Glossary of Terms




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A|B|C|D|E|F|G|H|I|J|L|M|N|O|P|Q|R|S|T|U|V|W|Z

Abstract of title: The condensed history of a title to a particular parcel of real estate, consisting of a summary of the original grant and all subsequent conveyances and encumbrances affecting the property and a certification by the abstractor that the history is complete and accurate.

Acceleration Clause: The clause in a mortgage or deed of trust that can be enforced to make the entire debt due immediately if the borrower defaults on an installment payment or other covenant.

Accrued items: On a closing statement, items of expense that are incurred but not yet payable, such as interest on a mortgage loan, or taxes on real property.

Acre: A measure of land equal to 43,560 square feet or 4,840 square yards, or 4,047 square meters or 160 square rods or 0.4047 hectares.

Actual eviction: The legal process that results in the tenant being physically removed from the leased premises.

Adjustable rate mortgage: (ARM) A loan characterized by a fluctuating interest rate, usually one tied to a bank or saving and loan association cost of funds index.

Ad valorem tax: A tax levied according to value.

Adverse possession: The actual, open, notorious, hostile and continuous possession of another’s land under a claim of title. Possession for a statutory period may be a means of acquiring title.

Affidavit of title: A written statement made under oath by a seller or grantor of real property and acknowledged by a notary public, in which the grantor identifies himself or herself, certifies that since the examination of title on the date of the contracts no defects have occurred in the title and, certifies that he/she is in possession of the property.

Agency: The relationship between a principal and an agent wherein the agent is authorized to represent the principal in certain transactions.

Agent: One who acts or has the power to act for another. A fiduciary relationship is created under the law of agency when a property owner as the principal executes a listing agreement or management contract authorizing a licensed real estate broker to be his/her agent.

Air-lot: A designated airspace over a piece of land. An air-lot, like surface property, may be transferred.

Air-rights: The right to use the open space above a property, usually allowing the surface to be used for another purpose.

Alienation: The act of transferring property to another. Alienation may be voluntary, such as by a gift or sale, or involuntary, as through eminent domain or adverse possession.

Amortized loan: A loan in which the principal as well as the interest is payable in monthly or periodic installments over the term of the loan.

Annual percentage rate: The relationship of the total finance charges associated with a loan. This must be disclosed to borrowers b lenders udder the Truth-in-Lending Act.

Appraisal: An estimate of the quantity, quality or value of something. The process through which conclusions of property value are obtained. Also refers to the report that sets forth the process of estimation and conclusion of value.

Appreciation: An increase in the worth of value of a property due to economic or related causes, which may prove to be either temporary or permanent. Opposite of depreciation.

Appurtenance: A right, privilege or improvement belonging to, and passing with, the land.

Appurtenant easement: An easement that is annexed to the ownership of one parcel and allows the owner the use of the neighbor’s land.

Assemblage: The combining of two or more adjoining lots into one larger tract to increase their total value.

Assessment: The imposition of a tax, charge or levy, usually according to established rates.

Assignment: The transfer in writing of interest in a bond, mortgage, lease or other instrument.

Assumption of mortgage: Acquiring title to property on which there is an existing mortgage and agreement to be personally liable for the terms and conditions of the mortgage, including payments.

Attachment: The act of taking a person’s property into legal custody by writ or other judicial order to hold it available for application to that person’s debt to a creditor.

Attorneys opinion of title: An abstract of title that an attorney has examined and has certified to be, in his or her opinion, an accurate statement of the facts concerning the property ownership.

Avulsion: The sudden tearing away of land, as by earthquake, flood, volcanic action, or the sudden change in the course of a stream.

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Balloon payment: A final payment of a mortgage loan that is considerably larger than the required periodic payments because the loan amount was not fully amortized.

Bench mark: A permanent reference mark or point established for use by surveyors in measuring differences in elevation.

Binder: An agreement that may accompany an earnest money deposit for the purchase of real property as evidence of the purchaser’s good faith and intent to complete the transaction.

Blanket loan: A mortgage covering more than one parcel of real estate, providing for each parcel’s partial release from the mortgage lien upon repayment of a definite portion of the debt.

Breach of contract: Violation of any terms or conditions in a contract without legal excuse; for example, failure to make a payment when it is due.

