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Real Estate Terms

All Real Estate Terms

TermDefinition
Abstract of Title A summary or digest of all transfers, conveyances, legal proceedings, and any other facts relied on as evidence of title, showing continuity of ownership, together with any other elements of record that may impair title.
Acceleration Clause A condition in a mortgage, trust deed or contract giving the lender the power to declare all sums owing immediately due and payable upon default, such as a delinquency in the repayment of the note.
Acceptance The act of agreeing or consenting to the terms of an offer thereby establishing "the meeting of the minds" that is an essential element of a contract.
Access Rights The right of an owner to have ingress and egress to and from his property over adjoining property.
Accession An addition to real property through the efforts of man (annexation) or by natural forces (accretion)
Accord and Satisfaction Exists when one party performs part of his obligations and the other party relieves him of the obligation to perform the rest.
Accretion Accession by natural forces, the gradual increase of land on a shore of an ocean or bank of a stream resulting from the action of the water.
Accrued Depreciation The difference between the value of an item at the time of the appraisal and the current replacement cost of the item in new condition.
Acknowledgement Signing that the conveyance is voluntary, before a notary or other eligible official.
Acquisition The act or process by which a person procures property.
Acre A measure of land equaling 4,840 square yards, or 43,560 square feet. If square, it is 208.71 feet square.
Actual Age The length of time improvements have been standing, or existed.
Actual Authority Authority expressly given by the principal or given by the law and not denied by the principal.
Actual Eviction A court-enforced order to remove a lessee from the property. It results in physical ouster of the lessee.
Actual Fraud An act intended to deceive another, e.g., making a false statement, making a promise without intending to perform it, suppressing the truth.
Actual Notice Exists when a person has actual knowledge of a fact.
Actual Severance Occurs when an item is physically severed from the land.
Ad Valore 'According to value.' Such as the basis of property taxes.
Addendum An addition or change to a contract.
Adjustable Rate Mortgage (ARM) A mortgage loan which bears interest at a rate subject to change during the term of the loan.
Adjusted Basis The cost basis decreased due to such items as allowable depreciation and property losses, and increased by the cost of improvements and special assessments.
Adjustments Decreases or increases to sales prices, by dollar amounts or percentages, to reflect the differences between sold properties and a property being appraised.
Administrator A person appointed by the probate court to administer the estate of a person who died intestate.
Adverse Possession A method by which a person other than the owner of record acquires title to real property through hostile, continuous possession for a statutory period.
Affidavit A statement or declaration reduced to writing sworn to or affirmed before some officer who has authority to administer an oath or affirmation.
Affiliated Licensee A licensee (e.g.; associate broker, salesperson) who works on behalf of an employing broker.
Affirmative Easement A right to physically use the servient tenement, e.g. a party wall connecting adjoining townhouses, a right of way providing ingress and egress over an adjoining parcel, or an easement to run a sewer line across neighboring property.
After-acquired Title Title acquired after it was supposedly transferred to another.
Age-Life Method Method of depreciation, also called the straight-line method, that presumes the improvements depreciate at an equal rate each year until the end of their economic life, when the building would be torn down.
Agency The legal relationship created when a person acts on behalf of another in business and legal dealings with others.
Agent One who acts for and with authority from another, called the principal or client.
Agreement A mutual understanding or arrangement; may or may not be a contract.
Air Rights The rights in real property to the reasonable use of the air space above the surface of the land.
Alienation The transfer of property, voluntarily or involuntarily, from one person to another.
Alienation Clause A clause in a contract, mortgage or trust deed giving the lender certain rights (e.g., the right to call the loan due, approve a buyer, or change the interest rate) in the event of a transfer of mortgaged property. Also known as 'due on sale clause.'
Allodial A real property ownership system where ownership by a private party may be complete except for those rights held by government. This is in contract to the feudal system.
Alluvium The gradual increase of the earth on a shore of an ocean or bank of a stream resulting from the action of water.
Amenities Satisfaction of enjoyable living to be derived from a home.
Americans With Disabilities Act (ADA) Federal law passed in 1990 to prohibit discrimination against those with disabilities, in public accommodations and commercial facilities.
Amortization Liquidation of a financial obligation on an installment basis; also recovery over a period of cost or value.
