mortgage or
deed of trust
BACK
TO TOP
- W
- Waive
- To knowingly abandon, relinquish,
or surrender a right, benefit, or claim.
- Wall Bearing Construction
- Weight of roofs and floors supported
entirely by the exterior walls, with no load-bearing partitions.
Posts and pillars are used at points where the span is too wide
for exterior wall support.
- Warranty
- A legal, binding, promise, given
at the time of a sale, whereby the seller gives the buyer certain
assurances as to the condition of the property being sold. Warranties
as to real property have taken on a lessor role with the increase
of the use of title insurance.
- Warranty
Deed
- A deed used in many states to convey
fee title to real property. Until the wide spread use of title
insurance, the warranties by the grantor were very important to
the grantee. When title insurance is purchased, the warranties
become less important as a practical means of recovery by the
grantee for defective title.
- Wasting Assets
- Assets which, by use or lapse of
time, are consumed or reduced in book value, irrespective of market
fluctuation. Includes oil, minerals, patent rights, franchises
for a fixed term, etc. Also called "diminishing assets",
"wasting property."
- Watt Hour
- The basis used to determine electric
bills. Example: A 100 watt light bulb means if the bulb burns
for one hour, it will use 100 watts of electricity.
- Weep Holes
- Small holes in a retaining wall
or other wall where it may be necessary to drain off excess water
to avoid pressure build-up.
- Wild Interest
- An interest of record which cannot
be traced in the chain of title. Frequently occurs when an incorrect
legal description appears on a document. An apparent wild interest
may occur if a woman who changes her name through marriage after
acquiring property, sells the property using her married name
only.
- Without Recourse
- A finance term. A mortgage or deed
of trust securing a note without recourse allows the lender to
look only to the security (property) for repayment in the event
of default, and not personally to the borrower.
- Working Drawing
- Drawing used by workman in construction.
Shows all structural detail such as electric, plumbing, partitions,
etc.
- Wrap-Around
Mortgage
- A second or junior mortgage with
a face value of both the amount it secures and the balance due
under the first mortgage. The mortgagee under the wrap-around
collects a payment based on its face value and then pays the first
mortgagee. It is most effective when the first has a lower interest
rate than the second, since the mortgagee under the wrap-around
gains the difference between the interest rates, or the mortgagor
under the wrap-around may obtain a lower rate then if refinancing.
- Wrought Iron
- An easily molded form of iron used
for decorative railings, gates, furniture, etc. The term is loosely
used to describe steel or aluminum used in the same manner.
BACK
TO TOP
- Y
- Yacht Basin
- A system of docks and channels used
for the keeping of yachts and similar boats.
- Yard
- (1) A measure of 36". (2) The
area between the building and property line of a residential property
(back yard, side yard, front yard). (3) An enclosure, in or out
of a building, used for a business purpose (lumber yard, etc.)
- Yard Lumber
- Lumber generally found in a lumber
yard, that is, lumber graded for general building purposes.
- Yield
- Ratio of income from an investment
to the total cost of the investment over a given period of time.
BACK
TO TOP
- Z
- Zero Lot Line
- The construction of a building on
any of the boundary lines of a lot. Usually built on the front
line such as a store built to the sidewalk.
- Zero Side
Yard
- The building of a subdivision with
each house built on a side boundary line. This gives more usable
yard space on narrow lots. An easement for maintenance is given
over a portion of the lot adjoining each house.
- Zone
- (1) An area of a county or city
in which the use of the land is restricted by law (zoning ordinance).
(2) An area designated by a number for the delivery of mail. Zip
codes incorporate the zones.
|
|