Broker: One who acts as an intermediary on behalf of others for a fee or commission.

Brokerage: The bringing together of parties interested in making a real estate transaction.

Buffer Zone: A strip of land, usually used as a park or designated for a similar use, separating land dedicated to one use from land dedicated to another use. (e.g. residential from commercial)

Building code: An ordinance that specifies minimum standards of construction for buildings to protect public safety and health.

Building permit: Written governmental permission for the construction, alteration or demolition of an improvement, showing compliance with building codes and zoning ordinances.

Buyer-agency agreement: A principal-agent relationship in which the broker is the agent for the buyer, with fiduciary responsibilities to the buyer. The broker represents the buyer under the law of agency.

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Capital gain: Profit earned from the sale of an asset.

Caveat emptor: A Latin phrase meaning "Let the buyer beware"

Certificate of title: A statement of opinion on the status of the title to a parcel of real property based on an examination of specified public records.

Chain of title: The succession of conveyances, from some accepted starting point, whereby the present holder of real property derives title.

Closing statement: A detailed cash accounting of a real estate transaction showing all cash received, all charges and credits made and all cash paid out in the transaction.

Cloud on title: Any document, claim, unreleased lien or encumbrance that may impair the title to real property or make the title doubtful; usually revealed by a title search and removed by either a quitclaim deed or suit to quiet title.

Clustering: The grouping of home sites within a subdivision on smaller lots than normal with the remaining land used as common areas.

Commingling: The illegal act by a real estate broker of placing client or customer funds with personal funds. By law, brokers are required to maintain a separate trust or escrow account for other parties funds held temporarily by the broker.

Commission: Payment to the broker for services rendered, such as in the sale or purchase of real property; usually a percentage of the selling price.

Common elements: Parts of a property that are necessary or convenient to the existence, maintenance and safety of a condominium or are normally in common use by all of the condominium residents. Each condominium owner has an undivided ownership interest in the common elements.

Comparables: Properties used in an appraisal report that are substantially equivalent to the subject property.

Competitive market analysis,(CMA) A comparison of the prices of recently sold homes that are similar to a listing seller’s home in terms of location, style and amenities.

Condemnation: A judicial or administrative proceeding to exercise the power of eminent domain, through which a government agency takes private property for public use and compensates the owner.

Condominium: The absolute ownership of a unit in a multiunit building based on a legal description of the airspace the unit actually occupies, plus an undivided interest in the ownership of the common elements, which are owned jointly with the other condominium unit owners.

Consideration: That received by the grantor in exchange for his or her deed. Something of value that induces a person to enter into a contract.

Constructive eviction: Actions of a landlord that so materially disturb or impair a tenant’s enjoyment of the leased premises that the tenant is effectively forced to move out and terminate the lease without liability for any further rent.

Contingency: A provision in a contract that requires a certain act to be done or a certain event to occur before the contract becomes binding.

Contract: A legal enforceable promise or set of promises that must be performed and for which, if a breach of the promise occurs, the law provides a remedy. A contract may be either unilateral, by which only one party is bound to act, or bilateral by which all parties to the instrument are legally bound to act as prescribed.

Conventional loan: A loan that requires no insurance or guarantee.

Conveyance: A term used to refer to any document that transfers title to real property. The term is also used in describing the act of transferring.

Counteroffer: A new offer made in response to an offer received. It has the effect of rejecting the original offer, which cannot be accepted thereafter unless revived by the offeror.

Covenant: A written agreement between two or more parties in which a party or parties pledge to perform or not perform specified acts with regard to property: usually found in such real estate documents as deeds, mortgages, leases and contracts for deeds.

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Deed: A written instrument that, when executed and delivered, conveys title to or an interest in real estate.

Deed in lieu of foreclosure: A deed given by the mortgagor to the mortgagee when the mortgagor is in default under the terms of the mortgage. This is a way for the mortgagor to avoid foreclosure.

Deed in trust: An instrument that grants a trustee under a land trust full power to sell, mortgage and subdivide a parcel of real estate. The beneficiary controls the trustee’s use of these powers under the provisions of the trust agreement.