Amortized Loan A loan in which loan principal is repaid entirely during the loan term, instead of entirely at the end of the term.
Amount Realized The selling price less selling expenses, such as commissions, advertising, legal fees, loan placement fees or discount points paid by the seller.
Annexation Any manmade addition to land.
Annual Percentage Rate (APR) The total finance charge expressed as an annual percentage of the amount financed, in accordance with Regulation Z and the Federal Truth in Lending Act.
Anticipation, Principle of Affirms that value is created by anticipated benefits to be derived in the future.
Antitrust Laws Laws prohibiting businesses from engaging in practices to create a monopoly or restrain fair trade (such as price-fixing).
Apparent Authority Authority that one person, by words or conduct toward other persons, has led others to believe another person possesses, when there had been no actual agency authority granted.
Appraisal An analysis of facts about a property resulting in an estimate or opinion of the value by an appraiser.
Appraised Value The value of a property at a given time, based on facts regarding the location, improvements, etc., of the property and surrounding, by an appraiser.
Appraiser One qualified by education, training and experience and licensed or certified to estimate the value of property using formal appraisal processes.
Appreciation An increase in value of real property due to positive physical or economic changes or a decrease in or elimination of negative elements in the surrounding area.
Appurtenance All rights, privileges, and improvements which belong to and pass with the transfer of the property, unless a contrary intention is manifested, e.g., rights-of-way, easements, water rights, and any property improvements.
Appurtenant Easement An easement that benefits one parcel of land (dominant estate) and passes with ownership of that land.
Arbitration A nonjudicial process in which a neutral third party conducts a hearing and makes a decision which is binding on the parties to a dispute.
Arrears Payment after an item is due but not paid, such as the payment of interest for the period between the last payment and present payment of a mortgage.
Asbestos A type of building material primarily used in insulation until 1976. If ingested, and with enough repeated exposure, it could cause cancer of the lungs and stomach.
As is A term meaning property will be sold in its current condition, generally with disclosure of any defects.
Assemblage Putting several parcels of land under one ownership.
Assessed Valuation A valuation placed upon a piece of property by a public authority as a basis for levying taxes on the property.
Assessment The valuation of property for the purpose of levying a tax or the amount of the tax levied.
Assessor The official who has the responsibility of determining assessed values.
Assigned Agency In some states, a relationship in which a broker may appoint a specific licensee within the same firm to act as an agent for a buyer or seller, leaving other licensees free to represent other parties. Also called a split agency or designated agency.
Assignee One to whom property, an interest in property or contractual rights is transferred.
Assignment A transfer of property or rights to another.
Assignment of Rents Provision A provision in a deed of trust (or mortgage) under which the lender may, upon default by the borrower, take possession of the property, and collect income from the property and apply it to the loan balance and the costs incurred by the lender.
Associate Broker A person qualified to be a broker, but licensed under another broker.
Assume and Agree to Pay When a buyer assumes primary responsibility for an existing mortgage and agrees to make the payments per the terms of the note directly to the lender.
Assumption Fee A lender's charge for processing records for a new owner who is assuming an existing loan.
Assumption of Mortgage An agreement by a purchaser (grantee) to take over personal liability for payment of an existing note secured by a mortgage or deed of trust against the property.
Attachment The process by which real or personal property of a party to a lawsuit is seized and retained in the custody of the court to compel an appearance before the court or to furnish security for a debt or costs arising out of the litigation.
Attorney-In-Fact A person holding a power of attorney granting him authority to transact business and sign agreements on behalf of another.
Attorney State State in which lawyers carry out the closing functions at settlement meetings.
Automatic Extension Clause Provides that the lease automatically renews at its original lease terms unless one party notifies the other.
Avulsion A sudden and perceptible loss of land by the action of water, such as by a sudden change in the course of a river.
Backup Offer An offer accepted by a seller that will become effective if a prior offer fails.
Balance Sheet A statement of the financial condition of a business at a certain time, showing assets, liabilities, and capital.
Balloon Payment A payment on a promissory note, usually the final one for discharging the debt, which is significantly larger than any installment payments.
Bankruptcy A legal proceeding providing relief from payment of some debts, for an insolvent debtor.
Bargain and Sale Deed Any deed that purports to convey title to real estate without any warranties.
