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Home , Conditional sale, Defeasible estate, Hard money loan, Real estate business, Real estate owned, Rental value

REAL TERMINOLOGY A Course Companion for Studying for The Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course.

Estate M anagement. A ACCREDITED RESIDENT MANAGER (ARM An individual who has completed IREM s educational program for resident ma nagers o f residential . ABANDONMENT Failure to occupy and use p rope rty; may result in loss of rights. ACCELERATED COST RECOVERY SYSTEM (ACRS) The system fo r figur ing de prec iation (cos t reco very) for deprec iable ABATEMENT OF NUISANCE The act of ending or acquired and placed into service after January 1, terminating a nuisance; a type of legal ac tion brought to 1981 end a nuisance. ACCELERATED DEPRECIATION A m ethod of cost write-off in ABSENTEE OWNER A property holder who does not which depreciation allowances are greater in the first few years reside on the property and who usually relies on a of than in subsequent years. This permits an earlier property m anager to supervise the investment. recovery of capital and a faster write-off of an as set.

ABSOLUTE OWNERSHIP SEE: Estate ACCELERATION CLAUSE A clause in a of trust or mo rtgag e giving the lende r the right to call all s um s owing him ABSTRACT A brief sum ma ry. or her to be immediately due and payable upon the occurrence of a certain event. It is also a clause that perm its a debtor to ABSTRACTORS A person who, historically, searches pay off a loan before the due date. out anything affecting the to real property and summarizes the information in the findings. ACCEPTANCE 1. Agreeing to the terms of an offer to enter into a , thereby creating a binding contract. 2. Taking ABSTRACT OF JUDGMENT A summary of money judgme nt. Th e sum ma ry is usually prepared s o that it delivery of a deed. The act of agreeing or consenting to an may be recorded, thereby creating a (judgement) on offer. by the judgment debtor. ACCEPTANCE OF AN OFFER After acceptance of an offer, a ABSTRACT OF TITLE A sum mary of the instrum ents broker may not return the buyer s deposit without authorization affecting title to a parcel of real property as shown by the from the seller. An essential element of every contract, it is the public records. consent to be bound by the offer. In , it is the consent to accept a grant of real property. ABSTRACTION A method of valuing land. The indicated value of the improveme nt is deducted from the sale The acquisition of title to additional property by price. its annexation to real estate already owned . An addition to property through the efforts of man or by natural forces. ABSTRACTION METHOD Method of appraising vacant land; allocation of the appraised total value or ACCESS RIGHT The right of an owner to go into and sale price of the property between land and building out of his or her p rope rty. either on a ratio basis or by subtracting a figure representing building value or price from the total ACCOMMODATION PARTY A person who, without appraised value or price of the property. Also called receiving value, signs a promissory note to help another person Allocation Method. borrow money or get credit.

ACCELERATE To make a note all due and payable at ACCOMMODATOR An intermediary who holds funds in a one time. delayed exchange.

ACCREDITED MANAGEMENT ORGANIZATION ACCORD AND SATISFACTION An agreement to accept (AMO) A professional designation awarded to qualified something different than (and usually less than) what the firms by the institute of Real

PAGE 1 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. original contract called for. The discharge of an existing 4840 square yards, 43,560 square feet, or a tract about 208.71 contract by accepting the performance under a substitute feet square. contract. Generally, consideration under the new contract is different from and of lesser value than under ACT A statute the original contract, and satisfaction is the performance of that contract; the combination discharges the original ACTUAL AUTHORITY Authority expressly given by the contract. princ ipal or given by the an d not denie d by the principal.

ACCRETION A gradual addition to land from natural ACTUAL Forcible removal of a tenant from a causes; for example, from gradual action of ocean or property by an officer after a judgement decree of river waters. has been issued in favor of the owner.

ACCRUE To increase or accumulate; interest on loans ACTUAL FRAUD An act intended to deceive another, e.g., is said to accrue daily. making a false statement, making a promise without intending to perform it, suppressing the truth. ACCRUED DEPRECIATION The difference between the cost of replace ment of a new building, as of the date ACTUAL NOTICE An individual may be conscious of the of the appraisal and the present appraised value. circum stances in which the owner received title to the prop erty and is at the same time is aware that the owner has not Depreciation that has accumulated over a period of time. reco rded the deed nor is he in p ossession of the prope rty. (1) The difference between the cost of replacement new There is no constructive notice, only actual notice as to the as of the date of the appraisal and the present appraised owner of the prope rty. value. (2) The accumulated losses in value that has affected the im provem ents on real property. ADDENDUM An attachment to a purch ase agreem ent or to escrow instructions. Used to modify or make changes. ACCRUED ITEMS OF EXPENSE Those incurred expenses which are not yet payable. The seller s ADJACENT Located next to or near an object or parcel of accrued expenses are credited to the purchaser in a prop erty. statement

ADJOINING Located so as to touch an object or share a ACCUSATION A written statement of rules violated, common property line. used in a property right healing.

ADJUDICATION A judicial or court decision. ACKNOWLEDGMENT When a person who has signed a document formally declares to an authorized ADJUSTED COST BASIS The income tax cost basis of the public official (usually a notary public) that he or she property with certain additions, such as acquisition costs and signed vo luntarily. The official attests that the sign ature is the cost of improvements, and certain subtractions, such as voluntary and genuine. A formal declaration before a depreciation in value. notary public or qualified officer that the person signing the document is doing so voluntarily and using his or her ADJUSTMENT INTERV AL The time between permitted legal nam e and signature; called notarizing. changes in the interest rate or mo nthly paym ents, typically six months to one year, depending on the indexused. ACOUSTICAL TILE Blocks of fiber, mineral, or metal with small holes or a rough-textured surface to absorb ADJUSTMENTS In appraising , a means by which sound, used as covering for interior walls and ceilings. characteristics of a residential property are regulated by dollar amount of percentage to conform to similar characteristics of ACQUISITION The act or process by which a person another residential property. proc ures property. ADJUSTABLE-RATE-MORTGAGE A mortgage or deed of ACQUISITION COST Under FHA . A loan is based trust with a variable interest rate (an interest rate that changes on acquisition cost, which is sale price or FHA value, perio dically. This m ortgage tends to attract more people into whichever is lesser, plus nonrecurring closing costs the the mortgage mark et. buyer is paying per FH A rules. ADJUDICATIVE METHODS The resolution of a dispute by ACRE A measure of land equaling 160 square rods, mirroring the judicial process in that a third party decides the

PAGE 2 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. controversy much as a judge does in court. ADVANCE FEE AGREEMENTS. For DRE approval, an ADJUSTED BASIS The adjusted basis is eq ual to advance free agreement must state the total amount of the purchase price plus buying. advances fees to be paid. An advance fee agreement may not include a guarantee the transaction will be completed. ADJUSTABLE RATE MORTGAGE (ARM) A which bears interest at a rate subject to change ADVANCE COMMITMENT The institutional investor s during the term of the loan, predeterm ined or otherwise. prior agreement to provide long-term financing upon the completion of construction; also known as a take-out loan com mitm ent. ADJUSTABLE RATE NOTE A note whose interest rate is tied to a flexible index. ADVANCE FEES A fee paid in advance of any services rendere d. Som etimes unlawfully charged in c onnection with ADMINISTRATIVE AGENCY A government agency that illegal practice of obtaining a fee in advance for the that administrates a complex area of law, adopting an advertising of property or a business for sale., with no intent to enforcing detailed regulations that have the force of law. obtain a buyer, by persons representing themselves as a real estate licensees, or representative of a licensed real estate ADMINISTRATIVE LAW JUDGE A law judge that firm. conducts hearings enforcing the detailed regulations that have the force of law, by a government agency. It is a ADVERSARY Opponent, a person or a group that opposes complex area of law. the other.

ADMINISTRATOR A person appointed by the probate ADVERSE INTEREST A purpose in opposition to the interest court to manage and distribute the estate of a deceased of another party(as for example, with a buyer and a seller) pers on when no ex ecutor is n am ed in th e will or there is no will. A method of acquiring property based on open and notorious possession, under a ADJUSTED CO ST BASIS For ta x pur poses it is claim of right, color of title, continuous use for five years, and the cost of the property plus improvements and minus the payment of . A method of acquiring property through depreciation, amortization, and depletion. continuous use of that property while paying taxes on it.

ADMINISTRATOR A person appointed by the .ADVERTISING (COSTS) Purchased space in a newspaper, probate court to administer the estate of a deceased magazine or other medium used to attract public attention to a person. His or her duties include making an inventory of for sale or . They should be based on the assets, managing the property, paying the debts and projected vacancies, turnover conditions. Where you expenses, filing necessary reports and tax returns, and advertise depends on who are the customers that you want to distributing the assets as ordered by the probate court. reach.

AD VALOREM According to value AFFIANT One who makes an affidavit or gives .

AD VALOREM LIEN Refers to General real estate AFFIDAVIT A statement or declaration reduced to writing, tax. sworn to or affirm ed before som e officer who has authority to administer an oath or affirmation, such as a notary public or a AD VALO REM TAX A based upon value. commanding officer in the service.

ADVANCES Transfer of funds from a lender to a AFFIDAVIT OF TITLE A statement in writing , made under borrower in advanc e on a loan. Mon ey adv anced by a oath by selle r or grantor, ack nowledge d before a Nota ry Pub lic beneficiary under a trust deed to pay real estate taxes or in which the affiant identifies hims elf or herself and affiant s other items to protect the lender s interest under the trust marital status certifying that since the examination of title on deed. Also refers to additional funds loaned under an the contract date there are no judgements, bankruptcies or open -end trust deed or mortgage. , no unrecorded deeds, , unpaid repairs or improvements, or defects of title known to the affiant and that ADVANCE FEE ACCOUNTS A verified copy of affiant is in possess ion of the property. advance fee accounts must be sent to the owner of advance fee funds every quarter. AFFIRM To c onfirm, s wear, ratifyin g, verity.

PAGE 3 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course.

AGENT , UNIVER SAL An agent authorized to do everything AFFIRMATION A solemn declaration by an individual that can be lawfully be delegated to a representative. who is adverse to take an oath. AGENTS OF PRODUCTION Four factors that are combined AFTER-TAX CASH FLOW (See cash flow) to produce income; labor, coordination, capital, and land.

AGE-LIFE METHOD OF DEPRECIATION SEE: AGREEMENT A mutual understanding or compact between Straight-line Method of Depreciation. parties. Altho ugh often used a synonym ous with contract, technically it denotes mutual promises that fail as a contract for AGENCY A special relationship of trust by which lack of consideration. one person (agent) is authorized to conduct business, sign papers, or otherwise act on behalf of another person AGREED -UPON-COMPENSATION To receive this (principal). compensation you must be the procuring cause, must find a read y, willing and a ble bu yer, an d must be the one that initially AGENCY AGREEMENT An agent must use brought the third party into the contract.. reasonable care and skill in carrying out the tasks dictated by the agency agreement. AGREEMENT FOR DEED ( See contract for deed)

AGENCY CONFIRMATION STATEMENT The AGREEMENT OF SALE (1) A written contract between Agency Disclosure Addendum will always be used by the a buyer and seller setting out the terms of sale. (2) An selling broker whenever Agency Confirmation Statement installment sales co ntrac t cove ring re al property, espe cially a is required . An Agency Co nfirm ation State me nt is long-term contract. required in a transaction involving the lease of one-top- four unit residential property for m ore than one year. AGRICULTURE (FLORIDA) Defined in Chapter 475,F.S., to mean property zoned as such, consisting of more than 10 AGENCY COUPLED WITH AN INTEREST When the acres. agent has a personal interest in the subject of the agency; as when one co-owner has been authorized by AIR LOT A parcel of property above the surface of the earth, the others to sell the property. not containing any land; for example , a unit on the third floor. AGENCY DISCLOSURE ADDENDUM This required when a broker is involved in negotiating the sale of one- The rights in real property to the reasonable use to-four unit residential property. This defines and of the air space above the surface of the land. explains, in general terms, the words and phrases used to express the agency relationship of brokers to the ALIENATE Conv eys title to rea l property. parties of the residential sale transaction. R efusals to sign the Agency Disclosure Addendum could occur ALIENATION The transferring of property to another. when: owners refuse to list with the broker FSBO seller s Conveyance or transfer of title to real estate from one person refusal to accept an offer and when buyers refuse to sign to another person. a deposit receipt offer presented for consideration. ALIENATION CLAUSE In a deed of trust or m ortgage, a AGENT One who represents another called a provision that if the secured property is sold or transferred, the princ ipal an d has authority to a ct for the princip al in lender has the option of accelerating the loan and declaring the dealing with third parties. The relationship is referred to entire unpaid balance immediately due and payable. Also as an agency. Someone authorized to act for another called a "due-on-sale" clause. (called the principal) in business matters. ALIENATION, INVOLUNTARY Tran sfer of an intere st in AGENT , GENERAL An ag ent authorized to hand le all property against the will of the owner, or without the action of of the principal s affairs in one area or in a specified the owner, occurring through the operation of law, natural area. process, or adverse possession.

AGENT , SPECIAL An agent authorized to do ALIENATION, VOLUNTARY When an ow ner voluntarily everything that can br lawfully delegated to a transfers an interest to someone else. representative. ALL-INCLUSIVE DEED OF TRUST A financing device

PAGE 4 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. whereby a lender makes payments on the existing trust AMELIORATING Impro vements to pro perty deeds of a borrower and takes from the borrower a junior that, w hile no t dam aging the va lue of the prope rty, technically trust deed with a face value in an amount equal to the qualify as waste. For example, an building amount outstanding on the old trust deeds and the construc ted on property d esignated only for single-fam ily additional amount of money borrowed. structures is considered ameliorating waste.

ALLOCATION METHOD SEE: Abstraction Method. AMENITIES As used in the , the features that make a piece of real property, especially a home, ALLODIAL SYSTEM A theory of land ownership that enjoyable. individuals may own land free of the rights of an overlord. AMENDMENT A change made to correct an error or to alter ALLODIAL TENURE A real property ownership system or augm ent part of an ag reem ent without changing its prin ciple where ownership may be complete except for those idea or essence. rights held by the government. Allodial is in co ntrast to feudal tenure. AMER ICAN INST ITUTE OF AR CHITE CTS (AIA) A professional association of registered architects that publishes ALLUVION (ALLUVIUM) Soil that has been construction contract forms as one of its activities. deposited by accretion on the shore of a river or body of water and that increa ses the re al property. AMERICAN SOCIETY O INDUSTRIAL SECURITY A professional association of industrial security personnel that ALTA OW NERS POLICY (A.L.T.A.) An owner s provides training leading to the designation of Certified extended coverage policy that provides buyers and Protection Professional (CPP). owners the sam e protection the ALTA policy gives to lenders. AMERICANS WITH DISABILITIES ACT This is the act that set forth the requirement that must make facilities ALTA TITLE POLICY (Am erica n Lan d Title accessible to the handicapped to the extent readily achievable. Association) A type of title ins uran ce po licy issu ed by title insuranc e com panies which expa nds the ris ks norm ally AMORTIZATION (1) The liquidation of a financial insured against under the standard type policy to include obligation on an installment basis, which includes both principal unrecorded mechanic s ; unrecorded physical and interest. (2) Recovery of cost or value over a period of ; facts a physical survey would show,; water time. The method or plan for the payment of a debt, bond, and ; and rights of parties in possession , deed of trust, etc., by installments or sinking fund. such as tenants and buyers under unrecorded instruments. AMORTIZE Pay off a debt in installments.

ALTER EGO A doctrine which holds that a corporation AMOR TIZED LO AN (MORTGAG E) A loan to be repaid, is really owne d by sh areh older s as their own prope rty, interest and principal, by a series of regular payments that are and therefore it sho uld not be considered as a separate equal or nearly equal, without any special balloon payment entity. Usually used to try to hold shareholders liable for prior to maturity. Also called a Level Payment Loan corporate debts. AMOUNT IN CONTROVERSY The amount of money at ALTERNATIVE DISPUTE RESOLUTION (ADR) issue in a lawsuit; used as a limitation on the jurisdiction of The resolution of disputes by negotiation, mediation, and some courts. arbitration. ANCHOR STORE The most important store in a shopping ALTERNATIVE MORTGAGE INSTRUMENTS center, the store that has the largest draw of customers. Nonstandardized financing loans. ANNEXATION Attaching to land so that AMBULATORY Capable of being changed or the law views it as part of the real property (a ). revoked. In wills, it refers to the concept that a will may Annexation can be actual or constructive. be revoked or modified at any tim e up to the testator's death. ANNEXATION, ACTUAL A physical attachment of personal property to land.

PAGE 5 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course.

ANNEXATION, CONSTRUCTIVE When personal can sue in this matter, state attorney general, U.S. attorney property is associated with real property in such a way general, and a tester. that the law treats it as a fixture, even though it is not physically attached to the re al property. APARTMENT OWNERS Are considered business establishments subject to the Unruh Civil Rights Act. ANNIVERSARY DATE Recurring every year; the date an ins uran ce po licy must be renewed to continue in APPEAL The review or rehearing by a higher court of a effect. low (inferior) court's decision.

ANNUAL DEBT SERVICE The amount of money APPELLANT The party appealing a court decision. Either required each year for the payment of all mortgage party may appeal; hence, the appellant could have been either intere st and principal. the plaintiff or the defendant in the trial court.

APPELLEE In an appeal , the party who did not file the ANNUAL PERCENTAGE RATE (APR) The cost of appeal. Also known as the respondent. credit as determined in accordance with Regulation Z of the Board of Governors of the Federal Reserve System APPLICANT A person who applies for something; a for implementing the Federal T ruth in Lending Act. candidate.

ANNUITY A sum of mo ney receive d or paid yea rly APPRAISAL An estimate and opinion of value. An opinion or at other fixed periods. or es tima te of th e fair m arke t value of a prope rty.

ANNUITY CAPITALIZATION An income capitalization APPRAISAL CERTIFICATION There are two types of method providing for annuity recapture of invested certification, genera l and residential. capital; also referred to as yield capitalization. Discounts future income to an estimate of present value. APPRAISAL PLANT Copies of current statistics and publications kept by appraisers in their library or record room. ANSWER The docum ent the defendant must file with the court in respon se to the plaintiffs s com plaint. APPRAISAL REPORT Com mu nication of a forma l appraisal.

ANTICIPATION, PRINCIPLE OF Affirms that APPRAISED VALUE Estimated worth of a property value is created by the anticipated benefits to be derived determined by someone qualified in valiation. in the future. APPRAISER One qualified by education, training, and ANTICIPATORY BREACH Advance notice of experience, who is hired to estimate the value of real and intention to violate the term s of a contract. personal property on the basis of experience, judgment, facts, and use of formal appraisal processes. ANTICIPATORY REPUDIATION When one party in a contract informs the other before the time set for APPRECIATION Increase in the v alue o f property. performance that he or she does not intend to perform as agreed. APPROPRIATIVE RIGHT SEE: Prior Appropriation

ANTI-DEFICIENCY RULES that prevent a APPROPRIATION OF WATER The taking, impounding or secured lender from suing the borrower for a deficiency diversion of water flowing on the public domain from its natural judgement after in certain circumstances. course and the application of the water to some beneficial use personal and exclusive to the appropriators. ANTIDEFICIENCY LEGISLATION Legislation that prohibits a lender from obtaining a judgement for money APPURTENANCE That which belongs to something, but not against a defaulting borrower under a deed of trust when imm emorially; all those rights , privileges and improvem ents the value of property foreclosed upon is not adequate to which belong to and pass with the transfer of property, but satisfy the de bt. which are not necessarily a part of the actual property. Appurtenances to real property pass with the real prope rty to ANTI-DISCRIMINATION VIOLATIONS The following which they are appurtena nt, unless a con trary intention is

PAGE 6 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. ma nifes ted. T ypical appu rtena nces are right-of wa y, when the price paid for a comparable property is being used. easem ents, water rights, and any property improvements. AS IS CLAUSE A provision in a deposit receipt stating that the buyer accepts the property in its present condition. APPURTENANT Attached to or considered part of land, because of being considered necessary and ASSEMBLAGE The process of combining two or more incidental to the use of that land. Comm only applied to contiguous parcels into one larger parcel which makes the one easem ents that are co nsidered part o f property. parcel m ore valuable than the separate .

APPURTENANT RIGHT A right that belongs to the ASSESSED VALUE Value plac ed on property as a bas is owners of one property that gives them the right to use for taxation. A va lue us ed by the tax assessor b efore July another p rope rty (which they do n ot own) in a spec ific 1978. It represented 25 percent of the assessor's fair market way that benefits their property (e.g., an ). value. After deducting any exemptions from assessed value, one applied the tax rate to the net figure to determine annual APPURTENANCE, INTANGIBLE An appurtenant right property taxes. that does not involve ownership of physical objects; for example, an easement (as opposed to mineral rights). ASSESSMENT The valuation of property for the purpose of levying a tax, or the amount of tax levied. APR See: ANNUAL PERCENTAGE RATE ASSESSMENT BOND An obligation to pay for costs of local ARBITRATION A neutral third party who listens to improvements such as sidewalks, sewers, or street lighting. each party s position and makes a final binding decision. ASSESSMENT OF REAL PROPERTY In a real estate ARBITRATOR A neutral third party who receives transaction a sale of real property would create a new evidence and resolves the dispute. assessme nt of real property.

ARCHITECTURAL STYLE Generally the appearance ASSESSMENT ROLL A list of all taxable property showing and character of a building s design and construction. the assessed value of each parcel; establishes the tax base.

AREA MANAGEMENT BROKER (AMB) A property ASSETS Anything of real value owned by an individual or manager who works directly for the Federal Housing business. Administration managing subsidized housing under contract. ASSESSOR The official who has the responsibility of determining the assessed values. ARM An adjustable rate mortgage. ASSET MANAGEMENT The assembly, management and ARMS LENGTH TRANSACTION A transaction, such disposition of a portfolio of investment properties. as the sale of property, in which all parties involved are acting in their own self-interest and are under no undue ASSIGN To transfer a right or an interest in property to influence or pressure from the other parties. another.

ARREARS That which is behind; used when describing ASSIGNEE One to whom property is assigned or payment of past due interest and loan payments. transferred.

ARTICLES OF INCORPORATION An instrument A transfer to another of any property or right. setting forth the basic rules and purposes under which a The transfer of one's entire interest in property. Generally, the private corporation is formed. term is limited to intangible personal property (that is, stocks, bonds, promissory notes) and to leasehold estates. ARTIFICIAL PERSON A person created by law, as distinguished from a natural person, a human being; ASSIGNMENT OF RENTS An assignment of future rents usually refers to a corporation. form property as security for a debt.

ARM S LENGTH TRANSACTION May be used ASSIGNMENT FOR RENTS CLAUSE A clause in a deed of

PAGE 7 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. trust or m ortgage, providing that in the event of default, ATTACHMENT Seizure of property by court order before all rents and income from the secured property will be judgm ent, usua lly done to have it available in the event a paid to the lender to help reduce the outstanding loan judgment is obtained in a pending law suit. The actual or balance. constructive seizure of property by court order during a lawsuit. The usual purpose is to hold the assets as security for the ASSIGNMENT OF A DEED OF TRUST An instrument satisfaction of a judgment. that transfers the beneficial interest under a deed of trust from one lender to another. ATTACHMENT LIEN A lien on property arising because of an attachme nt of th at pro perty. ASSIGNMENT OF RENT CLAUSE A clause in a trust deed that gives the beneficiary the right under limited ATTACHMENTS, MAN MADE SEE: Fixture circumstances to collect rents of the property if the borrower defaults. ATTACHMENTS, NATURAL Things growing on a piece of land, such as trees , shrubs or crops. ASSIGNOR One who assigns a right or an interest to another. ATTEST (1) To affirm to be true or genuine. (2) An official act establishin g authenticity. ASSIGNEES Those to whom property or interests therein shall have been transferred ATTESTATION The act of witnessing the execution of an instrument (such as a deed or a will).

ATTORNEY-IN-FACT An agent authorized to perform certa in ASSOCIATE Person working for a broker. acts for another under a power of attorney. (See Power of Attorney.) ASSOCIATION An organization of persons having a com mon interest. AUTOMATIC EXTENSION CLAUSE a lease providing that a lease will be renewed indefinitely until one of ASSOCIATION AGREEMENT Set of private the parties gives notice of the intent to terminate at the end of conditions, covena nts, and restrictions applyin g to all the lease term. properties in a planned unit development, condominium, or other comm unity project. AUTHORITY, ACTU AL Authority actually given to an agent by the principal, either expressly or by implication. ASSUMPTION Acceptance of personal liability for another's debt or obligation. In the case of the sale of AUTHORITY, APPARENT SEE: Agency, Apparent. real estate, the buyer personally accepts and prom ises to pay off the existing dee d of trust. AUTHORITY, IMPLIED An agent s authority to do everything reasonably necessary to carry out the principals expressed ASSUMPTION FEE A lender s charge for changing orders. over and p roce ssing new reco rds for a new owner who is taking over an existing loan. AUTOMATED UNDERWRITING A service that enables lenders to obtain a credit risk classification using applications ASSUMPTION OF AGREEMENT A contract by software in the loan underwriting process. which a person agrees to pay a debt or obligation owed by someone else. AVULSION The sudden tearing away or removal of land by the action of water flowing over or through it. ASSUMPTION OF MORTGAGE OR DEED OF TRUST The taking of title to pro perty b y a grantee in AWARD The decision of the arbitrator. which he or she assumes liability for payment of existing note secured by a mortgage or deed of trust against the prop erty. B ATTACHED Shares one or more walls and often involves a party wall agreem ent.

PAGE 8 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course.

BACKFILL The replacement of excavated earth in a hole or against the side of a structure. BASEBOARD A board that goes around the room against the wall and next to the floor. Personnel property is transferred in trust for an accom plishment of a specific purpose. A BASE MOLDING Molding used at the top of the baseboard. possessory interes t in personal property. BASIS (1) Cos t Basis The dollar amount assigned to BALANCE SHEET A financial statement showing a property at the time of acquisition under provisions of the person's assets, liabilities, and net worth. Internal Revenue Code for the purpose of determining gain, loss and d epre ciation in ca lculating the inco me tax to be pa id BALLOON PAYMENT When the final payment on a upon the sale or exchange of property. (2) Adjusted Cos t Basis note is greater than the preceding normal installments, The cost basis after the application of certain conditions for the final installment is termed a balloon payment. An improvements, etc., and deductions fo r deprec iation. installment promissory note providing for the last payment to be m uch large r than any previous payment. BASE SHOW Molding used at junction of baseboard and By statute, any payment more than twice the smallest floor, sometimes called a carpet strip. payment is a balloon payment, although in practice generally the term refers only to the last paym ent.

BAND OF INVESTMENT Method of estimating interest BASIC MONEY SUPPLY This consists of cash, coins, and and capitalization rates based on a weighted average of checking accounts. the mortgage interest rate (or other cost of borrowed funds) and the rate of return on equity required. BATNA Best Alternative To a Negotiated Agre ement.

BANKER S MONTH 30 days BATTEN Narrow strips of wood or metal used to cover joints on the interior or exterior of a building; they are also BANKER S YEAR 360 days used for decora tive effect.

BARGAIN AND SALE DEED Any deed that recites a BEAM A horizontal structural member supporting a load. conside ration and purports to convey real estate; a with a covenant against the BEARING WALL OR A wall or partition that grantor s act is one in which the grantor warrants that supports any vertical load, in addition to its own weight. grantor has done nothing to harm or cloud title. BEFORE-TAX CASH FLO W (Btcf; Cash Throw off; Gross BASE COSTS Average or typical costs of similar Spendable Income) The resulting amount when annual buildings, usually obtained from published cost manuals; debt service is subtracted from net operating income. used in the comparative square foot method of estimating cost of construction. BENCH MARKS A location indicated on a permanent marker by surveyors. BASE INDUSTRIES Businesses that attract outside mo ney into the area, prim ary. BENEFICIARY (1) One entitled to benefit from a trust. (2) The lender on the security of a note and deed of BASE LINE In the g overnm ent survey system, a main trust. The creditor (lender) under a deed of trust. east-west line from which township lines are established. Each principal meridian has one base line associated BENEFICIARY STATEMENT (See O ffset State ment.) with it. BEQUEATH To le ave b y will. BASE RENT SEE: Minimum Rent. BEQUEST Personal property that is given by the terms of BASE VALUE SEE: Value, Base a will. A of pers onal property by w ill.

BASE AND ME RIDIAN Imaginary lines used by BETTERMENT An improvement on real property that surveyors from which they find, measure, and describe increases the value and is considered a capital asset. the location of lands.

PAGE 9 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course.

BLACKTOP Asphalt paving used in streets and driveways. BILATERAL CONTRACT A contract in which the consideration given by each party is a promise: that is , BLANKET DEED OF TRUST A deed of trust binding more a promise for a promise. than one p arce l of pro perty a s security. It is frequently encountered in subdivisions, where every lot in the subdivision BILATERAL ESCROW INSTRUCTIONS A single set is bound by the same deed of trust. As the lots are sold, they of escrow instructions signed by both the buyer and the are released from the deed of trust by a partial release seller ; often signed at the opening of escrow, not at the provision. end. BLANKET MORTGAGE (LOAN) One mortgage or BILATERAL EXECUTORY CONTRACT A deed of trust that covers more tha n one piece of rea l property. contract between the seller of a hom e and a real estate broker, whereby the seller agrees to pay the broker a BLENDE-RATE MORTGAGE The average trust deed or commission if he procures a buyer ready, willing and mortgage covering more than one parcel of land. able to buy and the broker agrees to use due diligence. BLIGHTED AREA An area in which real property is BILATERAL EXECUTORY When a broker declining in value because of destructive economic forces. contracts to perform certain services for a principal and in exchange the principal and in exchange the principal BLIGHT CORRECTION Rehabilitation of residential agrees to pay the broker a specific fee, their agreement prop erties that have d eterio rated significantly. would bilate ral executory. BLIND ADVERTISEMENT Advertisement that does not BILL A proposed law, formally submited to a contain the name of the broker. legislature for consideration. BLOCK In referen ce to platted property, a group of lots BILL OF SALE A written instrument given by the seller surrounded y streets or unimproved land. to the buyer to pass title to person al property. BLOCK BUSTING The practice on the part of unscrupulous BINDER A written statement that binds the or real estate agents of inducing panic selling of homes at parties to an agreement until formal contracts can be below market value, especially by exploiting the prejudices of drawn; an agreement to cover a down payment as property owners in neighborhoods in which the racial make-up evidence of good faith. is changing or appears to be on the verge of change.

BINDING ARBITRATION The decision of the arbitrator BOARD FOOT A unit of measurement for lumber: one foot is final and not review able by the courts. wide, one foot long, one inch thick (144 cubic inches).

BIWEEKLY PAYMENTS Real estate loan payments BOMA CHART OF ACCOUNTS The standardized system made every two weeks. A monthly payment is divided by of income and expenses accounting for office properties two and paid 26 times per year. developed by the Building Owners and Managers Association International. BIENNIUM (biennial) A period of two tears. BONA FIDE In good faith; genuine BILATERAL CONTRACT An agree ment wherein both parties are legally obligated to each other to perform. (BFP) A purcha ser w ho pa ys fair value for property in good faith, and without notice of BINDER A memorandum given subject to the writing adverse claims. of a formal contract for sale, usually acknowledging receipt of a portion of the down payment for purchase of BOND An obligation under seal. Real estate bonds are real prope rty. issued on the sec urity of a mortgage or deed of trust. A certificate repre senting a contract for the paym ent of mo ney, BRACKETING When using the sales comparison often used to repay certain loans or held as security to ensure approac h, selection of m arke t data so that the subject is the performance of a stated act. The type of investment made contained within a range of data. by people looking for fixed returns and a little risk.

PAGE 10 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course.

operating costs. BOND COVERAGE Insuranc e protection individuals or firm s aga inst defau lt in the perform ance of th eir BREEZE WAY A covered porch or passage, open on two duties. ends, that connects the house and garage, or two parts of the house. BOOK VALUE An accounting term which is the difference between cost and the total amount of BRIDG E LOAN A loan that bridges the gap between two depreciation that has been taken. other loans, usually for a short time.

BOOK OF ABSTRACTS A key set of books BRIDGING Wood or metal pieces used to brace floor ma intained by a title comp any. joists.

BOOT In an exchange, any property that isn t treated BROKER An agent who earns income by arranging as a like-kind for income tax purposes; for example, if a sales and other contracts. A real estate broker is an individual buildin g is tra de for a vacant lot and a yac ht, the yacht is licensed by the state of California to arrange the sale or boot. transfer of interests in real property for compensation.

BORROW ER (Debtor) The mortgagor; one who gives BROKER , ASSOCIATE One who is licensed as a real a mortgage as security for a debt. estate broker but works for another broker.

BORROWER S STATEMENT TO LENDER BROKERAGE A broker s business Document prepared by the lender and signed by the borrower authorizing the lender to perform ce rtain acts BROKER S COMMISSION Agreement between the client (complete a loan; etc.) Usually included in the loan and the broker. This charged to the seller and not the buyer. package. BROKER FEE Mere payment of the buyer s broker fee by the BOUNDARY The perimeter or border of a peice of seller does not make the cooperating buyer s broker a dual land ; dividing line between one piece of property and agent. another. BROKER S When a person is granted a brok er s BOUNDS Boundaries license it is valid for four years, unless suspended or revoked. BRANCH OFFICE A business location other than the real estate broker s principal place of business. BROKERS LOAN STATEMENT A statement signed and received by the borrower at the time of a loan transaction, BRACING Frame lumber nailed at an angle in order indicating the costs, deductions, including commissions, of a loan negotiated by a real estate licensee. to provide stability to the structure.

BROKER S PRINCIPAL. In a the BREACH The breaking of or failure of duty, either broker s principal can be a: seller, buyer, or . by omission or co mm ission. The violation of or failure to perform an obligation. BROKER-SALESPERSON RELATIONSHIP AGREEMENT A written ag reem ent required by regulations of the Real Estate BREACH OF CONTRACT. A violation of the terms of a Commissioner setting forth the material aspects of the legal agreement; default. Breach of contract allows the relationship between a real estate broker and each non-breaching party to rescind the contract, sue for salesperson and broker performing licensed activities in the damages, or sue for perform ance of the contract. name of the supervising broker. BREAC H MAT ERIAL A breach of contract important BROWNFIELDS Area where soil is contaminated. enough so that bit excuses the nonbreaching party from preforming his or her contractual obligations. B.T.U. British therm al unit. The quantity of heat required to raise the temperature of one pound of water one degree BREAK-EVEN POINT level at which gross Fahrenheit. income for a p rope rty equ als the total fixed and variab le

PAGE 11 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course.

BUFFER ZONE A strip of land separating one type of portion of it s stock-in-trade to someone other than customers. land use from another. BUILT-INS Cabinets and other features built in as a part of BUILDING CODE A set of rules establishing minimum the house. standards for construction methods and materials, BUMP CLAUSE A provision in a deposit receipt that allows BUILDING EXPENSES A good source to find out a the seller to keep the property on the m arke t until a cond ition in buildin gs ex penses is the utility comp any. the contract is fulfilled.

BUILDING LINE Often called a setback line, a The rights that accompany the building line is a line running a certain distance from the ownership of real estate. Each stick is a right street, in front of which an owner cannot build. These lines are set by law. BURDEN OF PROOF SEE: Proof, Burden of.

BUILDING OWNERS AND MANAGERS ASSOCIATION BUNDLE OF RIGHTS An ownership concept that describes INTER NATIONAL (BO MA) An international real property by the legal rights associated with owning the organization of office building owners and managers, property. It specifies right such as the rights to sell, lease, use, which fosters professionalism through its educational occupy, mortgage, and trade the property, among others. programs, forums and publications. These rights are typically purchased by the buyer in a sales transaction unless specifically noted or limited in the sale. BUILDING OWNERS AND MANAGERS INSTITUTE INTERN ATIONAL (BOMI). An independent BUSINESS BROKER Real e state licens ees who enga ge in educational organ ization supp orted by BO MA. Its the sale, purchase or lease of a business. course s lead to the designations Real Property Administrator (RPA), Systems Maintenance Technician BUSINESS BROKERAGE The sale, purchase, or lease of (SMT), Systems Maintenance Administrator (SMA), and businesses that provide goods and services. Facilities management Administrator (FMA). BUSINESS COMPULSION SEE: Duress BUILDING PAPER A heavy waterproofed paper used as sheathing in exterior walls, or in roof BUSINESS CYCLE A wavelike movement of increasing and construction as insulation and protection against decreasing economic prosperity consisting of four phases; moisture. expansion, re cession, contraction an d revival.

BUILDING RELATED ILLNESS A clinically diagnosed BUSINESS OPPORTUNITY BROKERAGE The real estate condition that is caused by toxic substances or activity dealing in the sale, purchase or lease of a business. pathogens, that persists when an occupant leaves the buildin g. Sym ptom s inclu de hyp erse nsitivity, BUSINESS PARK A development or subdivision allocated to pneumonitis, asthma and certain allergic reactions. office-warehouse or similar use. Also known as an office park. An outgrowth of industrial parks. BUILDING RESIDUAL TECHNIQUE Technique of income capitalization; the net income to the building BUSINESS AND PROFESSIONS CODE One of the 25 (after deducting the incom e required for the land ) is California c odes containing the laws passed by the state capitalized into an estimated value for the building. legislature. It contains the statutes regulating the conduct of real estate brokers and establishes the Department of Real BUILDING STANDARD The specific set of amenities Estate. and alterations a landlord is willing to make free of charge for an inco ming commercial tenant. BUSINESS OPPORTUNITY A term used to describe a business inclu ding its stock-in-trade, fix tures , and good will. BULK PURCHASING A method of cutting operating costs for a property in which sup plies a re purcha sed in BUSINESS TRUST (See ) large quantities and stored for later use. Also called volume buying. BUYDOWN (See Subsidy Buydown)

BULK SALE The sale by a business of a major

PAGE 12 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course.

BUYER If the buyer in a real estate transaction, (such used in the production of income. Examples would include as lease contract) needs assistance in deciding how to land, buildings, and eq uipment. take option, he shou ld con sult his attorney. CAPITAL-DEFICIT AREA A region where the total amount AGREEMENT An employment of savings is not sufficient to finance economic development contract with a purchase. already underway in that area.