Deed restrictions: Clauses in a deed limiting the future use of the property. Deed restrictions may impose a vast variety of limitations and conditions. For example, they may limit the density of buildings, dictate the types of structure that can be erected or prevent buildings from being used for specific purposes or even from being used at all.

Default: The nonperformance of a duty, whether arising under a contract or otherwise; failure to meet an obligation when due.

Deficiency judgment: A personal judgment levied against the borrower when a foreclosure sale does not produce sufficient funds to pay the mortgage debt in full.

Developer: One who attempts to put land to its most profitable use through the construction of improvements.

Discount point: A unit of measurement used for various loan charges; one point equals 1 percent of the amount of the loan.

Dower: The legal right or interest, recognized in some states, that a wife acquires in the property of her husband held or acquired during their marriage. During the husbands lifetime the right is only a possibility of an interest; upon his death it can become an interest in land.

Dual agency: Representing both parties to a transaction. This is unethical unless both parties agree to it, and it is illegal in many states.

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Earnest money: Money deposited by a buyer under the terms of a contract, to be forfeited if the buyer defaults but applied to the purchase price if the sale is closed.

Easement: A right to use the land of another for a specific purpose, such as for a right-of-way or utilities; an incorporeal interest in land.

Eminent domain: The right of a government or municipal quasi public body to acquire property for public use through a court action called condemnation, in which the court decides that the use is a public use and determines the compensation to be paid to the owner.

Encroachment: A building or some portion of it-a wall or fence for instance that extends beyond the land of the owner and illegally intrudes on some land of an adjoining owner or a street or alley.

Encumbrance: Anything such as a mortgage, tax, or judgment lien, an easement, a restriction on the use of the land or an outstanding dower right that may diminish the value or use and enjoyment of the property.

Equity: The interest or value that an owner has in property over and above any indebtedness.

Erosion: The gradual wearing away of land by water, wind and general weather conditions ; the diminishment of property by the elements.

Escheat: The reversion of property to the state or county, as provided by state law, in cases where a decedent dies in testate (without a will) without heirs capable of inheriting, or when the property is abandoned.

Escrow: The closing of a transaction through a third party called a escrow agent or escrowee, who receives certain funds and documents to be delivered upon the performance of certain conditions outlined in the escrow instructions.

Escrow account: The trust account established by a broker under the provisions of the license law for the purpose of holding funds on behalf of the broker’s principal or some other person until the consummation or termination of a transaction.

Estate at Will: An estate that gives the lessee the right to possession until the estate is terminated by either party; the term of this estate is indefinite.

Estate for Years: An interest for a certain, exact period of time in a property leased for a specified consideration.

Estate from period to period: An interest in leased property that continues from period to period-week to week, month to month or year to year.

Estate taxes: Federal taxes on a decedent’s real and personal property.

Estoppel: Method of creating an agency relationship in which someone states incorrectly that another person is his or her agent, and a third person relies on that representation.

Estoppel certificate: A document in which a borrower certifies the amount owed on a mortgage loan and the rate of interest.

Eviction: A legal process to oust a person from possession of real estate.

Evidence of title: Proof of ownership of property; commonly a certificate of title, an abstract of title with lawyer’s opinion, title insurance or a Torrens registration certificate.

Executed contract: A contract in which all parties have fulfilled their promises and thus performed the contract.

Executory contract: A contract under which something remains to be done by one or more of the parties.

Express agreement: An oral or written contract in which the parties state the contract terms and express their intentions is words.

External depreciation: Reduction in a property’s value caused by outside factors.

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Fair Housing Act: The federal law that prohibits discrimination in housing based on race, color, religion, sex, handicap, familial status and national origin.

Fee simple absolute: The maximum possible estate or right of ownership of real property, continuing forever.

FHA loan: A loan insured by the Federal Housing Administration and made by an approved lender in accordance with the FHA regulations.

Fiduciary: One in whom trust and confidence is placed; a reference to a broker employed under the terms of a listing contract or buyer agency agreement.

Fiduciary relationship: A relationship of trust and confidence, as between trustee and beneficiary, attorney and client or principal and agent.

Fixture: An item of personal property that has been converted to real property by being permanently affixed to the realty.