Baseline A survey line used in government surveys running in a true east-west direction, forming the north-south boundaries of townships.
Basis The owner's cost of his asset, deducted from the amount realized in calculating capital gains.
Benchmark A monument used to establish elevations.
Beneficiary A person entitled to the benefit of a trust; the lender in deed of trust transaction.
Bilateral Contract A contract in which the parties exchange promises, and are equally obligated to perform.
Bill of Sale A written instrument given to pass title of personal property from the vendor to the vendee.
Blanket Mortgage A single mortgage which covers more than one piece of real property.
Blockbusting The practice of inducing panic selling of homes by representing that persons of a different race, religion, color, etc, are moving into the area.
Bona Fide Purchaser A purchaser of real property who pays consideration in good faith and has no actual or constructive notice of the existence of another person's claim to the title.
Bond Written evidence of an obligation given by a corporation or government entity.
Boot
Branch Office A broker's office other than his main office.
Breach The breaking of a law, or nonperformance of a contractual duty, either by omission or commission.
Break-Even Point The point at which gross income is equal to the total of fixed and variable expenses.
Broker A person who acts as an intermediary in a business transaction
Brokerage An activity involving the sale or lease of a commodity through an intermediary who usually acts as an agent for one of the parties.
Budget Mortgage PITI for principal, interest, taxes and insurance. Provides that an amount equal to 1/12 of the estimated annual property insurance premiums, property taxes, homeowners' association dues and/or special assessments will be paid to mortgagee.
Buffer Zone Used in urban planning to provide separation of two incompatible areas, e.g., on land between a residential area and an area zoned for industrial use.
Building Code A systematic regulation of construction of buildings within a municipality established by ordinance or law.
Set back line A line beyond which an owner cannot build. Also called a building line.
Bundle of Rights Rights of ownership, including right to use, possess, enjoy and dispose of a thing in any legal way and to exclude everyone else without rights from interfering, includes right to lease, devise, air rights above property.
Business Opportunity A business and/or good will of an existing business.
Buydown A payment to the lender from the buyer, the seller, and/or a third party, causing the lender to reduce the interest rate during the first 1-5 years of the loan.
Buyer's Agent An agent who represents only the buyer in a real estate transaction, regardless of whether the commission is paid by the buyer or by the seller or through a commission split with the listing agent.
Buyer's Closing Statement The buyer's closing costs and credits detailed so that the buyer will know what has been charged and credited to him at closing.
Buyer's Market The condition which exists when a buyer is in a more commanding position as to price and terms because real property offered for sale is in plentiful supply in relation to demand.
Cap In an adjustable rate mortgage, the maximum percentage the interest rate can increase each year and/or a maximum total increase in the rate over the life of the loan.
Capacity to Contract One of the elements needed for an enforceable contract. Each party to the contract must be legally competent and have authority to contract.
Capital Gain At resale of a capital item, the amount by which the net $ exceeds the adjusted cost basis (book value). Used for income tax computations. Gains are called short or long term based upon length of holding period after acquisition. Lower tax rate than reg.
Capital Loss A loss realized upon disposition of property. The amount by which the adjusted cost basis exceeds the net sale proceeds.
Capitalization Estimating value of property based on its net income and a reasonable return on the investment, by dividing annual net income by the capitalization rate.
Capitalization Approach Used to appraise property that produces income, by evaluating its net income and converting it to a value estimate.
Capitalization Rate The rate which is considered a reasonable return on the investment, and used in the process of estimating value based upon net income. The rate necessary to attract the average investor to a particular kind of investment.
Extender Clause Says broker entitled to commission if seller sells property within period after expired listing to buyer who learned of property during listing due to broker. Also called holdover, carryover, protection or safety clause.
Cash Flow The net income generated by a property, after debt service, but before depreciation and other noncash expenses.
Caveat Emptor Let the buyer beware. The buyer must examine the goods or property and buy at his own risk, absent misrepresentation.
CC & Rs The basic rules establishing the rights and obligations of owners of real property within a subdivision in relation to other owners within the same subdivision and in relation to the homeowners association.
Certificate of Eligibility Issued by the government, bearing evidence of an individual's eligibility to obtain a federal VA loan.
Certificate of Occupancy Issued by a building code department to allow occupancy, after inspection shows completed work satisfies all code requirements.