BUYERS MARKET The supply of available properties CAPITAL GAIN The gain recognized for federal and exceeds the demand. state income tax purposes when a taxpayer disposes of a capital ass et. BYLAWS Rules for the conduct of the internal affairs of corporations and other organizations. CAPITAL EXPENDITURE Money expended on repairs and improvements and repair or prolong its life; not deductible. COMPARE : Ded uction, Re pair C CAPITALIZATION In appraising, a method of determining value of pro perty b y cons idering net incom e and a reasonable percentage of return on the investm ent. CALL PROVISION SEE: Acceleration Clause CAPITALIZED INCOME APPROACH SEE: Income CAL-VET FINANCING The State of California holds the Approach. titles under Cal-Vet financing. CAPITALIZED INCOME METHOD OF DEPRECIATION CANCEL ESCROW To terminate escrow bu mutual Method for estim ating depreciation by comparing the subject s written instructions. capitalized value to its replac ement cost ne w.

CAL-VET LOAN PROGRAM (CALIFORNIA VETERANS The percentage rate or rate of LOAN) intere st considered a reasonable return on the inve stm ent. It is A program administered by the State Department of used in the capitalization method of determining value based Veterans Affairs for the direct financing of farms and upon net return. hom es fo r veterans who qualify. CAP RATE See LIFE OF LOAN CAP CANCELED A license ceases to exist, effective as of the date approved by the Commission , and does not C.A.R. Abbreviation for the California Association of Realtors. involve disciplinary action. CARET California A ssociation of Real Estate CANCELLATION Termination of a contract without Teachers; a division of the California Association of Realtors. undoing acts that have already been performed under contract. COMPARE; Rescission. CARPET ST RIP See Base Shoe

CANCELLATION OPTION A lease clause granting CARRYBACK LOAN SEE: Loan, Carryback the tenant the option to cancel at the end of a predetermined term .````````````` CARRYOVER CLAUSE SEE: Extender Clause

CAP A ceiling on interest rate increases. CASE LAW Rules of law developed in court decisions, as opposed to constitutional law, statutory law, or administrative CAPACITY Legal ability to perform some act, such as regulations. Also called decisional law. enter into a contracto r exe cute a dee d or w ill. CASH-ON-CASH Investment return based on actual cash CAPITAL An agent of production; construction and inves ted; cash flow as a pe rcen tage or ratio to eq uity. equipment costs; inves tme nt m oney. CASH RETURN TO EQUITY Equity dividend; cash flow. CAPITAL ASSETS Assets of a perm anent nature

PAGE 13 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course.

CASE OR CONTROVERSY REQUIREMENT A by a local government verifying that a newly constructed provision in the U.S. Constitution That limits judicial building is in compliance with all codes and maybe occupied. power to deciding actual, active conflict (as opposed to hypothetica l questions ). CERTIFICATE OF SALE The document given to the Declaratory relief is an exception to this rule. purchaser of a mortgage foreclosure sale, instead of the deed; replaced with a sheriffs deed only after the redemption period CASEMENT WINDOW Windows set in frames of wood expires. or metal that swing outward. CERTIFICATE OF REASONABLE VALUE (CRV) The CASH FLOW (After tax cash flow) The new Veterans Adm inistrations's written appraisal of the value of a amount of cash a property produces when all cash prop erty. income and other cash generated are added together and all cash expenses and other cash paym ents are CERTIFICATE OF TAXES DUE A written statement of deducted. guaranty of the condition of the taxes on a certain property made by the County Treasurer of the county wherein the CASH FLOW STATEMENT A yearly financial report property is located. Any loss resulting to any person from an showing the bottom-line return after taxes. error in a tax certificate shall be paid by the county which such treasurer represents. CAUCUS Occurs when the mediator meets with each party s eparately. CERTIFICATE OF TITLE A written opinion by an attorney that ownership of the particular parcel of land is as stated in the CAUSE OF ACTION A legal right; facts giving rise to certificate. an en forceable claim . CERTIFICATE OF TITLE OPNION (Opinion of Title) A CAVEAT EMPTOR A Latin phrase meaning " let the document signed by a title examiner ( attorney or title company buyer beware"; the legal maxim stating that the buyer agent) stating the judgement that, based on an examination of must examine the goods or property and buy at his or the public re cords, the seller has good title to the prope rty her own risk. being conv eyed to the buyer ( not to be co nfus ed with ) CCIM Certified Commercial Investment Member CERTIFIED APARTMENT MANAGER (CAM); CERTIFIED C.C. & R s Abbreviation for covenants, conditions, APARTM ENT PR OPERTY SUPERVISO R (CAPS); and restrictions. Often used synon ymo usly with genera l CERT IFIED APARTMENT M AINTEN ANCE T ECHN ICIAN plan restrictions on a subdivision. (CAMT). Designations awarded by the National Apartment Assoc iation (NAA) for appropriate courses of study. CEASE AND DESIST ORDER An ac tion by a government agency to require a person business to stop CERTIFIED APPRAISER (See State Certified appraiser) an illegal or unfair practice. CERT IFIED ASSOCIATION M ANAGER (CAM) A CENTRAL TOWN A town that performs a variety of designa tion award ed by the C omm unity Association Institute services for the surrounding area. for courses of study in the professional management community associations. CENSURE An official act of d isapproval. CERTIFIED PLANT ENGINEER (CPE) A designation CERTIFICATE OF CLEARANCE The State awarded for qualification in plant engineering facilities Board of Equalization issu es that the seller has p aid management by the Am erican Institute of Plant Engineers sales tax. (AIPE)

CERTIFICATE OF ELIGIBILITY Issued by the CERTIFIED (CPM ) A prope rty Dep artm ent of Vete rans Affairs - evidenc e of individu al s manager who has fulfilled the Institute of Real Es tate eligibility to obtain a VA loan Management s requirements for this professional designation.

CERTIFICATE OF OCCUPANCY A statement issued CERTIFIED SHOPPING CENTER MANAGER (CSM );

PAGE 14 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course.

CERTIFIED MARKETING DIRECTOR (CMD). Designations granted to qualified shopping center CITATIONS Statements of alleged violations and the managers and marketing directors who have satisfied penalties imposed. the requirements and educational programs of the International Council of Shopping Centers. CITY GROWTH PATTERNS The following people have done work on this subject, Von Thunen, Burgess, Babcock and CERTIORARI, WRIT OF The Suprem e Court Hoyt. order indicating that the court has decided to exercise its discretion and accept a case offered on appeal. The CIVIL CODE One of the 25 California codes containing the court reviews only those select cases that it deems statutes passed by the state legislature. The most important worthy of review. code relating to contracts and real estate, the Civil Code defines the nature and requirements for contracts and real CHAIN A unit of m easurement used by surveyors. A estate transactions, among its many other provisions. chain consists of a hundred links equal to 66 feet. CIVIL LAW A system of jurisprudence, sometimes called A series of conveyances, Rom an law, wherein all the laws are set forth in adva nce to encum bran ces, and other instrum ents affecting the title regulate conduct (as opposed to , where the from the time original patent was granted, or as far back principles of law develop on a case-by-case basis). In as records are available. A history of the recorded California the term also refers to the law relating to and ownership of real estate and claims against title to real between individuals, as opposed to . estate. CIVIL RIGHTS Fundamental rights guaranteed to all persons CHATTEL The old na me for pe rson al property. by the law. The term is primarily used in reference to constitutional and statutory protections against discrimination CHATTEL MORTGAGE A perso nal-property based on race, religion, sex, or national origin. mortgage. (See Security Agreem ent.) CIVIL RIGHTS ACT OF 1866 A federal law that CHATTEL R EAL In real estate, an estate less guarantees that citizens of all races have the same rights as than a freehold estate, such as a lease. white citizens to inherit, purchase, lease, sell, hold and convey real and pe rson nel property. CHATTELS (1) Perso nal property. (2) T his term is sometimes used in a law to describe any interest in real CIVIL RIGHTS ACT OF 1968 Violations of this act should be or personal property other than a freehold. reported to HUD .

CHECK A square measuring 24 miles on each side and CLAPBOARD Boards that are used for siding and that are representing the largest unit of measure in the usually thicker at one edge. government survey system. CLAUSE A distinct provision in a written document.

CHOICE-OF AGENCY After a bro ker h as confirme d his CLIENT A person represented by a broker or an choice-of-agency, the choice cannot be corrected or attorney. modified at any time. CLOSE OF ESCROW (COE) The date when documents are CHOSE IN ACTION A personal right to something not recorded and title passes from seller to buyer; on this date presently in owners , but recoverable by a legal action for buyer becomes legal owner and title insurance becomes possession. effective.

CHOSE IN POSSESSION Something in possession CLOSING (1) Process by which all the parties to a real estate rather than the right of possession. transaction conclude the details to a sale or mortgage. The process includes the signing and transfer of documents and CIRCUIT BREAKER An electrical device that distribution of funds. (2) Condition in description of real automatically interrupts an electrical circuit when an property by courses and distances at the boundary lines where overload occurs. Circuit breakers can be reset and the lines meet to include all the tract of land. today are used instead of fuses.

PAGE 15 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course.

CLOSING COSTS The miscellaneous expenses COLLATERALIZATION The hypothecating of pro perty, buyers and sellers normally incur in the transfer of usually pers onal, as security for a loa n. ownership of real property over and above the cost of the prop erty. SECURITY The transfer of property of other valuables to ensure the performance of a principal CLOSING STATEMENT An accounting of funds made agreement; an obligation attached to a contract to guarantee to the buyer and seller separately. Required by law to be its performance. made at the completion of every real estate transaction. COLLECTIBLE INCOME Gross incom e from property CLOUD ON TITLE A claim or document that affects minus the vacancy and other types of rent loss. Also called title to real estate. The actual cloud may ultimately prove gross adjusted income. invalid, but its existence mars the title. COLLUSION A secret agreem ent between two or more CLTA POLICY The title insu rance policy issued to persons wishing to defraud another for a wrongful purpose or hom eowners and n onins titution al lend ers. T he initials to obtain an object forbidden by law. stand for the California Land Title Association, an organization that regulates and standardizes the COLOR OF TITLE Tha t which app ears to be a goo d title provisions within title policies. but, in fact, is not; for example, a forged deed. A document that appears to convey title, but in fact is ineffective, conveying CODE OF CIVIL PROCEDURE One of the 25 California no title at all. It is one of the requirements for adverse codes that contain the statutes passed by the state possession and easement by prescription. legislature. It contains most of the procedural requirements for enforcing rights granted by other codes, COMBED PLYWOOD A grooved building material used including the procedures for , , and primarily for interior finish. lawsuits. COMMERCIAL ACRE A term applied to the of an CODE OF ETHICS A set of rules and principles acre of land after the area devoted to streets, sidewalks, curbs, expressing a standard of accepted conduct for a and so on has been deducted from the acre. proffessio9nal group and governing the relationship of members to each other and to the organization COMMERCIAL BANK A financial institution chartered by the state or federal government to receive, lend and safeguard COD ICIL An ame ndm ent to a will. money and other items of value. They tend to loan money for construction loans, home improvement loans, and consumer CODIFICATION Collection and organization of loans. piecem eal laws into a com prehensive code. COM MER CIAL LOAN A personal loan from a commercial COINSURANCE CLAUSE A com mo n provision in bank, usually unsecured and short term, for other than policies that limits the liability of the mortgage purposes. insurance company to that proportion of the loss that amount of insurance bears to a percentage of the value COMMERCIAL PAPER Negotiable instruments used of the property. in business.

COLLAR BEAM A beam that connects the pairs A classification of rea l estate of opposite roof rafters above the attic floor. that includes income producing properties. When appraising a commercial property, the appraiser is most concerned with the COLLATER AL Property subject to a security interest; sale price of com parable properties . Com mercial property property used as security for a debt. (See Security usually must be zoned for business purposes. Agreement.) Another word for security. This held until the money has been paid back. COMMERCIAL TENANT Reasons for rejecting a commercial tenant may be any one of the following; insufficient COLLATERALLY Refers to liens secured by other margin to m aintain long-term rent, incom patible m ix with liens. existing tenants, and a large amount of physical alteration would be required to accomm odate the tenant.

PAGE 16 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course.

COMMINGLING The mixing of different funds so A body of unwritten law that developed in England from the that th ey can no lon ger be distinguis hed. In dome stic general customs and usage. It was adopted in the United law it refers to the combination of separate property and States and exercised by court decisions following the ancient , so that the separate property and English principles and the recodified law of a state. community funds can no longer be distinguished; in such cases all property is considered com munity property. COMMON LAW REMEDY Money awarded to a plaintiff in a For brokers it refe rs to the m ixing o clients' money with civil lawsuit; damages. COMPARE: Equitable Remedy the broker's separate bank accounts. COMMON STOCK That class of corporate stock to which COMMISSION An agent's compensation for performing there is ordinarily attached no preference with respect to the the duties of his or her agency agreement. In the real receipt of dividends or the distribu tion of assets on corporate estate business, it is usually a percentage of the selling dissolution. price or a percentage of the lease or rents, for example. Demanding a commission or a discount based on your COM MUNITY ASSOCIATIONS INSTITUTE (CAI). A status as a licensee after the terms of an agreement professional organization offering educational programs for have been struc k are unethical. persons involved in homeowners , condominium, and associations COM MISS ION SPLIT The previously agreed upon division of money between a broker and a sales- COMMUNITY CENTER A shopping center of about 100,000 associate when the broker has been paid a commission to 250,000 square feet (20to70 retail spaces) supported by from a sale made by the associate. more than 5,000 families.

COMMISSIONER S FINAL REPORT Mayb e use d in COMMUNITY LAND-USE Political factors should be it s entirety by a subd ivider in his a dvertisem ent of his incorporated into the management plan because of this. subdivision. COMMUNITY PROPERTY All pro perty a cquired by a COMMITMENT A pledge or a promise; a firm husband and wife living together, except separate property. agreem ent. (See Separate Prop erty.) P rope rty own ed in c om mo n by a husband and wife as a kind of marital partnership. COMMITMENT OF TITLE Sim ilar to a prelim inary title repo rt; gua rante es that the title comp any will issue title COMMUNITY REINVESTMENT ACT Federal law requiring insurance. financial institutions to lend in communities served, including low and m oderate-incom e areas, consistent with COMMON AREA An entire common interest considerations of safety and soundness. subdivision except the separate interests therein. CO-MORTGAGOR a person who signs a note or trust deed COMMON ELEMENTS The parts of multiple- in addition to the borrower to give extra security to the loan. owners hip prope rty not included in the units; those parts The co-mortgagor is jointly liable for the repayment of the loan. in which each individual owner holds an undivided interest. COM BINATIO N LOAN A combined construction loan and permanent take-out loan after construction is completed. COMMON GRANTOR A person who owned two or more adjacent properties and then sold them to different COMPACTION Packing or consolidation of soil. W hen soil is buyers. added to a lot to fill in low places or to raise the level of the lot, it is often too loose to sustain the weight of buildings. COMMON INTEREST SUBDIVISION Subdivided lands The refore, it is n ecessary to co mp act the add ed so il so tha t it which include a separate interest in real property will carry the weight of the building without danger of settling or combined with an interest in common with other owners. cracking. The intere st in com mo n may be throu gh a m em bers hip in an association. Examples are and COMPARABLE PROPERTY SALES Sales which have stock . similar characteristics as the subject property and are used for analysis in the appraisal process. Commonly called COM MON LAW The body of law that grew from Comparables , they are recent selling prices of properties custom s and practices developed and used in England.

PAGE 17 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. similarly situated in a sim ilar mark et. COMPREHENSIVE PLAN (Master Plan) A statement of policies for the future physical developm ent of an area (e.g., COM PARAT IVE INC OM E AND EXPENSE AN ALYSIS city, county, region). A financial study of the projected incom e from a property in as-is condition versus financial returns from that COMPREHENSIVE ENVIRONMENTAL RESPONSE property if suggested capital improvements were COM PENSATION AND LIABILITY ACT (CER CLA) A 1980 implem ented. Property m anagers use the analysis to federal law created to impose liability on people or demonstrate to owners the return on proposed capital organizations resp onsible for environm ental dam age and to expenditures. facilitate the financing of asbestos cleanup projects and property damage claims. COM PARATIVE MAR KET AN ALYSIS (C MA) One of three methods in the appraisal process. A means of COMPUTERIZED LOAN ORIGINATIONS (CLOs) com parin g sim ilar type properties , which hav e rec ently Accessing lender loan program s via computer. sold, to the subject prope rty. CONCEALMENT The act of keeping from site or keeping COMPARATIVE SQUARE FOOT METHOD Method of secret. estimating construction costs using typical square foot costs for the type of construction being estimated. A negotiable point in a lease, decide in the prospective tenant s favor. COMPARISON APPROACH A real estate comparison method which compares a given property with a similar CONCIERGE SERVICES A trend in the property or comparable surrounding properties; also called management field that provides personal , secretarial, catering market comparison. or other services to the occupants of office or residential buildings. COMPENSATION Anythin g of value o r a valuable consideration, directly or indirectly paid, promised or CONCLUSION The final estimate of value, realized from the expected to be paid or received. facts , data, experien ce an d judgem ent, set out in an a ppra isal. Appraiser s certified conclusion. COMPENSATING FACTORS Positive factors that are considered by lenders to approve loans to otherwise CONCLUSIVE PRESUMPTION A legal assumption marginal borrowers. that cannot be rebutted, and is therefore accepted as true and binding on the courts. COMPETENT Legally qualified or capable. CONCURRENT ESCROW A real estate transaction COMPETITION, PRINCIPLE OF Holds that profits tend procedure in which the closing of one escrow is dependent to breed competition and excess profits tend to breed upon the closing of another one; also called a double escrow; ruinous completion. commonly used in exchanges and in instances where the buyer depends on funds he expects to get from the sale of COMPETITIVE BIDS Work estimates submitted to the another p rope rty. property manager by service contractors, suppliers, trades people or construction contractors. CONCURRENTLY Occurring simultaneously, at the same time; real estate exchanges often must be recorded COMPLAINANT A person who makes an allegation or concurrently. a charge against another (the respondent). CON CUR RENT OW NERSHIP Any form of ow ners hip in COMPLAINT A document a plaintiff files with the court which two or m ore people sha re title to piece of pro perty, to start a lawsuit. A formal allegation or charge. holdin g und ivided intere sts . A lso ca lled co tenancy.

COMPOUND INTEREST Interest paid on the CONDEMNATION (1) The act of taking original principal and a lso on the accru ed an d unp aid for public use by a political subdivision. (2) A declaration by interest that has accumulated as the debt matures. proper governm ental authorities that a structure is unfit for use. The taking of private property for public use through th exercise of the power of .

PAGE 18 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course.

land. The ownersh ip of an individual u nit in a m ulti-un it CONDITION A provision in a contract stating that the structure, combined with joint ownership of common walkways, contract will not go into effect or that it will term inate land, and o ther p ortion s of th e property. Each con dom inium is upon the occurrence of some specified future event. (1) owned separately in a fee simple estate. They generally offer A restriction added to a conveyance that, upon the more amenities than other types of residential rentals or occurrence or nonoccurrence of a some act or event, ownership. Owners can obtain secondary financing and cash causes the estate to be defeated. (2) A contractual out his or her equity, can sell at a higher price than paid, provision that upon the occurrence or nonoccurrence of getting benefit from increased value or can obtain financing. a stated act or event, an obligation is created , destroyed, or defeated. CONDOMINIUM ASSOCIATION The organization that manages the operation of a condominium, imposing CONDITIONS, COVENANTS, AND RESTRICTIONS assessments and arranging for the maintenance of the Rec orde d dee d res triction s that run w ith the land, usua lly com mo n areas. T he as sociation memb ers a re the unit initiated by the original subdivider. owners., and they usually elect a board of directors.

CONDITION PRECEDENT A condition that must CONDOMINIUM DECLARATION The document which occur before an estate is created or enlarged, or before establishes a condominium and describes the property rights of some other right or obligation occurs. the unit owners.

CONDITION SUBSEQUENT A condition that, upon CON DUIT Usually a metal pipe in which electrical wiring its failure or nonperformance, causes the defeat or is installed. extinguishment of an estate, right, or obligation. CONFESSION OF JUDGMENT Any entry of judgment CONDITIONAL COMMITMENT A loan upon the debtor's voluntary admission or confession. comm itment for a definite amount under certain terms and condition s. It is sub ject to an unk nown purch aser's CONFIRMATION OF SALE A court approval of the sale of satisfactory credit rating. property by an executor, administrator, guardian, or conservator. CONDITIONAL ESTATE Usually called, in California , Fee Simple defeasible. An estate that is granted subject CONFLICTING DEMANDS When different parties each to a condition subsequent. The estate is terminable on make claims that are inconsistent with one another. happening of the condition. A loan that does not exceed Fannie CONDITIONAL FEE SEE: Fee Conditional Mae /Freddie M ac lim its. This lim it changes ann ually.

CONDITIONAL SALE CONTRACT A contract for CONSERVATION Minor repair, renovation and restoration of the sale of property wh ereb y the seller re tains legal title residential buildings that have substantial economic use until the conditions of the contract have been fulfilled. remaining. Also called blight prevention. The buyer has an equitable interest in the property. (See Security Agreem ent.) A contract for the sale of property CONSIDERATION Anything of value , or tha t is lega lly by which po ssession is de livered to the buye r, but title sufficient, given to induce som eone to enter into a contract. remains with the seller until full payment or the The induc em ent fo r ente ring into a contra ct; usually m oney, satisfaction of other stated conditions. services, or a promise, although it may consist of a legal benefit to the promisor or any legal detriment to the promisee. CON DITIO NAL USE PERMIT An exception to or relief from the application of a ordinance, because of CONSIDERATION, ADEQUATE Consideration that is special authorization g ranted by the zoning authorities. com parable in value to the consideration of the other party to The issuance rests on public policy benefits and prior the contract is giving. A contract is enforceable even if the authorization in the zoning ordinance. consideration is inad equate, but a court c an no t orde r spe cific perform ance in that case. CONDOMINIUM A system of individua l ownersh ip of units in a multifamily structure, combined with joint CONSTANT A factor repres enting twelve tim es the monthly ownership of common areas of the structure and the payment expressed as a percentage of the original loan amount. A short-cut to providing annual debt service.

PAGE 19 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course.

CONTEMPLATING AUCTIONING HOMES A homebuilder CONSTITUTION A fundamental document that should consider the ability to quickly liquidate developments establishes a governments structure and sets limits on after the initial sales mom entum has worn off. power. CONTINGENT Conditional, uncertain, conditioned upon the CONSTITU TIONAL 1. Pertaining to or based on a occurrence or nonoccurrence of some uncertain future eve nt. constitution. 2. Not in violation of the U.S. constitution or a state constitution. CONTINGENCY A condition that must be met or an event that must happen before a purchase contract becomes binding CONSTRUCTION The interpretation of an between the parties. ambiguous term or provision in a statute or agreem ent. CONTINGENCY CLAUSE SEE: Condition CONSTRUCTION CLASSIFICATION Type of construction; a system that rates the basic frame, walls, CONTINUATION STATEMENT A statement filed to extend the and roof of a structure as to their relative fire resistance ( time limit on a financing statement that had been filed earlier. e.g., Class A, B, C, or D construction, Class A being the most fireproof). CONTRACT. An agreement to do or not to do a certain thing. It must have four essential elements: capable parties, mutual CONSTRU CTION LOAN A temporary loan to a home consent, a lawful object, and consideration. A contract of real buyer by the lender to pay the building contractor, either estate must also be in writing and signed by the party or parties in installments or in one lump sum at the end of to be cha rged with perform ance. construction. CONTRACT, BILATERAL A contrac t in which each party CONSTRUCTIVE A fiction imputed by law. prom ises to do som ething. CO MPARE : Con tract, Unila teral.

CONSTRUCTIVE EVICTION A breach of the CONTRACT, EXECUTED A contract in which both parties landlord's warranty of quiet enjoyment. Any acts by the have co mpletely perform ed their contractual obligations. landlord that substantially interfere with the tenant's use and enjoyment of the premises. CONTRACT, EXECUTORY A contract in which one or both partie s hav e not yet comp leted perform ance of th eir CONSTRUCTIVE NOTICE Notice given by the obligations. public records; that which is co nsidered equivalent to acutal notice even though there is not actual notice. (1) CONTRACT, EXPRESS A contrac t that has been put into Notice given by a recorded document. (2) Notice words, either spoken or written. imputed by a law because a person could have discovered certain facts upon reasonable investigation, CONTRACT, INSTALLMENT LAND SEE: Contract, Land and a "rea sonable m an" in the sam e situation would have conducted such an investigation. CONTRACT, LAND A con tract for the sale of pro perty in which the buyer pays in property immediately, but not taking CONSTRUCTIVE RECEIPT Control of the cash title until the purchase price has been paid in full. Also called proceeds in a delayed exchange without the actual an installment land contract, installment sales contract, land physical possession by the exchanger or his or her sales contract, , and other names. agent. CONTRACT, ORAL A spoken agreement, as opposed to a CONSUMMATE To com plete. written one.

CONSUMER CREDIT PROTECTION ACT A CONTRACT OF SALE (See Contract.) federal law that includes the truth-in-Leading Law. CONTRACT RATE Average rate charged on ARM loans or CONSUMER GOODS Goods sold or purchased fixed -rate loans by sav ings institutions nationally. primarily for personal, family, or household purposes. CONTRACT RENT Amount of rent being paid under CONTIGUOUS Adjoining or touching upon , such as contractual commitments binding owners and tenants. properties touching each other.

PAGE 20 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course.

CONTRACT SERVICES Maintenance tasks performed by outside laborers on a regular basis for a specified fee. COOPERATIVE A building owned by a corporation, where the residents are shareholders in the corporation; each CONTRACT, UNENFORCEABLE an agree ment that a shareho lder re ceive s a proprie tary lea se on an ind ividua l unit court would refuse to enforce; for example, it may be and the right to use the common areas. unenforceable because it isn t in writing, or because the statute of limitations has run out. COORDINATOR An agent of production; management.

CONTRACT, UNILATERAL When one party promises CO-OWNERSHIP(Concurrent or multiple ownership) to do something if the other party performs a certain an, Title to real property held by two or more persons at the same but the other party does not promise to perform it; the time. contract if formed only if the other party does perform the requested act. CORRESPONDENT An abbreviated term meaning COM PARE : Con tract, Bilateral. mortgage loan correspondent. A mortgage banker who services loans as an agent for the owner of the mortgage. Also CON TRAC T, VALID A bind ing, legally en forceable applies when a mortgage company originates a loan. contract. CORNER LOT Lot with frontage on two intersecting streets. CON TRAC T, VOID An agreement that isn t an enfo rcea ble CORNER INFLUENCE The increase in value of a property contract beca use it lacks a require d elem ent or is because it is located on a corner lot. defens eve in some other respect. CORPORATE COOPERATIVE Cooperative in which legal CONTRACTION A pha se of the business cycle ownership of a building is being held by a corporation created characterized by decreasing production. for that purpose.

CONTRACT, VOIDABLE A contract that one of the CORPORATION An association organized under strict rules, parties can disaffirm without liability, because of lake of in which individuals purchase ownership shares; regarded by capacity or a negative factor such as fraud or duress. law as an artificial person, separate from individual shareholders. CONVENT IONAL M ORTGAGE LOAN A loan that is made that is not federally insured or guaranteed. COR POR ATION NOT FOR PROFIT An artificial or fictitious person formed to conduct specified types of business activities. CONVERSION The wrong ful appropriation of another's goods to one's own use; to change from one character or CORPORATION, DOMESTIC A corporation doing business use to another. (1) In , an unauthorized claim of in the state where it was created. owners hip over another's personal property. (2) In property, the change of character of property from rea l to CORPORATION , FOREIGN A corpora tion doing b usiness in personal , or vice versa. one state, but created in another state.

COOPERATIVE The main difference in this type of CORPORATION SOLE An artificial or fictitious person ownership and a condominium is that a cooperative has form ed by a n ecc lesias tical body. a blanket mortgage over the whole building. CORRECTIVE MAINTENANCE Actual repairs necessary to CONVERTIBLE- RATE LOAN (Mortgage) A loan that keep a property in good co ndition and operating smoothly. starts out as a adjustable-rate loan, then, at the option of the borrower during a designated period , is switched to CORRECTION LINES Adjustment lines used in the a fixed-rate loan. government survey system to compensate for the curvature of the earth. They occur at 24-mile intervals (every fourth CONVEYANCE (1) The transfer of the title of township line), where the distance between range lines is real property from one to another. (2) An instrument corrected to 6 miles. that transfers an interest in real property from one person to another. The transfer of title to real estate from one CORRELATION SEE: Reconciliation person to another.

PAGE 21 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course.

COST The expenditure of monies necessary for the crea tion of imp roveme nts on a property. COST SEE: Replacement Cost, Reproduction Cost.

COST APPROACH TO VALUE (Cost-depreciation COST APPROACH One of the three c lassic approaches to Approach) A method in which the value of the value. It involves estimating the replacement cost new of the property is derived by estimating the replacement cost of improvements, deducting the estimated accrued depreciation, the improvements, then deducting the estimated and then adding the market value of the land. This is called the depreciation, then adding the market value of the land. Summation Method. This is most efficient when used estimating the cost of a new buildin g. Th e information used in this a ppro ach is COS T BASIS See Adjusted Cos t Basis. called Co st Data COST MULTIPLIER Factor used in adjusting published COST OF FUNDS The cost to the lender, expressed construction cost figures to estimate current and local costs. as a percentage, to obtain funds for lending,. Includes interest paid to depositors, cost of borrowing, advertising, COST-PLUS A m ethod of paying c onstruction co ntrac tors in giveaways and other sales costs, administrative and which the contractor furnishes a preliminary estimate for the overhead costs, reserves, etc. proposed job and is paid the actual cost of the work plus a percentage of profit. CO-TENANT Anyone who shares ownership of a piece of property with another; may be a joint tenant, a COST-TO0CURE METHOD OF DEPRECIATION Method of tenant in common, a tenant in partnership, or a spouse estimating accrued depreciation (loss in value) based on the owning co mm unity prope rty. cost to cure or repair observed building defects.

CO-TENANCY Any form of joint ownership. COUNTER FLASHING Flashing used on chimneys at roof-line to cover shingle flashing an d prevent m oisture entry. COUNTER OFFER Rejection of an offer to buy or sell, with a simultaneous substitute offer. COUNTER-OFFER The rejection of an offer by the submission of another offer, different in terms from the original COUNTY RECORDS A system for offer. Any purported acceptance of an offer that introduces documents in permanent books at the county court new terms is a rejection of that offer, and amounts to a house; maintained by each county and provided for by counter-offer. law; open to public examination COURT-ANNEXED ARBITRATION This may be ordered by COUNTY TAX RATE. The county tax rate is set the superior court when the sum at stake is less than $50,000 annually by the County Treasurer. dollars.

COURSE A direction, stated in terms of a compass COURT PAPERS These papers cannot be served by the bearing, in metes and bo unds des criptio n of prope rty. property owner or manager.

COURT-ANNEXED A court mandated arbitration. COURTYARD HOME SEE Zero-Lot-Line Home.

COOPERATIVE APARTMENT A form of own ersh ip in COVENANT An agreement or a promise to do or not to do which each individual apartment owner shares in a a particular act. Covenant: A contractual agreement whereby cooperative venture that entitles the owner to use, rent, one of the parties promises to perform or to refrain from doing or sell a specific apartmen t unit. certain acts.

CORPORATION A group or a body of persons COVENANT OF QUITE ENJOYMENT A promise that buyer recognized by law as an individual person with rights and or tenant s possession will not be disturbed by the previous liabilities distinct from those of the persons comprising it. owner, the , or anyone else claiming an interest in the Since the corporation is created by law, it may continue property. for any length of time that the law prescribes. An artificial entity given authority to conduct business and possess CPI (CERT ITFIED PROPERTY INDEX) This index is many of the rights of natural persons. One of the key commonly used for rent increases in office buildings characteristics is that of perpetual existence.

PAGE 22 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course.

CPM Certified Property Manager; a member of the while driving, hence curb appe al. Institute of Real Estate Property management of the National Association of Realtors. CURBSTO NE APPR AISAL A slang phrase, implying an informal valuation of a property based on observation and CRAWL HOLE Exterior or interior opening permitting experience. access underneath a building, as building codes may require CURTAIL SCHEDULE A list of the due dates and amounts by which the principal sum of an obligation will be reduced by Any financing out of the partial payments. ordinary, such as seller carrybacks and wrap-around s. CUSTOMER A prospective property buyer.

CREDIT A paym ent re ceiva ble as oppo sed to a de bi, CYCLICAL FLUCTUATION See business cycle which is a payment due.

CREDIT APPLICATION A statement provided by the borrower for a prospective lender in order to establish or D exhibit financial stability. DAMAGES The indemnity recoverable by a person who CREDIT BID When a lien holder purchasing the has sustained an injury to either his or her person, property, or security property at a forec losure sa le is allo wed to apply rights through the act or default of another. Compensation the amount the borrower owes him or her to the ordered by the courts for the loss of or injury to one's person or purchase, rather than having to pay the full amount of the prop erty. bid in cash. DAMAG ES, ACTUAL Compensatory damages. CREDIT REPORT Credit history of a person or business issued by a company in the credit reporting DAMAGES, COMPENSATORY Dam ages intended to business, used to help determine creditworthiness. compensate the plaintiff for harm caused by the defendant s an or failure to, including personal injuries (physical and mental), CREDITOR One wh o is owed a debt. property damage and financial loss.

CREDITOR, SECURED A creditor with a lien on DAMAG ES, CONSEQ UENT IAL Damages compensating for specific property, which enables him or her to foreclose loses that where not the direct result of the defendant s or collect the debt from the sale proceeds if it is not wrongful act, but wh ich were foresee able consequence of it. otherwise paid. DAMAGES, EXEMPLARY Punitive damages CRIM INAL LAW The body of law concerned with crim es, an individuals action aga inst society. DAMAGES, LIQUIDATED A sum that the parties to a contract agree in advance (at the time of entering into the CUL-D E-SAC A dead end street. contract) will serve as compensation in the event of a breach.

CUL-DE-SAC LOT Lot located at or near the end of a DAMAGES, PUNITIVE An award added to com pensatory dead-end street. damages , to punish the defendant for malicious or outrageous conduct and discourage others from similar acts. CURABLE DEPRECIATION Items of physical deterioration or functional obsolescence that if repaired DATA PLANT An appraiser s file of information on real would add at least as much of the market value of the estate. property as the cost of repairs. DATUM An artificial horizontal plane of elevation, CURE To re me dy a de fault, by payin g money that is established in reference to sea level, used by surveyors as a overdue or fulfilling other obligations. reference point in determining elevation. CURB APPEAL The impression gained, good or poor, DEALER A person who holds property primarily for sale of a property when it is first seen, usually from the street

PAGE 23 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. to his or her customers in the ordinary course of his or DECL ARATION OF H OMESTEAD A single-fam ily her business. dwelling; a house situated on a two-acre parcel; a fourplex.

DEALER PROPERTY Property held for sale to DECLARATION OF TRUST A form al instrum ent file d by a custom ers rather than as a long-term investm ent; a busines s trust with the Departme nt of State as a prerequisite developers inventory of subdivision lots, for example. for creating the trust.

DEATH OCCURRING ON THE PROPERTY A DECLARATORY JUDGEMENT A course of action declaring broker listing a property for sale m ust disclose a death rights claimed under a contract or statute intended to prevent accruing on the property within three years before the loss or guide performance by the party or parties affected. sale. DECLARATORY RELIEF A court's decision on the DEBENTURE Bonds issued without security, an rights of the parties in a question of law, without ordering obliga tion not secure d by a s pecific lien on property. anything to be done.

DEBIT A bookkeeping entry on the left side of an DECLINE PHASE Third phase in the cycle of a account, recording the creation of or addition to an asset neighborhood, generally marked by delayed repairs and or expense, or reduction or elimination of a liability or deterioration of buildings. item of equity or revenue. DECLINING BALANCE DEPRECIATION A method of DEBT COVERAGE RATIO (DCR) Net operating accelera ted depre ciation allow ed by the IR S in certain income divided by annual debt service. Used by lenders circum stances. Doub le Declining Balance Depreciation is its when analyzing incom e property loans. most common form and is computed by using the rate used for straight line deprecation DEBT-TO -INCO ME RATIO Borro wers monthly payment obligation s as a percentage of their income. DECREE OF FORECLOSURE Decree by a court ordering the sale of mortgaged property and the payment of debt owing to the lender out of the proceeds. DEBTOR (1) A party who "owns" the property that is subject to a security interest. (2) A person who owes DEDICATION An appropriation of land by its owner for some a debt. public use and a ccepted for su ch us e by au thorized pu blic officials on behalf of the public. A gift of privately owned land DEBT SERVICE The sum of money needed to the public or for public use. It may be voluntary or each payment period to amortize the loan or loans. involu ntary. DECEDENT A person who has died. DEDICATION, IMPLIED Involuntary dedication, resulting from an owners acquiescence to public use of his or her DECIDUOUS Trees which shed their leaves at property for at least 5 years. Also called common law seasonal intervals. dedication. DECISIONAL LAW SEE: Case Law DEDICATION, STATUTORY A dedication required by law; for example , dedication of property for streets and sidewalks DECK Usually an open porch on the roof or another as a p rerequisite to subdivision approval. part of the structure. DEDUCTION An amount a taxpayer is allowed to subtract DECLARATION The legal document that the from his or her income before calculating the tax on the deve loper of a condom inium must file a nd record in income. order to create a condom inium under state law. DEDUCTION, COST RECOVERY An income tax reduction DECLARATION OF ABANDONMENT A document that allows the taxpayer to recover the cos t of de prec iable recorded by an owner that voluntarily releases a property property used for the production of income or used in trade or from homestead protection. business. Formerly called a deprecation deduction. DECLARATION OF RESTRICTIONS SEE: CC&Rs

PAGE 24 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course.

DEDUCTION, REPAIR An income tax deduction deeds of trust. allowed for exp enditure m ade to keep property in ordinary, efficient operating condition, not allowed for a DEED OF TRUST, JUNIOR A second ( or third, etc.) Deed of princ ipal residence or person al use property. trust , with lower lien priority than the first trust deed.

DEED A written instrument that when properly executed DEED OF TRUST, SENIOR A deed of trust with higher priority and delivered conveys title. than another deed of trust on a property.

DEED CORRECTION A deed used to correct minor DEED RESTRICTION A restrictive covenant in a deed. mistakes in an earlier deed, such as misspelled names or errors in the legal description. DEEMER PERIOD Refers to the way this state regu lates rate fillings by title com panies, in other words, how appro val is DEED, GENERAL WARRANTY A deed in which the obtained for rate fillings by the regulatory authorities. grantor warrants the title against defects that might have arisen before or during his or her period of ownership. DEFAULT (1) Failure to fulfill a duty or promise or to COMPARE : Dee d, Special W arranty. discharge an obligation. (2) Omission or failure to perform any act. Failure to perform a legal duty or to discharge a promise. DEED, GIFT A dee d that is not supporte d by a valuable consideration; often lists love and affection as DEFAULT JUDGMENT A judgment obtained because the consideration. the defendant failed to appear and defend his case.