Foreclosure: A legal procedure whereby property used as security for a debt is sold to satisfy the debt in the event of default in payment of the mortgage note or default of other terms in the mortgage document.

Freehold estate: An estate in land which ownership is for an indeterminable length of time, in contrast to a leasehold estate.

Functional obsolescence: A loss of value to an improvement to real estate arising from functional problems, often caused by age or poor design.

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General lien: The right of a creditor to have all of a debtors property-both real and personal- sold to satisfy a debt.

General warranty deed: A deed in which the grantor fully warrants good clear title to the premises. Used in most real estate deed transfers, a general warranty deed offers the greatest protection of any deed.

Graduated payment mortgage: A loan in which the monthly principal and interest payments increase by a certain percentage each year for a certain number of years and then level off for the remaining loan term.

Grantee: A person who receives a conveyance of real estate from a grantor.

Grantor: The person transferring title to or an interest in real property to a grantee.

Gross income multiplier: A figure used as a multiplier of the gross annual income of a property to produce an estimate of the property’s value.

Gross lease: A lease of property according to which a landlord pays all property charges regularly incurred through ownership, such as repairs, taxes, insurance and operating expenses. Most residential leases are gross leases.

Growing equity mortgage: A loan in which the monthly payments increase annually, with the increased amount being used to reduce directly the principle balance outstanding and this shorten the term of the loan.

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Highest and best use: The possible use of a property that would produce the greatest net income and thereby develop the highest value.

Holdover tenancy: A tenancy whereby a lessee retains possession of leased property after the lease has expired and the landlord, by continuing to accept rent, agrees to the tenant’s continued occupancy as defined by state law.

Home equity loan: A loan under which a property owner uses his or her residence as collateral and can then draw funds up to a prearranged amount against the property.

Homeowners insurance policy: A standardized package insurance policy that covers a residential real estate owner against financial loss from fire, theft, public liability and other common risks.

Hypothecate: To pledge property as security for an obligation or loan without giving up

possession of the property.

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Implied agreement: A contract under which the agreement of the parties is demonstrated by their acts and conduct.

Income approach: The process of estimating the value of an income-producing property through capitalization of the annual net income expected to be produced by the property during its remaining useful life.

Inflation: The gradual reduction of the purchasing power of the dollar, usually related directly to the increase in the money supply by the federal government.

Inheritance taxes: State imposed taxes on a decedents real and personal property.

Installment contract: A contract for the sale of real estate whereby the purchase price is paid in periodic installments by the purchaser, who is in possession of the property even though title is retained by the seller until a future date, which may be not until final payment.

Interim financing: A short term loan usually made during the construction phase of a building project.

Intrinsic value: An appraisal term referring to the value created by a persons personal preferences for a particular type of property.

Involuntary lien: A lien placed on property without the consent of the property owner.

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Joint tenancy: Ownership of real estate between two or more parties who have been named in one conveyance as joint tenants. Upon the death of a joint tenant, the decedent’s interest passes to the surviving joint tenant or tenants by the right of survivorship.

Junior lien: An obligation, such as a second mortgage, that is subordinate in right or lien priority to an existing lien on the same property.

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Lease: A written or oral contract between a landlord and a tenant that transfers the right to exclusive possession and use of the landlord’s real property to the lessee for a specified period of time and for a stated consideration (rent). By state law, leases for longer than a certain period of time ( generally one year) must be in writing to be enforceable.

Lease option: A lease under which the tenant has the right to purchase the property either during the lease term or at its end.

Legal description: A description of a specified parcel of real estate complete enough for an independent surveyor to locate and identify it.

Levy: To assess; to seize or collect. To levy a tax is to assess a property and set the rate of taxation. To levy an execution is to officially seize the property of a person in order to satisfy an obligation.

Lien: A right given by law to certain creditors to have their debts paid out of the property of a defaulting debtor, usually by means of a court sale.

Life estate: An interest in real or personal property that is limited in duration to the lifetime of its owner or some other designated person or persons.

Liquidated damages: An amount predetermined by the parties to a contract as the total compensation to an injured party should the other party breach the contract.

Lis pendens: A recorded legal document giving constructive notice that an action affecting a particular property has been filed in either a state or a federal court.