Certificate of Reasonable Value (CRV) The federal Department of Veterans Affairs appraisal of property value.
Certificate of Title A written opinion by an attorney that ownership of the particular parcel of land is as stated in the certificate.
Chain of Title A history of conveyances and encumbrances affecting the title from the time the original patent was granted, or as far back as records are available, used to determine how title came to be vested in current owner.
Chattel A movable article of property; any tangible property other than land, buildings, and things annexed to land.
Chattel Mortgage A claim on personal property (instead of real property) used to secure or guarantee a promissory note.
Chattel Real An estate related to real estate, such as a lease on real property.
Civil Rights Act of 1866 Law enacted by Congress in 1866 to provide 'all citizens of the US shall have the same right, in every state and territory, as is enjoyed by white citizens thereof, to inherit, purchase, lease, sell, hold, and convey real and personal property."
Civil Rights Act of 1968 Law enacted by Congress (often called fair housing act) to provide for fair housing and equal housing opportunities throughout the US, by prohibiting discrimination based on race, religion, color, sex, national origin, familial status and handicap.
Claim of Right A term meaning an adverse possessor claims ownership of the land.
Clean Air Act Environmental protection law that imposes standards for air quality.
Clean Water Act Environmental protection law that imposes standards for water quality.
Closed-end Mortgage A loan of a fixed amount, so that additional funds cannot be borrowed without a new note and mortgage.
Closing A process by which all the parties to a real estate transaction conclude the details of a sale or financing, including the signing and transfer of documents and distribution of funds.
Closing Costs The miscellaneous expenses buyers and sellers incur in the transfer of ownership of real property over and above the cost of the property.
Closing Statement An accounting of funds made to a buyer or seller.
Cloud on the Title A claim, encumbrance or condition which impairs the title to real property until disproved or eliminated, often through a quitclaim deed or quiet title legal action.
Code of Ethics A set of rules and principles expressing a standard of accepted conduct for a professional group and governing the relationship of members to each other and to the organization.
Coercion Forcing a person to do something against his will, including using threats to force a person to do something. Also called duress.
Cold Calling Unsolicited telephone calls to gain business, subject to 'no-call' restrictions.
Collateral Marketable real or personal property which a borrower pledges as security for a loan.
Commingling Mixing of a licensee's funds in the same account with funds belonging to clients.
Commission An agent's compensation for performing the duties of the agency; in real estate practice, a percentage of the selling price of property, percentage of rentals, etc. A fee for services.
Common Elements The common area and facilities, e.g., all portions of a common interest subdivision other than the units. They may be general or limited.
Common Interest Subdivision Housing in which the owners own interests in or portions of the property in common. Includes planned unit developments, townhouses, cooperatives, and condominiums.
Community Property A form of ownership by husband and wife recognized in WI, WA, ID, CA, AZ, NM, TX, NV, LA and PR. Any real property owned in these states would be subject to their community property law, regardless of where the owners actually lived.
Comparative Cost Method Estimate of the replacement cost of a subject property based on cost per square foot or per cubic foot. Also known as the square foot method or cubic foot method.
Compensating Factors Aspects of a person's financial situation that provide a reason to go outside the normal guidelines for making a loan, such as evidence of an ability to afford the payments, a better than average credit history, a high FICO score, job security, etc.
Compensatory Damages An amount determined by a court or arbitrator to cover the actual amount of a loss suffered as a result of a breach of contract.
Competition, Principle of Holds that profits tend to breed competition and excess profits tend to breed ruinous competition.
Compound Interest Interest paid on original principal and also on the accrued and unpaid interest which has accumulated as the debt matures.
Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) Says past and present owners and even lenders are jointly and severally liable for cleanup of hazardous substances, unless they can qualify as innocent or bona fide prospective purchasers who have not contributed to waste contamination (superfund act).
Comprehensive Plan Provides for orderly development or redevelopment of the community so planners may make effective decisions regarding zoning changes, and enables property owners to plan for future development of their properties.
Concurrent Ownership When two or more persons own the same property at the same time as co-owners.
Condemnation The act of taking private property for public use by a political subdivision upon payment of just compensation to the owner. Also, declaration that a structure is unfit for use.