DEED, GRANT Any deed that uses the word gran t in DEFEASIBLE FEE Sometimes called a base fee or qualified its fee; a fee simple absolute interest in land that is capable of words of conveyance; carries two implied warranties and being defeated or terminated upon the happening if a specified conveys after-acquired title. The most commonly used event. deed in California. C OM PAR E: De ed, Q uitclaim. DEFEASANCE CLAUSE The clause in a mortgage or DEED , QUIT CLAIM A dee d that conveys a ny interest in deed of trust that gives the borrower the right to redeem his or a her property upon the payment of his or her property upon the piece of re al property th e grantor h as at the tim e dee d is payment of his or her obligations to the lender. executed. Often used to clear up a cloud on the title. It contains no warranties of any kind, and does not convey DEFEASIBLE Cap able o f being defeated. A defea sible after-acquired title. COMPARE Deed. Grant. estate is one that has a co ndition attached to the title, w hich if broken causes the termination of that estate. DEED IN LIEU OF A FORECLOSURE To prevent a foreclosure from happening an owner may give the DEFECT (See Cloud on Title) mortgagor the deed to the property to stop the foreclosure proceedings. DEFENDANT The party being su ed in a laws uit; the party against whom an action is filed. DEED OF RECONVEYANCE A legal instrument that conveys title from a trustee back to the borrower under a DEFERMENT A right to defer payment of an obligation (such mortgage on ce the m ortgage has been paid out, as paying taxes) until a later date. DEED OF TRUST A security instrument DEFERRED INTEREST See transferring title to property to a third person (trustee) as security for a debt or other obligation. DEFERRED MAINTENANCE Maintenance and accumulated repairs that have been postponed to later dates DEED OF TRUST, BLANKET 1. A trust deed that covers more than one parcel of real estate. 2. A trust DEFERRED PAYMENT OPTIONS The privilege of deferring deed tha t covers an entire building or developm ent , income payments to take advantage of statutes affording tax rather than an individual building or lot. benefits. DEED OF TRUST , FICTITIOUS A blank trust deed DEFICIENCY JUDGEMENT(Decree) A judgment given for form filed for record to save recording costs on real

PAGE 25 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. the unpaid bala nce of a debt re ma ining a fter the sur ety is security to ensure the performance of a contract. The money sold. A court de cree holdin g a de btor p erso nally liab le is usually intended to be applied toward the purchase price of for the shortage or insufficiency realized on the sale of property, or forfeited on failure to complete the contract. The secured property. The debtor owes the difference claim of the tenant to this money comes before any creditors of between the sale price of the property and the amount of the landlord. The landlord must furnish a written statement the secured debt. showing the amount received and the amount disbursed to the tenant. All unused deposit money must be returned to the DEFINE THE PROBLEM The first step in the tenant with proper accounting within two weeks after vacating appraisal process. premises.

DELAYED SELLING Most inventories of real estate DEPOSITION The formal, out of court testimony of a are held back because the owners expect the interest winess in a lawsuit, taken before the trial; used as part of the rates to drop. discovery proc ess, to determ ine the fans of th e cas e, or if or if the witness will not be able to attend the trial. A transcript of a DELEGATION OF POWERS The conferring upon by deposition can be introduced as ev idenc e in a trial. an agent upon another of all or certain of the powers that have b een conf erred upo n the agen t by the principal. DEPOSIT RECEIPT The docum ent used for a prospective real estate buyers offer to a seller, which also serves as the DELINQUENCY Failure to make timely payments on a buyer s rec eipt fo r deposit. If the seller accepts the rec eipt it loan. becomes their contract; also called an earnest money agreem ent or purchase and sale agreem ent. DELIVERY (OF A DEED) The unco nditional, irrevocable intent of a grantor immediately to divest (give DEPRECIATE To decline in value. up) an interest in real estate by a deed or other instrum ent. DEPRECIATED COST METHOD Method for adjusting com para ble sa les; adjustme nts are ca lculated from an an alysis DEMAND The desire to possess, plus the ability to of the depreciated replacement cost for each differentiating buy; an essential element of value. feature.

DEM AND D EPOSIT Checking accounts or transaction DEPRECIATION A loss in value fro m any cau se. T his deposit withdra wable upo n dem and, as opposed to tim e loss in value to real property may be caused by age or physical deposit. deterioration, or by functional or economic obsolescence.

DEMINIMUS VALUE Transactions with a value less DEPRECIABLE PROPERTY Property that s eligible for than a ce rtain minimum amount. depreciation (cost recovery) deduction because it will wear out and have to be replaced. DEMISE A transfer of an estate to another person for a specified period of years, for life, or at w ill. DEPTH Distance from the frontage of a lot to the rear lot line.

DENIAL A refusal or rejection. DEPTH TABLES Depth tables are used by appraisers when determ ining value o f bus iness pro perty th at varies in DENSITY The number of homes or lots per acre. depth.

DEPARTMENT O F HOU SING AN D URB AN DESCENT The passage of title to real property upon the DEVELOPMENT (HUD) A government agency death of the owner to his or her legal descendants. authorized to construct and provide financial assistance to housing development for low income tenants. DESCRIPTION A reference to certain maps, plats, and other instrum ents that are recorded with the county and serve to DEPARTMENT O F VETERANS AFFAIRS (D VA) A make a positive property identification. government agency that guarantees approved lenders against fo reclo sure loss o n loan s made to eligib le DESK COST The total of rent, telephone, utilities, veterans. advertising and other expenses divided by the number of desks found in a real estate office. DEPOSIT (MONEY) Money given to another as

PAGE 26 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course.

DESIGN TYPE Classification of buildings based on the DICTU A written observation, remark, or opinion by a judge use for which a structure is designed. to illustrate or suggest an argument or rule of law not incidental to the case at hand, and which, therefore, although persuasive, DEREGULATION An easing and relaxing of rules and is not binding on the judge. regulations for lenders. DIMINISHED UTILITY SEE: Accrued Depreciation. DESIGNATED SALES ASSOCIATES(FL) Two real estate licensees designated to represent the buyer and DIRECT CAPITALIZATION METHOD Income capitalization the seller as single agents in a nonresidential technique; value is estimated by dividing net operating income transaction. The buyer and seller must have assets of by the overall capitalization rate. more than $1 million or more and sign disclosures stating their assets meet the required threshold. DIRECT COSTS All of the costs that are directly involved with the physical construction of the structure, including labor, DESIST AND REFRAIN ORDER An order that materials and equipment, design and engineering, and the Real Estate Commissioner is empowered by law and subcontractors fees. refrain from committing an act in violation of the Real Estate Law. DIRECT MANAGEMENT CO URSE Expenses that can be attributed directly to the operation of a management firm or DETERIORATION The process of gradual departm ent. worsening or depreciation. DIRECT MARKET COMPARISON APPROACH SEE: Sales DETERMINABLE FEE An estate which may end on the Comparison Approach. happening of an event that may or may not occur. DIRECT MARKET METHOD Method of adjusting DETRIMENTAL RELIANCE SEE: Esto ppel, comparable sales; two or more comparable properties with one Promissory differing feature are used to estimate the amount of the adjustm ent fo r that feature. (Also ca lled the matched pa ir DEVELOPMENT PHASE First phase in the life cycle of method.) a neighborhood, consisting of the initial construction of improvements on vacant land. DIRECTIONAL GROWTH The direction in which the residential sections of a city seem destined or determ ined to DEVELOPMENT STAGE The first stage in a grow. development cycle. DISABLED PERSONS A hotel or lodging house need not be DEVELOPMENT METHOD (LAND DEVELOPMENT designed to accommodate disabled persons if it contains fewer METHOD) Method of vacant land valuation; than 25 rooms. development costs are subtracted from estimated gross sales, and finally, developer s profits are accounted for. DISABLED TENANT A landlord may not charge an The results are an estimate of raw land value. additional security deposit for a disabled tenant s guide dog. A landlord m ay mod ify residential rental property to accommodate the needs of disabled tenants. DEVE LOPMENT O F REG IONAL IMPAC T(DR I) A large proje ct affecting more th an on e cou nty. DISABILITY Any physical or mental impairment that substantially limits one or more of an individual s major life DEVELOPER WHO PLANS WELL To be one of activities, including carin for oneself, performing manual tasks, these a developer must anticipate risks and profits, walking, seeing, hearing, speaking and working. survey the market and measure present needs. DISAFFIRM To a sk a cour t to terminate a voida ble DEVISE A gift of real property by deed. contract.

DEVISEE One who rece ives real property und er a w ill. DISBURSEMENT The release of monies held in an escrow account; usually on the day that escrow closes. DEVISOR One who disposes of real property by will.

PAGE 27 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course.

DISCLOSURE REQUIREMENT If a real estate DISCRIMINATORY BUSINESS PRACTICES A broker licenc ee or seller willfully or negligently fails to com ply engaging in discrim inatory business practices is subject to with the disc losure req uirem ents he or she w ill be liable DRE discipline. for any actual damages suffered by a buyer. DISCRIMINATORY PREFERENCE Use of the words DISCLOSURE STATEMENT A statement that the Restricted , Exclusive and Private , in real estate Truth-in-Lending Law requires a creditor to give a debtor advertising should be avoided as they indicate discriminatory showing the finance charge, annual percentage rate, and preferences other required information. .

DISCOUNT To sell a promissory note before DISINTERMEDIATION The sudden withdrawal of maturity at a price less than the outstanding principal substantial sums of money savers have deposited with savings balance of the note at the time of sale. It may also be and loan associations, commercial banks, and mutual savings the amount deducted in advance by the lender from the banks. This term can also be considered to include life face of the note. insurance policy purchasers borrowing against the value of their policies. The essence of this phenomenon is financial intermediaries losing within a short period of time billions of DISCOUNT DEPARTMENT STORES A specialized dollars as owners of funds held by those institutional lenders type of shopping center or a larg e single store with exercise their prerogative of taking them out of the hands of emphasis on lower prices as a merchandising technique. these financial institutions. The closed door discount house is open only to qualifying members; the open discount house is open DISPOSABLE INCOME to the general public. The after-tax in com e a ho usehold receives to spend on personal consumption.

DISCOUNT POINTS A fee charged by the lender DISPOSSESS To deprive one of the use of real estate. when making an FHA or VA loan to offset the lower interest rate the lender will receive co mpared with DISPOSSESS PROCEEDINGS A suit brought by a landlord to conventional loan interest rates. One point is equal to 1 evict a tenant for defaulting in the terms of the lease. Also percent. known as unlawful detainer actions.

DISCOUNT RATE The interest rate that is charged DISSOLUTION OF MARRIAGE A . on money borrowed by banks from the Federal Reserve System. District A neighborhood that contains only one kind of land use. DISCOUNT TABLES Tables used by lenders and investors to show how much a given value is, called the DISTRICT COURT The main trial court in the federal court discounted value, based upon various interest rates and system and the lowest fe dera l court. It has jurisd iction in civil term s of m aturity. cases where the plaintiffs and defendants are from different state s (diversity o f citizenship) and the amount in controv ersy is over $10,000, and in cases involving a federal question. DISCRETIONARY POWERS OF AGENCY Those powers conferred upon an agent by the principal which empower the agent in certain circumstances to make DIVESTMENT The elimination or removal of a right or title, usually applied to the cancellation of an . decisions based on the agent s own judgement. DIVIDED AGENCY When a broker or an agent acts on DISCRIMINATION Failure to advertise real estate behalf of both parties he is considered a divided agent See for sale in non-English publications does not constitute dual agent unlawful discrimination if the property offered is in an area with a significant non-English speaking population. DOCTRINE OF CORRELATIVE USERS An owner may use only a reasonable amount of the total underground water DISCOUNTED CASH FLOW (DCF) Technique of supply for his or her be neficial use . income capitalization; estimated future investment returns are discounted to a present value. DOCUMENTAR Y TRANSFER TAX A state enabling act allows a county to adopt a doc umentary transfer tax to ap ply to

PAGE 28 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. all transfers of real property located in the county. Notice DOWER The right that a wife has in he r husb and's of payment is entered on the face of the deed or on a estate at his death. Dower has been abolished in California. separate paper filed with the deed. DOWN PAYMENT The difference between the sale price of DOCUMENTARY (DOC) STAMPS Tax applicable to the property and the loan am ount. property transfers and affixed to the grant deed; varies from county to county, city to city; sometimes called a DRE Ethics Regulations Do not compel a brok er to transfer tax cooperate with other brokers by sharing property information.

DOCUMENTARY STAMP TAX ON DEEDS, STATE Tax required on all deeds or other documents used as DRAW Usually applies to construction loans when conveyances. The charge is based on the total purchase disbursement of a portion of the mortgage is made in advance, price. as improvements to the property are made.

DOCUMENTARY STAMP TAX ON NOTES, STATE DUAL AGENCY Representing both principals in a Tax required on all promissory notes. The cost is based transaction. (Not a legal agency relationship in the state of on the face value of the note. Florida)

DEVELOPMENT PHASE First phase in the life cycle of DUAL AGENT Even if the buyer s broker does not intend to a neighborhood, consisting of the initial construction of be a dual agent by of his conduct, the seller s deposit receipt improvements on vacant lan d. agreement to employ him makes the seller his principal and client in addition to the buyer. Before a broker acting as a dual agent on the sale of one-to-four unit residential property may DOCUMENTS Legal instruments such as mortgages, relay confidential pricing information to the party, the broker contracts, deeds, options, wills, bills of sale, etc. mus t have written authority to relea se it. DOMICILE A person's permanent residence. DUE-ON- CLAUSE A clause in a deed of trust or mortgage that provides that upon the execution of DOMINANT TENEMENT The tenement obtaining additional deeds of trust or other against a the benefit of an easement appurtenant. That parcel of secured parcel of property, the lender may declare the entire land that benefits from an easement across another unpaid balance of principal and interest due and owing. parcel of property (servient tenement). DUE-ON-SALE CLAUSE An acceleration clause that DONEE The person to whom a gift is made. grants the lender the right to demand full payment of the mortgage or deed of trust upon sale of the property. A clause DONOR The person w ho makes a gift. in a deed of trust or mortgage that provides that if the secured property is sold or transferred, the lender may declare the DORMER A projection built out over the slope of a entire unpaid balance immediately due and payable. Its use roof, used to hous e window s on the upper floor to has been severely limited by recent court decisions. Also provide additional light and ventilation. called an alienation clause.

DOUBLE DECLINING BALANCE DEPRECIATION DUN & BRADSTREET A credit-reporting agency that (See DECLINING BALANCE DEPRECIATION) publishes credit ratings for many corporations and businesses.

DOUBLE ESCROW An escro w that will close on ly DUE PROCESS OF LAW A constitutional guarantee that upon the condition that a prior escrow is consum mated. the government will not interfere with a person's private The second escrow is contingent upon and tied to the property rights without following procedural safeguards first escrow. While double escrow is not illegal, unless prescribed by law. there is full and fair disclosure of the second escrow, there may be a p ossibility of fr aud or oth er ac tionable DURESS Unlawful constraint by force or fear. conduct by the parties. DUR ESS, ECON OM IC Threatening to take some action that DOUBLE-HUNG A window consisting of two sashes will be financially harmful to a person, to force him or her to that move up and down in a pair of channels and are sign a document; for example, threatening to breach a held open by tension springs.

PAGE 29 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. contract. Also called business compulsion. the property, transferring the servient tenement but retaining the dominant tenement. DUTIES OF AN AGENT A special relationship of trust by which one pe rson (ag ent) is authorized to EASEMENT BY IMPLICATION An easement created conduct business, sign papers or otherwise act. by law (not b y expr ess grant) whe n a pa rcel of land is divided, it there is a lon g-sta nding , apparen t use that is DVA Department of Veteran Affairs, established on reasonably necessary for the enjoym ent of im plied easement. March 15, 1989 to succeed the Veterans Adm inistration. COMPARE : Easem ent by Nec essity.

EASEMENT BY NECESSITY A special type of implied easem ent; w hen the dom inant teneme nt would be com pletely E useless without an easement, an easement exists even if it isn t a long-standing, apparent use.

EARNEST MO NEY DEPO SIT A deposit of m oney paid EASEMENT IN GROSS An easement that benefits a by a buyer for real property as evidence of good faith. partic ular individu al, not a parcel of property. Involves on ly a servient estate. A public utility easement is an example. EARNEST MONEY AGREEMENT SEE: Dep osit Receipt EASY MONEY Loose money policy of the federal reserve board. EASEMENT A right, privilege, or interest that one party has to use the land of another. Example: A right of EAVES The lower projecting edg e of a roof over the wall. way. A legal right to use a nother's la nd for one's benefit or the benefit of one's property (right-of-way). ECONOMIC BASE STUDIES An analysis of em ploym ent in the primary industries of the region. EASEMENT APPURTENANT An easement created for the ben efit of a particular parc el of prope rty. There is ECONOMIC LIFE The remaining useful life of an both a dom inant and a servient estate . The ease me nt is improvement or structure; that period during which an annexed to and pa rt of the dom inant property. improvement will yield a return on the investment.

EASEMENT, IMPLIED SEE: Easement by Implication. ECONOMIC OBSOLESCENCE The loss in value to property due to external causes such as zoning or a EASEMENT, NEGATIVE An easement that prevents the deteriorating neighborhood. It is also referred to as social servient tenant from using his or her own land in c ertain obsolescence. way (instead of allowing the dominant tenant to use it). Essen tially the same thing as a restrictive covenan t. ECONOMIC OVERSUPPLY A market condition in which available rental space is priced beyond the financial capabilities EASEMENT, POSITIVE An easement that allows the of potential tenants. dominant tenant to use the servient tenement in a partic ular w ay. ECONOMIC RENT The reasonable rental expectancy if the property were available for at the time of its valuation. EASEMENT BY PRESCRIPTION This brought about by open and notorious use over a long period of ECONOMIC TREND Pattern of related changes in some time. aspect of the e conom y.

EASEMENT, PRESCRIPTIVE An easement acquired EER Means Energ y Efficient R atio by prescription. EFFECT A SALE A provision in a requiring EASEMENT BY EXPRESS GRANT An easement the broker to obtain a signed contract from a ready; willing and granted to another in a deed or other docum ent. able buyer on the terms specified.

EASEMENT BY EXPRESS RESERVATION An EFFECTIVE AGE OF IMPROVEMENT The number of years easem ent create d in a deed when a lan downer is of age that is indicated by the condition of the structure, distinct dividing from chronological age.

PAGE 30 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course.

EFFECTIVE DATE OF VALUE (APPRAISAL) The payment of just compensation to the owner. The constitutional specific day the conclusion of value applies. or inherent right of a government to take private property for public good upon the payment of just compensation. EFFECTIVE GROSS RENT Gross rent, minus an allowance for vacancy and credit losses. EMPLOYEE Someone who works under the direction and control of another. COMPARE: Independent Contractor. EFFECTIVE INTEREST RATE The percentage of interest that is actually being paid by the borrower for the EMPLOYMENT AGREEMENT An agreement between broker use of the money, distinct from chronological age. and salesman must be kept by both broker and salesman for three years from date of termination. The amount of net income that remains after the deduction from gross EMPLOYER The individual who hires the services of income of bad debt vacancy factor and credit losses. another.

EGRESS Exit; the act or avenue or leaving EMPTY NESTER Older parents whose housing needs prop erty. change after their children have moved aw ay.

EIGHTEEN YEARS The legal age for getting a real ENCROACHMENT The projection of a structure onto the estate license land of an adjoining owner. A structure or natural object that unlaw fully extends into another's property. E.I.R. Abbreviation for Environm ental Impact Re port. ENCUMBRANCE (CLAUSE) Any claim, intere st, or right in ELECTIVE SHARE An estate defined as consisting of property possessed by another that may diminish the true 30 percent of the decedents s personal property and owner's rights or value in the estate. Examples include Florida rea l property, except homes tead exempt property mo rtgag es, easeme nts, or restriction s of any kind. A claim, claims. lien, or cha rge on property.

ELEMENTS OF COMPARISON Four categories of ENDORSEMENT See Indorsem ent. information about sales: terms of sale, time of sale, location elements, and physical elements. ENJO IN To prohibit an an, or command performance of an an, by court order; to issue an injunction. ELEMENTS OF VALUE Four prerequisites that must be present for an ob ject to have value : utility, sc arcity, EQA The California Environm ental Quality Act. dem and, and trans ferability. ENVIRONMENTAL IMPACT REPORT A report that must be ELECTRONIC DATA PROCESSING The use of a prepared whenever any agency or individual considers a com puter to co mpile and process information. project that may have a significant im pact on the environ ment, as directed by the California Environm ental Quality Act. ELLWOOD TECHNIQUE A mortgage/equity method of capitalization. ENVIRONM ENTAL PROT ECTIO N AGEN CY (EPA) A federal organization created by The National Environmental ELEVATION SHEET Drawings of the front and side Policy Act. The EPA s purpose is to centralize governments s views of the finished homes. environmental responsibilities.

EMBEZZLED FUNDS Are reportable as income for tax EQUAL CREDIT OPPORTUNITY Federal law prohibiting purposes. discrim ination in the extension of credit.

EMBLEMENTS Things that grow on the land EQUAL PROTECTION The Fourteenth Amendment to the require annual planting and cultivation. U.S. Con stitutio n and similar pro vision s in the California Constitution require each citizen to receive equal protection of EMINENT DO MAIN The right of the government and the laws. T here are no minimum standard s of protec tion; all certain others, such as public utilities, to acquire property equally situated individuals must simply be treated eq ually. for public or quasi-public use by condemnation, upon (The due proc ess claus e of th e Constitution im poses certain minim um standards of protection.)

PAGE 31 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course.

EQUILIBRIUM When supply equals demand. ERROR, HARMLESS A mistake by a trial judge that did not affect the final judgment in the case. EQUITABLE REMEDY A judgment granted to a plaintiff that is something other than an award of money ERRO R, PREJUDICIAL a mistake by a trial judge that may (damages); have affected the final judgment in the case. Also an injunction, , resc ission, and spe cific called reversible error (because it s grounds for reversing performance are examples. COMPARE: common Law the trial court s decision). Rem edy. ESCALATION The right reserved by the lender to increase EQUITABLE TITLE SEE: Title, Equitable. the amount of the payments and/or interest upon the happening of a certain event. EQUITY (1) The interest or value that on owner has in real property over and above the liens against it. ESCALATION CLAUSE A lease clause providing that rental (2) A part of our justice system by which courts seek to rate will increase or decrease according to selected index of supplement the strict terms of the law to fairness under economic conditions, such as the consumer price index. the circumstances, rather than on fixed legal principles or statutes. (3) Ownership in property, determined by ESCALATOR CLAUSE A clause in a contract that provides calculating the fair market value less the amount of liens for the upward or downward adjustment of certain items to and encumbrances. cover the specific contingencies set forth. A clause in a promissory note, lease, or other document that provides that EQUITY BUILD-UP The increase of th e owner's upon the passage of a specified time or the happening of a equity due to mortgage principal reduction and value stated event, the interest rate shall increase. appreciation. The of property to the state when EQUITY CAPITALIZATION RATE Factor used to there are no devisees or heirs capable of . estimate the value of the equity in the equity-residual Reversion of property to the state upon the death of an owner technique of capitalization and other mortgage and who has no heirs able to inherit. equity techniques; the equity cash flow divided by the equity value. ESCROW (ACCOUNT) The deposit of instruments and funds with a third neutral party with instructions to carry out the EQUITY FINANCING Lender financ es hig h-ratio provisions of an agreement or contract. A complete or perfect loan in exchange for a percentage of ownership and the escrow is one in which everything has been deposited to right to share in the property s cash flow. enable carrying out the instructions. The neutral third pa rty (stakeholder) who holds deeds or other docum ents pursuant to EQUITY PARTICIPATION A mortga ge tra nsaction in instructions for delivery upon completion or occurrence of which the lender, in addition to receiving a fixed rate of certain conditions. on the loan acquires an interest in the borrower s real property, and shares in the profits derived from the ESCROW AGENT The neutral third party holding funds or prop erty. something of value in trust for another or others.

EQUITY OF REDEMPTION The right to redeem ESCROW COMPANY When an escrow company acts as property during the foreclosure period. In California the escrow, it must be licensed by the Commissioner of mortgagor has the right to redeem within 12 months after Corporations. the foreclosure sale. ESCROW DISBURSEMENT ORDER (EDO) A course of EQUITY RESIDUAL TECHNIQUE Technique of action for determ ining the disp osition of a c ontested deposit. income capitalization; The net income remaining to the equity position (after mortgage payments) is capitalized ESCROW HOLDERS Lending institutions and attorneys can into an estimate of th e valu e of th e equ ity. act as escrow, as can brokers. Brokers can act only as escrow holders in a transaction if he charges the fees provided by law. EROSION The wearing away of the surface of the land by the action of wind, water, and glaciers, for ESCROW INSTRUCTIONS The document that authorizes example.

PAGE 32 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. an escrow agent to deliver items deposited in escrow year or any fraction of m ultiple thereof. It has a definite once the parties have complied with specified conditions. beginning and en ding date, and hence a known and definite duration. ESCROW MEMO The escrow memo contains the names of the buyer and the seller. It also contains ESTATE IN FEE SIMPLE SEE: Fee Simp le. information , is a form, and helps with the escrow instructions. ESTATE IN REMAINDER SEE: Remainder.

ESCROW NUM BER The file number assigned to an ESTATE IN REVERSION SEE: Reversion. escrow by the escrow officer for identification purposes. ESTATE IN SOLE Real property owned by a corporation. ESCROW OFFICER Also kno wn as an escrow agent, som eone qualified to perform all the steps necessary to ESTATE OF INHERITANCE An estate that may go to the prepare and carry out escrow instructions. heirs of the deceased. All freehold estates are estates of inheritance, except life estates. ESTATE The degree, quantity, nature, and extent of the interest that a person has in real property. (1) ESTIMATE A preliminary opnion of value. Appraise, set a Ownership interest in real estate. (2) The quality and value. quantity of rights in property. ESTIMATED REMAINING LIFE The period of tim e (years) it ESTATE AT SUFFERANCE An estate arising when the takes for the improvements to become useless. tenant wrongfully holds over after expiration of the term. The landlord has the choice of evicting the tenant asa ESTOP To ban, stop, or impede. trespasser or accepting such tenant for a similar term and under the condition of the tenant s previous holding. ESTOP NOTICE a notice served on the owner of Also called a tenancy at sufferance. prop erty or custodian of fu nds. It requ ests, with certain penalties for noncompliance, that any funds due to a general ESTATE AT WILL The occupation of real property contractor be paid to the claimant, laborer, or materialman. by a tenant for an indefinite period. It may be terminated at will by one or both parties. A leasehold tenancy, which ESTOPPEL A doctrine whereby one is forbidden to at common law could be terminated by either party at contradict or deny his or her own previous statement, act, or any time, without advance notice. Thirty days' notice are position. The doctrine that prevents a person from exercising a now required to terminate this type of estate in California. legal right, because that person previously acted in an inconsistent manner, so that a third person detrimentally relied ESTATE BY THE ENTIRETIES A tenancy created by on the earlier acts. the husband and wife jointly owning real property with instant and complete right of survivorship. ESTOPPEL CERTIFICATE A written statement that bars the signer from making a claim inconsistent with the instrument ESTATE FOR LIFE A freehold estate whose (comm only used with a ). duration is measured by and limited to the life or lives of one or more persons. ESTOPPEL, PROMISSORY A doctrine applied when som eone has made a tec hnically unen forceable prom ise to ESTATE FROM PERIOD TO PERIOD A leasehold another, and the other person has acted in reasonable reliance tenancy that continues indefinitely for successive periods on the promis e. If the person who relied on the promis e will of time, until terminated by proper notice. When the suffer harm unless it is enforced, a court may enforce it. Also periods are one month in duration, it is often called a called the doctrine of detrimental reliance. mo nth-to-m onth tenancy. ET AL Abbreviation meaning and others (other person). ESTATE TAXES These are a form of taxes that are paid off by the estate of the deceased. ETHICS A standard of conduct that all members of a given profession owe to the public, clients or patrons, and to ESTATE FOR YEARS A lease that will expire at a other members of that profession definite time or date. A leasehold tenancy of a fixed duration, being a definite and ascertainable period of a ET UX Abbreviation meaning and wife.

PAGE 33 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course.

seller, finds a buyer, the broker has earned the commission. EVICTION Disp ossession by le gal process, as in the termination of a tenant's right to possession through EXCLUSIVE AGENCY LISTING A written agreement re-entry or other legal proceedings. giving one agent the exclusive right to sell property for a specified period of tim e, but rese rving the right of the owner to EVICTION, ACT UAL Physically forcing someone off of sell the property himself or herself without liability for the property (or preventing them from reentering), or using payment of a commission. the legal process to make someone leave. COMPARE: Eviction, Constructive. EXCLUSIVE-RIGHT-TO-SELL LISTING A written agreem ent giving one agent the exc lusive right to sell property EVICTION, CONSTRUCTIVE When a landlord s an for a specified period of time . The agent may collect a (or failure to an) interferes with the tenant s quiet commission if the property is sold by anyone, including the enjoyment of the property, or makes the property unfit for owner, during the term of the listing agreement. An exclusive its intended use , to such an extent that the tenant is right to sell listing can best be identified as an Executory forced to move out. Unilateral Contract.

EVICTION NOTICE A landlord s legal notice to a EXCLUSIVE AGENCY AGREEMENT When a broker tenant explaining the tenant s default under the terms of receives an exclusive agency agreement from the seller, he the lease and informing him or her of a pending eviction owes a fiduciary relationship to the seller. suit. EXCLUSIVE RIGHT TO SELL AGENCY A contract EVICTION, RETALIATORY When a landlord evicts a hiring the broker as the only person authorized to sell property. tenant in retaliation for requesting repairs, filing a If anyone, including the seller, finds a buyer, the broker earns complaint against the landlord, or organizing or the commissions. participating in a tenants rights group. EXCULPATORY CLAUSE A provision in and EVICTION, SELF-HELP When a landlord uses physical other instrum ents seek ing to relieve one party o f liability fo r his force, a loc kout, or a utility shutoff to get rid of a tenant, negligence and other acts. In residential leases such clauses instead of using the legal process. are invalid, and in other leases the courts have limited the landlord's ability to escape liability for intentional acts, and for EVICTION, WRONGFUL When a landlord evicts a acts of affirmative negligence. tenant in violation of the tenant s rights. EXECUTE To complete, make, perform, do or to follow EVIDENCE All relevant information, facts, and out. To sign a document, intending to make it a binding exhibits adm issible in a trial. instrument. The term is also used to indicate the performance of a contract. EXCEPTIONS Conditional items listed on a preliminary title report and effecting the title,; would be excluded EXECUTED CONTRACT Com pleted and fully from cove rage by the title insuran ce com pany. performed by both parties.

EXCESS RENT The amount by which the total contract EXECUTION The legal process in which a court orders an rent exceeds m arket rent. official (such as a sheriff) to seize and sell the property of a judgment debtor to satisfy a judgment lien EXCESS LAND Land abo ve an d beyo nd what is needed for the of the site. EXECUTION LIEN A lien arising because of an execution on property. A judgment is not self-executing; however, when EXCHANGE A reciprocal transfer of properties a writ of execution has been obtained, the sheriff will levy between two or more parties. (seize ) prop erty, which creates a lien on the prope rty.

EXCLUSION General affecting title to real property EXECUTIVE The head of a governm ent, such as president, excluded from cove rage of a title insurance polic y. governor, or mayor.

EXCLUSIVE AGENCY A contract hiring the broker as EXECUTIVE POWER (FREC)(FL) Duties related to the the exclusive agent for the seller. If anyone, except the education of the licensees, the regulating of professional

PAGE 34 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. practices, and the publishing of materials. statistics for office properties classified by type of building, area and such EXECUTOR A person nam ed by the testato r of a w ill to carry out its provisions as to the disposition of the EXPORT PRODUCTION Goods and services produced for estate. A personal representative appointed in a will to sale or use outside the town or area in which they ar produced. administer a decedent's estate. EXPRESS Stated in words, spoken or written. EXEC UTO R/EXE CUT RIX A person named in a will to COMPARE: Implied. carry out its provisions . If it s a m an, he s an e xecutor; if it s a woman, she s an executrix. COMPARE: EXPRESS CONTRACT A contract whose elem ents administrator. are stated either orally or in writing.

EXECUTORY CO NTRAC A contract that is yet to be EXPROPRIATION To take by public authority through the preformed. power of eminent domain.

EXEMPT PROPERTY Property that has been decreed EXTENDED POLICY An ex tended ins uran ce po licy. to be excluded from taxation or claim by others. EXTENDER CLAUSE A clause in a listing agreement EXEMPTION A provision holdin g that a law or rule providing that for a specified period after the listing expires, the doesn t apply to a particular person or group. For broker will still be entitled to a commission if examp le, a pe rson entitled to a property tax exem ption is the property is sold to someone the broker dealt with during the not required to pay property taxes. An exemption can be listing term. Also called a carryover clause or safety clause. full or p artial.

EXHIB IT 1. Documentary or physical evidence subm itted in a trial. 2. An attachm ent to a docum ent. F EX PARTE By only one party or side. For example, an injunction obtained by evidence presented by only one FACADE The face of a building, especially the front face. side, without notice to the other parties. FACILITY MAN AGEM ENT AD MINISTRATOR (FMA) A EXPANDIBLE HOUSE A home designed for expansion designation awarded by BOMI based on the curriculum for and additions in the future. commercial property specialists who are responsible for real property as a corporate asset. EXPANSION A pha se of the business cycle characterized by increasing production. FACSIMILE (FAX) An ex act copy.

EXPANSION JOINT A fiber strip used to separate FACTOR MARKET A resource pool representing the four units of concrete to prevent cracking due to expansion as major elements of production that are bought and sold. a result of temperature changes. FACTORS OF VALUE The least important factor in figuring EXPANSION OPTION A lease clause granting a present value is the original cost. tenant an option to lease additional adjacent space after a specified period of time. FAILURE OF PURPOSE When the intended purpose of an agreement or arrangement can no longer be achieved; in most EXPEDIENTES The right to use another s land for a cased, this releases the parties from their obligations. specific purpose , sometimes known as the right -of-way. FAIR HOUSING ACT (TITLE VIII OF THE CIVIL RIGHTS ACT 1968) A federal law that prohibits discrimination in the sale, EXPENSES Certain items which appear on a closing rental or financing of housing based on race, color, religion, statement in connection with a real estate sale. sex, handicap, familial status or national origin. One of the regulations of this act is that hallways, doorways and common EXPERIENCE EXCHANGE REPORT An annual areas are accessible for the width of wheel chairs. BOMA publication containing income and expense

PAGE 35 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course.

FAIR MARKET VALUE The amount of money that An agency of the federal government that insures would be paid for a property offered on the open market mortgage loans. for a reasonable length of time with both the buyer and the seller knowing all uses to which the property could be FEDERAL HOUSING FINANCE BOARD Federal agency put and with neither party being under pressure to buy or that regulates the 12 Federal Home Loan Banks. sell. See market Value. FEDERAL INSURANCE CO NTRIBUTIO NS ACT (FICA) A FAMILIAL STATUS For the purposes of fair housing federal regulation requiring employers to pay retirement fund laws is not synonymous with marital status. taxes (social security) for employees.

FANNIE MAE The Federal National Mortgage FEDERAL LAND BANK SYSTEM Federal government Association (FNMA). Does conforming loans. agency making long term loans to farmers.

FARM AREA A selected and limited geographical FEDERAL NAT IONAL M ORTGAGE ASSOC IATION (FNMA) area to which a sales associate devotes special attention A federal corporation that provides lenders with a secondary and study; to farm an area neighborhood. mortgage m oney m arket.

FARMERS HOME ADMINISTRATION An agency of FEDERAL QUESTION A legal issue involving the U.S. the Dep artme nt of Agriculture. Prim ary responsibility is to constitution, a treaty, or a federal statute. Federal courts have provide financial assistance for farmers and others living jurisdiction to hear federal question cases, but they may also in rural areas where financing is not available on be decided in state court. reasonable terms from private sources. FEDERAL RESERVE SYSTEM The federal banking system of FASTTRACK CONSTRUCTION A method under the United States under the control of a central board of which construction of a building begins under a governors (Federal Reserve Board). It involves a central bank negotiated contract before all plans and specifications in eac h of 12 geo grap hical distric ts, with broad pow ers in have become final. Construction proceeds as plans controlling credit and the amount of money in circulation. They come off drawing board. are the primary government regulator in monetary policy activities. FEASIBILITY STUDY A report on the potential profitability of a propose real estate project. It includes FEDERAL SAVINGS AND LOAN INSURANCE considerations such as land area, physical features of CORPORATION (FSLIC) A federal corporation that the land, requirem ents of the project and estim ated cost. insures deposits in savings and loan associations.

FEDERAL DEPOSIT INSURANCE CORPORATION FEDERAL STATUTES Bankruptcy proceedings are initiated A fed eral corpo ration that insure s dep osits in under Federal statutes. comm ercial banks (FDIC). FEDERAL TRADE COMMISSION (FTC) A federal agency FEDERAL FAIR HOUSING LAWS Are not that investigates and eliminates unfair deceptive trade enforced by the Department of Justice practices.

FEDERAL HOME LOAN BANK (FHLB) A FEDERAL UN EMPLOYMEN T TAX AC T (FUT A) A district bank of the Federal Home Loan Bank System regulation requiring employers to file federal unemployment tax that lends only to savings and loan associations who are returns for employees. members. FEDERALLY RELATED TRANSACTIONS Any sa le FEDERAL HOME LOAN MORTGAGE CORPORATION transaction that ultimately involves a federal agency in either (FHLMC) A federal corporation that provides the primary or secondary mortgage market. Under FIRREA, savings and loan associations with a secondary state certified or state licensed appraisers must be used for mortgage money market for loans. It is also known as certain loans in federally related transactions. Freddy Mac. FEE An estate of inheritance in real property for life. FEDERAL HO USING ADMIN ISTRAT ION (FH A) FEE ABSOLUTE SEE: Fee Simple.

PAGE 36 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course.

FEE, CO NDITIO NAL Title that m ay be term inated by a does not relate to a specific transaction and is used for former owner if conditions stated in the deed are not m et. referenc e only. The only type of defeas ible fee that s rec ognized in California now. Also called fee simple subject to a FIDELITY BOND A security posted for the discharge of an condition subsequent. SEE: Power of termination. obligation of personal services.