Listing agreement: A contract between an owner and a real estate broker by which the broker is employed as agent to find a buyer for the owner’s real estate on the owner’s terms, for which service the owner agrees to pay a commission.

Listing broker: The broker in a multiple-listing situation from whose office a listing agreement is initiated, as opposed to the cooperating broker, from whose office negotiations leading up to a sale are initiated. The listing broker and the cooperating broker may be the same person.

Littoral rights: A landowners claim to sue water in large navigable lakes and oceans adjacent to his or her property. The ownership rights to land bordering these bodies of water up to the high-water mark.

Loan origination fee: A fee charged to the borrower by the lender for making a mortgage loan. The fee is usually computed as a percentage of the loan amount.

Loan-to-value ratio: The relationship between the amount of the mortgage loan and the value of the real estate being pledged as collateral.

Lot-and-block: A method of describing real property that identifies a parcel of land by reference to lot and block numbers within a subdivision, as specified on a recorded subdivision plat.

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Management agreement: A contract between the owner of income property and a management firm or individual property manager that outlines the scope of the manager’s authority.

Marketable title: Good or clear title, reasonably free from the risk of litigation over possible defects.

Market value: The most probable price property would bring in an arm’s-length transaction under normal conditions on the open market.

Mechanics lien: A statutory lien created in favor of contractors, laborers and material men who have performed work or furnished material’s in the erection or repair of a building.

Month-to-month tenancy: A periodic tenancy under which the tenant rents for one month at a time. In the absence of a rental agreement (oral or written) a tenancy is generally considered to be month to month.

Mortgage: A conditional transfer or pledge of real estate as security for the payment of a debt. Also, the document creating a mortgage lien.

Mortgage banker: Mortgage loan companies that originate, service and sell loans to investors.

Mortgage broker: An agent of a lender who brings the lender and borrower together. The broker receives a fee for this service.

Mortgagee: A lender in a mortgage loan transaction.

Mortgagor: A borrower in a mortgage loan transaction.

Multiple-listing clause: A provision in an exclusive listing for the authority and obligation on the part of the listing broker to distribute the listing to other brokers in the multiple listing organization.

Multiple listing service: (MLS) A marketing organization composed of member brokers who agree to share their listings agreements with one another in the hope of procuring ready, willing and able buyers for their properties more quickly then they could do on their own. Most multiple listing services accept exclusive-right-to-sell or exclusive agency listings from their member brokers.

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Net listing: A listing based on the net price the seller will receive if the property is sold. Under a net listing the broker can offer the property for sale at the highest price obtainable to increase the commission. This type of listing is illegal in many states.(Illegal in the State of New Hampshire)

Nonconforming use: A use of a property that is permitted to continue after a zoning ordinance prohibiting it has been established for the area.

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Obsolescence: The loss of value due to factors that are outmoded or less useful. Obsolescence may be functional or economic.

Occupancy permit: A permit issued by the appropriate local governing body to establish that the property is suitable for habitation by meeting certain safety and health standards.

Offer and acceptance: Two essential components of a valid contract; a "meeting of the minds".

Open-end loan: A mortgage loan that is expandable by increments up to a maximum dollar amount, the full loan being secured by the same original mortgage.

Open listing: A listing contract under which the broker’s commission is contingent upon the broker producing a ready, willing and able buyer before the property is sold by the seller or another broker.

Option: An agreement to keep open for a set period an offer to sell or purchase property.

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Package loan: A real estate loan used to finance the purchase of both real and personal property, such as the purchase of a new home that includes carpeting, window coverings and major appliances.

Partition: The division of co-tenants’ interest in real property when the parties do not all voluntarily agree to terminate the co-ownership; takes place through court procedures.

Party wall: A wall that is located on or at a boundary line between two adjoining parcels of land that is used or is intended to be used by the owners of both properties.

Payment cap: The limit on the amount the monthly payment can be increased on an adjustable-rate mortgage when the interest rate is adjusted.

Percentage lease: A lease, commonly used for commercial property, whose rental is based on the tenants gross sales at the premises; it usually stipulates a base monthly rental plus a percentage on any gross sales above a certain amount.

Percolation test: A test of the soil to determine if it will absorb and drain water adequately to use a septic system for sewage disposal.