Condition A future and uncertain event which, in a contract, must happen to create an obligation or which extinguishes an existent obligation or in a conveyance of real property, may cause an interest to be vested or defeated.
Conditional Fee Estate An estate that is granted subject to a condition subsequent, and terminable on happening of a condition. Also called defeasible fee, qualified fee, or fee simple determinable.
Land Sale Contract A contract for the sale of property stating that possession is to be given to the buyer, but title is to remain vested in the seller until the conditions of the contract have been fulfilled. Also called a conditional sale contract or agreement for sale.
Conditional Use Permit Exception to zoning restrictions that allows a land use that does not conform to zoning requirements as long as it is within the strict limitations of the permit regarding size, traffic control, etc.
Condominium An estate in real property involving an undivided interest in common in a portion of real property coupled with a separate interest in air space within a unit.
Conforming Loans Loans meeting Fannie Mae and Freddie Mac standards.
Conformity, Principle of Holds that the maximum of value is realized when a reasonable degree of homogeneity of improvements is present.
Consideration Anything given by a party to induce another to enter into a contract, e.g., property, personal services, money, promises.
Construction Lien A lien placed on real property by a person who has furnished work or material for the improvement of that property.
Construction Mortgage A loan made to finance construction or improvement of land. Funds are usually dispersed in increments as the construction progresses.
Constructive Eviction Breach of a covenant of warranty or quiet enjoyment, causing a tenant to vacate the premises, e.g., because of a condition making occupancy hazardous.
Constructive Notice Notice of the condition of title to real property presumed because of the existence of recorded information or a person's possession of the property.
Constructive Severance Occurs when an item is detached by intent only, such as by sale of rights, rather than physically severed.
Consumer Protection Act Also known as the Truth in Lending Act, it assures that applicants for consumer credit are given sufficient information about the cost of the credit so they can easily compare credit terms offered by various creditors.
Contingency A contract provision that requires the completion of a certain act before the contract is binding.
Contract An agreement to do or not to do a certain thing. It must have four essential elements: parties capable of contracting, consent of the parties, a lawful object, and consideration. If for the sale of real property, it must also be in writing and signed.
Contract for Deed A contract under which a buyer (vendee) agrees to pay the seller (vendor) for the property over a period of time. Also called conditional sale contract, land sales contract, agreement for sale, or real estate contract.
Contractual Lien A lien created through voluntary contract, e.g., a mortgage lien, or a trust deed lien.
Contribution, Principle of The value of any component part of a property is what it contributes to the value of the whole.
Conventional Loan A mortgage securing a loan made by investors without governmental underwriting, i.e., which is not FHA or VA guaranteed.
Conversion Change from one legal form or use to another, e.g., converting an apartment building to condominium use. The unlawful appropriation of another's property, e.g., agent spends trust funds.
Conveyance An instrument in writing used to transfer (convey) title to property from one person to another, such as a deed.
Cooperative A form of apartment ownership in which shareholders of a company owning a building are given exclusive rights of possession to their apartments through proprietary leases.
Corporation An entity established and treated by law with rights and liabilities, or both, distinct and apart from those of the persons composing it.
Corporation Resolution A document authorizing specific persons to legally sign for the corporation.
Correlation Weighing the data from different appraisal approaches. The final step in estimating the market value. Also called reconciliation.
Cost Approach One of three methods in the appraisal process. Estimates value based on the replacement cost of the improvements, less estimated accrued depreciation, plus the market value of the land.
Cost Basis The purchase price of the property plus certain closing costs, such as legal fees and title insurance.
Counteroffer Any change by the seller in the buyer's written offer.
Covenant An agreement or promise to do or not to do a particular act, such as a promise to build a house of a particular architectural style or to use or not use property in a certain way.
Covenant Against Encumbrances Guarantees there are no tax liens, mortgages, assessments or other liens except as stated in the deed.
Covenant of Further Assurance Warrants that the grantor will perform any additional act or provide any document needed to provide the title promised.
Covenant of Quiet Enjoyment Warrants that the grantee will not be disturbed by a person with a lien or better claim to the property.
Covenant of Seizen Guarantees the grantor owns and possesses the property, has a fee simple absolute interest, has no conditions restricting the title, and has the right to convey the title.
Covenant of Warranty Provides the grantor will defend the title against all persons who lawfully claim the title.