FEE SIMPLE An estate in real property by which the FIDUCIARY A person in a position of trust and confidence, owner has the greatest po ssible power over the title. In as between principal and broker. A fiduciary may not make a modern use it expressly establishes the title of real profit from his or her position without first disclosing it to the property with the owner without limitation or end. He or beneficia ry. she may dispose of it by sale, trade, or will, as he or she chooses. In modern estates the terms "Fee" and "Fee FIDUCIARY DUTY That duty owed by an agent to act in the Simple" are substantially synonymous. highest good faith toward the principal and not to obtain any advantage over the latter by the slightest misrepresentation, FEE SIMPLE ABSOLUTE The highest estate concealment, duress or pressure. known at law. A freehold estate of indefinite duration, incapab le of being defeated by conditions or limitations. FIDUCIARY RELATION SHIP a relationship of trust and Sometimes simply called fee or fee estate. confidence, where one party owes the other (or both parties owe each other) loyalty and a high er standard of good faith FEE SIMPLE DEFEASIBLE (QUALIFIED) A fee than they owe to third parties. For example, an agent is a simple estate to which certain conditions or limitations fiduciary in relation to the principal; husband and wife are attach, such that the estate may be defeated or fiduciaries in relation to each other. terminated upon the happening of an act or event. Also called a fee simple subject to a condition subsequent FILE AND USE Title insurers in most states file rate estates. schedules, policy forms, and endorsem ent form s with the state insurance department; they may then use those rates and FEE SIMPLE DETERMINABLE A defeasible fee that is forms after a specified waiting interval; rates so filed are terminated automatically if certain conditions occur. No ma ndatory. longer recognized in California; now treated as a conditional fee. FILTERING DOWN The process whereby higher-priced properties become available to lower income buyers. FEE SIMPLE ESTATE The greatest interest that one can have in real property. An estate is unqualified of FINAL ORDER A decision made by FREC. indefinite duration, freely transferable and inheritable. FINANCE CHARGE Any charge a borrower is assessed, FEE SIMPLE SUBJECT TO A CONDITION directly or indirectly, in connection with the loan. SUBSEQUENT A fee simple defeasible estate that requ ires th e hold er of the fu ture interes t to act prom ptly FINANCIAL INSTITUTIONS REFORM , RECOVERY, AND to terminate the present interest, in order for that interest ENFO RCEM ENT AC T OF 1989 (FIRREA) Federal to be terminated. legislation to liquidate, consolidate, and recover the assets of troubled savings and loan organizations. FEUDAL TENURE A real property ownership system in which ownership rests with a sovereign who may grant FINANCIAL INTERMEDIARY Financial institutions such as lesser inte rests in return for service o r loyalty. T his is in banks, savings and loan associations, mutual savings banks contrast to allodial tenure. and life insuran ce com panies which rece ive relatively s ma ll sums of money from the public and invest them in the form of FHA Federal Housing Administration. large sums. A considerable portion of these funds are loaned on real estate. FHLMC Federal Home Loan Mortgage Corporation; also known as . SEE: Secondary FINANCING PROCESS The systematic 5 step procedure Marketing. followed by major institutional lenders in analyzing a proposed loan, which includes ---- filing of application by a borrower FICTITIOUS DEED OF TRUST A recorded deed of ;lender s analysis of borrower and property; processing of loan trust that discloses all the terms of the trust deed but documentation; closing (paying) the loan; and servicing

PAGE 37 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course.

(collection and record keeping). lend on a specified property to a specified borrower for a certain length of time. FINANCING CONTINGENCY The buyer must use reasonably diligent efforts to secure financing. FIRST AMENDMENT The constitutional amendment guaranteeing freedom of speech, press, assembly, and FINANCING STATEMENT The instrume nt filed to religion. perfect the security agreement and give constructive notice of the security interest, thereby protecting the FIRST LIEN POSITION The spot held by the deed of trust interest of the secured parties . (See Security with highest lien priority, when there s more than one deed of Agreement; Security Interest; and Secured Party.) The trust on the property. SE E: Deed of Trust, First. security interest in personal property. It is analogous to a mortgage on real property, except that it secures FIRST MORTGAGE A legal document pledging collateral for pers onal property. Under the U CC, it ma y be filed in a loan (See mortgage ) that has first priority over all other Sacramento with the secretary of state. claims against the property except taxes and bonded indebtedness. That mortgage is superior to any other. FINANCING REAL ESTATE Securing a loan by giving real property as collateral for paym ent of the debt. FIRST TRUST DEED The deed with the highest position of being c ollected first. FIND A PURCHASER A provision in a listing contract requ iring a brok er to p rodu ce a ready, willing and a ble FISCAL POLICY Programs by the federal government that buyer or offer on the terms specified. are intended to influence economic activity by making changes in government expenditures and taxation implemented by the FINDER'S FEE Money paid to a person for finding U.S. Treasurey. someone interested in selling or buying property. To conduct any negotiations of sale terms, the finder must FIVE YEARS Commissioner s Final Public Report Expiration be a licensed broker or he violates the law. date.

FINISH FLOOR The final covering on the floor, FIVE-YEAR FORECAST A long-term. projection of such as wood, linoleum, cork, or c arpet. estimated income and expense for a property based on predictable changes. FIRE INSURANCE REQUIREMENT FORM A form includ ed in lo an pa pers that a borro wer m ust sign, in FIXED EXPENSES An expense item in a property s which the borrower agrees to obtain fire insurance operating budget that does not fluctuate with rental income. coverage to protect the property and insure the lender. FIXED (INTEREST) RATE MORTGAGE A mortgage with an FIRST CHOICE Anybody may bid on a piece of interest rate that does not change over the life of the loan. property, there are no priorities. FIXED TERM A period of time with a definite ending date. FIRE SAFETY Smoke detectors and fire extinguishers are required by law, but most insurance companies also FISCAL POLICY Programs by the federal government that require them. are intended to influence economic activity by making changes in government expenditures and taxation. FIRE STOP A solid, tight closure of a concealed space placed to prevent the spread of fire and smoke FIXED EXPENSES Operating costs that are more or less through the space. permanent and that vary little from year to year.

FIRST DEED OF TRUST The loan o f first p riority; it FIXITY OF LOCATION The physical characteristic of real takes precedence over junior loans and encumbrances. estate that subjects it to the influence of its surroundings. Also called senior primary lien. FIXTURE An item of personal property that has been so FIRST TIME HOME BUYERS Generally buy homes attached to real property as to be considered part of that real with two or less bedrooms. prop erty.

FIRM COMMITMENT The am ount lenders agre e to FIXTURES Items that were originally personal property but

PAGE 38 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. that have b ecome part o f the real property, usu ally satisfy a debt. A mortgage or involuntary lien must be sold by because they are attached to the real property more or a court-ordered sale; a sale under a deed of trust may be either less permanently. Examples: Store fixtures built into the by court action or through a private trustee's sale. property and plumbing fixtures. FORECLO SURE, JUDICIAL A lawsuit filed by a mortgagee FLAG LOT Rear lot, behind other or lots, with or deed of trust beneficiary to foreclose on the security property a long, narrow access ro ad (like a flagpole). when the borrower has defaulted.

FLASHING Sheet m etal or sim ilar material used to FORECLO SE, NONJUD ICIAL Foreclosure by a trustee under protect a building form water seepage. the power of sale clause in a deed of trust.

FLAT FEE A property management fee expressed as a FOREIGN TRADE ZON E (FTZ) An area designated under dollar amount per year or month. federal law that permits manufacturing, shipping or storage of goods duty-free. FLAT LEASE SEE: Straight Lease. FORFEITURE Loss of a legal right, interest, or title by default. FLEA MARKET A large building or open area in which space is sold to individuals for the sale of merchandise, FORM REPORT Written appraisal report presented on a usually used or of a collectible nature. standardized form or checklist.

FLOOR AREA RATIO METHOD A Flexible method of FORMAL APPRAISAL An estimate of value that is reached limiting the size of a building in relation to the size of a by the collection and analysis of relevant data. A formal lot; used in some zoning ordinances as an alternative to appraisal is usually reported in writing. strict size and coverage limits. FORMAL COMPLAINT An outline of charges against a FNMA Federal National Mortgage association; also licensee that mu st be answered w ithin the statutory time lim it. known as . SEE: Secondary Marketing. FORMAL CONTRACT Any agreement that contains all the FOOTING The base or bottom of a fo undation wall, essentials of a contract, including that it is in writing and under pier. or column. seal; a contract dependent on a particular form.

FOOTLOOSE A term describing industries that are FORMAL HEARING (See Hearing) capable of being located almost anywhere. FORMAL WILL A will signed by the testator in the FOLLOW-UP What a sales associate does after a presence of two or more witnesses, who must themselves sign sale to m aintain cus tom er co ntact and good will. the will.

FORCIBLE DETAINER Wrongful retention of property FOUR UNITIES SEE: Unities, Four. by actual or constructive force. FOUNDATION Tha t part o f a structure or w all who lly or partly FORCIBLE ENTRY Entry into property without the below the surface of the ground tha t is the base or support, consent of the owner, by acts that constitute more than including the footings. mere trespass. FOURTEENTH AMENDMENT The constitutional amendment FORBEARANCE Any arrang em ent that delays that directs that no state can deprive a person of life, liberty ,or foreclosure action. property without due process or equal protection of the law.

FORECASTING Taking the past asa guide to the FRANCHISE A specified privilege awarded by a government future, together with judgements from the projections of or business firm which awards an exclusive dealership. the future. FRAUD Dec eption that deprives another perso n of his FORECLOSURE A legal proceeding to enforce a her rights or injures him or her. False representation or lien on such as a mortgage or deed of trust. The concealment of material facts that induces another justifiably to proces s by which secured property is seized and sold to rely on it to his detriment.

PAGE 39 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course.

FROST LINE The depth of frost penetration in the s oil. FRAUD, ACTIONABLE Fraud that me ets certain criteria, so that the victim can successfully sue. The FRUCTOSE Fruits, crops, and other plants. If the victim/plaintiff usually must prove that the defendant vege tation is produced by h um an lab or, su ch as crop s, it is concealed a material fan or made a false statement called fructus industrials; vegetation growing naturally is called (intentionally negligently) with the intent to induce the fructus naturales. victim to enter a transaction, and that the victim was harmed because he or she relied on the FRUCTUS INDUSTRIALES Plants planted and cultivated by misrepresentation. people, such as crops ( fruits of industry ).

FRAUD , ACTUAL Intentional misrepresentation or FRUCTUS NATURALES Naturally occurring plants ( fruits of concealment, or n eglige nt m isrep rese ntation, which is nature ). making a false statement without reasonable grounds for believing it is true. FRUITS AND NUTS Usually bring the highest monetary return per acre. FRAUD, CONSTRUCTIVE A breach of duty that misleads the person the duty was owed to, without an FSBO (For Sale BY Ow ner) Property offered for sale intention to deceive. typically without the use of a real estate broker.

FRED DIE MAC ( See FEDERAL HOME LOAN FULL CASH VALUE SEE: Value, Full Cash. MOR TGA GE CORP ORA TION .) FULLY INDEXED NOTE RATE As related to adjustable rate FREE AND CL EAR Title to property that is absolute mortgages, the index value at the time of application plus the and unencumbered. gross margin states in the note.

FREEHOLD An estate of fee. An estate in real FUNCTIONAL OBSOLESCENCE A loss value due to property that is either a or an estate in fee. adverse factors from within the structure which affect the utility of the struc ture, value and m arke tability. FREEHOLD ESTATE An estate of indeterminable duration, e.g., fee simple or life estate. FUNCTIONAL UTILITY The combination of the usefulness and attrac tivene ss of a pro perty. FRONT-END RATIO The ratio used by lenders to qualify a borrower for a loan, determined by adding the FUNDING The release of loan funds from a lending principal, interest, taxes, insurance, and mortgage institution to the escrow company, generally on the closing day insurance on the new loan and by diving by the of escrow or recordation. borrower s gross monthly income. FUNDING LETTER Written request to a lender for the FRONT FOOTAGE Prop erty m easurem ent fo r sale release of loan funds; also called request for loan proceeds. or valuation purposes. T he property measurem ent is along the street line, and each front foot extends to the FURTHER ASSURANCE A provision in a deed containing a depth of the lot. It is usually used in connection with covenant or warranty to perform any further acts the grantee com me rcial prope rty. (buye r) might re quire to perfect title to th e property.

FRONTAGE A term used to describe or identify that FURRING Strips of wood or m etal fastened to wall to part of a parcel of land or an improvement on the land even it, form air space, or to give the wall greater thickness. that faces the street or a body of water. The term is also used to refer to the lineal extent of the land or the FUTURE ADVANCES Futu re (ad ditional) loans m ade by a improvement that is parallel to and facing the street, e.g., lender and secured under the original deed of trust. The a 75 foot frontage. advances may be either optional or obligatory, but the deed of trust or m ortga ge m ust provide in the security ins trum ent that it FRONT MONEY The minimum amount of money will cover any such future advances. necessary to initiate a real estate venture, to get the trans action und erwa y. FUTURE APPRECIATION This appreciation is referred to as savings value.

PAGE 40 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course.

FUTURE BENEFITS The anticipated benefits the ownership. present owner will receive from the property in the future. G.I. LOANS Common term for loans guaranteed by the An estate that does not or may department of veterans Affairs for qualified veterans. Also entitle one to possession or enjoyment until a future time. known as DVA loans.

FUTURE VALUE The estimated lump-sum value of GIFT A voluntary transfer of property without consideration. money or property at a date in the future. GIFT DEED A deed for which there is no material consideration. G GINNIE MAE The GNMA. GIRDER A beam used to support other beams, joists, GABLE ROOF Pitched roof with sloping sides. and partitions. GAIN A profit, ben efit, or value gain GOING CONCERN VALUE The worth of a business, includ ing real estate, goodwill and earning ca pacity. GAIN, CAPITAL A gain realized on the sale of a capital asset. Re al estate is cons idere d a ca pital asset if it is GOLF COURSES One of the major things that builders like income property, or property used in a trade or business. to build close to or around. GAMBREL ROOF A curb roof, having a steep GOOD FAITH A party s honest intent to transact business; lower slope with a flatter upper slope above. free from any intent to de fraud the other party, each part s faithfulness to one s duty or obligations set forth by contract. GARNISHMENT A legal process to seize a debtor's property or money in the possession of a third GOOD FAITH IMPROVER Someone who makes an party. improvem ent on land in the mistaken belief that he or she owns the land. Also called an innocent improver GUARANTEE OF TITLE An assurance of clear title. GOODWILL An intangible but salable asset of a business GENERAL AGENT A representative authorized by the derived from the expectation of continued public patronage. principal to perform only acts related to a business or to employment of a particular nature. GOVERNMENT LOT A parcel of land that can t be divided into a regular section in the government survey, because of the GENERAL LIEN A lien on all the property of the debtor. convergence of range lines, or because of a body of water or som e other obstacle or irregularity. GEN ERAL PARTNERSHIP An association of two or more persons for the purpose of jointly conducting a GOVERNMENT NATIONAL MORTGAGE ASSOCIATION busines s, each being responsible for all the debts (GNM A) A federal corporation that assists in financing incurred in the conducting of that business. special assistance programs for federally aided housing. The corporation is also known as Ginny Mae. GENERAL PLAN A long-term, comprehensive plan for the develo pm ent of a city or cou nty, used as a guid e in GOVERNMENT SPONSORED ENTERPRISE (GSE) preparing zoning ordinances. Collective title for the secondary market consisting of the FNM A, FHLMC; and GN MA. GENERAL PLAN RESTRICTIONS Covenants, conditions, and restrictions placed on a subdivision or GOVERNMENT SECURITIES In order to combat inflation other large tract of land, designed to benefit and burden the Federal Reserve will buy government securities on the each lot in the tract. open m arket.

GENERAL A deed in which the GOVERNMENT SURVEY A method of specifying the grantor warrants the title against defects might that might location of a parcel of land using prime meridians , base line, have arisen before or during his or her period of standard parallels, guide meridians, townships and sections.

PAGE 41 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course.

GRADE Ground level at the foundation. agricultural land.

GRADUATED LEASE Usually a long-term lease that GRID A chart used in rating the borrower, property, and provides for adjustments in the rental rate on the basis of neighborhood. some future determination. For example, the rent may be based upon the result of appraisals to be made at GROSS FLOOR AREA A method of measuring industrial predetermined times in the future. space in which the area is the total of all floor space within the exterior walls of the building, with no allowance made for GRADUATED PAYMENT MORTGAGE (GPM) A structural projections and with a required minimum ceiling land loan for which periodic payments increa se at a height of 7½ feet. stated period of time and then level off for the remainder of the term of the loan. GROSS INCOME Total income before expenses are deducted. GRANT (1) To transfer. (2) A deed. (3) When used in a d eed, a technical term implying ce rtain GRO SS INC OM E MU LTIPLIER (G IM) The ratio of the warranties. A transfer or conveyance of real estate. selling price (or appraisal value) to the gross income of a property. M ay be multiplied by the gross incom e of a property GRANT DEED In California, a deed in which the word to produce an estimate of the property s value. Also known as grant is used as a work of conveyance and therefore by the (GRM). law implies certain warrantees, deed used to transfer property in California. By statute it impliedly contains GROSS LEASE A common residential lease under which only two limited warranties. the tenant pays a fixed rental and the landlo rd pays all operating expe nses for the prope rty. GRANTEE The buyer; a person to whom a grant is made. GRO SS M ARGIN With regard to an adjus table rate mortgage, an amount expressed as percentage points, stated GRANTING CLAUSE Wo rds in a deed that indicate in the note which is added to the current index value on the the granto r s intent to transfer an interest in property. rate adjustment date to establish the new note rate.

GRANTOR The seller; one who signs a deed. The GROSS NATIONAL PRODUCT The total value of all goods seller or person wh o executes a grant. and services produced in an economy during a given period of time. GRANTOR/GRANTEE INDEXES Indexes of recorded documents, with each document listed in alphabetical GROSS RENT M UTIPLIER A number that reflects the order according to the last name of the grantor (in the ratio between the sales price of a property and its gross grantor/grantee index) and grantee (in the monthly rents. It is used in the income approach of appraising grantee/grantor index). The recording number of each prop erty. document is given, so that they can be located in the public record. COMPARE: Tract Index. GROSS SALES The total sales ma de by a retail tenant at a leased premises. A proportion of gross sales is charged as GRATUITOUS AGENT A person not paid by the rental consideration under a percentage lease. principal for services on behalf of the principal, who cannot be forced to act as an agent, but who becomes GROSS SCHEDULED INCOME Total income from bound to act as an agent, but who becomes bound to act investment property before deducting any expenses. in good faith and obey the principal s instructions once he or she undertakes to act as an agent. GROUND LEASE An agree me nt leasing land o nly, without improvements, ordinarily with the understanding that GREAT DEPRESSION During this period one of the improvements will be placed on the land by the tenant. facts is that even though the economy slumped the population grew. GROUND RENT (1) Earnings from the ground only. (2) Earnings of improved property after an allowance is made GREENBELT LAW (FL) Legislation that authorizes for earnings of im provem ents. (3) A perpetual rent that a county property appraisers to assess land used for grantor in some states may reserve to himself or herself and agricultural purposes according to its current value as his or her heirs w hen he or she c onve ys rea l property.

PAGE 42 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course.

estate and all tha t goes with it as be ing inc idental. GROUP LICENSE A right granted a sales associate or broker associate to work various properties owned by HIGHER LAND COSTS This generally leads to the lot sizes affiliated entities under one owner developer. of the homes being decreased.

GROWING EQUITY MORTGAGE Loan with fixed HIGHEST AND BEST USE An appraisal phrase that intere st rate and s cheduled annu al increases in m onthly means that use of real property that is most likely to produce paym ents, resu lting in s horte r ma turity. the greatest net return on land or buildings, or both, over a given period of time. Qualifies as the highest and best use. GUARDIAN A person appointed by a court to administer the affairs of a minor or an incompetent HIGH FARM LAND COSTS To be able to come out at the person. end of the year with a profitable statement some cattlemen have had to plant fruits and vegetables. GUIDE MERIDIANS SEE: Meridians, Guide. HIGH LOCAL UNEMPLOYMENT The type of area that will except businesses that have high employment, but create H noise and dust. HIP ROOF A pitched roof with sloping sides and ends.

HARD MONEY LOAN Loan usually from a private HISTORIC COST Cost of a property at the time it was lender . Actual money loaned and secured by a trust constructed or purchased. deed as o pposed to a loa n car ried back by a se ller, in which no money passes. HIV Persons afflicted with HIV are not protected under federal fair housing laws. HABENDUM CLAUSE The to have and hold clause which may be found in a deed. HOLDER IN DUE COURSE One who has taken a negotiable note, check, or bill of exchange in due course (1) HANDICAP STATUS As defined in the Fair Housing before it was past due; (2) in good faith; (3) without Act, a physic al or m ental impairm ent that substantially knowledge that it has been previously dishonored and without limits one or more major life activities. notice of any defect at the time it was negotiated to him or her; (4) for value. Someone who acquires a negotiable instrument HAZARD COM MUNICATIO N STAN DARD PLAN An in good faith and without any actual or constructive notice of OSH A-mandated plan to be compiled by property defect. T he acquisition must occur before the note's maturity. managers detailing protective measures to be Such a holder takes the note free from any personal defenses implemented when handling hazardous chemicals. See (such as failure of consideration, fraud in the inducement) that Occupational Safety and Health Administration may be available against the mak er.

HAZARD INSURANCE Insurance that protects the HOLOGRAPHIC WILL A will that is entirely written, dated, and owner and lender against physical hazards to property signed by the testator in the testator's handwriting. No such as fire and windstorm damage. witnesses are needed.

HEADER A beam placed perpendicularly to joists HOLDOVER TENANT Tenant who remains in possession of and to which joists are nailed in the framing of openings leased property after the expiration date of the lease. such as windows, doors, and stairways. HOME EQUITY LOANS Due to the Tax Reform Act of 1986 HEARING A session in which testimony and these loans have become very popular due to their tax argu me nts are pre sented, especially be fore an official. advantages.

HEIRS Persons who succeed to the estate of someone HOMEOWNER S ASSOCIATION A nonprofit association who dies intestate (without a will). It sometimes indicates made up of homeowners in a subdivision responsible for anyone who is e ntitled to inhe rit a decedent's property. enforcing the subdivision s CC&Rs and managing other community affairs. HEREDITAMENT A term usually referring to real

PAGE 43 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course.

HOMEOWNERS ENDORSEMENT An addition to a HUD FORM A final accounting of closing costs, itemizing the policy of title insurance that extends the norm al policy to buyer s and sellers closing costs separately; a consumer cover items other than those stated in the standard protection form. policy; may include such items as mineral rights and mechanics liens. HUNDRED PERCENT LOCATION A retail business location considered the best available for attracting business. HOMEOWNER'S EXEMPTION An exemption or reduction in real property taxes available to those who HYPOTHECATE (HYPOTHECATION) To give something as reside on their property as of March 1. The current security with out giving up pos session of it. To pled ge property; amount is $70 off the normal tax bill otherwise due. to pledge a security interest in property without the transfer of possession. HOM E PURCHASE LOAN The leader in home An example is a trust deed. purchase lending is saving institutions. HOM ESTEAD (1) A home upon which the owner or I owners have recorded a Declaration of Homestead, as provided by California statutes, that protects the home against judgments up to a specified amount. (2) A ILLUSORY CONTRACT An agreement that gives the probate homestead is a similarly protected home appearance of a contract, but in fact is not a contract because property set aside by a California probate court for a it lacks one of the essential elements. widow or minor children. A special, limited exemption against certain judgments available to qualified IMMIGRATION REFORM AND CONTRO L ACT OF1986 homeowners. The act must be adhered to by all American employers.

HOTEL MANAGEMENT Property m anagers usua lly IMMUNE Real property that is owned by a unit of attend a co llege c ours e which is p art of a major in hotel- government and is not subject to taxation. restaura nt managem ent. IMPERFECT REAL ESTATE MARKET The following three HOMESTEAD EXEMPTION In som e jurisdictions, a factors help to make the real estate market imperfect, (1) reduction in the assessed value allowed for one s Imperfect knowledge, (2) Production time for new units, and (3) principal residence. Must sell and will sell sellers.

HOUSEHOLD One individual , or a group of IMPLIED Not expressed by words, but presumed from individuals, living in dwelling unit. facts, acts, or circumstances.

HOUSING AND URBAN DEVELOPMENT (HUD) IMPLIED BY LAW Required by law to be part of an DEPARTMENT. A U.S. government agency established agreement; read into an agreement even if it contradicts the to implement certain federal hous ing and comm unity express terms the parties agreed to. development program s. This federal age ncy attem pts to assure decent, safe, an d san itary ho using for all IMPLIED CONTRACT An agreement that has not been put Americans, and investigates complaints of discrimination into words, but is implied by the actions of the parties. in housing. IMPLIED LISTING An employment contract that arises HOUSING FINANCIAL DISCRIMINATION ACT (1977) from the conduct of the broker and the seller and may be Prevents discrimination in the purchase, enforceable even though not clearly spelled out in words. construction, rehabilitation, improvement of housing accommodations because of conditions, characteristics, IMPLIED WARRANTY SEE: Warranty, Implied. or trends in the neighborhood. IMPLIED WARRANTY OF HABITABILITY A warranty HUD The department of housing And Urban implied by la w in ev ery res idential leas e, that the prope rty is development which is responsible for the implementation safe and fit for habitation. and administration of U.S. government housing and urban development programs. IMPOUND (ACCOUNT) A trust account established by the lender to pay property taxes and hazard insurance.

PAGE 44 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course.

"Unearned increment" is used in this connection since the IMPROVEMENTS Man-made additions to rea l property. values increased without effort on the part of the owner. Gen erally increa sing the va lue of the prope rty. INEFFECTIVE Status of a license when it is inactive or has INCOME Amount earned or gained, not return of been suspended. capital. INDEMNIFY To make a payment for a loss. INCOME AND EXPENSE REPORT A mo nthly finan cial report s howing the inco me from property, INDEMNIFICATION Compensation to a person who has operating expenses and the amount remitted to the already sustained a loss. For example, insurance payment for owner. a loss unde r policy.

INCOME APPROACH (Income Approach to value) INDEMNITY a guarantee against loss; a building contractor An appraisal technique used on income may , for exam ple, give a title company an indem nity producing properties. Also known as the Capitalization agreement that renders the title company harmless against any Approach. liens that may arise due to the contractor s failure to pay his or her bills. INCOME FORECAST Gross or net income estimate. INDEPENDENT CONTRACTOR A person who contracts to INCOME (PRODUCING) PROPERTY Property that do a job for another but maintains control over how he or she generates rent (or other income) for the owner, such as will carry out the task, rather than following detailed an apartment building. Most of this property is owned by instructions. COMPARE: Employee. individuals. INDEX a number used by a lender to measure interest rate INCO ME RATIO The monthly payment on a loan changes over time; used as a guide for resetting rates of (including principal, interest, taxes and hazard insurance) adjustable rate loans. divided by thr borrowers monthly gross income. INDEX LEASE A lease containing an escalation clause. INCOME STATEMENT A summary of all income and expenses of a business for a stated period of time. INDEX METHOD Method for estimating construction costs; adjusts original costs to the current cost level by a multiplier INCOME STREAM Actual or estimated flow of net obtained from a published cost index. earnings over time. INDICATED VALUE Value estimate calculated/produced by INCOMPETENT Someone incapable of an appraisal approach. managing his or her own affairs by reason of age, disease, weakness of mind, or any other cause. INDIRECT COSTS All of the time and money costs involved Any increase. (1) A term frequently use d to refer to in a construction pro ject that are not directly involve d with construction itself. Examples are loan fees, interest, legal fees, INCREMENT the increased value of land because of and m arketing costs. population growth and increased wealth in the com munity. INDIRECT LIGHTING A method of illumination in which the light is reflected from the ceiling or other object outside the INCUBATOR SPACE A building located in an fixture. industrial park and divided into small units of varying sizes to accommodate young, growing companies that INDIRECT MANAGEMENT COSTS Expenses in the budget want to combine office and industrial space at one of a re al estate agency or paren t com pany that are partially location. attributable to the operation of the managem ent depa rtmen t.

INCURABLE DEPRECIATION Building defects or INDIVIDUAL BUSINESS OWNER When an individual problems that would cost more to repair than the owner ren ts office sp ace both the husband and the wife should anticipated value increase from such repair. sign.

INDEBTEDNESS A debt or obligation.(2)

PAGE 45 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course.

INDIVIDUAL LENDER Seller, third party, or real estate INGRESS The act of or av enue for entering prope rty. agent ; any person or group of persons other than institutional lenders. INHERIT To take property through a deceased's estate.

INDORSEMENT (1) Th e act of signing one's INITIAL MOVE-IN FEES This fee should be paid by money name on the back of a check or a note, with or without order or certified check. further qualification. (2) The signature described above. The title insurance policy usually has on e of these. INJUNCTION An order issued by a court to restrain one or more parties to a suit or proceeding from performing an act INDUSTRIAL PARK A suburban industrial subdivision deemed inequitable or unjust in regard to the rights of some designed to offer comp aratively sm all firm s land in other party or parties in the suit or proceeding. outlying areas with good accessability to transportation IN-MIGRATION Movement into a community or region by now often called a business park. new residents.

INDUSTRIAL LEASE The following should be INNOCENT IMPROVER SEE: Good Faith Improver. contained in this type of lease; what happens if a indus trial ten ant vio lates pollution law s, what happens if INQUIRY NOTICE SEE: Notice, Inquiry. there is a strike and picket lines block other tenants access and is the storag e of hazard ous materials INSTALLMENT A partial payment of a debt due in a allowed on the premises. series of payments.

INDUSTRIAL REAL ESTATE Properties that include INSTALLMENT NOTE A note that provides that payments of (1) sites in industrial parks or subdivisions, (2) a certain sum or amount be paid in more than one payment on redeveloped industrial parcels in central areas, (3) the dates specified in the instrum ent. industrial acreage. It is commonly owned by the com pany occ upying it. INSTALLMENT-SALE(Method) A method of reporting capital gains by installm ents for successive tax years to INFLATION Increase in prices for goods and services minimize the impact of capital gains tax in the year of the sale. resulting from too much money in circulation or rising costs of s ervices an d materia l. INSTALLMENT SALES CONTRACT Also known as an agreem ent of sale or a land contract. INFLATION ENDORSEMENT Coverage that may be added to the standard owner s polic y of title in sura nce; it INSTITUTE OF REAL ESTATE MANAGEMENT (IREM) adjusts the amount of coverage according to cost-of- A subsidiary group of the National Association of Realtors, living index. founded in 1933 to encourage professionalism in the field of property m anagement. INFOR MAL APPRAISAL An es tima te of value that is reached by using intuition, past experience, and general INSTITUTIONAL LENDER Lenders who make a knowledge. substantial number of real estate loans, such as banks, savings and loan associations, and insurance companies. INFORMAL HEARING A respondent who does not dispute allegations of material fact in the administrative INSTITUTIONAL PROPERTY Office buildings owned and complaint may request an informal hearing before the occupied by the same corporation. FREC for the final action complaint. INSTRUMENT A written legal document created to affect the INFOR MATION SU PERHIGHW AY A system of fiber rights of the parties. A document that transfers title, creates a optic cable s that will allow rapid trans fer of electronic lien, or gives a right to paym ent, such as a de ed, deed of trust, data of all different types(text, voice, video, etc.). or contract. (SEE: N egotiable Instrume nt.)

INFRASTRUCTURE The man-made physical features INSURABLE TITLE A property title that a title insurance of urban area, such as roads, highways, sewage and company is willing to insure. drainage system s and utility facilities necessary to support a concentration of population. INSURANCE CLAUSE A provision in a mortgage that requires the mortgagor to obtain and keep current a hazard

PAGE 46 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. insuranc e polic y. lende r for th e use of the lende r s money. CO MPARE : Princ ipal.

INSURANCE COMPANIES Are the most conservative INTEREST, FUTURE An interest in property that will or may income property ow ners . The y make th e polic ies pa yable become possessatory at some point in the future. SEE: to the insured and the lender. Remainder; Reversion.

INSURANCE, HOMEOWNER S Insurance against INTER EST-O NLY L OAN A straight non-a mo rtizing loan, in damage to the real property and the homeowner s which only interest is paid. Interest can be paid periodically or pers onal property. at maturity , when principal is paid in a lump sum.

INSURANCE, TITLE, EXTENDED COVERAGE Title INTEREST , PREP AID Intere st on a new loan th at m ust be paid insurance that covers problems that should be at the time of closing; covers the interest due for the first month discovered by an inspection of the property (such as of the loan term. Also called interim interest. encroachm ents and adverse possession) in addition to the problems covered by standard coverage policies. INTEREST RATE The percentage of a sum of money charged for its use. INSURANCE, TITLE, STANDARD COVERAGE Title insurance that protects against latent title defects (such INTEREST, UNDIVIDED A co-tenant s interest, giving him or as forged deeds) and undiscovered recorded her the right to posse ssion of the whole property, rather than to encumbrances, but does not protect against problems a particular section of it. SEE: Unity of Possession. that would only be discovered by an inspection of the prop erty. INTERIM FINANCING Any short-term financing, such as a Swing Loan or a loan used to finance construction, due at the INTANGIBLE ASSET Something of value lacking completion of the construction. Usually paid off with h the physical substance; existing only in connection with proceeds of a Take-out loan something else(e.g., the goodwill of a business). INTERIM OCCUPANCY When title and possession do Rights to something other not tra nsfe r at the sam e tim e, the real estate licens ee sh ould than tangible or physic al property. prep are an interim occupancy.

INTANGIBLE TAX ON MORTGAGES, STATE Tax INTERIOR LOT Lot with frontage on only one stree t. requ ired prior to a mortga ge be ing record ed. T he co sts is based on the value of the mortgage. INTERMEDIARY Financial institution that acts as a go- between for savers, depositors, and investors. INTEGRATION CLAUSE A provision in a contract document stating that the document contains the entire INTERMEDIATION The process whereby financial agreement between the parties. middleman consolidate m any sm all savings accounts belon ging to individual d epositors and in vest those funds in INTEGRATIVE NEGOTIATION Goals of the parties are large, diversified projects. mu tual gain, win-win INTERMEDIATE-TERM LOANS Temporary short-term INTENSITY The concentration of activity ( pedestrian loans, ordinarily three to ten years, that include home and vehicular traffic) used as a means of designating improvement loans, consumer loans or loans for the purpose land for commercial zones. of permitting a deve loper to delay long -term financing until more favorable loan conditions. INTENT, OBJECTIVE A person s manifested intention; what he or she appe ars to intend, whether or no t that is INTERMEDIATE THEORY STATE A state in which the what he or she actually intends. security of the mortgage is based on the title theory or deed of trust; but requires the lender to foreclose to obtain legal title. INTENT, SUBJECTIVE What a person actually intends, whether or not that is apparent to others. INTERMINGLE See Com ming le

INTEREST 1. A right or share in something (such as a INTERNAL RATE OF RETURN The rate of return generated piece of real estate). 2. A charge a borrower pays to a by an investment over the holding period; considers all future

PAGE 47 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. benefits, discounting them to equal the present value. INVESTMENT The outlay of money in the anticipation of income or profit; the sum risked or the property purchase. INTERNATIONAL COUNCIL OF SHOPPING CENTERS (ICSC) An organization of shopping center owners, INVESTMENT CONTRACT A type o f sec urity us ing the sale managers and major tenants that function as a medium of real property as the investm ent. for the interchange of information about shopping center operations. INVESTMENT PROPERTY Unimproved property held as an investment because it is appreciating in value. INTERNATIONAL FACILITY MANAGEMENT INVESTMENT VALUE The worth of a property to a ASSOCIATION (IFMA) An as sociation crea ted in particular investor based on his or her desired rate of return, 1980 to provide support to facility management risk tolerance, etc. professionals through career development, education and research programs. INVESTOR A person who holds property primarily for future appreciation in value for federal and state income tax INTERPLEADER A course of action when two purposes. contesting parties c annot reach an arbitrated agreem ent, A legal proceeding whereby the broker, having no INVITEE A person who enters another's land because financial interest in the disputed funds, deposits with the of an express or implied social invitation, such as a social court the disputed escrow deposit so that the court can guest. The term also covers certain government workers who determine who is the rightful claimant. A court enter someone's land, such as police officers and firefighters. proceeding initiated by a stakeholder, such as a broker Classification of such status was revoked by a recent court or escro w agent. case.

INTERROGATORIES Written questions submitted to INVOLUNTARY ALIENATION Title to real property may be the opposing party in a lawsuit during discovery, which acquired or transferred by operation of law or court order. he or she is required to answer in writing and under oath. INVOLUNTARY CONVERSION The loss of real INTERVAL OWNERSHIP Fee simple possession , for property due to destruction, seizure, condemnation, foreclosure the limited time purchased (one or more week s), of a sale, or tax sale. time -sha re unit, com plete with deed, title and equ ity. INVOLUNTARY INACTIVE The license status that results INTER VIVOS TRUST A living trust; inter vivos is a when a license is not renewed at the end of the license period. Latin expression meaning among the living . INVOLUNTARY LIEN Any lien imposed on property without INTERVAL OWNERSHIP See time sharing the consent of the owner.

INTESTATE A person who dies w ithout a will. IRREVOCABLE Incapable of being recalled or revoked; unchangeable. INTESTATE SUCCESSION Distribution of the property of a person who died intestate to his or her heirs. IRRIGATION DISTRICTS Quasi-political districts created under sp ecial laws to pro vide for wa ter se rvices to prope rty- ACTION A court action owners in the district. by a private landowner against the government, seeking compensation for damage to property that resulted from IREM CODE OF ETHICS A set of guidelines on good government action. business conduct for professional property managers.

INVER TED PYRAMID A way o f visualizing ownersh ip IRS Internal Revenue Service. of real property; theoretica lly, a property o wner own s all the earth, water, and air enclosed by a pyramid that has ISSUE A person s direct descendants: children, its tip at the center of the earth and extends up through grandchildren, great-grandchildren, and so on. the property boundaries out into the sky.

INVESTING The two main reasons for investing are incom e and profit.

PAGE 48 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course.

as a result of a judgment in a lawsuit. J JUDGMENT DEBTOR A person who has an unsatisfied money judgm ent levied against him or her.

JALOUSIE A screen or shutter consisting of overlapping horizontal slats that is used on the exterior to JUDGMENT LIEN A m oney judgme nt that, because it keep out sun and rain while admitting light and air. has been recorded, has become a lien against the judgment debtor's real property. JAMB The side post or lining of a doorway, window, or other opening. JUDGMENT REVERSED A decision by an appellate court disagreeing with an inferior court's decision and JOINDER REQUIREMENTS The rules requiring both modifying tha decision to conform with its findings. husband and wife to consent to and sign agreem ents and conv eyances conc ernin g com mu nity pro perty. JUDICIAL FORECLOSURE SEE: Fore closure, J udicial.