Personal property: Items, called chattels, that do not fit into the definition of real property; moveable items.

Physical deterioration: A reduction in a property’s value resulting from a decline in physical condition; can be caused by action of the elements or by ordinary wear and tear.

Planned unit development: (PUD) A planned combination of diverse land uses, such as housing, recreation and shopping, in one contained development or subdivision.

Prepaid items: On a closing statement, items that have been paid in advance by the seller, such as insurance premiums, an some real estate taxes, for which he or she must be reimbursed by the buyer.

Prepayment penalty: A charge imposed on a borrower who pays off the loan principal early. This penalty compensates the lender for interest and other charges that would otherwise be lost.

Primary mortgage market: The mortgage market in which loans are originated and consisting of lenders such as commercial banks, savings and loan associations and mutual savings banks.

Private mortgage insurance: Insurance provided by private carrier that protects a lender against a loss in the event of a foreclosure and deficiency.

Procuring cause: The effort that brings about the desired result. Under an open listing the broker who is the procuring cause of the sale receives the commission.

Progression: An appraisal principle that states that, between dissimilar properties the value of the lesser property is favorably affected by the presence of the better quality property.

Promissory note: A financing instrument that states the terms of the underlying obligation, is signed by its maker and is negotiable (transferable to a third party).

Prorations: Expenses, either prepaid or paid in arrears, that are divided or distributed between buyer and seller at the closing.

Puffing: Exaggerated or superlative comments or opinions.

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Quiet title: A court action to remove a cloud on the title.

Quitclaim deed: A conveyance by which the grantor transfers whatever interest he or she has in the real estate, without warranties or obligations.

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Rate cap: The limit on the amount the interest rate can be increased at each adjustment period in an adjustable-rate loan. The cap may also set the maximum interest rate that can be charged during the life of the loan.

Ready, Willing and Able Buyer: One who is prepared to buy property on the seller’s terms and is ready to take positive steps to consummate the transaction.

Real Estate: Land; a portion of the earth’s surface extending downward to the center of the earth and upward infinitely into space, including all things permanently attached to it, whether naturally or artificially.

Real estate license law: State law enacted to protect the public from fraud, dishonesty and incompetence in the purchase and sale of real estate.

Real Estate Settlement Procedures Act: (RESPA) The federal law that requires certain disclosures to consumers about mortgage loan settlements. The law also prohibits the payment or receipt of kickbacks and certain kinds of referral fees.

Real property: The interests, benefits and rights inherent in real estate ownership.

Realtor: A registered trademark term reserved for the sole use of active members of local Realtor boards affiliated with the National Association of Realtors.

Recording: The act of entering or recording documents affecting or conveying interest in real estate in the recorder’s office established in each county. Until it is recorded, a deed or mortgage ordinarily is not effective against subsequent purchasers or mortgagees.

Redemption: The right of a defaulted property owner to recover his or her property by curing the default.

Redlining: the illegal practice of a lending institution denying loans or restricting their number for certain areas of a community.

Regression: An appraisal principal that states that, between dissimilar properties, the value of the better quality property is adversely affected by the presence of the lesser-quality property.

Regulation Z: Implements the Truth-in-Lending Act requiring credit institutions to inform borrowers of the true cost of obtaining credit.

Replacement cost: The construction cost at current prices of a property that is not necessarily an exact duplicate of the subject property but serves the same purpose or function as the original.

Resolution Trust Corporation: The organization created by FIRREA to liquidate the assets of failed savings and loan associations.

Restrictive covenants: A clause in a deed that limits the way the real estate ownership may be used.

Reverse-annuity mortgage: (RAM) A loan under which the homeowner receives monthly payments based on his or her accumulated equity rather than a lump sum. The loan must be repaid at a prearranged date or upon the death of the owner or the sale of the property.

Right-of-way: The right given by one landowner to another to pass over the land, construct a roadway or use as a pathway, without actually transferring ownership.

Riparian rights: An owner’s rights in land that borders on or includes a stream, river or lake. These rights include access to and use of the water.

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Sale and leaseback: A transaction in which an owner sells his or her improved property and, as part of the same transaction, signs a long term lease to remain in possession of the premises.