Credit Union Members-only bank that specializes in short-term consumer loans, but may also provide funds for long-term financing of real estate, equity loans and home improvement loans to their members.
Curable Depreciation Items of physical deterioration and functional obsolescence which are customarily repaired or replaced by a prudent property owner.
Curtesy In some states, a right of the husband to a life estate in the deceased wife's property.
Damages The indemnity recoverable by a person who has sustained an injury, either in his person, property, or relative rights, through the act of another. Loss sustained or harm done to a person or property.
Debt-to-Income Ratio A percentage of a borrower's current debt load and income that lenders use to determine the amount to lend to a borrower.
Debtor A person who is in debt; the one owing money to another.
Dedication The giving of land by its owner to a public use.
Deed A written instrument that conveys title to real property from one person (grantor) to another (grantee).
Deed in Lieu of Foreclosure A deed to real property accepted by a lender from a defaulting borrower to avoid the necessity of foreclosure proceedings by the lender. Also called an estoppel deed.
Deed Restrictions Limitations in a deed that dictate certain uses that may or may not be made of the property.
Default Failure to fulfill a duty or promise or to discharge an obligation. Omission or failure to perform any act.
Defeasance Clause The clause in a mortgage that gives the mortgagor the right to redeem his property upon the payment of his obligations to the mortgagee.
Deferred Maintenance Existing but unfulfilled requirements for repairs and rehabilitation. Postponed or delayed maintenance causing decline in a building's physical condition.
Deficiency Judgement Judgement given by a court when the value of security pledged for a loan is insufficient to pay off the debt of the defaulting borrower.
Defeasible Fee A fee simple absolute interest in land that is capable of being defeated or terminated upon the happening of a specified event.
Delayed Exchange 1031 exchange where sale is made by taxpayer, and sale proceeds are held by facilitator until they are used to pay for replacement property, identified within 45 days and actually purchased within 180 days after date of transfer of title to property sold
Demise An estate that will end.
Depreciation Loss of value of property brought about by age, physical deterioration or functional or economic obsolescence. Also, the decrease in value of an asset that is allowed as an expense for income tax purposes.
Designated Agency An agency relationship in which one agent in a brokerage represents a buyer and another agent in the brokerage represents the seller in the same transaction, while remaining single agents for the buyer and seller, respectively (split or assigned agency).
Devise A gift or disposal of real property by last will and testament.
Devisee A person who receives a gift of real property by will.
Devisor A person who disposes of real property by will.
Direct Principal Reduction Periodic loan payments that include a fixed amount of principal, plus interest on the unpaid balance.
Discount Sale of promissory note before maturity at price less than outstanding principal balance of note at the time of sale. Also, an amount deducted in advance by the lender from the nominal principal of loan as part of borrower's cost of obtaining the loan.
Discount Points The amount of money the borrower or seller must pay the lender to get a mortgage at a lower interest rate.
Discount Rate The interest rate the Federal Reserve charges on loans to member banks to enable those banks to have adequate funds in reserve.
Discounting Selling loans for less than the outstanding balance.
Dominant Estate A parcel of land which benefits from an easement.
Donee A person who receives a gift.
Donor A person who makes a gift.
Dower In some states, the right of a wife to a life estate in the deceased husband's property.
Downpayment The part of the purchase price not financed.
Downzoning Rezoning of an area, reducing the density of use allowed for a parcel.
Dual Agency An agency relationship in which the agent acts concurrently for both of the principals in a transaction.
Earnest Money A deposit by a purchaser of real estate as evidence of good faith. Not the buyer's consideration for the contract.
Duress Unlawful constraint exercised upon a person whereby he is forced to do some act against his will.
Easement An irrevocable right, privilege or interest limited to a specific purpose which one party has in the land of another.
Easement Appurtenant An easement that benefits the land (dominant estate) of the holder of the easement.
Easement by Prescription When the unauthorized, non-exclusive, open, notorious, hostile, continuous and uninterrupted use of another's property for a period set by state statute results in the user obtaining an irrevocable right to continue the use.
Easement in Gross An easement giving a person (rather than another parcel of land) the irrevocable right to use another's land, such as a right of way held by a public utility company.
Economic Life The period over which a property will yield a return on the investment over and above the economic or ground rent due to the land.