JOINT The space between the adjacent surfaces of two JUDICIAL REVIEW Wh en a court considers whether or not a components joined and held together by nails, glue, or statu te or regulation is con stitutio nal. cement, for example. JUDICIAL SALE A sale of property by court proceedings to JOINT NOTE A note signed by two or more persons satisfy a lien. who have equal liability for payment. JUMBO LOAN Amount of loan exceeding the maximum JOINT PROTECTION POLICY A title insurance policy purchased by FNMA and FHLMC. Also called a Nonconforming insuring the interest of both owner and lender. Loan.

JOINT TENANCY Joint ownership by two or more JUNIOR LIEN A lien lower in priority or rank than another or persons with right of survivorship. Four unities must be other liens. present: time, title, interest, and possession. Property held by two or more people with right of survivorship. JUNIOR MORTGAGE A mortgage second in lien to a previous mortgage. JOINT TENANCY DEED A deed that gives title to grantee as joint tenants. JUNIOR TRUST DEED Any trust deed which is not a forst trust deed. JOINT TR USTEESH IP A trust created jointly by husband and wife. JURAT Certificate f an officer, such as notary public or magistrate, who has witnessed someone s signature to a JOINT VENTURE In legal effect it is a partners hip sworn document; also, that part of an affidavit stating by whom, for a limited , specific business project. where, w hen, and before w hom it was sworn.

JOISTS One of a series of parallel beams to JURISDICTION The authority of a court to hear and which the boards of floor and ceiling laths or plaster decide a particular type of case. The power of a court to hear boards are nailed and supported in turn by larger beams, and decide a case or issue. girders, or bearing walls. JURISDICTION, APPELLATE The authority to hear an JUDGMENT A court of competent jurisdiction's final appeal (as opposed to conducting a trial). Compare: determination of a matter presented to it. The final Juris diction, Or iginal. decision by a court in a lawsuit, motion, or other matter. JURISDICTION, DIVERSITY The fed eral courts power to JUDGMENT AFFIRMED A decision by an hear cases in which a citizen of one state sues a citizen of appellate c ourt reaffirming, approving, and agreeing with another state (or country). an inferior court's decision. JURISD ICTION , GENERAL When a court s jurisdiction is not JUDGMENT CREDITOR A person who is owed money limited to specific types of cases.

PAGE 49 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course.

JURISD ICTION , ORIGIN AL The authority to conduct a LABOR-INTENSIVE INDUSTRY A business with a high trial (as opposed to hearing an appeal). COMPARE: concentration of employees per acre. Jurisdiction, Appellate. LABOR-ORIENTED INDUSTRY a business that tends to JURISD ICTION , PERSO NAL A court s authority over a locate near a low-co st labor pool. particular individual; usually obtained by service of process LACHES Unreasonable delay in asserting one's legal rights. JURISDICTION, SUBJECT MATTER The types of cases a particular court has authority to hear. LAFCO Local Agency Formation Commission. COMPARE : Juris diction Ge nera l.

JUST COMPENSATION SEE: Eminent Domain. LAISSEZ-FAIRE Allow to act; noninterference by JUST VALUE The fair market value. gove rnm ent in trade , industry, an d individual a ction gene rally.

LAND The surface, the soil and rocks beneath, and the airspace above that the landowner can reasonably use and enjoy. K LAND CONTRACT(of sale) A contract used in the sale of real prope rty whe n the seller wishes to retain legal title until all or a certain part o f the p urch ase price is paid by the buyer. It is KEY LOT Lot that has several other lots backing onto also referred to as an installment sales contract or an its sideyard. agreement of sale.

KEY TENANT A major department store in a LAND DESCRIPTION (LEGAL DESCRIPTION) A definite shopping center. Also called anchor store. and positive written identification of a specific parcel of land and its location without additional oral testim ony. KICKBACK Payment of money from someone other than the buyer or seller associated with the real estate LANDLOCKED Property totally surrounded by other business. property with no means of ingress or egress.

KIOSK A sm all sale s stall in a sh opping m all. LANDLORD The person who leases property; the owner of the prope rty. KITING Also known as ballooning, an unethical and fraudulent act in which dual contracts are made, one at LAND SALES CONTRACT Contract for Deed) A contract for the true purchase price and the second at a higher price, the sale of property, by which possession is delivered to the with the hope of duping the lender into granting a higher buyer, but title remains with the seller until full payment or the loan satisfaction of other stated conditions.

LAND RESIDUAL TECHNIQUE Technique of income capitalization; the net income remaining to the land (after income attribu table to the buildin g has been dedu cted) is capitalized into an estimate of value for the land.

L LANDS, TENEMENTS, AND HEREDITAMENT Inheritable lands or interest. LABOR An agent of production; cost of all operating expenses and wages except managem ent. LARGE PARCEL Total parcel of property from which a governmental body is acquiring only a portion through LABOR-EXTENSIVE INDUSTRY A business with a condemnation. low concentration of employees per acre. LATE CHARGE A charg e made by a lender agains t a

PAGE 50 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. borrower who fails to make loan installments when due. insurance, and repairs), in addition to the rent paid to the landlord. LATE SUPPORT The support that the soil of an adjoining owner gives to his or her neighbor's land. LEASE OPTION A lease in which the lessee is given the option to purchase the property at a specific price and under LATENT DEFECTS Defens that are not visible or the term s set out in the lease option agreem ent.. apparent; hidden defects. LEGACY A gift o f mo ney by w ill. LATERAL SUPPORT SEE: Support, Lateral. LEGAL ADVICE Legal advice is not something that a LATH A building material of wood, metal gypsum, or real gives. Refer the client to a lawyer. insulating board fastened to the frame of a building to act as a plaster base. LEGAL DOCUMENT SERVICE The process server must br at least 18 years of age and the person receiving the service LAUNDRY ROOM The building owner may own and must be at least 18 years of age. service the machines, outside vendors may own and handle the machines themselves or the machines may LEGAL DESCRIPTION A description recognized by law; a be operated on a card instead of a coin. description by which property can be definitely located by reference to government surveys or approved recorded maps. LAWFUL OBJECT A legal purpose. LEGALLY SUFFICIENT (FL) A com plaint that contains fac ts LAW OF FIXTURES Five tests to determine whether indicating tha t a violation has occurred of a F lorida statue , a an ob ject is a fixtu re or p erso nal property. DBPR rule, or a FREC rule.

LAY MEMBER One not belonging to or connected LEGATEE Someone who receives personal property (a with a particular profession. legac y) under a w ill.

LEASE A contract between owner and tenant, setting LEGISLATURE The arm of a government that has primary forth conditions upon which the tenant may occupy and responsibility for making new laws. use the prope rty and the term of the occupancy. LENDER A lender with assets of more than $10,000,000 LEASE ASSUMPTION A transaction where by a per year must not disclose to the public the race, sex and proerty owner agrees to take over the balance of income of the loan applicant s , the amount of loans requested payments on a prospective tenant s current lease if he or , and the action taken by the lender on the loan application. she rents spac e in the owner s pro perty. LENDERS ESCROW INSTRUCTIONS A lender s instruction LEASED FEE Property owner s interest in leased to an escrow company giving specific conditions that must be prop erty. met before escrow can close or the deed of trust can be recorded. LEASE, FIXED A lease in which the rent is set at a fixed amount, and the landlord pays most or all of the LENDER S TITLE INSURANCE Title insurance issued for operating expenses (such as taxes, insurance, and the unpaid mortga ge am ount to pro tect th e lend er against title repair costs). Also called a flat lease, gross lease, or defects. straight lease. LESSEE A tenant; the perso n who is entitled to LEASE, GRADUATED A leas e in wh ich it is possession of property under a lease. agre ed that the renta l paym ents will increase at intervals by an agreed amount or according to an agreed formula. LESSOR A landlord; the property owner who executes a lease. The estate of a tenant under a lease. (Se e Estate for Years .) LESS-THAN-FREEHOLD ESTATE A leasehold estate.

LEASE, NET A leas e requiring the tenant to pay all LET The temporary use of property to be rented. the costs of maintaining the property (such as taxes,

PAGE 51 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course.

LETTER OF CREDIT Letter from a bank asking that suspended or revoked license has been reinstated. the holder be allowed to withdraw money from the recipient bank or agency that will be charged back to the LIEN A lien makes the debtor's property security for the first bank. payment of a dept or the discharge of an obligation. A charge or claim against property as security for payment of a debt or LETTER OF INTENT An expression of intent to invest, obligation. develop, or purchase without creating any firm legal obligation to do so. LIENEE One whose property is subject to a claim or charge by another. LETTER REPORT One-to five-page written report summarizing the appraisal and its conclusions. LIEN EQUITABLE A lien arising as a matter of fairness, rather than by agreement or by operation of law. LEVEL Used in finance to express the paym ent where the monthly sum of principal and interest is always the LIEN, MATERIALMAN S Similar to a mechanic s lien, but same. based on a debt owed to someone who supplied materials (as opposed to labor) for a project. LEVEL -PAYM ENT PLAN A method of amortizing a mortgage whereby the borrower pays the same amount LIENOR One who has a claim or charge on the property of each month. another.

LEVERAGE Use of borrowed funds to purchase LIEN PRIORITY The order in which liens are paid off out of property, with the expectation of increasing the rate of the proceeds of a foreclosure sale. return to equity; som etim es called tradin g on the eq uity. An example of using m aximum credit. LIEN, PR OPER TY TAX A specific lien on property to secure payment of the property taxes. LEVY To execute upon; to seize and sell property to obtain m oney to satisfy a judgm ent. LIEN, S PECIF IC A lien that attaches only to a particular piece of property (as opposed to a general lien, which attaches LIABILITY The claim of creditors against a business. to all of the debtor s property).

LIABILITIES Debts or claims that creditors have LIEN, TAX A lien on property to secure the payment of taxes. against assets. LIEN THEORY STATES States in which the mortgagor LIABILITY INSURANCE Insurance protecting a (borrower) retains legal title to the property; lender (mortgagee) property owner or manger in case of damage to the has a lien on the property asa security for the debt. person or property of another due to the owner s or manager s negligence. LIFE ESTATE An estate in real property that continues for the life of a particular person. The life involved may be that of LICENSE Personal, nonassignab le authorization to the owner or that of some other person. An estate in property enter and perform certain acts on another's land. whose duration is limited to and measured by the life of a natural person or persons. LICENSEE Under the law before 1968, which classified persons who entered upon othe rs' land, a LIFE-E STAT E PUR AUTR E VIE A life estate for the life of licensee was someone who entered upon land with the another , where the measuring life is someone other than the owner's express or implied permission for a business life tenant. purpose. Referring to real estate licensee he may be given disciplinary action for being incompetent. LIFE INSURANCE COMPANY A business that collects a pers on s savings by sellin g con tracts (po licies) often paid Certification as a licensee; the granting through periodic premiums to provide cash payment upon by the state of a license to practice real estate. death.

LICENSE, RESTRICTED A real estate broker s or LIFE SAFETY AND SECURITY A trend in property salesperson s license that includes limitations on the management that provides for the management of the total licensee s right to do business; usually issued after a physical pro tection of tenants. Atypical life safety and security

PAGE 52 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. program consists of prevention, detection, containment or derived from ancestors. and counteraction. LINTEL A horizontal board that supports the load over LIFE SAFETY CONTROL CENTER A security center an opening such as a door or window. found most often in large complexes, responsible for handling various emergencies impacting complex LIQUIDATED DAMAGES CLAUSE An agreement workers. between the parties that in the event of a breach, the amount LIFE TENANT Someone who owns a life estate; the of dama ges shall b e liquid ated (set o r fixed). The am ount is person entitled to possession of the property during the set before the breach, usually at the time of making the measuring life. contract, on the assumption that the exact amount of damages is difficult to determine because of the nature of the contract. LIFETIME CAP Ceiling for rate increases over life of an ARM, expressed as a particular percentage rate or as LIQUIDATION The process of determining liabilities and so many points over or under the initial rate. apportioning the assets in order to discharge the indebtedness of a business to be sold. LITTORAL RIGHTS Rights to shoreline property on a large body of water, such as an ocean or lake. LIQUIDITY The ease with which property can be converted into cash. LIMITED APPRAISAL REPORT When exercising the departure provision you are usu ally wor king unde r this LIQUIDITY OF INVESTMENT The ease in which provision. investments can be quickly turned into cash.

LIMITED LIABILITY COMPANY A business entity LIS PENDENS A notice of pending litigation recorded to give where each owner has the limited liability of a corporate constructive notice of a suit that has been filed. A recorded shareholder and the tax advantages of a partner. notice that a lawsuit is pending, the outcome of which may affect title to property. LIMITED LIABILIT Y PARTNERSHIP A partnership composed of some partners whose contribution and LISTING An employment contract between a broker and liability are limited. There must always be one or m ore his principal (client). general partners with unlimited liability and one or more limited partners with limited liability. A special LISTING AGREEMENT An employment contract partners hip com posed of limited and general partne rs. authorizing a broker to sell, lea se, or e xchange an owner's The general partners have unlimited liability and total prop erty. management, whereas the limited partners have to voice in the management and their only financial exposure is to LITIGANT A party to a lawsuit; a plaintiff or defendant. the extent of their investment. In some ways the limited partners' interest is similar to that of stockholders in a LITIGATION A civil la wsuit; a judicial co ntrov ersy. corporation. LITTO RAL Legal rights related to land abutting an ocean, LINEAL The line of ancestry or a straight line sea, or lake, usually extending to the high-water mark.

LINEAR FOOT A measurement meaning one foot or LOAD FACTOR The ratio of rentable space to usable space 12 inches in length as contrasted to a square foot or a on a multiple-tenancy floor of an office building. cubic foot.

LINEAR REGRESSION Statistical technique for LOAN APPLICATION A lender s initial source of information calculating sales adjustment; line of best fit for two on a borrower/applicant and the collateral involved; stipulates variables. the amount of money requested and the repayment terms.

LINK Each deed or oth er instrum ent tra nsfe rring title in LOAN APPLICANT S AGE A lender may consider a loan the chain o f title, the history of ownership of a parcel of applicant s age when m aking a determ ination of the applicant s real estate. credit worthiness.

LINEAL Descended in a direct fam ily line; relating to LOAN ASSUMPTION In a loan assumption setup the seller

PAGE 53 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. and buyer are liable under the loan. LOAN-TO-VALUE-RATIO (LTV) Percentage of a loan to a property s appraised value; expressed in terms as to how much LOAN ASSUMPTION FEE A fee a lender charges a the lender will lend. buyer in return for granting the bu yer perm ission to assume an existing loan. LOAN TRUST FUND ACCOUNT (See Impound Accou nt.) LOAN CLOSING When all conditions of the loan have been met , the loan officer authorizes the recording of LOAN UNDERWRITING The process of approving or the trust deed and disbursement of funds. disapproving loan applications.

LOAN COMMITTEE The committee in a lending LOAN VALUE The lende r's ap prais ed va lue of the prope rty. institution that reviews and approves or disapproves the loan applications recomm ended by a loan officer. LOCAL ACCESS NETWORK A method of linking together personal computers within the same office to allow LOAN COMMITMENT A lender s agreement to lend a communication between the computers. specified amount of money; must be exercised within a certain tim e limit. LOCAL PRODUCTION Goods and services produced for sale or use in the town or area in which they are produced. LOAN, CONSTRUCTION A loan made to cover the cost of construction of a building, usually arranged so LOCK-IN CLAUSE A clause in a promissory note or land that the money is advanced in installments as the work contract that prohibits prepayment before a specified date, or progresses. prohibits it altogether.

LOAN, CONV ENTIO NAL Loan with only the property as LOCK-IN RATE Form al com mitm ent to lend a spec ific security, without the government insuring (FHA) or am ount or at a spec ific rate, guaran teed for a s pecific tim e guaranteeing (VA) the loan. period.

LOAN CORRESPONDENT A loan age nt usually LOFT A low-rent , multistory building located in the central used by distant lenders to help the lender make real business district, originally used for a combination of estate loans. manufacturing, office and storage space.

LOAN FEE A loan origination fee. LONG-LIVED, INCURABLE PHYSICAL DETERIORATION LOAN, GUARANTEED A loan in which someone (the Loss in value attributable to the major components of a VA, for example) guarantees repayment; so that if the building, when age is the major contributing factor and the cost borrower defaults, the guarantor reimburses the lender of repair would exceed the value that would be added to the for some or all of the loss. structure by the repair.

LOAN ORIGINATION Steps involved in the loan LOSS , CAPITAL A loss taken on the sale of a capital asse t. process, from application to close of escrow. Rea l estate is considere d a ca pital asset if it s inco me property, investment property, or property used in a trade or business. LOAN ORIGINATION FEE A fee a lender charges a borrower in exchange for issuing a loan; also called a LOSS FACTOR The ratio of rentable space to usable space loan fee. on a single-tenancy floor of an office building.

LOAN PACKAGE A group of documents prepared LOSS, PASSIVE A loss taken in connection with income along with a loan application to give the prospective property. SEE: Passive Income. lender complete details about the proposed loan. LOT A parcel of land; especially, a parcel in subdivision. LOAN, PURCHASE MONEY 1. A loan the borrower uses to buy the security property (as opposed to a loan LOT AND BLOCK DESCRIPTION The type of legal secure d by property the borrow er already owns). 2. A description used for platted property. The description states carryback loan. only the property s lot number and block number in a particular subdivisio n. To find out the exac t location of the p rope rty s

PAGE 54 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. boundaries you consult the plat map for that subdivision MANAGEMENT CONFIRMATION LETTER This letter at the county recorder s office. contains: where the owner has moved to, why he or she did not sell an d his o r her c urrent goal in renting the prope rty. LOT BOOK REPORT A short title company report providing the property owners name, the vesting, the MANAG EMENT PL AN The financial and operational property s legal description, and a plat map. strategy for the ongoing management of a property. It is based on the market analyses, a property analyses and the owners LOUVER An opening with a series of horizontal goals and consists of an operating budget, a five year forecast slats set at an angle to permit ventilation without and sometimes a comparative income and expense analysis. admitting rain, sunlight, or vision. Future data very important.

LUMP SUM Payment of the entire principal amount MANAGEMENT PRICING WO RKSHEET A method of due at maturity on a straight note. computing management fees by itemizing management activities, calculating the direct cost to the firm and adding a LUMP-SUM DOLLAR ADJUSTMENT Type of sales percentage for profit. adjustment; specific dollar amount is added or subtracted for each differing feature. MANDAMUS,WRIT OF A court decree ordering a lower court judge, public official, or corporate officer to perform an act acquired of that office. M MANDATE Direc tive fro m higher authority to a lower body. MARGINAL LAND Land which barely pays the cost of MAI A term that designates a person who is a working or using it. member of the American Institute of Appraisers of the National Association of Realtors. MARGIN The amount added to the index rate determined a borrowers adjusted interest rate on a adjustable loan. MAILBOX RULE An ac ceptance of a contract o ffer is effective as of the moment it is mailed, even though the MARGIN OF SECURITY The difference between the other party hasn t received it yet. amount of secured loan(s) on a property and its appraised value. MAINTENANCE CLAUSE A provision in a mortgage agreem ent that requires m ortgagors (borrowers) to MARKET APPROACH (to value) SEE: Sales Comparison maintain mortgaged property in good condition. Approach. MAINTENANCE STAFF OR PERSONNEL May be MARKET ANALYSES A regional and neighborhood studies either employees or independent contractors. They of economic. Demographic and other information made by the should report the number of people living in a residential property manager to determine the supply and demand, market unit, the use of extension chords and the storage of trends and other factors important in leasing and operating a flammable products. specific p rope rty. MAJORITY, AGE OF The age at which a person gains MARKET-ORIENTED INDUSTRY A busines s that tends to legal capacity; in California, 18 years old. COMPARE: locate near industrial users and consumers of its products. Minor.

MAKER A person who signs a promissory note; the MARKET DATA APPROACH (See Comparative Market borrower who promises to repay the debt. Analysis.)

MARKET EXPOSURE Making a reasonable number of MLS Mere membership in an MLS by a broker creates potential buyers of a property is available for sale. a dual agency with the principals of other broker members of the MLS. () MARKET METHOD OF DEPRECIATION SEE: Sales Data Method of Depreciation. MALFEASANCE The comm itting of an unlawful act, especially by a pu blic official. MARKET PRICE The price paid regardless of

PAGE 55 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. pressures, motives, or intelligence. real property and is not paid, that person is entitled to a lien against the property a s a m eans of securing paym ent. C ertain MARKET RENT The renta l incom e the property co uld statutory steps must be taken to file, record, and foreclose the command if placed for rent on the open market as of the lien. Mem o to set: A docum ent filed in a lawsuit which asks to effective d ate of the a ppra isal. be pla ced on the waiting list ("doc ket") for the nex t availa ble court date. MARKET TREND DATA Two forces the tend to affect value in this outlook are social and economic, and MEDIATION The act of having a third party attemprt to gove rnm ental and e nvironm ental. reconcile a dispute between two parties.

MARKET VALUE (1) The price at which a willing MEDIATION CLAUSE A clause in a contract requiring seller would sell and a willing buyer would buy, neither mediation in the even of a dispute. being under abnormal pressure. (2) As defined by the courts, it is the highest price estimated in terms of money MEDIATOR A person who helps the parties reach a that a property will bring if exposed for sale in the open voluntary agreem ent. market, allowing a reasonable time to find a purchaser with knowledge of the property's use and capabilities for MEETING OF MINDS SEE: Mutual Consent. use. MEGALOPOLIS A heavily populated urban area which MARKETABLE TITLE Title free and clear of includes many cities. reasonable objections and doubts; also called merchantable title. MENACE A threat to use duress. (Se e Duress.)

MERCHANTABLE TITLE (See M arketable Title.) MASTER IN CHANCERY An appointed assistant to the court. MERCHANTS ASSOCIATION An organization of shopping centers tenants intended to facilitate joint advertising, MATERIAL FACT A fact that would be likely to promotion and other activities beneficial to the center. affect a person's decision in determ ining whether to enter into a particular transaction. MERGER Uniting two or more separate properties by transferring ownership of all of them to one person. MATERIALM AN Someone who supplies materials for a construction project. SEE: Lien, Materialman s. MERGER OF TITLE The combination of two estates. Also COMPARE: Mechanic. refers to the joining of one estate burdened by an encumbrance and another estate benefitted by the MATURE PHASE SEE: Stable Phase. encumbrance. Whenever a benefit and a burden are merged, the encumbrance is extinguished. MATURITY DATE The date by whic h a loa n is supposed to be pa id off in full. MERIDIANS Imaginary north-south lines that intersect base lines to form a starting point for the measurement of land. MAXIMUM PERCENTAGE LEASE A type of percentage lease that sets a ceiling on the amount of MER IDIAN, PRINCIPAL In the government survey system, rent to be paid. the main north-south line in a particular grid, used as the starting point in numbering the ranges. California has the MEASURING LIFE SEE: Life Estate. Humboldt Meridian, the Mt. Diablo Meridian, and the San Bernardino Meridian. MECHAN IC Someone who performs work (con struc tion, im provem ent, or repa irs) on real property. METES Measurements. SEE: Lien, Mechanic s. COMPARE: Materialman. METES AND BOUNDS DESCRIPTION Terms used MECHANIC'S LIEN A lien given b y statute to to describe the boundary lines of land, setting forth all the persons supplying labor, m aterials, or other services to boundary lines together with their terminal points and angles. improve real property. Whenever a contractor, laborer, Metes means measurements Bounds means boundaries. or materialman provides labor or materials to improve

PAGE 56 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course.

MIDD LEMAN An intermediary who merely brings two MISREPRESENTATION An intentional or negligent parties together. suggestion or statement of a material fact in a false manner with the intent of deceiving someone into taking a course of MILL A taxation measurement equal to one tenth of action he would not otherwise normally pursue. one percent ($.001). MIST AKE, MUTUAL When both parties to a contract were MILLAGE A tax expressed as the number of mills to mistaken about a fan or a law. be applied. MIST AKE, UNILATERAL When only one of the parties to a MINERAL RIGHTS Rights to the minerals located contract was mistaken about a fan or a law. beneath the surface of a piec e of prope rty. MITIGATION Facts or circumstances that tend to justify or MINIMUM-GUARANTEED PERCENTAGE LEASE A excuse an act or course of conduct. type of percentage lease that requires the tenant to pay either a fixed minimum rental or a percentage of gross MIS Mortgage Information System sales, whichever is greater. MIXED CAPITALISM The U.S. economic system is a MINIMUM RENT Base rent that is the fixed minimum prim e exa mp le. Ma ny differen t types of businesses abo und in amount paid under a percentage lease. the U .S. giving it streng th economic ally.

MINIRESORT A budget motel that has been MIXED-USE DEVELOPMENT (MXD) A development in the transformed into a desirable weekend vacation spot by use of pro perty c om bining retail, o ffice-residential or industrial- capitalizing on local recreational areas and points of office residential development. interest. MOBILE HOME PARK The property manager of thid type of MINISTORAGE Small, secure storage units rented to rental must offer a one-year lease to all tenants. individ uals and s ma ll busin esses. Rent is usua lly established after surveying similar spaces to determine MODULAR HOME Building composed of modules market rents . construc ted on an a ssemb ly line in a facto ry.

MINOR (1) A person under the age of m ajority. MONETARY POLICY Programs by the Federal Reserve (2) In California all persons under eighteen years of age System that increase or decrease the supply of or demand for - the age of majority in California. Someone under age money in an effort to achieve designated economic goals. 18. MONTH-TO-MONTH TENANCY A lease of property for a month at a time, under a periodic tenancy that continues for MINOR, EMANCIPATED A minor who is or has been successive months until terminated by proper notice, usually 30 married, is on active duty in the armed forces, or has a days. declaration of emancipation from a court. An emancipated minor has legal capacity to co ntract. MONTHLY MORTGAGE PAYMENTS A specified amount of money that is paid every month to reduce the amount of the MINUS CASH FLOW An event that takes place when mortgage. there is not enough cash to cover expenses and service the mortgage debt. MOBILE HOME A stationary, non mo torized veh icle designed and equipped for human habitation. It may be MISDEMEANOR Any crime punishable by fine or transported to a homes ite by special equipm ent. imprison me nt other tha n a pe nitentiary. MOLDING Usually patterned strips used to provide MISFEASANCE A lawful act done in a negligent or ornamental variation of outline or contour, such as cornices, unlawful manner. bases, window and door jambs.

MISPLACED IMPROVEMENT A build ing that is MONUMENT A fixed object and point established by functionally obsolete because it is the wrong type or use surveyors or others to establish land locations. for its location; an example of functional obsolescence. MORAL TURPITUDE An act of corruption, vileness, or

PAGE 57 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. moral depravity; a disgraceful action or deed. Insurance against financial loss available to mortgage lenders from the Mortgage G uaranty Insurance Corporation, a private MORATORIUM The temporary suspension, company organized in 1956. usually by stature, of the enforcement of liability for debt. MORTGAGE YIELD The rate of return for a buyer of an MORTGAGE An instrum ent by which property is exiting loan that takes into consideration the interest rate, hypothecated to secure the payment of a debt or discount rate, loan servicing fees and the term of the loan. obligation. MORTGAGOR One who gives a mortgage on his or her MORTGAGE-BACKED SECURITIES Investment property to secure a loan or assure performance of an securities similar to bonds representing an interest in a obligation; the borrower under a mortgage. (See Debtor.) A pool of mortgages. borrower (property owner) of money under a mortgage.

MORTGAGE BANKERS Use their own fund s to MOTELS AND HOTELS Acce ss from freeways or highways make loans, sell loans to investors and service loans that is a very important factor of doing business. they have made. MULTIM EDIA A computer system or program that utilizes MORTGAGE BROKERS Differ from mortgage data in several different forms (i.e., text, voice , music and bankers in that they invest no capital; their prime function video) is to bring together borrowers and lenders, for this they are paid a fee. MULTIPLE Licenses held by a broker in two or more real estate firms. MORTGAGE COMPANY A mortgage loan company that originates, services, and sells loans to investors. MULTIPLE LISTING A listing, usually an exclusive-right-to- sell, taken by a member of an organization composed of real estate brokers with the provisions that all members will have the oppo rtunity to find an interested client; a cooperative listing. MO RTG AGE/EQUIT Y ANAL YSIS A technique used to A listing taken by a broker and shared with other brokers analyze the debt and equity return requirements of an through a specialized distribution service, usually provided by investm ent. the local real estate board. Generally, such listings are exclusive right to sell listings. PREMIUM (MIP) FHA insures lenders against loss on FHA loans;. The MULTIPLE REGRESSION Statistical technique for premium can be paid up front or financed as part of the calculating sales adjustments for more than one feature. loan. MUNICIPAL COURT An inferior trial court having jurisdiction MORTGAGE LOAN DISCLOSURE STATEMENT A in cas es inv olving up to $15,000 in money dam ages and in statement that informs the buyer of all charges and unlawful detainer actions in which the is under expenses related to a particular loan. $1,000 per month.

MORTGAGE, SATISFACTION OF The docum ent a MUTUAL ASSENT An agreement between the parties in a mortgagee gives the mortgagor when the mortgage debt contract. The offer and acceptance of a contract. has been paid in full, acknowledging that the debt has been paid and the mortgage is no longer a lien against MUTUAL CONSENT When all parties freely agree to the the property. COMPARE: reconveyance. terms of a contract, without fraud, undue influence, duress, menace, or mistake. Mutual consent is achieved through offer MORTGAGEE One to whom a mortgagor gives a and acceptance; it can be referred to as a meeting of the mortgage to secure a loan or performance of an minds. obligation: the lender under a mortgage. (See Secured Party.) A creditor (lender) under a mortgage. A lender MUTUAL MISTAKE SEE: Mistake, Mutual. who holds a m ortgage on a spe cific property as secu rity for the money loaned to the borrower. MUTUAL SAVINGS BANK A savings bank originated in the New England states in which depositors place their savings MORTGAGE GUARANTY INSURANCE with the right to borrow money for home loans. There are no

PAGE 58 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. mutual saving banks in California. prom issory note that me ets specified statutory requirem ents and is therefore easily transferable in somewhat the same MUTUAL WATER COMPANY A water company manner as money. The negotiable instrument can be passed organized by or for water-use rs in a given district, with by endorsement and delivery (or in some cases by mere the objec t of securing an am ple water s upply at a delivery), and the transferee takes title free of certain real reasonable rate. Stock is issued to users. defenses (such as failure of consideration, fraud in the inducement) that might exist against the original maker of the negotiable instrument. You are not responsible dor this if it has been forged or altered N NEGOTIABILITY Loan is capable of being sold on the secondary mortgage mark et.

NAR National Association of Realtors. NEIGHBORHOOD An area whose occupants and users share some common ties or characteristics. NAREB National Association of Real Estate Boards. This trade organization is now known as the NEIGHBORHOOD CENTER A shopping center of about National Association of Realtors. 30.000 to 100.000 square feet (15 to 20 retail spaces) catering to 1,000 fa milies or more . NARRATIVE REPORT A detailed formal written report of the appraisal and the value conclusion. NEIGHBORHOOD CYCLE The process of neighborhood change, involving four phases of change: de velopm ent, NATIONAL ASSOCIATION OF INDUSTRIAL AND maturity, decline, and renaissance. (SEE: Princ iple of Cha nge.) OFFICE PARKS (NAIOP) A professional association for developers, owners and managers of NEPA Abbreviation for the National Environmental Protection office/business/industrial parks. Act, a federal statute requiring all federal agencies to prepare an Environmental Impact Statement and meet other NATIONAL ASSOCIATION OF REALTORS (NAR) requirements whenever a major federal action is anticipated Has a professional organization of property managers that could significantly affe ct the environment. called the Institute of Real Estate Management. NET This type of adjustment is the net sum of positive and NATIONAL ENVIRON MEN TAL PO LICY ACT (NEPA) negative adjustments. A federal act passed in 1970 that requires the processing of environmental impact disclosures for major federal NET AREA SEE: Useful Area. action affecting the environm ent.

NET INCOME Gross annual income less income lost due to NATURAL PERSON A human being, an individual (as vacancies and uncollectible rents, less all operating expenses. opposed to an artificial person, such as a corporation).

NEGATIVE AMORTIZATION Occurs when normal NET INCO ME RATIO Net income divided by gross income. payments on a loan are insufficient to cover all interest then due , so that unpaid interes t is added ro principal. NET LEASE Lease under which the less ee pays all property Thus, even though payments are timely made, the expenses. principal gro ws with ea ch paym ent. NET OPERATIN G INC OM E (NO I) The resulting amount NEGLIGENCE Either the failure to act as a reasonable, when all operating expenses are subtracted from effective prud ent perso n, or th e perform ance of an act that would gross incom e. not be done by a reasonable, prudent person. NET LISTING A listing that provides that the age nt m ay reta in NEGOTIABLE Capable of being assigned or as compensation for his or her services all sums received over transferred by endorsement; checks, drafts and notes and above a stated net price to the owner. An employment are all negotiable. agreement that entitles the broker to a commission only in the amount, if any, that the sales price of the property exceeds the NEGOTIABLE INSTRUMENT (NOTE) A check or listing price. No implied or expressed warranties.

PAGE 59 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course.

NET PRESENT VALUE This the discounted cash flow outlined by the statutes and the requirem ents in the security approach to capital budgeting. instrument, which include a notice of default, right to reinstate, publication of sale, and trustee's sale. NET SPENDABLE INCOME Net operating income less vacancies, uncollectible rents, and other operating NONPOSSESSORY INTEREST An interest in property that expenses. does not includ e the right to poss ess and o ccupy the property; an encumbrance, such as a lien or an easem ent. NEUTRAL DEPOSITORY An escrow business conducted by som eone who is a licensed escrow holder. NON-RECURRING CLOSING COSTS Fees and costs that are paid only once usually at closing, such as title insurance or NEW CAR DEALERS The best location fora new car points. dealer is with other different new car dealers. NONRECURRING VARIABLE EXPENSE A type o f varia ble NOLO CONTENDERE A pleading o f no contest by a prop erty ex pense (e .g.; ca pital im provem ents) that o ccurs on ly defe ndant; a plea in a crim inal ac tion not admittin g guilt once. but subjecting the defendant to punishment as if it were a guilty plea. NONRECOGNITION PROVISION A provision in the income tax law that allows a taxpayer to defer recognition and taxation NOMINAL INTEREST RATE A state (or c ontract) rate of a gain until a later time or later transaction. of interest. May not correspond to the true or effective annual percentage rate (e.g., when payments are made NOT ARY PUBLIC An individual licensed by the state to monthly). charge a fee for acknowledging signatures on instruments.

NONBINDING ARBITRATION The decision of the NOTE A signed written instrument prom ising payment of a arbitrator is review able by the court. stated sum of money . Shortened name for a promissory note. A note may contain all the following clauses, request for notice, NONCOMPETING TENANT RESTRICTIONS A lease prepayment penalty and late charges. clause granting a retail tenant an exclusive right to operate w ithout com petition on the property. NOTE, DEMAND A promissory note that is due when-ever the holder of the note dem ands payment. NON-CONFORMING LOAN A loan for an amount that exceeds the Fannie Mae/Freddie Mac guide lines for a NOTICE, ACTUAL Actual knowledge of a fan, as oppo sed to conforming loan. The limit is adjusted annually. Also knowledge imputed by law. known as a jumbo loan. NOTICE OF COMPLETION A notice recorded after NONCONFORMING USE A property use that doesn t termination of work on improvements, limiting the time in which conform to current zoning requirements, but is allowed me chanic's liens c an be filed agains t the prope rty. because the property was being used in that way before the present zoning ordinance was enacted. NOTICE OF CESSATION A notice recorded by a property owner when construction on the property has ceased, although NONFIDUCIARY LENDER Loan sources such as the project hasn t been completed; it limits the period in which individuals who owe no agency duty, because they lend laborers and suppliers can file mechanics liens. their own funds rather than invest on behalf of other lenders. NOTICE OF CHANGE OF TERMS OF TENANCY This notice may be used for rent increases, to notify tenant of new NONFREEHOLD ESTATE A lease tenancy. (See property m anager and to no tify tenants that they must begin to under E states for the four types of lease hold estates.) pay for certain utilities,

NONINSTITUTIONAL LENDER Lenders on real NOTICE OF DEFAULT A notice that is record ed in the county estate loans other than banks, insurance companies, recorder's office stating that a trust deed is in default and that and savings and loan associations. the holder has chosen to have the property sold. The trustor (property owner) has three months after the date of recording NONJUDICIAL FORECLOSURE Foreclosure and to reinstate the loan . Recorded notice that a trustor has sale of property without resort to court action, by private defa ulted on his secured debt. The correct nam e for this is sale. For deeds of trust the foreclosure provisions are request for notice .

PAGE 60 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course.

obstructs the free passage or use, in the customary manner, of NOTICE, INQUIRY When there were circumstances any navigable lake or river, bay, stream, canal, or basin, or any that should have alerted someone to a possible problem public park, square, street, or highway. A legal wrong arising and caused him or her to investigate further, he or she from acts or use of one's property in a way that unreas onably may be held to have had notice of the problem. interferes with another's u se of his property.

NOTICE OF INTENTION To s ell und er bulk NUISANCE RENT RAISE The am ount of m oney a property transfer law would be recorded in the county where the manager can raise current rents without causing a vacancy business is located. based on the theory that the tenant will pay rather than suffer the trouble and expense of moving. NOTICE OF LEVY A notice recorded by the receiver after a court has issued a decree of foreclosure. O NOTICE OF NONCOMPLIANCE (FL) Issued by the DBPR in the case of a minor rule violation that does not OBJECTIVE INTENT SEE: Intent. Objective. endanger the public health, safety and welfare. OBLIGATORY ADVANCES Disbursements of money that NOTICE OF NONRESPONSIBILITY A notice the lender is required to make, under terms of the loan, over provided by law designed to relieve a property owner the period of the construction loan. from responsibility for the cost of work done on the property or materials furnished for it when the work or OBLIGEE A pro mis or; a p erso n to whom another is materials were ordered by a person in possession. bound by a promise or another obligation. Notice relieving an owner from possession. Notice relieving an owner from mechanic's liens for work on OBLIGOR property not ordered by that owner. A borrower or m ortgagor.