Sales comparison approach: The process of estimating the value of a property by examining and comparing actual sales of comparable properties.

Salesperson: A person who performs real estate activities while employed by or associated with a licensed real estate broker.

Satisfaction of mortgage: A document acknowledging payment of a mortgage debt.

Secondary mortgage market: A market for the purchase and sale of existing mortgages, designed to provide greater liquidity for mortgages; also called the secondary money market. Mortgages are first originated in the primary mortgage market.

Security deposit: A payment by a tenant, held by the landlord during the term of the lease and kept on default or destruction of the premises by the tenant.

Separate property: Under community property law, property solely by either spouse before the marriage, acquired by gift or inheritance after the marriage or purchased with separate funds after the marriage.

Setback: The amount of space local zoning regulations require between a lot line and a building line.

Severalty: Ownership of real property by one person only. Also called sole ownership.

Severance: Changing an item of real estate to personal property by detaching it from the land; for example, cutting down a tree.

Shared appreciation mortgage: (SAM) A mortgage loan in which the lender, in exchange

For a loan with favorable interest rate, participates in the profits the borrower receives when the property is eventually sold.

Special assessment: A tax or levy customarily imposed against only those specific parcels of real estate that will benefit for a proposed public improvement like a street or sewer.

Special warranty deed: A deed in which the grantor warrants, or guarantees, the title only against defects arising during the period of his or her tenure and ownership of the property and not against defects existing before that time, generally using the language, "by, through or under the grantor but not otherwise"

Specific lien: A lien affecting or attaching only to a certain, specific parcel of land or piece of property.

Specific performance: A legal action to compel a party to carry out the terms of a contract.

Statute of frauds: The part of a state law that requires certain instrument, such as deeds, real estate sales contracts and certain leases, to be in writing to be legally enforceable.

Statutory lien: A lien imposed on property by statute-a tax lien, for example-in contrast to an equitable lien, which arises out of common law.

Statutory redemption: The right of a defaulted property owner to recover the property after its sale by paying the appropriate fees and charges.

Steering: The illegal practice of channeling home seekers to particular areas, either to maintain the homogeneity of an area or to change the character of an area, which limits their choices of where they can live.

Straight-line-method: A method of calculating depreciation for tax purposes, computed by dividing the adjusted basis of a property by the estimated number of years of remaining useful life.

Subagent: One who is employed by a person already acting as an agent. Typically a reference to a salesperson licensed under a broker who is employed under the terms of a listing agreement.

Subdivision: A tract of land divided by the owner known as the subdivider, into blocks, building lots and streets according to a recorded subdivision plat, which must comply with local zoning ordinances and regulations.

Subletting: The leasing of premises by a lessee to a third party for part of the lessee’s remaining term.

Subordination: Relegation to a lesser position, usually in respect to a right of security.

Subordination agreement: A written agreement between holders of liens on a property that changes the priority of mortgage, judgment and other liens under certain circumstances.

Subrogation: The substitution of one creditor for another, with the substituted person succeeding to the legal rights and claims of the original claimant. Subrogation is used by title insurers to acquire from the injured party rights to sue in order to recover any claims they have paid.

Substitution: An appraisal principal that states that the maximum value of a property tends to be set by the cost of purchasing an equally desirable and valuable substitute property, assuming that no costly delay is encountered in making the substitution.

Subsurface rights: Ownership rights in a parcel of real estate to the water, minerals, gas, oil and so forth that lie beneath the surface of the property.

Suit for possession: A court suit initiated by a landlord to evict a tenant from leased premises after the tenant has breached one of the terms of the lease or has held possession of the property after the lease’s expiration.

Suit to quiet title: A court action intended to establish or settle the title to a particular property, especially when there is a cloud on the title.

Surface rights: Ownership rights in a parcel of real estate that are limited to the surface of the property and do not include the air above it or the minerals below the surface.

Survey: The process by which boundaries are measured and land areas are determined; the on-site measurement of lot lines, dimensions and position of a house on a lot, including the determination of any existing encroachments or easements.

T. (back to the top)

Tax deed: An instrument, similar to a certificate of sale, given to a purchaser at a tax sale.