OBSERVED CONDITION METHOD OF DEPRECIATION NOT ICE TO PAY RENT OR QUIT A notice to a SEE: Cost-to-Cure Method of Depreciation. tenant to vacate rented property. Also called a three-day notice. Notice given to a tenant in default of his lease terms or on his rent, which directs him either to cure the OBSOLESCENCE Loss in value due to reduced default or to vacate the premises. This should only be desirability and usefulness of a structure because its design used when there is an existing lease. and construction become obsolete; loss because of becoming old-fashioned and not in keeping with modern needs. NOTICE OF SALE A notice issued by a trustee (or by OCCUPATIONAL SAFETY AND HEATH ADMINISTRATION the receiver after a decree of foreclosure) setting the date for the foreclosure sale. (OSHA) a federal organization empowered to prescribe and legislate the use of potentially toxic chemicals and compounds, and other safety rules for the workplace. NOVATION The acceptance of a new contra ct in substitution for the old contract, with the intent that the new contract will extinguish the original contract. OFFER A proposal to create a contract, which signifies Som etimes encountered in transfers of deeds of trust, the prese nt intent of th e offeror to be legally b ound by his where the new owner assumes the debt and the lender, prop osal. through novation, releases the former owner from any liability under the original promissory note and deed of OFFERS TO PURCHASE Any offer to purchase received trust. prior to the closing of a sale must be presented by the broker unless instructions stating otherwise are received from the NOW ACCOUNTS Negotiable order of withdrawal, an seller. interest bearing checking account permitted for the first time by savings and loan associations and banks as of OFFEREE A person to whom an offer is made. 1982. OFFEROR A person who m akes an offer. NUISANCE Anything that is injurious to health or indecen t or offens ive to the senses, or any obstru ction to OFFICE BUILDINGS Have had a national vacancy rate of the free use of property so as to interfere with the about 11%. com fortable en joym ent of life or property or unlaw fully

PAGE 61 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course.

OFFICE OF THRIFT SUPERVISORS (OTS) A branch OPERATING EXPENSES Expenses required to run a of the United States Treasury Department that replaced property. Includes fixed, variable, and reserves for the Federal Home Loan Bank Board as regulator of the replacement. thrift industry. OPERATING STATEMENT Written record of a property s OFFICE PARK See business park gross income, expenses, and resultant net income for a given period of time. OFFIC E POLICY M ANUAL This contains objectives of the business enterprise, employee and personnel OPINION An agent s opinion is not a sueable matter. policies and safety regulations, and job descriptions and benefits. OPINIO N, JUDICIAL A judge s Written statement of a decision in a court case, outlining the fans of the case and OFFICIAL RECORDS A master set of books kept by explaining the legal basis for the decision. the county recorder in which copies of all recorded documents in that county are stored; may be OPINION OF TITLE An attorney s written evaluation of the microfilmed. condition of title to a real property, based upon careful examination of the abstract of title. OFF-PRICE CENTER A specialized type of shopping center recognized by the Urban Land Institute; a variation OPINION OF VALUE An estim ate of a property s worth on the discount departm ent store concept. given by a licensee for the purpose of a prospective sale.

OFFSET STATEMENT Statement by owner of a deed of OPTION CONTRACT A right to have an act performed in the trust or mortgage against the property, setting forth the future; a right given for a consideration to purchase or lease a present status of the debt and lien. Also called a property upon specified term s within a sp ecified tim e; a beneficiary statem ent. contract to keep an offer o pen for a particular period of tim e. The right of a person to buy or lease property at a set price at OIL COMPANIES Because they have large tracks of any time during the life of a contract. land and are ample funded these companies are suited to develop large tracts of land. OPTION TO RENEW A lease provision giving the tenant the right to extend the lease for an additional period of time on ON-SITE JOB PROGRAM Employment of tenan ts specified terms. occupying low-cost residential buildings to perform maintenance work in these buildings. OPTIONEE The person to whom an option is given.

OPEN-END MORTGAGE OR DEED OF TRUST OPTIONOR The person who gives an option. (CLAUSE) A mortgage containing a clause that permits the mortgagor or trustor to borrow additional OPTION LISTING A listing that also includes an option, money without rew riting the m ortgage or deed of trust. permitting the broker to buy the property at the stated price at OPEN MARKET TRANSACTION Transaction in which any time during the listing period. both buyer and seller act willingly, with full knowledge of all details of the property and transaction, and under no OPTION ON PROPERTY Allows the buyer to buy within pressure. certa in restriction s but does not m ake buyer obliga ted to buy.

OPEN LISTING An authorization give n by a OPTION TO PURCHASE An option giving the optionee the property-owner to a in which the agent right to buy property owned by the optionor at an agreed price is given the nonexclusive right to secure a purchaser. during a specified period. Open listings may be given to any num ber of agents without liability to compensate any except the one who ORAL CONTRACT A verbal agreement, one not reduced first secures a buyer ready, willing, and able to meet the to writing. terms of the listing or who secures the acceptance by the seller of a satisfactory offer. ORDINANCE A law passed by a political subdivision of the state (such as a town, city, or county). OPERATING BUDGET A projection of income and expense for the operation of a property over a one-year ORIENTATION Placem ent of a ho use on its lot with regard to period. its exposure to the rays of the sun, prevailing winds, privacy from the street, and protection from outside noises.

PAGE 62 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course.

OVERAGES Unexplained overages in trust accounts may ORIGINATION FEE Fee paid to the lender for not be used to offset shortages. originating and closing the loan; typically 1% of the loan amount. OVERLAPPING TRUST DEED See Blanket Deed of Trust or Mortgage OR-MORE CLAUSE A simple prepayment clause that permits the borrower to make a normal payment or OWNER OF THE FUNDS All profits earned by a broker any larger amount, up to and including the entire through misuse of trust belong to the owner of the funds. outstanding ba lance, without a prepaym ent penalty. OW NERSHIP The right of a person to use and possess OSTENSIBLE That authority which a person property to the exclusion of others. reasonably believe an agent possesses because of the acts or om issions of the princip al. OWNERSHIP IN SEVERALTY Own ersh ip by a s ingle individual. COMPARE: Concurrent Ownership. OSTENSIBLE AGENCY An agency implied by law because the princip als intentionally or inadv erten tly OWNER S TITLE INSURANCE Title insurance issued for caused a third pers on to believe som eone to be his the total purchase price of the property to protect the new agent, and that third person acted as if that other person homeowner against unexpected risks. was in fact the principal's agent.

OST ENSIB LE PAR TNERSHIP One or more parties cause a third party to be deceived into believing that a P business relationship ex ists when no su ch re lationship exists. PACKAGE LOAN (MORTGAGE) Loan secured both by real OTS Took over the responsibilities of the disbanded and personal property, usually appliances and other fixtures. Federal Home Loan Bank Board. PACKAGE TRUST DEED OR MORTGAGE A trust deed OUSTER One co-tenant refuses to allow occupancy by secured by both real property an d personal property. the other co-tenant. (Applianc es, furniture etc.)

OUTLAW The Statue of Limitations has expired. PAPER Notes in lieu of cash.

OVERBUILDING Two things caused by overbuilding PANIC SELLING SEE: Bllockbusting. are lower rents and increased vacancy factor. PAR The face amount of a loan with no premium or OVERAGE A percen tage of gro ss sales over a certain discoun t. amount paid to an owner in addition to a minimum base rent; often required in percentage leases. PARCEL A lot or piece of real estate, particularly a specified part of a larg er tract.

OVERAGE RENT Amounts paid over and above the PAROL Oral or ver bal. base rent, under a percentage lease. PAROL CONTRACT An oral or verbal contract. OVERALL CAPITALIZATION RATE (OAR) The relationship between net income and value for the total PAROL EVIDENCE RULE A rule of courtroom evidence property. Used to capitalize income. that once the parties make a written contract, they may not then introduce oral agreements or statements to modify the OVERHANG The part of the roof that extends beyond terms of that written agreement. An exception exists for fraud the walls and that shades buildings and covers walks. or mistake, which will perm it the parties to offer evide nce to vary the terms of the writing. OVER IMPROVEMENT An im provem ent that is not the high est and be st use for the site on which it is PARQUET FLOOR Hardwood flooring laid in squares or placed, by reason of excessive size or cost. patterns.

PARTIAL EVICTION A situation in which the landlord s

PAGE 63 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. negligenc e renders all or part of the prem ises unus able partnership, all partners have unlimited liability and, absent to the tenant for the purposes intended in the lease. other agreements, share equally in the management and profits of the business. PARTIAL RECONVEYANCE (DEED) In a deed of trust or mortgage, a clause that perm its release of a PARTN ERSHIP, GENERAL A partnership in which each parcel or part of a parcel from the effects and lien of that mem ber has an equal right to manage the business and share security instrument. The release usually occurs upon the in the profits, as well as an equal responsibility for the paym ent of a specifie d sum of m oney. partnership s debts. All of the partners are general partners.

PARTIAL RELEASE CLAUSE A clause in a trust PARTNERSHIP, LIMITED A partnership made up of one or deed tha t provides for the relea se of pert of the property more general partners and one or more limited partners. from the lien of the trust d eed upon paym ent of a specific portion of the debt. PARTNERSHIP PROPERTY All property that partners bring into their business at the outset or late r acq uire fo r their PARTIAL TAKING Governmental agency acquiring business; property owned as tenants in partnership. SEE: only a portion of a property through condemnation. Ten ancy in partners hip

PARTICIPATION When a lending institution sells a PARITY WALL A wall erected on the line between two part interest in a block of loans to another institution or adjoining properties that are under different ownership for the agency. use of both owners.

PARTICIPATION CERTIFICATE Proof of PASSIVE INCOME Income (rents) received from income membership in a trust cooperative granted in a particular property, as opposed to wages, salaries, interest, dividends, or amount , usually with right to occupy a unit in prop erty royalties. An IRS term. owned by trust. PASS-THROUGH SECURITIES Certificates pledging a PARTITION ACTION A legal action by which co- group (pool) of existing government-backed mortgages used owners seek to sever their joint ownership. The physical for the purpose of channeling funds into housing markets. division of property between co-owners, usually through court action. PATENTS (1) Conveyance of title to government land. (2) An ambiguous legal description. Deeds used by the U.S. PARTIT ION, JUDICIAL A court action to divide up a government when confirming or trans ferring ownership to property among its co-owners, so that each owns part of private parties. it in severalty, or (if it s not practical to divide the property physically) each gets a share of the sale proceeds. PATIO HOME SEE: Zero-Lot-Line Home.

PARTITION, VALUNTARY Wh en co-owners agree to PAYEE The person entitled to payment under a promissory terminate their co-ownership, dividing up the property so note. that each owns a pie ce of it in severalty. PAYMENT CLAUSE A provision in a promissory note, deed PARTN ER, GENERAL A partner who has the authority of trust, or mortgage, permitting the debtor to pay off the to manage and contract for a general or limited obliga tion before maturity. partnership, and who is personally liable for the PAYOFF CHECK Final disbu rsem ent check to a lender to partnership s debts. pay off a loan in full.

PARTNER, LIMITED A partner in a lim ited partne rship who is prim arily an inves tor an d doe s not partic ipate in PAYOR Person who pays the sum on a note due to a payee. the management of the business, and who is not personally liable for the partnership s debts. PENALTY CLAUSE A provision in a mortgage that requires that requires the buyer to pay a penalty in money if the PART NERSHIP An association of two or more mortgage payments are made in advance of the normal due persons to unite their property, labor or skill, or any one date or if the mortgage is paid in full ahead of the due date. or combination thereof, in prosecution of some joint busines s, and to share the profits in certain propo rtions. PENNY The term, as applied to nails, that serves as a An agre ement of two or more individuals jointly to measure of nail length and is abbreviated by the letter d . undertake a business enterprise. If it is a general

PAGE 64 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course.

PERCENTAGE ADJUSTMENT Type of sales real property. (See Real Property.) Property that is movable, adjustment; the estimated difference between the as opposed to real property, which is immovable; also includes comparable sale and the subject is first calculated as a intangible property and leasehold estates. percentage of the sale price of the comparable, and then applied as an upward or downward adjustment to the PERSONAL REPRESENTATIVE Administrator for a price. deceased person s estate.

PER-UNIT-COST-METHOD A method of computing PERSONALTY Personal property. management fees based on the management firm s capabilities and the direct c ost of ma naging a s pecific PERSONAL USE PROPERTY Property that a taxpayer owns number of units. for his or her own use (or family use), as opposed to income property, investment property, dealer property, or property used PERCENTAGE FEE A property management fee in a trade or business. express ed as a percentage of the gros s collectible income from a property. PETITION TO CONFIRM Filed with the court when a party refuses to comply with the arbitration award. PERCENTAGE LEASE A lease on property, the rental for which is determined by the amount of business done PETITION TO REVIEW A request to a court of appeal by the tenant, usually a percentage of gross receipts ask ing to exam ine the rec ord of the p roce eding s in a s pecific from the business, with provision for a m inimum renta l. case.

PERCOLATION The ability of the soil to absorb water. PETITIONER A person who petitions the court on a special proceeding or a motion. PER DIEM By the d ay; an allowa nce for da ily expenses. PHYSICAL CONDITION OF PROPERTY When evaluating the physical condition of a building it is also important to note PERFORMANCE Point when a party or parties to a the num ber and size of the units and the staff size. contract fulfill the prom ises or ob ligations in the contract. PHYSICAL DETERIORATION OR DETERIORATION The PERFORMANCE BOND A bond furnished to loss of value from all causes of age and action of the elements. guarantee that a builder will perform in ac cordance with Loss in value brought about by wear and tear, disintegration, the contract terms and that the property at completion use and actions of the elem ents. will be free of mechanic s liens. PIER A column of masonry used to support other structural PERIMETER HEATING Baseboard heating or members. any system in which the heat registers are located along the outside walls of a room, especially under the PITCH The incline or rise of a roof. windows. PITI The monthly paym ents nece ssary to co ver princip al, PERIODIC COST A type of fixed property expenses interest, taxes, and insuranc e. that occurs on a regular but infrequent basis. PLAINTIFF The party who initiates a lawsuit; the person PERIODIC TENANCY A leasehold estate that who sues another. continues inde finitely for su ccessive periods of time , until terminated by proper notice. When the periods are one PLANNED UNIT DEVELOPMENT(PUD) A development month in duration, it is often called a month-to-m onth (usually residential) with small, clustered lots designed to leave lease. more open space than traditional subdivisions have. Each individual lot is substandard, has inadequate parking, and has PERMANENT FINANCING See Take-out Loan equity that often increases at a faster pace than other association housing. PERSONAL INJURY A term com monly used in tort (e.g. negligence cases) indicating an injury to one's being PLANNING Devising ways and means for achieving desired or body (for example, cuts or broken bones) as opposed goals. to injury to his property. PLANNING COMMISSION A local government agency PERSONAL PROPERTY Any property that is not responsible for preparing the community s general plan for

PAGE 65 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. development. SEE: General Plan. POINT OF BEGINNING (POB) The starting (and ending) place in a land survey using the metes-and -bounds method of PLANS AND SPECIFICATIONS Architectural and property description. engineering drawings and specifications for construction of a building , including description of materials and POINT OF CONTACT INFORMATION Any means by which manner in which they are to be applied. to contact the brokerage firm or individual licensee including mailing address, physical street address, e-mail address, PLANT DEPARTMENT Department in a title company telephone numbers, and fax machine numbers. where research materials and copies of official docum ents are kept. POLICE POWER The right of the state to enact laws and regulations and its right to enforce them for the order, PLATE BOOK A large book containing subdivision safety, health, morals, and general welfare of the public. The plats, kept at the county recorder s office. power of the state to prohibit acts that adversely affect the public health, welfare, safety, or morals. (Zoning and building PLATE A horizontal board placed on a wall or supported codes are examples of exercise of the police po wer.) on posts or studs to carry the trusses of a roof or rafters directly; a shoe or base member, as of a partition or POLIC Y MAN UAL The notebook of written rules and other fram e; a sm all flat board placed on or in a wall to regulations that set desired standards and procedures in an support girders and rafters, for example. office.

PLAT M AP Map of land subdivision or housing POORER NEIGHBORHOODS These neighborhoods suffer development. the most during a recession.

PLEDGE Dep osition of perso nal property by a PORTFOLIO LENDER A lender that keeps loans for its own debtor with a creditor as security for a debt or portfolio, rather than selling the loan on the secondary market engagement. to Freddie Mac or Fannie Mae.

PLEDGEE One who is given a pledge as security. POST AND BEAM This type of framing is larger-sized (See Security Pa rty) lumber used so that the framing members can be spaced farther ap art. PLEDGOR One who gives a pledge as security. (See Debtor) POSSESSION 1. The holding and enjoyment of property. 2. Actu al phys ical oc cupation of rea l property. PLOTT AGE or ASSEMBLAGE INCREMENT (VALUE) The appreciation in unit value created by joining POSSESSION DATE Day when the buyer actually moves on smaller ownerships into one large single ownership. to the property; may be different from the close of escrow or recording date. PLYWOOD (1) Lam inated wood made up in panels. (2) Several thicknesses of wood glued together with POSSESSORY INTEREST An interest in property that grains at different angles for strength. includes the right to possess and occupy the property; not necessarily ownership. PMI Private mortgage insurance. See mortgage insurance. POTABLE Water suitable for drinking.

POINT OF BEGINNING (POB) The starting point in a POTENTIAL GROSS INCOME The total annual income a metes and bounds description; described by reference to property would produce with 100% occupancy and no a monument. collection or vacancy losses.

POINT In the context of a loan, a point is equal to 1% POWER OF ATTORNEY An instrument authorizing a of the loan amount and would be included in the loan person to act as the agent of the person granting it. A special costs. power of attorney limits the agent to a particu lar or specific act, as a landowner may grant an agent special power of attorney POINTS (See Discount Points) to convey a single and specific parcel of property. Under a general power of attorney, the agent may do almost anything POINT ESTIMATE The final estimate stated in a for the principal that the principal could do him self or herself. A single dollar amount. document authorizing a person (an attorney-in-fact) to act as

PAGE 66 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. an agent. of a note before it actually becomes due. A fee or charge imposed upon a debtor who desires to pay off his loan before POWER OF SALE CLAUSE A clause in a deed of its m aturity. Not all prepaym ent clauses pr ovide for a p enalty, trust giving the tru stee the right to fo reclo se no njudicially and in many real estate transactions the law regulates the (sell the debtor s property without a court action) if the amount of penalty that may be changed. borrower defaults. PREPAYMENT PRIVILEGE Allows borrower to make extra POWER OF TERMINATION The future interest payments on the principa l payment without penalty. created whenever there is a grant of a fee simple subject to a condition subsequent estate. The future interest PRESCRIPTION, EASEMENT BY Securing of an matures into a present interest estate only if the holder easement by open, notorious, and uninterrupted use, adverse timely and properly exercises his right upon a breach by to the owner of the land for the period required by statute, the current holder of the fee estate. which, in California, is five years. A method of obtaining an easement by adverse use over a prescribed period of time. PRECEDENT A published judicial opinion that serves as authority for determining a similar issue in a later PRESENT INTEREST An estate in land that gives the owner case. SE E: Sta re De cisis the right to occupy his property immediately; as opposed to a future interest, which grants only the right to occupy the PRECEDENT, BINDING A precedent that a particular premises at some future date. court is required to follow. PRESENT VALUE Current value or the discounted value of PREDICTIONS An agent s predictions are not some future income or benefits. asueable matter. PRESUMPTION That which may be assumed without PREEMPTION SEE: Right of Preemption. proof. A conclusion or assumption that is binding in the absence of sufficient proof to the contrary. PREFABRICATED HOUSE A house manufactured, and sometimes partly assembled, before delivery to the PRE-TAX CASH FLOW The amount of incom e available to building site. the owner after the mortgage lender has been paid its portion of the net operating income. PREJUDGEMENT ATTACHMENT An attachment of property made before the trial, with the intent of PREVENTIVE MAINTENANCE A program of reg ularly holdin g that prop erty as security, to have an as set to sell scheduled maintenance activities and routine inspections of the if the c ourt ju dgm ent is favorable to the attaching p arty. interior and exterior of the buildings, equipment and grounds. Its objective is to pres erve the physical integrity of the prope rty, PRELIMINARY REPORT A report showing the current eliminate corrective maintenance costs and ensure statu s of a property an d the cond ition under whic h a title uninterrupted service to the tenants. company is willing to insure title as of a specific date. PRICE The amount of money or other consideration given for PREMISES SECTION (See Granting Clause) a property; agreed upon between buyer and seller; also called purchase price or sales price. PREMIUM An am ount, usually measured in poin ts, in excess of the loan balance owing, paid for the purchase PRICE LEVEL ADJUSTED M ORTGAGE (PLAM) Interest of a note and a trust deed. rate is fixed, but outsta nding loan b alanc e and monthly payments vary according to chan ges in some price index. PREPAID ITEMS Expenses paid by borrower-buyer at closing, such as taxes, insurance, and interest. PRIM A FACIE (1) Presumptive on its face. (2) Assumed correct until overcome by further proof. Facts, evidence, or PREPAYMENT Paying off part or all of a loan before documents that are taken at face value and presumed to be as payment is due. they appear (unless proven otherwise).

PREPAYMENT CLAUSE A provision in a mortgage PRIME CONTRACTOR A construction supervisor who that allows the mortgagor to pay the mortgage debt contracts with the property manager to oversee a job and then ahead of schedule without penalty. sublets the work to various skilled trades people.

PREPAYMENT PENALTY Penalty for the payment PRIMARY LENDER Financial institution that makes

PAGE 67 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. mortgage loans directly to borrower. proximity with lower-valued properties.

PRIMARY MARKET A source for the purchase of a PRINCIPLE OF SUBSTITUTION When a property can be mortgage by a borrower. easily replaced by another, the value of suc h property tends to be set by the cost of acquiring an equally desirable substitute PRIMARY MORTGAGE MARKET The market in prop erty. which loans are made directly to the borrowers. PRINCIPLE OF SUPPLY AND DEMAND Prices and rent PRIME RATE Interest rate banks charge preferred levels tend to increas e when de ma nd is g reate r than supp ly customers. and tend to decrease when supply exceeds demand.

PRINCIPAL The employer of an agent. Someone PRINCIPLE OF SURPLUS PRODUCTIVITY, BALANCE AND who hires an agent to act on his behalf. The term also CONTRIBUTION Income that is available to land, after the refers to the amount of an outstanding loan (exclusive of other economic agents have been paid for, is known as the interest). surplus of productivity; a proper balance of the agents maximizes the income available to land; the value of any agent PRINCIPAL MERIDIANS Imaginary lines running is determined by its contribution to the whole. north and south and crossing a base line at a definite point; used by surveyors for reference in locating and PRINCIPAL RESIDENCE PROPERTY Real property tha t is describing land under the government survey system. the owner s hom e, his or her ma in dwelling. A person can o nly have one principal residence at a time. The term is most often PRINCIPLE OF ANTICIPATION Value is the present used in connection with the income tax laws. worth of future benefits, bo th incom e and intangible amenities. PRIOR APPROPRIATION A system of allocating water rights. Under this system, a person who wants to use water PRINCIPLE OF CHANGE Real estate values are from a particular lake or river is required to apply for an constantly changed by social, economic, and political appropriation permit. It is not necessary to own property beside forces in society. (SE E: Neighborhood Cycle.) the body of water in order to acquire an appropriative right. COM PARE : Riparian R ights. PRINCIPLE OF COMPETITION Market demand generates profits and profits generate competition; PRIORITY That which com es first in point of time or right. competition stabilizes profits. superior, higher, or preferred rank or position. Private restrictions Are normally found in the CC&R . PRINCIPLE OF CONFORMITY Maximum value resu lts when properties in a neig hborhoo d are relatively PRIVATE MORTGAGE INSURANCE See Mortgage similar in size, style, quality, use and/or type. Insurance

PRINCIPLE OF CONSISTENT USE Both land and PRIVATE SECTOR When there is a federal deficit, the improvements must be appraised for the same use. treasury covers the short fall by issuing interest-bearing securities to inve stors , in doin g so, the governm ent is actually PRINCIPLE OF HIGHEST AND BEST USE Maximum borrowing money from the private sector. market value of a given parcel of land, vacant or improved, is created by developm ent or utilization at its PRIVITY Closeness or mutuality of a contractual highest and best use. relationship.

PRINCIPLE OF INCREASING AND DECREASING PROBABLE CAUSE Reasonable grounds or justification for RETURNS Income and other benefits available from prosecuting. real estate may be increased by adding capital improvements only up to the point of balance in the PROBATE Court supervision of the collection and agents of production, beyond which the increase in value distribution of a deceased person's estate. tends to be less than the increase in costs. PROBATE COURT A court that oversees the distribution of PRINCIPLE OF PROGRESSION AND REGRESSION property under a will or by intestate succession. Lower-valued properties generally benefit from close proximity to many properties of higher value and higher- PROBATION A suspended sentence during good behavior, valued properties tend to suffer when placed in close usually under supervision.

PAGE 68 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course.

PROCEDU RAL LAW The law of how to present and PRO PERT Y. Everything capable of being owned and acquired proceed with legal rights (for example, laws of evidence, lawfully. The rights of ownership. The right to use, possess, enforcement of judgments). It is the opposite of enjoy, and dispose of a thing in every legal way and to exclude substantiative law. everyone else from interfering with these rights. Property is classified into two groups, personal property and PROCESSING Preparation of loan application and real estate. supporting documents for consideration for by a lender or an insurer. PRO PERT Y ANAL YSIS A study made to familiarize a property manager with the nature and condition of a building, PROCURING CAUSE That event originating from its position relative to comparable properties and its estimated another s eries of events that, w ithout a bre ak in income and operating expenses. continuity, results in an agent's prod ucing a final buyer. PROPERTY HELD FOR PRODUCTION OF INCOME SEE: PROFESSIO NAL ASSO CIATION (PA) A business Income Property. corp oratio n con sisting of one or more individua ls engaged in a primary business that provides a PROPERTY INCOME One way to increase property income professional service. in a large metropolitan area is to rent garages and storage space separately. PRO FIT The amount one mak es over and above one s cosy. PROPERTY INSURANCE (See Hazard Insurance)

PROFIT AND LOSS STATEMENT A n annual PROPERTY MANAGEMENT A branch of the real estate financial report of a property s actual net profit before profession that seeks to preserve or increase the value of an taxes. investment property while generating income for its owners. The portion of the real estate business involving the PRO FORMA STATEMENT An estimate of the operations, maintenance and marketing of income-reducing economic results of a proposed project; a projected property incom e statem ent. PROPERTY MANAGEMENT FEES For many real estate PROGRESSION The principle that states the value of offices property management fees are a more steady source of an inferior property is enhanced by its association with income than commissions. superior properties of the same type. PROPERTY MANAGER A broker acting as a property PROMISEE Someone who has been promised manager may not legally refuse to rent an apartment to an something; someone who is supposed to receive the unmarried couple. The property manager must make sure the benefit of a contractual promise. prop erty m anagem ent contra ct give s him or her the s pecific right to display signs on the property. Some of hid duties are ; PROMISOR Someone who has made a contractual preparing a tweleve month statement, forecasting projected promise to another. monthly dues and creating budgets and ha ndling expenses.

PROMISSORY ESTOPPEL SEE: Esto ppel, PROPERTY PROFILE Shows the way title was taken. Prom issory. PROPERT Y TAX SEE: Tax, Property. PROMISSORY NOTE See Note PROPERTY USED IN A TRADE OR BUSINESS Property PROOF, BURDEN OF The responsibility for proving or such as business sites and factories used in one s trade or disproving a particular issue in a lawsuit. In most cases, business. the plaintiff has the burden of proof. PROPOSITION 13 The initiative measure passed in 1978 PROOF, STANDARD OF The extent to which the that led to major revisions in California s property tax laws. plaintiff or prosecutor must have convinced the jury or judge in order to win the case. In mo st civil suits, a PROPOSITION 90 Allows a senior citizen to purchase a preponderance of the evidence must support the new hous e in a d iffere nt county and keep his or her old tax bill. plaintiff s case. In a criminal action, the prosecutor s case mus t be proven beyond a reasonable doubt. PRORATION The proc ess of dividing s om ething (es pecially a sum of m oney or an expense) proportionately. The bankers

PAGE 69 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. rule. (360 days) PUBLICITY Editorial space in a newspaper, magazine or other me dium that is not paid for but s erves to attract public PROPRIETARY LEASE The right of a mem ber of a attention to an ind ividua l, firm or comm odity. cooperative to occ upy a unit in the building subject to certain conditions. PUD A form of development that contains a mixture of building types and land use.

PUFFING Superlative statements about a property that PROFIT A PRENDRE An easement coupled with a shouldn t be considere d ass ertion s of fact. The best buy in power to c onsum e res ourc es on the burdened property. town, or It s a fabulous location are examples of puffing. Puffing is not a sueable matter. PROMISSORY NOTE A written prom ise to pay a designated sum of money at a future date. PUNITIVE DAMAGES Money awarded by the court for the sole purp ose of punishing the wrongdoer, and not designed to PROPERTY Anything that may be owned. Anything compensate the injured party for his damages. of value in which the law permits ownership. PUR AUTR E VIE SEE: Life Estate Pur Autre Vie. PRORATE To divide or assess proportionate shares of charges and credits between buyer and seller PURCHASE AND INSTALLMENT SALEBACK Involves according to their individual period of ownership. purchase of the property upon completion of construction and imm ediate saleback on a long-term installment contract. PRORATIONS Adjustments of interest, taxes, and insurance, etc., on a pro rated basis as of the closing or PURCHASE OF LAND , LEASEBACK AND LEASEHOLD agreed upon date based on a 30 day month. MORTGAGES An arrangement whereby land is purchased by the lender and leased back to the developer with a PRORATION OF TAXES Division of the taxes mortgage negotiated on the resulting leasehold of the income equally or proportionately between buyer and seller on property constructed. The lender receives an annual ground the basis of time of ownership. rent, plus a perc entage of incom e from th e property.

PROVISIONAL TITLE A condition in a deed makes PURCHASE AND LEASEBACK Involves the purchase of the title provisiona l. property by the buyer and immediate leaseback to seller.

PROXIMATE CAUSE That cause of an event which, in PURCHASE MONEY INSTRUMENT A mortgage or deed a natural and continuous sequence unbroken by a new of trust that does not permit a deficiency judgment in the event cause, produced that event, and without which the event of foreclosure and sale of the secured property for less than would no t have happened. Also, the procuring cause. A the amount due on the promissory note. It is called purchase broker is the procuring cau se of a sale if his or her efforts money since the deed of trust and mortgage was used to buy set in motion an unbroken chain of events that resulted all or part of the prope rty. in the sale. PURCHASE-MONEY MORTGAGE OR PURCHASE-MONEY PUBLIC ACCOMMODATIONS Places of public DEED OF TRUST (PMM) A mortgage or deed of trust accommodations constructed for first occupancy before given as part or all of the consideration for the purchase of August 26, 1990 are required to remove architectural prop erty or given as se curity for a loan to obtain money for all barriers which limit access by disabled persons. or part of the purchase price.

PUBLIC RECORDS Records which by law impart PURCHASE AND SALE AGREEMENT A contract in which a constructive notice of matters relating to land. seller prom ises to convey title to real property to a buye r in exchange for the p urch ase price. Usu ally calle d a de posit receipt in California. SEE: Deposit receipt. PUBLIC TRUSTEE The county official whose offices has been created by the statute to whom title to real PURCHASE PRICE See price property in certain states, e.e, Colorado, is conveyed by trust deed for the use and benefit of the beneficiary, who usually is the lender. Q

PAGE 70 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course.

QUADRANT Quarter; any of the four quarters into which something is divided. QUIET TITLE ACTION A lawsuit designed to remove any clouds on a title to property. It forces the claimant of an QUALIFICATION The process of reviewing prior to adverse interest in property to prove his right to title; otherwise the approval (of a buyer s housing needs and financial he will be fore ver barred from asserting it. abilities, of a borrower s mortgage loan application, or of an application for licensure.(Underwriting) A deed to relinquish any inte rest in property tha t the grantor may have, but im plying no warranties. QUALITY OF CONSTRUCTION Classification or A deed that tran sfers only w hatever rig ht, title, o r interest, if rating based on basic structural integrity, materials, any, the grantor owns, without implying any warranties. finishes, and special features. QUORUM The minimum number of persons who may QUANTITY SURVEY A highly technical process in lawfully transact the business of a meeting. arriving at a cost estimate of new construction and sometimes To in the building trade as the price take-off method. It involves a detailed estimate of the quantities of raw material. Used as well as the current price of the R ma terial a nd ins tallation cos ts. These fac tors a re all added together to a rrive a t the cost of a structure. It is RACE/NOTICE RULE When the same property has been usually used by contractors and experienced estimators. sold to two different buyers, it the second buyer records his or her deed before the first buyer, th e sec ond buyer has g ood title QUARTER ROUND A m olding whose pr ofile to the property - as long as he or she did not have notice of the resembles a quarter of a circle. first buyer s interest. QUASI Almost as if it were. RADIANT HEATING A m ethod of heating, usually consisting of coils or pipes placed in the floor, wall, or ceiling. QUASI-CONTRACT A contract implied by law; that is, the law will imply and consider certain relationships as RAFTER One of a series of boards of a roof designed to if they were a contract. support roof loads. QUASI-LEGISLATIVE (FL) Powers delegated to the RANGE A strip of land six m iles wide, determ ined b y a FREC to enact rules and regulations, decide questions of government survey, running in a north-south direction. practice, and validate records. ( imprint with FREC s seal). RANGE LINES (SUBMERIDIANS) A series of government survey lines running no rth an d sou th at six-m ile inter vals QUASI- JUDICIAL (FL) Powers delegated to the staring with the principal meridian and forming the east and FREC to discipline real estate licensees for violations of west boundaries of town ships. of real estate license law and FREC administrative rules. RANGE VALUE The appraiser s estima te of th e range in QUAS I PARTNERSHIP (See Ostensible Partnership) which the property s value is most likely to be. QUESTION OF FACT In a lawsuit, a question about RATE ADJUSTMENT DATE W ith res pect to an adjustable what actually occurred, as opposed to a question about rate mortgage, the date the borrower s note range may the legal consequences of what occurred ( a question of change. law). RATIFICATION The adoption or approval of an act QUESTION OF LAW In a lawsuit, a question about perform ed on be half of a pe rson without previous authorization. what the law is on a particular point; what the legal rights Approval and confirma tion of a prior ac t performe d on one's and duties of the parties were. behalf by another person without previous authority. QUIET ENJOYMENT The right of an owner to the use RATIFIED Approved of property without interference with his or her possession or use. RATIO The relationship in quantity, size or amount between QUITE TITLE A court ac tion broug ht to establish title two things; proportions. and to remove a cloud from the title.

PAGE 71 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course.

REAL ESTATE (See Real Prop erty) members consist primarily of real estate brokers and salespersons. REAL ESTATE SALES ASSOCIATE The same as a real estate salesperson, holding a real estate license and REAL ESTATE CONTRACT 1. A pu rcha se an d sale employed by a broker. agreement. 2. A land contract. 3. Any contract having to do with re al property. REAL ESTATE DEBT Real estate debt has been rapidly increasing over the past two decades. REAL ESTATE CYCLE Periodic pattern of changes in the amount of construction and volum e of sales in the real estate REAL ESTATE CYCLE A sequence of strengths and market. weaknesses that occurs in the real estate segment of the general business economy; phases of the cycle are REAL ESTATE INVESTMENT TRUST(REIT) A specialized influenced by, but are not identical to, those of the form of holding title to property that enables investors to pool business cycle. their resources and purchase property, while still receiving considerable tax advantages, without being taxed as a REAL ESTATE SETTLEMENT PROCEDURES ACT corporation. Also known as REIT. (RESPA) A federal law requiring the disclos ure to borrowers of settlement (closing) procedures and costs REAL ESTATE LICENCE The commissioner has the by means of a pamphlet and forms prescribed by the right to suspend a real estate a real estate licence when a United States Department of Housing and Urban licensee : mak es a secret profit, acts for m ore than one party Development. without the consent of each and is derelict in his duty. A license is not required when an owner rents or manages his or her own prop erty. REAL ESTATE SYNDICATE An organization of investors usually in the form of a limited partnership who REAL ESTATE LICENSEE M ALFEASAN CE (CA) The have joined together for the purpose of pooling capital for special fund established by the legislature to help compensate the acquisition of real property interests. victims of real estate licensee malfeasance a Recovery Account Fund. READY, WILLING, AND ABLE BUYER A purchaser of property, who is willing to buy on terms acceptable to the seller, and who further possesses the financial ability to consummate the sale. Producing such a buyer REAL ESTATE PROFESSION A profession requiring sometimes earns the broker a commission, even though knowledge of real estate values, experience in dealing with the a sale is not forthcoming. public, plus exceptional personal integrity and character as qualifications to act as advisors and agents for members of the public. REAL ESTATE Land, including the air above and the earth below, plus any permanent improvements affecting the utility of the of the land; real prope rty; property th at is REAL ESTATE RECO VERY ACCOUNT (CA) Awards of not perso nal property. attorneys fees, and punitive damages, may be recovered from the Rea l Estate Recovery Account. An individual s recovery from the Real Estate Recovery REAL ESTATE ADVERTISING All referen ces to age in Account is not limited to $50,000 per transaction. real estate advertising are prohibited.

REAL ESTATE SALESPERSON Is the agent of the REAL ESTATE AGENT A rea l estate agent is employing broker. A real estate salesperson is the special required to use diligence, care and skill in the agent. In California a real estate salesperson must be licenced performance of by the Department of Real Estate. (DRE) his duties.

REAL ESTATE SERVICES Real estate activities involving REAL ESTATE BUSINESS A comm ercia l activity in compensation for performing the activities for another. which the sale, purchase, leasing rental or exchange or management of real property is conducted by qualified and licensed parties acting either for themselves or for REAL ESTATE TRUST A special arrangement under compensation. federal and state law whereby investors may pool funds for investments in real estate and mortgages and yet escape corporation taxes. REAL ESTATE BOARD An organization whose

PAGE 72 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course.

REAL PROPERTY Land and anything affixed, inapplicable by the introduction of contradictory evidence. incidental, or appurtenant to it, and anything considered immovable under the law. Land, buildings, and other RECAPTURE (1) The rate of interest necessary to provide immovable property permanently attached thereto. for the return of an investment. (2) A provision in tax laws that reduces certain benefits from claiming depreciation. REAL ESTATE PURCHASE CONTRACT Must be made by parties with legal capacity to do so, must be an RECAPTURE CLAUSE A provision in a percentage lease offer made on definite terms and with a lawful objective, that grants the landlord the right to terminate the lease at the and must include acceptance of the terms by all parties end of a certain period if gross sales have not reached the and some form of consideration. level anticipated during negotiations.

REAL PROPERTY ADMIN ISTRAT OR (RPA) A RECAPTURE PROVISION A clause within an assignment property manager who has successfully completed and subletting lease clause giving the landlord the right to BOMI s educational program and fulfilled other recover any space that the tenant is unable to occupy or requirements for this professional designation. sublease.

REAL PROPERTY LOAN LAW Article 7 of Chapter 3 RECEIVER A neutral third party, appo inted by the court to of the Real Estate Law under which a real estate collect the rents and profits from property, and distribute them licens ee ne gotiating loan s s ecured by real proerty within as ordered by the court. Often used as a remedy when mere a specified range is required to give the borrower a damages are inadequate. statement disclosing the costs and terms and which also limits the amount of expenses and charges that a RECEIVERSHIP CLAUSE A provision in a mortgage, bborrower may pay with respect to the loan. related to income producing prope rty, that is designed to require that income derived shall be used to make mortgage REAL PROPERTY SALES CONTRACT An payments in the event the mortgagor (borrower) defaults. agreement to convey title to real property upon satisfaction of specified conditions which does not RECESSION The peak in the business cycle; the point at require conveyance within one year of formation of the which the supply equals and begins to surpass demand. contract. The buyer does not take title. RECIPROCAL When you divide a number into one, the REAL PROPERTY TAXES. Unpaid real property taxes resu lt is a recipro cal. constitute a lien prior to a mortgage lien. RECIPROCAL OF THE CAPITALIZATION RATE Multiplier REASONABLE TIME In the real estate business 30 and factor are the reciprocals. days is considered a reasonable time . RECOMM ENDED ORDER A determination by an REALIZATION The point at which a g ain or profit is administrative judge that includes findings and conclusions as actually obtained; for example, the value of a piece of well as other information required by law or agency rule to be a property has been increasing steadily, but the owner s final order. profit won t be re alized until sh e sells the prope rty. RECOGNITION The point at which a g ain is ta xed (whic h is REALTOR A real estate broker holding active ordinarily in the year it was realized, but may be later if a membership in a real estate board affiliated with the nonrecognition provision applies). National Association of Realtors. Membership in a trade orga nization for brok ers o r salespeople is optional. RECONCILIATION The process by which the appraiser reviews and considers the indicated values developed by the REALTY Real property. applied approaches to arrive at a final value conclusion.

REASONABLE TIME A variable period of time, which RECONSIDERATION A request by the Department of Real may be affected by market conditions, desires of the Estate or the respondent made before the effective day of the owner, supply and demand, fluctuations of values, or an hearing decision. official decision. RECONVEYANCE (DEED OF) A conveyance to the REBUTTABLE PRESUMPTION A presumption landowner of the legal title held by a trustee under a deed of that is not conclusive and that may be contradicted by trust. The transfer of property back from a lender who holds an evidence. A presumption that applies unless proven interest as security for the payment of a debt. In a deed of

PAGE 73 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. trust, the beneficiary reconveys property upon RECURRING VARIABLE EXPENSE A type o f varia ble satisfaction of the promissory note. property expense (e.g., redecorating costs) that occurs repeatedly on an irregular basis. RECONVEYANCE DEED Conveys title from trustor to trustee. REDEEM To buy back; repurchase; recover.

RECO NVEY ANCE, PAR TIAL A reconveyance that REDEMPTION Buying back one's property after a judicial releases some parcels from the lien of a blanket deed of sale. The repurchasing of one's property after a judicial sale. trust, usually recorded when the borrower has paid off a certain am ount of the debt. REDEMPTION, EQUITABLE RIGHT OF The right of a borrower to redeem property prior to the foreclosure sale. RECORDATION (RECORD) Filing of instruments for record in the office of the county recorder. The act of REDEMPTION PERIOD Period of time in which the borrower having a docum ent filed for record in the county ma y redeem his or her prope rty. recorder's office. Once recorded, the instrument gives constructive notice to the world. REDEMPTION, STATUTORY RIGHT OF The right of a mortgagor to redeem property after a foreclosure sale. RECORDED LOT, BLOCK AND TRACT Legal description of a parcel of land by means of reference to a REDEVELOPMENT Existing structures are destroyed anew recorded plat of a subdivision. ones are built im me diately. RECORDING The process of placing a document on REDLINING Is the failure or refusal by the lender to provide file with a designated public official for public notice. financing in certain communities. Redlining does not include any consideration of the market value of the real estate intended to RECORDING NUMBER The numbers stamped on secure the loan. A licensee is required to report any institution that he documents when they re recorded, used to identify and knows that is taking part in this activity. locate the docu me nts in the public record. (Each page is stamped with a consecutive number, but an entire The paying-off of an existing obligation ans document is often referred to by the number on the first assuming a new obligation in its place. To finance anew, or page.) extend or renew existing financing.

RECOVERING ADDICTS Are considered REFORMATION A legal action to correct a mistake in a handicapped persons and are protected under the deed or other docum ent. Federal Fair Housing Act REGIONAL CENTER A large shopping center containing RECOVERY FUND . Generally administered by the Real from 70 to 225 stores and more than 400,000 square feet of Estate Commission. Requires licensees to contribute, leasable area. then reim burses aggrieved persons who are unable to collect from brokers for wrongdoings. REG IONAL MAIL For this type of m ail to be successful it Real Estate Commissioner. The public official charged must encompass a surrounding population of over150,000 with enforcing the re al estate laws as they apply to people within a 15-mile radius. licensees, subdivisions, and real estate related activities. REGISTRATION Authorization by the state to place an RECOVERY PERIOD The assigned time over which applicant on the register (record) of officially recognized property is depreciated for tax purposes. individuals or businesses.

RECTANGULAR SURVEY SYSTEM System for legal REGRESSION The principle that states that the value of a description of property based on principal meridians, superior property is adversely affected by its association with baselines, and a grid system. an inferior property of the same type.

RECURRING COSTS Any item that requires an REGULARLY RECURRING COSTS A type of fixed property impound account. expense (e.g. cleaning costs) that occurs consistently each month. RECURRING CLOSING COSTS Costs and fees that will br paid monthly or annually such as fire, insurance, REGULATION 1. A rule adopted by an administrative interest, property taxes and mortgage insurance. agency. 2. Any governmental order having the force of law.

PAGE 74 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course.

REGULATION Z The Federal Reserve Board s RELEASE To give up or abandon a right. The release of regulation that implements the Truth in Lending Act. An rights may be voluntary, as when one voluntarily discharges an estim ated breakdown of cos ts that will be incurred in obliga tion under a contrac t. The release m ay be in volun tary, obtaining a loan; given to the borrower by an institutional by operation of the law; for example, one's wrongful conduct lender before the loan is taken out; a consumer may ba r him from asserting his rights. In deeds of trust a protection form. partial release clause frees certain property from the security of the deed of trust upon the payment of specified sums of REINSTATE To cure adefault under a note secured by mo ney. a trust dee d. RELEASE CLAUSE A stipulation in a deed of trust or REIT A method of pooling investment money using the mortgage that upon the payme nt of a specific sum of money to trust form ownership. the holder of the deed of trust or mortgage, a particular lot or area shall be removed from the blanket lien on the whole area RELATION BACK A legal doctrine that allows a court involved. to rule that a party acquired title at some point before he or she actually received the deed. Applied in cases RELEASE DEED An instrument executed by the mortgagee involving escrow or the exercise of an option to or the trustee reconveying to the mortgagor or trustor the real purchase. estate which se cure d the loan a fter the deb t has been paid in full. RELIGIOUS ORGANIZATIONS May limit sales or RELEASE OF LIABILITY An agree ment by the lender to rentals of dwellings fo r noncomm ercial purposes to terminate the personal obligation of the buyer. members of the same religion.

RELICTION The gradual lowering of water from the usual REINSTATEMENT A right available to anyone watermark. under an accelerated promissory note secured by a deed of trust or m ortga ge on property. If a deed of trust is foreclosed by trustee's sale, the debtor m ay have up to REMAINDER An estate that vests after the termination of the three months from the re cord ing of the notice of default prior estate, such as after a life estate. Example: A life estate to pay the amount in arrears plus interest and costs, may be granted to Adam s, with the remainder granted to thereby completely curing the default (reinstating) without Baker. Most commonly, an estate (future interest) that arises penalty. in favor of a third person after a life estate.

REG IONAL ANALY SIS Includes economic conditions, REMAINDER DEPRECIATION The possible future loss in a physical attributes and population growth. value of an improveme nt to re al property.

REHABILITATION The restoration of property to REM AINDERMAN The pers on who ha s an e state in satisfactory condition without drastically changing the remainder. plan, form or style of architecture. REMAINDER PARCEL The portion of a property left to the REINTERMEDIATION Return of savings to thrift owner when there has been a partial taking by eminent institutions from previously higher paying investment domain. outlets. REMAND To send back to a lower court for further REIT A Real Estate Investment Trust is a business action. trust which deals principally with interest in land ---- generally organized to conform to the Internal Revenue REMEDY The means by which a right is enforced, Code. preserved, or compensated. Some of the more common rem edies are dam ages, injunctions, re scission, and spec ific REJECTION Refusal to accept an offer. Repudiation performance. of an offer automatically terminates the offer. REMODELING To change the floor plan or architectural RELATIVE COM PARISO N ANALYSIS The style of the improvements. adjustment terms are expressed in terms of value (superior, inferior, etc.). RENAISSANCE Fourth phase in the cycle of a neighborhood, the transition to a new cycle through the demolition, relocation, or major renovation of existing buildings.

PAGE 75 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course.

RENEGOTIABLE RATE MORTGAGE A loan secured criticism with a formal warning included. by a long term mortgage which provides for renegotiation, at pre-determined intervals, of the interest REPRODUCTION COST The cost of replacing the subject rate (for aa maximum variation of five percent over the improvement with one that is the exact replica, having the life of the mortgage). sam e quality of workmanship, design and layout, or cost to duplicate the asset. RENT The consideration paid by a tenant for possession of property under a lease. REQUEST FOR NOTICE OF DEFAULT AND NOTICE OF SALE A recorded notice made by anyone requesting that he RENTABLE SPACE According to BOMA. The floor or sh e be n otified in the e vent that a Notic e of D efau lt is area of an office building minus allowances for stairs, recorded. elevator shaft, duct work and other areas not available to the tenant. RESCIND To annul, cancel. Repeal or terminate.

RENTAL AGREEMENT This agreement should be a RESCISSION The unmaking of a contract, and the restoring bilateral, executory con tract. All parties should get a of each party to the same position each held before the signed co py. contract arose.

RENTAL HOUSING The demand for rental housing RESCISSION OF CONTRACT The cancelling of a contract by are produced by , the price of the home, the volume of either mutual consent of the parties or legal action. sales and the fu ture h ousing su pply. RESERVATION A right or interest retained by a grantor RENTAL PROPERTY ADS These adds that give when conveying property; also called an exception. phone numbers should have a recorded message so that there is no doubt about what they hears. RESERVE ACCOUNT SEE: Im pound account.

RENUNCIATION When someone who has been RESERVES (1) In a common interest subdivisions, an granted something or has accepted something later accumulation of funds collected from the owners for future gives it up or rejects it; as when an agent withdraws from replacement and major maintenance of the common area the agency relationship. COMPARE: Revocation. facilities. (2) With regard to mortgage loans, an accumulation of funds, collected from the borrower by the lender as part of RENT CONTROL Rent co ntrol of rental property each monthly mortgage payment , an amount allocated to pay will usually decrease investing in rental property. Places property taxes and insurance when they are due. the government s burden of supporting the poor on the shoulde rs of private property ow ners. RESERVES FOR REPLACEMENT Annual allowances set up for rep lacem ent of building com ponents and eq uipment. RENT MULTIPLIER SEE: Gross Incom e Multiplier. RESIDENTIAL PROPERTY There are more square feet of RENT ROLL Total of all scheduled rental amounts for this type of property to be managed than any other type. The tenant space, services and parking. type of prop erty that people live in or rent.

RENTAL LOSS METHOD OF DEPRECIATION SEE: RESIDENTIAL REAL ESTATE The majority of loans from Capitalized Income Method of Depreciation. savings and loans are used for this type of real estate.

RENUNCIATION To abandon an acquired right RESIDENTIAL SALE The sale of improved residential without transferring that right to another. property of four or fewer units, the sale of unimproved residential property intended for use as four or fewer units, or REPLACEMENT COST METHOD The cost to replace the sale of agricultural property of ten or fewer acres. a structure with one having utility equivalent to that being appraised, but constructed with modern materials and RESIDUAL TECHNIQUES OF CAPITALIZATION Income accordin g to current standards, d esign and layout. This approach to valuation methods that separate income attributed method uses the three following items; the square foot to components of the property, such as land or building , or method, the unit -in-place m ethod an d the quantity debt or equity, for purposes of analysis. survey m ethod. RESIDUE That portion of a person's estate that has not REPRIMAND An official act of oral and/or written been specifically devised.

PAGE 76 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course.

RETALIATORY EVICTION A landlord's attempt to evict a RES JUDICATA The legal doctrine holding that once a tenant from a lease because the tenant has used the remedies lawsuit between two parties has been tried and a final availa ble un der th e warranty of ha bitability. judgment has been issued, neither one can sue the other over the same dispute again. RETROSPECTIVE VALUE The value of the property as of a previous date. RESOLUTION OF A CONTRACT Three methods of resolving a contract are negotiation and compromise, RETURN Profit from an investm ent; th e yeild arbitration and default. The end result of contract negotiations. RETURN ON INVESTMENT General rule of return on investment and risk, is the greater the return on the investment RESPA (See Real Estate S ettlement Procedures A ct) the greater the risk.

RESPONDEAT SUPERIOR This Latin phrase, "let REVENUE STAMPS SEE: Tax, Documentary Transfer. the master answer," means that an employer is liable for the tortuou s acts of a n em ployee , and a principal is liable REVERSE To overtu rn a lower c ourt s dec ision o n app eal, for the acts of an agent. To be liable, the acts must be ruling in favor of the appellant. COMPARE: Affirm. within the "course and scope" of the agency or employment. For example, an employer would not be REVERSE ANNUITY MORTGAGE Stream of mo nthly liable for the acts of an employee while at home and not payments provided to homeowners through an annu ity doing work for the employer. purc hased by a loan a gains t the owner s accum ulated equ ity in their home. RESPONDENT The pers on ag ainst whom an app eal is taken; the opposite of an appellant. REVERSION The right a grantor keeps when he or she grants someone an estate that will or may en d in the future. RESTITUTION Restoring something to a person that Examples: The interest remaining with a landlord after he or he or she was unjustly deprived of. she grants a lease, or the interest an owner of land has after he or she grants someone a life estate. Any future interest RESTRICTED REPORT This report may only be used (estate) left in the grantor. The residue of an estate left in the by the client and for one particular purpose. grantor after the termination of a lesser estate.

RESTRICTION A limitation on the use of real property REVERSIONARY INTEREST The interest which a person arising from a contract or a recorded instrument. An has in lands or other property, upon the termination of the encum bran ce on property tha t limits the use of it; usually preceding estate. A future interest. a covenant or condition. REVOCATION Withdrawal of an offer or other right, thereby RESTRICTION, DEED A restrictive covenant in a voiding and destroying that offer or right. It is a recall with deed. intent to rescind.

RESTRICTION, PRIVATE A restriction imposed on REZONE An am endme nt to a zoning ordinanc e, usually property by a previous owner, or the subdivision changing the uses allowed in a particular zone. Requires the developer; approval of the local legislative body. Also called a zoning a restriction covenant or a condition in a deed. amendment. CO MPARE: Zoning, Spot.

REST RICT ION, PUBLIC A law or regulation limiting or RIDER An addition ti a docum ent. regu lating the use of real prope rty. RIDGE The horizontal line at the junction of the top edges of RESTRICTIVE COVENANT A promise to do or not do two sloping roof surfaces. (The rafters at both slopes are an act relating to real property; usually an owner s nailed at the ridge.) promise to not use property in a particular way. May or may not run with the land. Sometimes between the RIDGE BOARD The board placed on edge at the ridge owner and the neighboring owner. of the roof to support the upper ends of the rafters; also called roof tree, ridge piece, ridge plate, or ridgepole. RESTRICTED LICENSE A license with restrictions attached. RIGHT OF FIRST REFUSAL A right of preemption.

PAGE 77 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course.

RIGHT OF PREEMPTION A right to have the first ROW HOUSE SEE: Townhouse. chance to buy or lease property if the owner decide s to put it up for sale or make it available. Also called a right RULE AGAINST PERPETUITIES A complex set of laws of first refusal. COMPARE: Option. designe d to prevent excessive restrictions on the transferability of property. The rule holds that "n o interest is good unles s it RIGH T OF SURVIVORSHIP The right to acquire the mu st ves t, if at all, not later tha n 21 ye ars a fter som e life in interest of a deceased joint-owner. It is the being at the creation of the interest." distinguishing feature of a joint tenancy. RULES-OF AGENCY DISCLOSURE Can be given with a RIGHT TRIANGLE A right triangle in which two of the sellers listing. The exact wording of the Rules-of-Agency sides meet at a right angle. Disclosure is not dictated by statute. Trans actions involving the sale of nonresidential property RIGHT OF RESCISSION A borrowers s right to cancel requires the statutory Rules-of Agenc y Disclosure be given to a credit contract within three business days from the day the buyer. he or she entered into the loan contract. RULE OF CAPTURE A legal principle that grants a The right to pass over a piece of landowner the right to all oil and gas produced from wells on real property or to have pipes, electrical lines, or the like his or her land, even belonging to someone else. go across it. An easem ent granting a person the right to pass across another's property. RUNNING WITH THE LAND Binding or benefiting the successive owners of a piece of property, rather than RIGHT, TITLE AND INTEREST A term used in deeds terminating when a particular owner transfers his or her to denote that the grantor is conveying all of that to which interest. Usually said in reference to an easement or a gran tor he ld claim . restrictive co venant.

RIGHT-TO-USE A lease hold interest in a time-share RURAL HOUSING SERVICES ADMINISTRATION (FL) An unit based on a limited time (one or more weeks) agency of the Department of Agriculture that offers assistance specified in the agreement. to rural residents and communities.

RIPARIAN RIGHTS The righ t of a landowner with R-VALUE A special rating or method of judging the regard to a stream crossing or adjoining his or her insulating effectiveness of insulation products. prop erty.

RISER (1) The upright board at the back of each step of a stairway. (2) In heating, a riser is a duct slanted S upward to carry hot air from the furnace to the room above. SAFETY CLAUSE In a listing agreement, a provision that if anyone found by the broker during his listing period RISK The chance of loss of all or a part of an purchases the property within a specified time after the investment; the uncertainty of financial loss. expiration of the listing, the broker receives his full commission. RISK ANALY SIS A study made, usually by a lender, SALES PRICE See Price of the various factors that might affect the repayment loan. SALES COMPARISON APPROACH TO VALUE See Market Approach to Value RISK RATING A process used by the lender to decide on the soundness of making a loan and to reduce all the various factors affecting the repayment of the loan to a SATISFACTION OF MORTGAGE SEE: Mortgage, qualified rating of some kind. Satisfaction of.

ROLLOVER When a taxpayer sells his or her princip al SALE- LEASEBACK A situation in which the owner of a residence and reinvests the sale proceeds in another piece of prope rty sells it and retains occupancy be lea sing it home, deferring recognition of the gain on the sale. from the buyer.

ROUNDED To reflect the input numbers with the SALE- LEASEBACK-BUY-BACK A sale and leaseback highest degree of precision, answers should be rounded. transaction in which the leaseholder has the option to buy back

PAGE 78 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. the original property after specified period of time. SAVINGS ASSOCIATION INSURANCE FUND (SAIF) Administered by the FDIC to insure deposits at savings and SALE OF RENTAL PROPERTY In the sale of loans and federa l savings banks. rental property an agency agreement requires a written contract. SAVINGS AND LOAN ASSOCIATIONS Deposit-type savings institutions that are major lenders in the residential SALES ANALY SIS GRID Table of relevant data on field. comparable properties. SAVINGS BANKS Savings and loan associations using SALES ASSOCIATE A licensed individual who, for newly-permitted designations. compensation, is employed by an owner-developer or by a broker. SCARCITY In rela tively sh ort su pply.

SALES COMPARISON (APPROACH) One of the SCRIBING Fitting woodwork to an irregular surface. three classic approaches to value. It involves comparing similar properties, that have recently sold, to the subject SEAL An impression mark or stamp made to attest to the property This method is considered the most important execution of an instrume nt. one.. SEASONAL VARIATIONS Changes in the economy that SALES CONTRACT A contract between buyer and recur at lea st once a year. seller setting out the terms of sale. SECR ET PR OFIT A financial benefit that an agent takes SALES DATA METHOD OF DEPRECIATION Method from a transaction without informing the principal; usually the of estimating depreciation wherein building values result of self-dealing. abstracted from sales are compared to current costs new. SECOND FLOOR One disadvantage of adding a second floor is that an additional set of stairs may be required or a fire SALESPERSON An individu al licen sed to sell scape may have to be added. property, but who must at all times be under the supervision and direction of a broker. SECOND MORTGAGE (SECONDARY FINANCING) A loan that is junior or subordinate to a first mortgage, normally taken SALVAGE VALUE In computing deprecation for tax out when the borrower n eeds more m oney. purposes, the reasonably anticipated fair market value of the property at the end of its useful life and must be SECONDARY FINANCING A loan secured by a second considered with all but the declining balance methods of mortgage or a second deed of trust. depreciation. SECONDARY LENDER Agency or financial institution that SANDWICH LEASE A leasehold interest that lies buys mortgage loans previously made by primary lenders. between the prim ary lease and the operating leas e. Example: A leases to B; B subleases to C; C subleases SECONDARY MARKETING Buying and selling existing to D. C's lease is a sandwich lease. mortgage and trust deed loans. The primary market is the one in which lenders loan money to borrowers; the secondary SASH A wood or metal frame containing one or m ore market is the one in which the lenders sell their loans to the windowpanes. large secondary marketing agencies (FNMA, FHLMC, and GNMA) or to other investors. SATISFACTION OF MORTGAGE Discharge of a mortgage or deed of trust lien from the records upon SECONDARY MORTGAGE MARKET The purchasing and payment of the secured debt. Discharge of an obligation selling of existing mortgages and notes secured by a deed of or indebtedness by paying what is due. trust. This market is dominated by Fannie Mae, Freddie Mac and Ginnie Mae. SATISFACTION OF JUDGEMENT This paying off judgem ent. It m ust be rec orded to clear title SECRET PROFIT OR COMMISSION (See Overage)

SATISFACTION PIECE An instrument for recording SECTION A square mile of land, as established by and acknowledging payment of an indebtedness secured government survey, containing 640 acres. with a mortgage.

PAGE 79 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course.

SELLER FINANCING When a seller extends credit to a SECT ION O F TO WNSHIP A section of tow nship buyer to finance the purchase of the property; as opposed to consists of 640 acres. having the buyer obtain a loan from a third party, such as an institutional lender. SEE: Loan, Carryback. SECTOR THEORY A development method that resem bles a pie chart. SELLER S MARKET The m arket condition which exists when a seller is in a more commanding position as to price and SECURITY Property pledged to ensure payment of term s bec ause dem and exceeds supply. debt; collateral. SELLING OFFICE (SO) In MLS printouts, the selling SECURED DEBT An obligation that includes broker is noted as the selling office. property held as security for the payment of that debt; upon default, the property may be sold to satisfy the SEMIFIDUCIARY LENDER Noninstitutional source of real debt. estate lending, such as through a mortgage broker, involving greater risks than funding through fiduciary lenders. SECURED PARTY The party having the security interest in personal property. The mortgagee, conditional SENIOR CITIZEN HOUSING To qualify as senior citizen seller , or pledgee is referre d to as the secured party. housing, a project must not limit residency to persons over the age of 62. SECURITY AGREEMENT An agreement between the secured party and the debtor that creates a security SENIOR LIEN A lien that is superior to or has priority over interest in personal property. It replaced such terms as another lie n. Also, the first deed of trust or le in on a property. chattel m ortgage, pledge, trust receipt, chattel trust, equipment trust, conditional sale, and inventory lien. SEPARATE PROPERTY Prop erty tha t is owned by a husband or w ife and that is not com mu nity pro perty. It is SECU RITY DEPO SIT A deposit made to assure property acquired by either spouse prior to marriage or by gift performance of an obligation, usually by a tenant. A sum or inheritance after marriage; also, in California, it is the income of cash given as collateral to ensure faithful performance from sepa rate p rope rty after ma rriage. Pro perty h eld by a of sp ecifie d oblig ations. A landlord has three weeks in married person that is not community property; it includes which to re turn the un used portion of the tenant s property owned before marriage and property acquired after security deposit. marriage by gift or inheritance.

SECURITY INTEREST A term designating the interest SEPTIC TANK An underground tank in which sewage from of a secured creditor in the personal property of the the house is reduced to liquid by bacterial action and drained debtor. off.

SECURITIZATION Debt issuance backed by SERVICE OF PROCESS Delivery of a legal document mo rtgag e portfolio (especially a summons) to a person in accordance with the rules prescribed by statute, so that he or she is held to have SEIZIN The possession of land under a claim of received it (whether or not he or she actually did). freehold. SERVICE INDUSTRIES Businesses that attract local money SELF-DEALING When a real estate agent buys the (e.g., grocery stores, retail shops). principal s property him or herself (or sells it to a relative, friend, or associate, or to a business he or she has an SERVICING LOANS Supervising and administering a loan intere st in), w ithout disclosing that fa n to the principal, after it has been made. This involves such things as and in violation of his or her fiduciary duties to the collecting payments, keeping accounting records, computing princ ipal. on interest and principal, foreclosure of defaulted loans, and so on. SELF-EXECUTING ARBITRATION CLAUSE The parties do not need to use the court to compel SERVIENT ESTATE Tha t parc el of prope rty whic h is arbitration. burdened by and encum bered with an easement.

SELLER The owner of the property now being sold. SERVIENT TENEMENT An estate burdened by an Most trust deeds and notes are held by the seller. easem ent.

PAGE 80 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course.

SETBACK The minimum distance a building or other judgem ent. improveme nt m ust stand from the prope rty lines ; in accord with local zoning ordinances or deed restrictions. SHERIFF S SALE A foreclosure sale held after a judicial foreclosure. Sometimes called an execution sale. SET-BACK ORDINANCE An ordinance prohibiting the erection of a building or structure between the curb SHOPPING CENTER A shopping center can be a and the set-back line. (see Building Line) complicated management problem as it may contain the following problems, security patrols, unchaperoned minors, and SETTLEMENT 1. An agreement between the parties large parking lots. to a civil lawsuit, in which the plaintiff agrees to drop the suit in exch ange for mon ey or the defendant s prom ise to SHORT PAYOFF Lender agreem ent to com prom ise adebt. do or refrain from doing something. 2. Closing. Also called short sale.

SETTLEMENT STATEMENT A document that SHORT PLATTING Subdividing a parcel of land into two, presents a final, detailed accounting for a real estate three, or four lots. transaction, listing each party s debits and credits and the amount each will receive or be required to pay at SHORT ( TERM) RATE A reduced rate for title insurance closing. Also called a closing statement. applicable in cases where the owner of a property has been insured previously or where any lender has been insured SETTLOR One who creates an inter vivos or living som ewhat rec ently on the property. trust. SICK BUILDING SYNDROME A physical condition caused SEVERABLE When one provision in a law or a by substances within a building that causes symptoms that contract can be held unenforceable, without making the disappear when occupant leaves the building. entire law or contract unenforceable. SIDE YARD The area between a building and one of the side SEVERALTY Sole ownersh ip of prope rty. Ow ners hip boundaries of the lot it s located on. by one person. SIGHT DEPOSIT See Dem and Deposit SEVE RALT Y OW NERSHIP Ownership by only one person; sole ownership. SIGNED INSTRUMENT It is unlawful to modify without the consent and knowledge of the party related to the instrument Term ination of a joint tenancy, turn ing it into a tenancy in common. SIGNS The property manager mus t mak e sure the property managem ent contract gives him or her the specific right to SEVERANCE DAMAGE Damage to the value of the display sign s on the property. remainder parcel as a result of a partial taking by eminent domain. SILL The board or piece of metal forming the lower side of an op ening , such as a door sill or window sill. SHAKE A hand-split shingle, usually edge- grained. SIMPLE CONTRACT Essentials of a simple contract are lawful object, mutual consent, and capable parties. SHARED APPRECIATION MORTGAGE A loan having a fixed rate of interest se t below the mark et rate SIMPLE INTEREST Intere st comp uted on the principal; for the term of the loan which also provides for amount of a loan only as distinguished from compound contingent interest to be pa id to the lend er on a certain interest. percentage of appreciation in the value of the property against which the loan is secured upon transfer of sale of SINGLE AGENT A broker who represents the seller or the the property or the repayment of the loan. buyer but not both.

SHEATHING Structural covering, such as boards, SINGLE BATH HOMES There are very few of these homes plywood, or wallboard, placed over the exterior studding being built now as buyers generally demand two bathrooms. or rafters of a house. The skin that covers the house. SINGLE-HUNG A window characterized by a movable lower SHERIFF'S DEED A deed giv en by c ourt o rder in sash. connection with the sale o f property to satisfy a

PAGE 81 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course.

SINKING FUND (1) A fund set aside from the income SPECIAL AGENT One authorized by a principal to perform from property tha t, with a ccru ed interes t, will eve ntually a particular act or transaction, without contemplation of pay for replacement of the improvements. (2) A similar continuity of service as with a general agen t. fund set aside to pa y a debt. SPECIAL ASSESSMENT Legal charge against real SITE PL AN A document that indicates the estate by a public authority to p ay the cost of pu blic improvements details for a project of greater-than- improvement, as distinguished from taxes levied for the average-size. general support of government.

SITUS Relationships and influences created by SPECIAL-FUNCTION A town whose employment location of a pro perty th at affect va lue (e.g.; ac cessibility, concentrates on one special service or purpose. personal preference).

SIXTY-TWO-OR-OVER SENIOR CITIZEN HOUSING If SPEC IAL EXC EPTION PERM IT SEE: Conditional Use a housing project qualifies as 62-or-over senior citizen Perm it. housing, all persons under the age of 62 are excluded, including spouses under the age of 62. SPECIAL POWER OF ATTORNEY A written instrument SLAB-ON-GRADE Concrete foundation poured whereb y a principal co nfers lim ited authority upon an agent to directly on the ground. perform certain prescribed acts on behalf of the principal.

SLANDER OF TITLE A false and malicious SPECIAL PURPOSE PROPERTY Hotels, resorts, nursing statements disparaging an owner s title to property and homes, theaters, schools, places of worship and other resulting in actual pecuniary damage to the owner. business or organizations whose special needs dictate design and operation of the building. SLUM CLEARANCE The razing of substandard and unsalvageable re sidential buildings for redevelopment. SPECIAL TAX ASSESSMENTS Special tax assessments differ from annual tax assessments because SMALL CLAIMS COURT A branch of the special assessments provide for local improvement. Municipal Court. The rules of this court forbid parties to be assisted by attorneys, dispense with most formal SPECIAL WARRANTY DEED A deed in which the grantor rules of evidence, and have all trials heard by judges. warrants or guarantees the title only against defects arising The monetary limit of cases before the court is $1,500. during grantor s ownership of the property and not against defects existing before the time of grantor s ownership. SOCIETY OF INDUSTRIAL AND OFFICE REALTORS (SIOR) An association of R ealtor spe cializing in SPECIFIC CYCLE A wavelike movement, similar to the leasing an d sellin g indu strial a nd office prope rty. business cycle, that occurs in certain sectors of the general econom y. SOIL PIPE Pipe carrying waste from the hous e to the main sewer line. SPECIFIC LIENS Claims that affect only the property designated in the lien instruments or agreements. SOLD TO THE STATE A bookkeeping entry on the county tax rolls indicating that the property taxes are SPECIFIC PERFORMANCE A legal action to compel delinquent. The entry begins the five-year redemption perform ance of a contract; for ex am ple a c ontra ct for the sale period, afte r which the property m ay be physically sold to of land. A contract remedy by which one party is ordered by the public for back taxes. the court to com ply with the term s of the agreem ent.

SOLE OR SOLE PLATE A structural mem ber, SPOT ZONING SEE: Zo ning, Spot. usually two-by-four, on which wall and partition studs rest. SPOUSE A person's husband or wife.

SOLE PROPRIETOR A sole proprietor may have a SREA The Society of Real Estate Appraiser trade name and may or may not have employees. STABLE PHASE Second phase in the cycle of a SPAN The distance between structural supports, such neighborhood, marked by stability of the existing buildings and as walls, columns, piers, beams, and girders. occupants.

PAGE 82 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course.

STABILIZED BUDGET Part of a five -year projected authorization to sell real estate. A law that req uires certa in budget, arrived at by averaging income and expense contracts (including most real estate contracts) to be in writing items over a five-year period. to be enforcea ble.

STANDARD DEPTH Generally the most typical lot STATEMENT OF IDENTITY Form often required by the title depth in the neighborhood. com pany from buyer and s eller to ensu re tha t item s fou nd in the title search apply to the individuals in question. STANDARD FIRE INSURANCE A basic form of insurance protecting a property against direct loss or STATUTE OF LIMITATIONS A statute that requires damage. lawsuits to be brought within a certain time to be enforceable. The basic periods are one year for personal injury, two years STANDARD OF PROOF SEE: Proof. Standard of. for oral contracts, three years for damages to real or personal property, four years for written contracts, and three years from STANDBY COMMITMENT The mortgage banker date of discovery for fraud. frequently protects a builder by a standby agreem ent, under which the banker agrees to make the mortgage STATUTORY CONSTRUCTION Wh en a judg e interprets loans at an agreed price for many months into the future. and applies a statute in the cou rse of resolving a law suit. The builder deposits a standby fee with the mortgage banker for this service. Frequently, the mortgage broker STATU TORY LAW Laws adopted by a legislative body protects self by securing a standby from a long term (congress, a state legislature, or a county or city council), as inves tor for the s am e period of time , paying a fee for this opposed to constitutional law, case law, or administrative privilege. regulations.

STAR E DEC ISIS a fundamental principle of law, STATUTORY WARRANTY DEED A short term warranty which holds that courts should follow prior decisions on a deed which warrants by inference that the seller is the point of law. A proper decision is a binding precedent on undisputed owner, has the right to conve y the prope rty, and will equal or lower c ourts havin g the sam e fac ts in defend the title if necessary. This type of deed protects the controve rsy. purc haser in that the conv eyor c oven ants to defend all claim s against the property. If conveyor fails to do so, the new owner STARKER A taxpayer who won an important U.S. can defend said claims and sur former owner. Court of Appea ls case in 1979 (T .J. Starker v. U.S.) Dea ling with dela yed ex change and w hose nam e is STAY Delay temporarily; stop for a limited time. synonymous with the those exchanges; the Sterker ruling has since been modified in IRS Code Section 1031 STEERING Channeling prospective buyers or ten ants to particular neighborhoods based on their race, religion, national STATE ACTION In con stitutio nal law , action by a origin, or an cestry. gove rnm ent (federal, sta te, or lo cal) rather than by a private party. STEPPED -UP BASIS a higher, increased tax value of prop erty given as the re sult of mo st sales or taxable transfers. STATE BOARD OF EQUALIZATION. Is responsible The tax basis is used in computing capital gains and losses on for collecting state taxes. the tra nsfe r of property.

STATE COURT Cases that involve the U.S. STEP-UP LEASE (STEP-UP CLAUSE) Lease agreement government are not heard in state court. that establishes progressively higher rental amounts for different segments of the lease term; graduated lease. STATEMENT OF ISSUES A written allegation by the STOCK commissioner identifying the issues and listing the rules The ownersh ip elem ent in a corpora tion usually violated, used in a non property right hearing. divided into shares and represented by transferable certificates (may be divided into two or more classes of differing rights and stated values). STATUTE A written law. STOCK COOPERATIVE SEE: Cooperative. STATUTE OF FRAUDS The state law that provides that certain contracts must be in writing in order STRAIGHT LEASE Lease agreement in which rent is a fixed to be enforceable in the courts. Exam ples: real property amount that stays the som e over the entire lease term. leased for m ore tha n one year or an agent's

PAGE 83 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course.

STRAIGHT-LINE DEPRECIATION an accounting procedure that sets the rate of depreciation as a fixed SUBCHAPTER-S CORPORATION A corporation that, for percentage of the amount to be depreciated; the federal tax purposes only, is taxed sim ilarly to a partners hip. percentage stays the sam e each year. The corporate entity is disregarded for most federal tax purposes, and the shareholders are generally taxed as STRAIGHT-LINE METHOD OF DEPRECIATION individual partners. Method of comp uting depreciation in which the loss in value of a building is assumed to be the ratio of its age SUBDIVIDE To segment large, acquired tracts of real (or effective age) to its total useful or economic life. property in order to create small tracts for the purpose of resale. STRAIGHT MORTGAGE OR DEED OF TRUST a mortgage or deed of trust in which there is no SUBDIVIDED LANDS ACT The right of the state to regulate reduction of the principal during the term of the for the purpose of promoting health, safety, welfare and instrument. Payments to interest are usually made on an mo rality. annual, semiannual, or quarterly basis. SUBDIVISION A legal definition of those divisions of real STRAIGHT NOTE A pro mis sory n ote that is property for the purpose of sale, lease or financing which are unamortized. The principal is paid at the end of the term regulated by law. of the note. SUBD IVISION PLAT SEE: Plat. STRAIGHT PERCENTAGE LEASE A type of percentage lease that bases rental rate solely on gross SUBDIVISION REGULATIONS State and local laws that sales. must be complied with before land can be subdivided.

STRICT LIABILITY When som eone is he ld lega lly SUBJECT PROPERTY The real property under discussion responsible for an injury to another, even though he or or apprais al. she did not an negligently. COM PARE : Negligence. SUBJACENT SUPPORT Support that the soil below the STRIKE LIST An arbitration service sends a list of surface gives to the surface of the land. arbitrators to each party and the parties strike the names that are un acceptable. SUBJECT TO (1) Burdened by and liable for an obligation. (2) A method of tak ing ov er a loan without becom ing pe rson ally STRING, STRINGER (1) a timber or other support for liable for its paym ent. cross-members. (2) in stairs, the support on which the stair treads rest. SUBJECT TO" MORTGAGE OR DEED OF TRUST When a grantee takes a title to real property subject to a mortgage or STRIP CENTER A small shopping center of about deed of trust, he or she is not responsible to the holder of the 10,000 to 30,000 square feet (four to ten retail spaces) promissory note for the payment of any portion of the amount located at the edge of an urban area or in a suburb. due. The most that he or she can lose in the event of a foreclosure is his or her equity in the property. In neither case STRUCTURAL DENSITY The ratio of the total is the original maker of the note released from his or her ground floor area of a building to the total land area on responsibility. (See also Assumption of Mortgage or Deed of the site on which it is built. Trust.)