Tax lien: A charge against property, created by operation of law. Tax liens and assessments take priority over all other liens.

Tax sale: A court-ordered sale of real property to raise money to cover delinquent taxes.

Tenancy by the entirety: The joint ownership, recognized in some states, of property acquired by husband and wife during marriage. Upon the death of one spouse the survivor become the owner of the property.

Tenancy in common: A form of co-ownership by which each owner holds an undivided interest in real property as if he or she were sole owner. Each individual owner has the right to partition. Unlike joint tenants, tenants in common have right of inheritance.

Tenant: One who holds or possesses lands or tenements by any kind of right or title.

Testate: Having made and left a valid will.

Time is of the essence: A phrase in a contract that requires the performance of a certain act within a stated period of time.

Time-share: A form of ownership interest that may include an estate interest in property and which allows use of the property for a fixed or variable time period.

Title: The right to or ownership of land. The evidence of ownership of land.

Title insurance: A policy insuring the owner or mortgagee against loss by reason of defects in the title to a parcel of real estate, other than encumbrances, defects and matters specifically excluded by the policy.

Title search: The examination of public records relating to real estate to determine the current state of ownership.

Township: The principal unit of the rectangular survey system. A township is a square with six-mile sides and an area of 36 square miles.

Trade fixture: An article installed by a tenant under the terms of a lease and removable by the tenant before the lease expires.

Transfer tax: Tax stamps required to be affixed to a deed by state and/or local law.

Trust: A fiduciary arrangement whereby property is conveyed to a person or institution, called a trustee, to be held and administered on behalf of another person, called a beneficiary. The one who conveys the trust is called the trustor.

Trust deed: An instrument used to create a mortgage lien by which the borrower conveys title to a trustee, who holds it as security for the benefit of the note holder (lender); also called a deed of trust.

Trustee: The holder of bare legal title in a deed of trust loan transaction.

Trustees deed: A deed executed by a trustee conveying land held in a trust.

Trustor: A borrower in a deed of trust loan transaction.

U. (back to the top)

Unenforceable contract: A contract that has all the elements of a valid contract, yet neither party can sue the other to force performance of it. For example, an unsigned contract is usually unenforceable.

Unilateral contract: A one-sided contract wherein one party makes a promise so as to induce a second party to do something. The second party is not legally bound to perform; however, if the second party does comply, the first party is obligated to keep the promise.

Unit of ownership: The four unities that are traditionally needed to create a joint tenancy-unity of title, time, interest and possession.

Usury: Charging interest at a higher rate than the maximum rate established by state law.

V. (back to the top)

Valid contract: A contract that complies with all the essentials of a contract and is binding and enforceable on all parties to it.

VA loan: A mortgage loan on approved property made to a qualified veteran by an authorized lender and guaranteed by the Department of Veteran Affairs in order to limit the lender’s possible loss.

Variance: permission obtained from zoning authorities to build a structure or conduct a use that is expressly prohibited by the current zoning laws; an exception from the zoning ordinances.

Vendee: A buyer under the terms of a land contract.

Vendor: A seller, usually under the terms of a land contract.

Voidable contract: A contract that seems to be valid on the surface but may be rejected or disaffirmed by one or both of the parties.

Void contract: A contract that has no legal force or effect because it does not meet the essential elements of a contract.

Voluntary lien: A lien placed on property with the knowledge and consent of the property owner.

W. (back to the top)

Will: A written document, properly witnessed, providing for the transfer of title to property owned by the deceased, called the testator.

Wraparound loan: A method of refinancing in which the new mortgage is placed in a secondary, or subordinate, position; the new mortgage includes both the unpaid principal balance of the first mortgage and whatever additional sums are advanced by the lender. In essence it is an additional mortgage in which another lender refinances a borrower by lending an amount over the existing first mortgage amount without disturbing the existence of the first mortgage.

Z. (back to the top)

Zoning ordinance: An exercise of police power by a municipality to regulate and control the character and use of property.

ABBREVIATIONS (back to the top)

Ac. Acre

Appl. Appliances

Assoc. Association

Assum. Assumable

Att. Attached

AutoOpen. Automatic garage door openers

BA. Bath

Bal. Balcony

Blt-in. Built-ins such as hutch etc.