STUDS OR STUDDING Vertical supporting SUBLEASE A lease given by a tenant. timbers in walls and partitions. SUBLETTING Partial transfer of a tenant s right in arental SUB-ACCOUNTS Sub-acounts within a trust prop erty to a third party. account must be reconciled within the general account. SUBMERIDIANS (See Range Lines) SUBAGENTS. Subagents are also called selling agents. A licensed salesperson cannot be a subagent of SUBORDINATE To make subject or junior to. the seller. SUBORDINATION Made subject to or subservient to; SUBBASELINES (See Township Lines) assignment to a lesser roll or position.

PAGE 84 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course.

SUBORDINATION (AGREEMENT) In a mortgage SUCCESSOR IN INTEREST The next succeeding owner of or deed of trust, a provision that a later lien shall have a an interest in property. The transferee or recipient of a priority interest over the existing lien. It makes the property interest. existing lien inferior to a later lien, in effect exchanging priorities with that later lien. SUCCESSOR S LIABILITY The liability of the next successive owner of the real estate. SUBORDINATION CLAUSE Senior lien that m akes it inferior to what would otherwise be a junior lien. SUIT An act of suing; an action in court of law for the reco very of a righ t or cla im. SUBPOENA A legal order to cause a witness to appear and giv e testimo ny. SUMMARY SUSPENSION Emergency or immediate action against a license to protect the public. SUBPOENA DUCES TECUM An order to produce books, records or other documents. SUMMATION APPROACH SEE: Cost Approach. SUBROGATE To substitute one perso n for another's SUMMONS A doc um ent inform ing a d efen dant that a lawsuit legal rights to a claim or debt. has been filed against him or her, and ordering the defendant to file an answer to the plaintiff s com plaint with the court. SUBROGATION The substitution of another person in place of the creditor with regard to an SUM-OF-THE-YEARS S-DI GITS DEPRECIATION An obligation. accelerated depreciation method. Accomplished by multiplying the remaining years of the property s economic life by the SUBSIDIZED HOUSING Residential development for prop erty s rem aining value and then dividing by the sum of all low-in com e fam ilies that are insured or (indire ctly) the years in the re ma ining e conom ic life of the p rope rty. finan ced in part by a go vernme nt agency. SUPERFUND AMENDMENTS AND REAUTHORIZATION SUBSIDY BUYDOWN Funds provided usually by the ACT OF 1986 (SARA) The umbrella title given to various builder or seller to temporarily reduce the borrower s amendments to CERCLA.. Am endm ents limit pesticide liability monthly principal and interest payment. and provide the government reclamation of contaminated prop erty. SUBSTANTATIVE LAW The laws describing rights and duties. Differs from procedural law, which SUPPLY AND DEMAND, PRINCIPLE OF In appraising, a only describes how to enforce and protect rights. valuation principle stating that market value is affected by intersection of supply and demand forces in the market as of SUBSTANTIAL PERFORMANCE When a promisor the appraisal date. doesn t perform all of his or her contractual obligations, but does enou gh so that the promis ee is required to fulfill SUPERIOR COURT The principal trial court of the state; a his or her side of the bargain. COMPARE: Breach, court of unlimited monetary and subject matter jurisdiction, and Material an ap peal court for decisions of m unicipal co urts a nd sm all claims courts. SUBSTITUTION, PRINCIPLE OF Affirms that the maximum value of a property tends to be set by the cost SUPERSEDEAS, WRIT OF A stay of enforcem ent; of acquiring an equ ally desirable and valuable substitute temporary stop in a legal proceeding; restraining order. prop erty, as sum ing no costly delay is enc ountered in making the substitution. SUPPORT, LATERAL The Support that a piece of land receives from the land ad jacent to it. SUB-STRUCTURE DAT A Includes information about basement or crawl area, parts of the building as is also SUPPORT, SUBJACENT The support that the surface of a known as foundation data. piece of land receives from the land be neath it. SUBURBAN DEVELOPMENT This was greatly aided SUPPORT RIGHTS The right to have one s land supported by the railroads enabling people easy access to the by the land adjacent to it and beneath it. nearby cities. SUPPLY The quan tity of go ods or services offered for sa le SUCCESSION The inheritance of prope rty. to the consumers.

PAGE 85 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course.

SUPREME COURT The highest court in the TACKING When successive periods of use or possession by California and the federa l court struc ture. This cour t is more than one person are added together to make up the five almost exclusively an appeals court, accepting (by years required for prescription or adverse possession. certiorari) only those cases that, in the court's desecration, involve issues of significant magnitude and social importance. TAKING When the government acquires private property for public use by con dem nation, it s called a tak ing. The term is SURETY One who guarantees the performance also used in inverse condemnation lawsuits, when a by another, a guarantor. government action has made private property useless.

SURPLUS PRODUCTIVITY, PRINCIPLE OF The net TAKE-O UT LO AN The loan arranged by the owner or builder income that rem ains after the proper costs of labor, developer for a buyer. The construction loan made for orga nization and capital hav e bee n paid , which sur plus is construction of the improvements is usually paid in full from the imputable to the land and tends to fix the value thereof. proceeds of this more permanent mortgage loan.

SURRENDER Giving up an estate (such as a life TANGIBLE ASSET Anything of substance; personal and estate or leasehold) before it has expired. real prope rty.

SURVEY The proc ess by whic h a pa rcel of land is TANDEM PLAN This is the name of the plan used by GNMA located on the ground and measured. and FNMA for buying loans at par, which is less than market value.

SURVIVORSHIP SEE: Right of Survivorship. TAX A compulsory charge on property or individuals, the payment of which supports a governm ent. SUSPENSION When a real estate agent s licen se is temporarily withdrawn. TAXABLE INCOME Gross income minus tax deductions; net operating income plus reserve for replacements minus SUSPENSION, SUMMARY License suspension before financing costs and allowable deductions. a hearing has been held. TAXABLE VALUE The assessed va lue les s allow able SWING LOAN A short term loan to bridge the gap exemp tions resu lting in a n am ount to which the tax rate is between the purchase of a new home and the applied to determine property taxes due. subsequent sale of an old one. TAX BASIS The tax va lue of property to the taxpayer. It is a figure used to compute capital gains and losses. SYNDICATE An association formed to operate an investment business. A syndicate is not a recognized TAX CERTIFICATE A docum ent sold by a local tax authority legal entity; it can be organized as a corporation, granting the certificate buyer the right to receive delinquent partners hip, or trust. taxes plus interest when paid by the legal property owner.

SYNDICATION A gro up of individuals poolin g their TAX CLAUSE A provision in a mortgage that requires the resources to purchase property through the holding borrower to pay all legitimate property taxes. vehicle of a partnership, corporation, or other association. Each individual owns share in the legal TAX DEED Deed issued to the purchaser at a tax sale. entity fo rmed to acqu ire and hold title to the property. TAX-DEFERRED EXCHANGE A method of postponing SYSTEM MAINTENANCE ADM INISTRATO R (SMA); capital gains when disposing of real property by trading one SYST EMS MAINT ENANC E TECHNICIAN property for another of like kind. Designations awarded to building engineers and maintenance personnel by the Building Owners and TAX DISTRICT An authority, such as a city, county, school Managers Institute International (BOMI) for completion of board or special levy area(e.g., water district) with powe r to courses in building systems operation and maintenance. assess property owners annually in order to m eet it s expenditures for the public good.

TAX-FREE EXCHANGE The trade or exchange of one real T property for another without the need to pay income taxes on the gain at the time of trade.

PAGE 86 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course.

TAX, GENERAL REAL ESTATE Property taxes. TENANCY BY THE ENTIRETIES An estate created by husband and wife jointly owning real property with instant and TAX LIEN A claim against real property arising out of complete right of survivorship. non-payment of the property taxes. TENANCY-IN- by two or more TAX PARTICIPATION CLAUSE A lease provision persons who hold an undivided interest in real property, without requiring the tenant to pay a pro-rata share of any right o f survivors hip; the interests need not be equ al. increase in real estate taxes or assessments in addition to the basic renta l. TENANCY, TERM SEE: Estate for Years.

TAX, PROPERTY An annual ad valorem tax levied on real and pe rson al property. TENANCY IN PARTNERSHIP The form of concurrent ownersh ip in wh ich ge nera l partn ers o wn partne rship property, TAX SALE Sale of property after a period of whether or not title to the property is in the partnership s name. nonpayment of taxes. Each partner has an equal undivide d interest, but no right to transfer the interest to someone outside the partnership. TAX RATE The percentage of value that is used to determine the amount of tax to be levied against each TENANT One who leases real property from the owner. individual unit of property; ad valorem (accord ing to value). TENANT ALTERATION COSTS Construction, remodeling and alteration expenses for work needed to make the premises TAX SALE NUMBER A number assigned to a usable by the tenant. These costs are assumed by the tenant property when property taxes are not paid on time; or the owner or both and are a major point of negotiations. identifies th at pro perty o n the delinq uent tax ro ll. TENANTS BY THE ENTIRETIES Under certain state laws, TAX SERVICE A reporting service that notifies the ownership of property acquired by a husband and wife during lender in th e event the borrower does not keep the marriage, which property is jointly and equally owned. Upon property tax es curre nt. death of one spouse it becomes the property of the survivor.

TAX SHELTER An investment that shields items of TENANT, HOLDOVER A lessee who remains in possession income or gain from payment of incom e taxes; a term of the property after the lease term has expired. used to describe some tax advantages of owning real property (or other investments), including postponement TENANT, LIFE Someone who owns a life estate. or even elimination of certain taxes. TENANT M IX The combination of retail tenants occupying a TAX WRITE-OFF When a purchaser buys an older shopping center; must be considered carefully to achieve buildin g for this purpo se on ly the bu ilding is depreciable maximum profit for each m erchant of the center. not the land. TENANT UNION A local organization of residential tena nts TECHNICAL OVERSUPPLY A marke t condition in working for their common interests and rights. which available rental space exceeds tenant demand. TENANT WARDENS Employees of tenant companies who TENANCY A leasehold estate. (For specific types are schooled in em ergency procedures by the building staff to of leases see Estates.) direct their fellow employees during routine drills and actual emergencies. TENANCY AT SUFFERANCE A rental situation in which a tenant who originally obtained possession of the TENDER An unconditional offer by one of parties to a remises legally continues to occupy the property after the contract to perform his or her part of the agreement; made expiration of the leasehold interest and with out the when the offeror be lieves the other p arty is b reac hing, it consent of the owner. establishes the offeror s right to sue if the other party doesn t accept it. Also called a tender offer. TENANCY AT WILL When a tenant is in possession with the owner s permission, but there s no definite lease TENEMENTS All rights in real property that pass with a term; as when a landlord a llows a holdover tenant to conveyance of it. remain on the premises until another tenant is found. TENT ATIVE M AP The Subdivision Map Act requires

PAGE 87 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. subdividers initially to submit a tentative map of their tract of the contract. to the local planning commission for study. The approval or disapproval of the planning commission is noted on THIRTY-DAY NOTICE A notice terminating a pe riodic the map. The reafter, the planning c omm ission requests tenancy without cause, by ending a tenancy thirty days from a final map of the tract embodying any changes. date of service.

TENURE IN LAND The manner in which lan d is THREE-DAY NOTICE A notice giving a tenant thre e days in held. which to cure a default or quit the premises. It is the first step in an unlawful detainer action, as the means of terminating a TERM A prescribed period of time; especially, the lease for cause. When rent is delinquent, it is sometimes length of time a borrower has in which to pay off a loan, called a no tice to quit or pay rent. or the duration of a lea se. THREE-QUARTER BATH This bath contains a shower, a TERM LOAN A loan made for a specific period of sink and a toilet. time. THRESHOLD A strip of wood or metal beveled on each edge TERM MORTGAGE A nonamortizing loan that and used above the finished floor under outside doors. normally calls for repayment of the principal in full at the end of the loan term. TIDELANDS Lands that are covered and un covered by the ebb and flow of the tide. TERMS Refers to the amount of each installment payment, interest rate , due dates, and number of years. TIER An east west row of townships (as used in the government survey method of land descriptions). TERMITES Antlike insects that feed on wood. TIGHT MONEY MARKET A market in which the demand for TERMITE SHIELD A shield, usually of money exceeds the supply, causing interest rates to increase noncorrodible metal, placed on top of th e foundation wall and borrower qualifications to be tightened. or around pipes to prevent passage of termites. TIME DEP OSIT Savings account with a fixed maturity, as TESTAMENT The written dec laratio n of one's last will. opposed to a demand deposit.

TESTAMENTARY DISPOSITION A gift passing "TIME IS OF THE ESSENCE" The se words , when plac ed in by will. an agreement, make it necessary that all time limitations and requirements be strictly observed. TESTATE Describes a person who dies leaving a will. TIME-SHARE ESTATE A right of occupancy in a time share project (subdivision) which is coupled with an estate in the real TESTATOR A person who makes a will. Technically, prop erty. a testator is a male and a testatrix is a female, although in common use testator refers to anyone who makes a TIME-SHARE CONDOMINIUM Ownership in vacation area will. residential property for an assigned period, usually two weeks. Also called interval ownership. TESTATR IX A wom an who m akes a will. TIME-SHARE PROJECT A form of subdivision of real TESTER A person working with a fair housing property into rights to the recurrent, exclusive use or organization, who pretends to be interested in buying or occupancy of a lot, parce l, unit or a segm ent of real property, renting property from someone suspected of unlawful on an annual or some other period basis, for a specified period discrimination. of time.

THEFT As related to real estate, it includes entering TIME-SHARE USE A licen se or contractu al or m em bers hip and removing part of the realty, defrauding by right of occupancy in a timeshare project which is not coupled misrepresentation, and taking away part of the security with an estate in the rea l property. for a trust d eed with the intent to defraud the ben eficia ry. T-INTERSECTION LOT Lot facing the dead-end street at the THIRD PARTY Persons who are not parties to a T-intersection. contract which affects an interest they have in the object

PAGE 88 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course.

TITLE Evide nce of the owner's right or interest in property. (1) The right of ownership. (2) The evidence TITLE INSURANCE Insurance written by a title company to of a perso n's ownership or interest in property. protect a property-owner against loss if title is defective or not ma rketable. A spe cial po licy of insura nce issue d by a title com pany, insuring the owner against loss of or defect in title to TITLE, AFTER-ACQUIRED Title acquired by a grantor the insure d property. The policy m ay be e ither a CLT A policy, after he or she attempted to convey property he or she issued to the property owner and to noninstitutional lenders, or didn t own. an ALTA policy, issued to institutional lenders.

TITLE, CLEAR Title that is free of encumbrances or TITLE POLICIES An ALTA lende r s polic y is the Title defects: marketable title. Policy usually required by the lender. TITLE COMPANY Com pany authorized to sell title insurance, as well as to serve escrow needs. TOPOGRAPHY Nature of the surface of the land. Topography may be level, rolling, or mountainous. TITLE, EQUITABLE The ven dee s interest in property under a land contract. Also called an equitable interest. TORRENS SYSTEM A governmental title registration COMPARE : Title, Lega l. system th at uses certificates of title is sued by a p ublic o fficial ( the registrar of title) as evidence of title. TITLE INSURANCE Insuranc e protecting a property owner against losses resulting from an imperfect title. A title included in a state-insu red title system no longer used in California.

TITLE, LEGAL The vendor s interest in property under TORT (1) A wrongful act. (2) A wrong or injury. (3) Violation a land contract. COMPARE: Title, Equitable. of a legal right. A civil wrong, not arising from a breach of contract. Most lie in negligence, although they could also TITLE, MARKETABLE Tile free and clear of be intentional torts (such as assault and battery, trespass) or objectionable liens, en cum brances, or defects, so that a strict liability torts. reasonable prudent person with full knowledge of the fans would not hesitate to purc hase the property.. TORTFEASOR A perso n who comm its a tort.

TITLE PLANT A duplicate (usually microfilmed) of a TORTIOUS Conduct which amounts to a tort. county s public record, maintained by a title company at its offices for use in title searches TOWNHOUSE One of a row of houses usually of the same or similar design with common side walls or with a very narrow TITLE REPORT A report which discloses condition of space between adjacent side walls. title , made by a title company preliminary to issuance of title insuran ce po licy. A duplicate (usually microfilmed) of TOW NSHIP A territorial subdivision that is six miles long a county s public record, maintained by a title company at and six miles wide and that contains 36 sections, each one its offices for use in title searches. mile square.

TOWNSHIP LINES Lines running ea st-west, spaced six TITLE THEORY A mortgage arrangement whereby miles apart, in the government survey system. title to mortgaged real property vests in the lender. Some states give greater protection to mortgage lenders and TOWNSHIP TIER In the g overnm ent survey system, a strip assume lenders have title interest, Distinguished from of land running east-west, six miles wide and bounded on the the Lien Theory States north and south by township lines.

TITLE THEORY STATE A state in which the borrower TOWNHOUSE A residential unit connected to similar units. assigns title to the lender, typically in a deed of trust. Describes a style of architecture , with title to the unit and its lot invested in the individual buyer with an undivided interest in the common area. TITLE SEARCH An inspection of the public record to determine all TRACS An on-line computer system being developed by HUD to help administer subsidized housing. TIME PERIODS Time periods for various lawsuits are specified in the Statute of Frauds.

PAGE 89 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course.

TRACT 1. A piece of land of undefined size. 2. In the government survey system, an area made up of 16 TRANSFEREE The person to whom a transfer is made. townships; 24 miles on each side. TRANSFEROR The person who makes a transfer. TRACT INDEX An index of the public record, grouping together all recorded documents that carry a particular TRANSMUTATION AGREEMENT A contract in which co- legal description. COMPARE: Grantor/grantee Indexes. owners a gree to change their form of ow ners hip; usually one in which hu sband and wife agree to change com munity property TRADE ASSOCIATION A voluntary n onprofit to separa te pro perty. organization of independent and competing business units engaged in the sam e industry or trade, form ed to TREADS Horizonta l boards of a stairway. help solve industry problems, promote progress and enhance service. TREND A series of relate d cha nges bro ught about by a chain of causes and effects. TRADE FIXTURES Articles of personal property that are annexed to real prope rty but that are necessary to TRESPASS An invasion of an owner's rights in his or her the carrying on of a trade and are removable by the property. (1) Unauthorized entry onto another's land. (2) owner. Fixtures installed to further one's trade, business, Invas ion of another's rights or pro perty. or pro fess ion. T hey are an e xception to the gene ral rule that fixtures are part of a building. Such fixtures installed TRESPASSER One who tresp asses. T he im porta nce of this by a tenant may be removed before the expiration of the classification of individuals on property is created by the tenancy. me thods for rem oval a nd the liability o f the p rope rty own er if the tre spasser is inju red on his p rope rty. TRAD E-IN Method of guaranteeing an owner a minimum amount of cash on the sale of his or her TRIAL The fundam ental court proc eeding in a lawsuit, in present property to permit him or her to purchase which a judge ( and in some cases, a jury) hears evidence another. If the p rope rty is no t sold within a spe cified time presented by both parties and issues a judgment. COMPARE: at the listed price, the broker agrees to arrange financing Appeal. to purchase the property at an agreed-upon discount. TRIER OF FACT The one who decides questions of fact in a TRADE NAME Any adopted or fictitious name used to lawsuit. In a jury trial, it s the jury; in a non-jury trial, it s the designate a business concern. judge. (Q uestions of law are always decided by the judge.)

TRANSACTIONAL BROKER A real estate agent TRIGGERING TERMS The Truth-in-Lending Act requires representing both buyer and seller in a transaction; also creditors to disclose certain information if certain credit terms, referred to as a dua l agent. are included in the advertisement. Triggering terms include the amount or percentage of down payment, number of payments, TRANSACTION ACCOUNTS Accounts used to make period (term) of repayment, amount of any payment, and the payments or transfers to others, such as a checking amount of any finance charges. account TRIM The finish materials in a building, such as moldings TRANSFER Conveyance; passage of title. applied around openings (window trim, door trim) or at the floor and ceiling (baseboard, cornice, picture molding). TRANSFERABILITY The ability to will, lease, give or sell a p rope rty. TRUST A right of property, real or personal, held by one party called the trustee for the benefit of another party TRANSFER FEE A charge made by alending called the beneficiary. Arrangement whereby one person holds institution holding or collecting on a real estate mortgage property for the benefit of another under fiduciary (special to change its records to reflect different ownership. confidential) relationship.

TRUST ACCOUNT An account separate and apart and TRANSFER TAX See DOCUMENTARY STAMPS physically segregated from broker s own funds, in which broker is required by law to deposit all funds collected for client. TRANSFER TAX STAMPS In a real estate sale, the transfer tax stamps are the prime responsibility of the TRUST COOPERATIVE A cooperative in which legal seller. ownersh ip of a buildin g is he ld by a trust com pany.

PAGE 90 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course.

TRUST DEED Deed given by a bo rrower to a trustee to U.S. Constitution or a state constitution. be he ld pen ding fulfillm ent of an obligation, which is usually repayment of a loan to a beneficiary. A deed of UNDERIMPROVEMENT An improvement which, because of trust. It may contain all the following clauses, request for its deficiency in size or in cost, is not the highest and best use notice, prepayment penalty and late charges. of the site.

TRUST FUNDS. Trust funds accepted by a broker may UNDERWRITING Insuring something against loss; not be plac ed in th e broker s bus iness account, or h is guarante eing financ ially. personal account. Trust fund handling requirements do not apply to advance fees. A broker must place trust UNDIVIDED INTERESTS SEE : Interest, Undivided funds in an interest-bearing account if requested by the owner of the funds. The broker must keep records of UNDUE INFLUENCE Tak ing an y fraudulen t or un fair trust funds deposited in a trust account. A broker must advantage of another's necessity or weakness of mind. Using retain records of trust funds for three years after the a position of trust and confidence improperly to persuade a closing or cancellation of the transaction involving the person to take a course of action. By relying on the trusted funds. If a broker is found to be mishandling trust funds, confidant, the decision maker fails to exercise his free will and the brok er, the broker s business may be handed over to independent judg ment. a receiver. Criminal penalties apply to mishandling of trust funds. UNEARNED INCREMENT An increase in value of real estate due to no effort on the part of the owner, often due to an TRUSTEE The person who holds property in trust increase in population. for another. In a deed of trust, the person who holds bare legal title in trust. After a deed has been paid off , UNENFORCEABLE CONTRACT Incapable of being the deed reconveying title to the trustor will be signed by enfo rced at law. An exam ple of an un enfo rcea ble co ntrac t is the trustee. an oral listing agreement to pay a broker a commission.

TRUSTEE'S DEED The deed issued by the UNETHICAL CONDUCT An owner/ broker submits a beneficiary after the foreclosure and sale under a deed listing to a m ultiple listing service, and an other brok er se lls his of trust. property, however the owner/broker does not disclose that he is a broker would constitute unethical conduct under DRE TRUSTEE'S SALE The private sale of prope rty held regulation. by a trustee under a deed of trust as part of the foreclosure proceedings. UNIFORM COMMERCIAL CODE A group of statutes establishing a unified and comprehensive scheme for TRUSTOR (1) One who conveys his or her property regulation of security transactions in personal property and to a trustee. (2) The borrower or debtor under a deed of other commercial matters, superseding the existing statutes on trust. chattel mortgages, conditional sales, trust receipts, assignment of accounts receivable, and other similar matters. TRUTH IN LENDING LAW (TIL) A complex set of federal statutes designed to provide a borrower with a UNIFORM RESIDENTIAL LANDLORD AND TENANT ACT, means of discovering and comparing the true costs of A model law drafted in 1972 by the National Conference of credit. Under Regulation Z of the act, certain borrowers Commissioners on Uniform State Laws. It serves as a model of prope rty have three days after accepting a loan to statue for standardization and regulation of the residential resc ind without cost or liability. landlord-tenant relationship.

TWO-STEP MORTGAGE Loan with lower initial fixed UNIFORM SETTLEMENT STATEMENT A closing statement interest rate, increasing after conversion period. required for any trans action involving a loan that s subject to the Real Estate Settlement Procedures An (RESPA). TURNOVER The frequency in which new tenants move in and out of a unit. UNIFO RM STAND ARDS O F PRO FESSIO NAL APPR AISAL PRACTICE These standards are developed, interpreted and U amended by The Appraisal Standards Board. UNILATERAL (CONTRACT) One-sided, ex parte.

UNCONSTITUTIONAL Violating a provision of the

PAGE 91 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course.

UNILATERAL ESCROW INSTRUCTIONS Separate reasonable basis to the representation. It would be unlawful sets of escrow instructions, one for the buyer and one for conduct. the seller; n orm ally drawn up afte r all the inform ation is in and escrow is ready to close. UNLAWFUL DETAINER An action to recover possession of real prope rty. A lawsuit designed to evict a UNILATERAL MISTAKE SEE: Mistake, Unila teral. defaulting tenant, or anyone unlawfully in possession of property, from premises. It is summary in nature, entitled to a UNLAWFUL DISCRIMINATION A bank refuses to priority court trial, and litigates only the right to possession of loan money to a buyer because of his religion. property (and damages resulting therefrom).

UNINCORPORATED ASSOCIATION The legal UNLAWFUL DISCRIMINATION A person fined with this act designation for an organization that has recorded a may be fined as high as $10,000 for a first violation. statement listing the names of those who are authorized to execute conveyances on its behalf, which makes UNLIQUIDATED DAMAGES The amount of valuable possible for title to be held in the association s name. consideration awarded by a co urt to a n injured party as a result of a default. UNITIES, FOUR The unities of time, title, interest, and possession, requ ired fo r a join t tenancy. UNSECURED DEBT A debt not backed by specific property to satisfy the ind ebtedness in case of default. UNIT- IN - PLACE METHOD The cost of erecting a building by estimating the cost of each separate UNSECURED NOTE (LOAN) A loan granted solely on the com ponent. strength of a borrower s signature; no security is pledged, and no deed of trust recorded.

UNITY OF INTEREST When each co-owner has an UNTENANTABLE Not fit for oc cupancy. equal interest (equal share of ownership) in a piece of prop erty. UPC Identification number for a specific property; also called UNITY OF POSSESSION When each co-o wner is assessor s tax parc el num ber, a ccount num ber or folio equally entitled to poss ession of the entire p rope rty, number. because the ownership interests are undivided. URB AN LAND INSTITU TE (ULI) A nonprofit organization UNITY OF TIME When each co-owner acquired title at founded in 1936 to improve the quality of land-use planning the same time. and developm ent.

UNITY OF TITLE When each co-o wner acq uired title URBAN PROPERTY City property; clos ely settled prope rty. through the same instrument (deed, will, or court order). URBAN REN EWAL Renovation, rehabilitation and UNIVERSAL AGENT A representative authorized by redevelopment of substandard urban residential properties. the principal to perform all acts that the principal can personally perform and that m ay be lawfully delegated to USABLE SPACE Floor area of an office building that can be another. used for tenant office space.

UNJUST ENRICHMENT A legal doctrine that USE VARIANCE SEE: Variance, Use. prevents a person from inequitably benefitting from another's mistake, poor judgment, or loss. In a land USPAP Stands for Uniform standards of Professional sales contract the vender may no longer keep both the Appraisa l. prop erty an d the buyer's excess paym ents (over his damages) in the event of breach, because to do so USURY OR USURIOUS INTEREST Claiming a rate of would unjustly enrich him at the buyer's expense. interest gre ater than perm itted by law. Charging a greater rate of inte rest o n loan s than the rate a llowed by law (10 perce nt in UNLAWFUL Illegal. many cases).

UNLAWFUL CONDUCT A licensee solicits a UNTENABLE PROPERTY The penalty for any landlord who listing by selling a prospective home seller and the collects or demands rent when his property has become property has a high market value when there is no untenable is ; actual damages up to $10,000, the tenant s court

PAGE 92 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. costs and fees, and possible punitive damages imposed VALLEY The internal angle formed by the junction of by a judge. two sloping sides of a roof.

UTILITIES Refers to services rendered by public utility VALUATION (1) Estimated worth or price. (2) The act of companies, such as ---- water, gas, electricity or valuin g by ap prais al. telephone. VALUATION SEE: Appraisa l. UTILITY The ability to give satisfaction and/or excite a desire for possession. An element of value. VALUE Present worth of future benefits arising out of ownership to typical users/investors. The monetary worth of UTILITY VALUE The usef ulnes s of prope rty. property , goods or services to buyers. When net operating income is divided by the capitalization rate you get value.

VALUE, BASE Under Proposition 13, the initial assessed value of a piece of property, used in calculating a particular owner s property taxes; this figure is later adjusted to reflect V inflation and improvements. VALUE, FULL CASH Under Proposition 13, the assessed VA Veteran s Administration. value of newly transferred property; it s the purchase price of the property, unless it can be shown that the property wouldn t VACANCY AND COLLECTION LOSSES A deduction have been sold at that price on the open mark et. from potential gross income for (1) current or future space not rented due to tenant turnover and (2) loss from VARIABLE CO STS RATIO A method of expre ssing variable uncollected rent due from delinquent tenants. costs for a property as a percentage of total rental income.

VACANCY RATE The percentage of rental units that VARIABLE EXPENSE An ex pense item in a property s are not occupied. operating budget that increases or decreases with the occupancy level of the building. VACATE To set aside, cancel, or annul; to leave em oty. VARIABLE INTEREST RATE An interest rate that fluctuates in a set proportion to changes in an economic index, such as VALID The legal c lassificatio n of a contract th at is the cost of mo ney. Extensive regulations cover use of VIRs in binding and enforceable in a court of law. loans on residential prope rty.

VALUABLE CONSIDERATION SEE: Consideration. VARIABLE SCALE PERCENTAGE LEASE A type of percentage lease in which the percentage rental rate increases VALID CONTRACT (1) Legally sufficient and or decreases according to the volume of business done by the authorized by law. (2) Having force or binding force. tenant. Fully effective at law; legally sufficient. VARIANCE An exception or departure from the general VALID DEED All legal essential legal elements are rule. A n exc eption granted to a property own er, relieving him present. One that is binding and enforceable in a court of from obeying ce rtain aspects of a zoning ordinance. Its law. gran ting is discr etionary with the zoning a uthorities a nd is based on undue hardship suffered by the property owner because of unique circu ms tances af fectin g his p rope rty. VALID ESCROW It is a necessary requ irem ent in a valid escrow for the transfer of title to real property for: VARIANCE, USE A variance that permits an owner to use a binding contract for the sale of real property and a the property in a way that isn t ordinarily allowed in that zone; conditional delivery of instructions to escrow for example, a commercial use in a residential zone.

V A LOAN A loan made to qualified veterans for the VENDEE Purc haser or b uyer or real p rope rty. purchase of real property wherein the Department of Veteran s Affairs guarantees the lender payment of the VENDOR Seller of real property. mortgage. VENDOR S LIEN A claim against property giving the seller

PAGE 93 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. the rig ht to hold the property a s security for any unpa id status, sa lary, and length of em ployment. purc hase money. VOID Having no legal force or effec t. VENEER Thin sheets of wood placed over another ma terial.

VENT A pipe installed to provide a flow of air to or from VOID CONTRACT To have no legal force or effect; that a drainage system or to provide a circulation of air within which is unenforceable. Unenforceable, null, having no legal such system to protect trap seals from siphon age and effect. back pressure. VOIDABLE CONTRACT An instrument that appears to VENUE The location in which a cause of action be valid and enforceable on its face but is, in fact, lacking occurs; it determines the court having jurisdiction to hear som e ess ential requirem ent. M ay be d eclared void, but is va lid and decide the case. For real estate, the court having unless and until declared void. prop er venue is one in the c ounty in which the property is located. VOIDABLE CONTRACT A title that is valid until voided by the party wh o has a right to nullify it. VERIFICATION A sworn s tatem ent before a du ly qualified officer as to the correctness of the contents of VOLUME BUYING See Bulk Purchasing an instrument. Written certification under oath and/or penalty of perjury, confirming the truth of the facts in a docum ent. VOLUNTARILY INACTIVE The license status that results when a licensee has met all the requirements for licensure, yet VERSUS Against (a bbre viated v. or vs .). Used in the licensee chooses not to engage in the real estate business, case names, with the plaintiff's nam e given first. and has requested his or her license be placed in this status. VEST To confer or bestow upon, as in the expression, Title shall ves t in...... VOLUNTARY LIEN Any lien placed on property with the consent of the owner or as a result of the voluntary act of the VESTED Bestowed upo n som eone, such as title owner. to property. Absolute, not contingent or subject to being defeated. VRM Variable Rate Mortgages. See Adjustable-Rate Mortgages VESTEE Current recorded owner. VESTING The manner in which title is held. W VETERANS ADMINISTRATION Federal agency succeeded as of March 15' 1989 by the Department of Veterans Affairs. WAINSCOTING Wood lining of an interior wall, lower section of a wall when finished differently from the upper part. VETERAN'S EXEMPTION A deduction from the annual property tax allowed to a qualified veteran WAIVE To give up a right. residing on residential property. Since July 1978, it has am ounted to $40 o ff the norm al tax bill. WAIVER Giving up of certain rights or privileges. The relinquishment may be voluntary and knowing, or it may occur VETO Wh en the president or governor form ally rejects involuntarily through action of the parties. The action resulting a bill that Congress or the legislature has passed. The in the waiver is unilateral, and requires no action or reliance by bill won t becom e law unless the legislative body votes to the other p arty. override the veto. WALK-UP An apartment building with two or more floors VOD Verification of Deposit form sent to borrower s without an elevator. financial institutions to verify funds for the down payment and closing costs. WAREHOUSES Rent is usually established after surveying similar spaces to determ ine ma rket rents. VOE Verification of emp loyment form s ent to prospective borrower s employer to verify employment WAREHOUSING Temporary retention of loans pending

PAGE 94 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. sales to investors. WELFARE OR SOCIAL SECURITY A lender may not legally deny a loan application based on the applicant s receipt WARRANT A guaran tee or covenant, as in a warranty of income from a public assistance program such as W elfare deed. or So cial Security.

WARRANTY An absolute undertaking or promise that WILD DEED A deed that will not be discovered using the certain facts are as represented. Occasionally used grantor-grantee indexes., because of a break in the chain of interchangeably with guarantee. title. A deed of trust or other document can be wild.

WARRANTY DEED A deed that is used to convey WILL A written, legal document that directs the disposition of real property and that contains warranties of title and one's property after death. quiet possession; the grantor thus agrees to defend the prem ises again st the lawfu l claim s of th ird person s. It is WILL, NUNCUPATIVE An oral will made on the testator or commonly used in other states, but in California the grant testatrix s deathbed. No longer recognized in California. deed has replaced it. Used predominantly in states that do not have title insurance companies. This deed WILL, STATUTORY A formal will prepared on the statutory contains six full warranties of protection to the buyer, will form provided in California s Probate Code. includ ing warranties that the selle r own s the property, that it is unencumbered, and that the seller will defend WIRELESS COMMUNICATION Electronic communication title against any defects. that is sent via satellite, thus eliminating the need to use telephone lines. WARRANTY OF AUTHORITY A representation by an agent to third persons that the agent is acting within the WITNESS A person who gives testimony ; one who scope of authority co nferred by his or her princip al. observers and attests to the signing or executing of a docum ent. WARRANTY FOREVER A provision in a deed gaurante eing that the selle r will for all time defend title WITNESSED WILL A forma l will, signed by the testator in and possession for the buyer. the presence of two or more witnesses, each of whom must also sign the will. WARRANTY, IMPLIED In the sale of property, a guarantee created by operation of law, whether or not WOR K WEEK (REGULAR) This type of may include the seller intended to offer it. holidays, Sundays and weekdays.

WARRANTY OF HABITABILITY Implied WORKERS COMPENSATION INSURANCE Provides warranty in residential leases. The landlord coven ants coverage for employees injured or killed in the course of the by implication that the premises are suitable for human job. occupancy. The implied warranties are found in the statutes and implied by common law. WRAP AROUND MORTGAGE (DEED OF TRUST) (See All-Inclusive Deed of Trust.) WASTE The destruction, or material alteration of or injury to premises by a tenant-for-life, or tenant, or WRAP-AROUND DEED OF TRUST A sophisticated tenant-for-years. Example: a tenant cutting down trees financing packa ge that permits the seller to sell his property or mining coal. The destruction, injury, material without paying o ff the outstanding de ed of trust. The buyer's alteration, or abusive use of property by a person larger loan, which is used to purchase the property, includes rightfully in possession, but who does not own the fee or provisions for paying off the seller's existing loan. entire estate (for example, by a lessee or life tenant). WRAPAROUND LOAN A loan that is really a combination of WATER RIGHTS SEE: Prior Appropriation; Riparian loans, the existing loan(s) and a new second loan. Rights WRIT A court ord er directing a party to do a specific act, WATER TABLE Distance from the surface of the usually to appear in or report to a court of law. ground to a depth at which natural ground water is found. S WRIT OF POSSESSION A process of the court under WEAR AND TE AR Deprecation of an asset due to which property may be seized. An order from the court to the ordinary usage. sheriff or other law enforcement officer directing and authorizing a specific act.

PAGE 95 REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course.

regu lation of pro perty u ses within each distric t. A us e that is WRIT OF ATTACHMENT A writ authorizing and legally nonconforming is allowed to continue in this zone. direc ting the phys ical attachme nt (se izure) of pro perty. ZONING AMENDMENT SEE: Rezone. WRIT OF EXECUTION An orde r directing the sheriff to seize prop erty to satisfy a judgment. ZONING, EXCLUSIONARY A zoning law that has the effect of preventing certain groups (such as minorities or poor WRIT OF IMMEDIATE POSSESSION An order people) fr om living in a com mu nity. authorizing a landlord to obtain immediate possession of a tenant's premises, pending the outcome of an unlawful ZONING, SPOT An illegal rezone that favors (or restricts) a retainer action or other court proceeding. particular property owner (or a small group of owners) without justification. WRIT OF POSSESSION A court order issued after an unlawful detainer action, informing a tenant that he or she must vacate the landlord s property within a specified period or be forcibly removed by the sheriff. X X An individual who cannot write may execute a legal document by affixing an X (his/her mark) where the signature normally goes. Beneath the mark a witness than writes the person s name and signs his or her name as the witness.

WRITTEN OFFER Submitting all written offers is a beneficial practice. Y

YARD A unit of measurement 3 feet long.

YIELD The interest earned by an investor on an investment (or by a bank on the m oney it has loaned). Also, called return.

YIELD RATE The yield expressed as a percentage of the total investment. Also called the rate of return. Z

ZONE The area set off by the proper authorities in which the real prope rty can be us ed for only specific purposes.

ZONING ORDINANCES Act of city or county authorities specifying the type of use to which property may be put in specific areas. A government's division of a city or other geographic area into districts, and the

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