Economic Obsolescence Loss in value resulting from conditions outside property, such as deterioration of the neighborhood caused by changes in uses of neighboring properties, blight, changes in zoning and legislative restrictions, or fumes from factory.
Economic Rent The reasonable rent expected if the property were available for rent at the time of its valuation.
Effective Age The number of years of age as indicated by the condition of the structure, distinct from chronological age.
Effective Demand Demand for an item from those who have a desire or need for it and the purchasing power to acquire it.
Effective Gross Income Scheduled gross income less vacancies and collection losses.
Effective Interest Rate The percentage of interest actually being paid by the borrower for the use of the money, distinct from nominal interest.
Emblements Crops requiring annual planting and cultivation.
Eminent Domain The right of the government or an authorized private entity to acquire property for necessary public or quasi-public use by condemnation, upon payment of fair compensation to the owner.
Encroachment An unlawful intrusion onto another's adjacent property by improvements to real property, e.g., a swimming pool built across a property line.
Encumbrance Anything which affects or limits the fee simple title to or value of property, e.g., mortgage or easement.
Environmental Impact Reports (EIRs) A report that describes proposed actions and their impact on the environment, identifies unavoidable adverse environmental effects, and assesses feasible alternatives.
Environmental Impact Statement A statement disclosing the effects of a development, whenever a proposed project would have a major impact on the environment.
Equal Credit Opportunity Act (ECOA) Federal law that requires lenders and other creditors to make credit equally available without discrimination based on race, color, religion, national origin, age, sex, sexual preference, marital status, or receipt of income from public assistance program
Equitable Lien Liens imposed by courts of equity, often as a result of breach of contract.
Equity The interest or value which an owner has in real estate over and above the liens against it. A branch of remedial justice by and through which relief is afforded to suitors in courts of equity.
Equitable Right of Redemption The right to pay off the mortgage debt plus interest and costs prior to the foreclosure.
Erosion The wearing away of land by the act of water, wind or glacial ice.
Escalation Lease A lease containing an escalator clause to compensate for inflation and rising operating costs, e.g., the rent amount may be adjusted every six months according to percentage changes in the cost of living index.
Escalation The right reserved by the lender to increase the amount of the payments and/or interest upon the happening of a certain event.
Escalator Clause A clause in contract providing for upward or downward adjustment of certain items to cover specified contingencies, usually tied to some index or event. Often used in long term leases to provide for rent adjustments to cover tax and maintenance increases
Escheat The reverting of property to the State when there are no heirs capable of inheriting.
Escrow The deposit of instruments and/or funds with instructions with a third neutral party to carry out the provisions of an agreement or contract.
Escrow Agent The neutral third party holding funds or something of value in trust for another or others.
Estate The quantity of interest, share, right equity, of which riches or fortune may consist in real property. The degree, quantity, nature and extent of interest which a person has in real property.
Estate at Sufferance An estate arising when the tenant wrongfully holds over after the expiration of the term. The landlord may choose to evict the tenant as a trespasser or accept the tenant. Also called a tenancy at sufferance.
Estate at Will The occupation of lands and tenements by a tenant for an indefinite period, terminable by one or both parties.
Estate for Life A freehold estate held by a person only for the duration of one or more persons' lives, after which the estate holder has no say in where the estate passes.
Estate for Years An interest by virtue of a lease for the possession of real property for a definite and limited period of time. May be for any specified period.
Estate from Period to Period (Period Tenancy) An interest in land where there is no definite termination date but the rental period is from one week, month, year, etc. to another.
Estate in Remainder Held by the person (other than the grantor) to whom title will pass upon termination of a life estate.
Estate in Severalty Sole ownership by one natural person (a human being) or legal person or entity (e.g., a corporation).
Estate of Inheritance An estate which may descend to heirs. All freehold estates are estates of inheritance, except life estates held for the life of the life tenant.
Estoppel A legal theory under which a person is barred from asserting or denying a fact because of his previous acts or words.
Estoppel Deed A deed given by a delinquent borrower to the lender in order to avoid foreclosure (a deed in lieu of foreclosure).
Ethics That branch of moral science, idealism, justness, and fairness, dealing with duties a member of a profession or craft owes to the public, clients or partners, and to professional brethren or members. Accepted standards of right and wrong.
Eviction The act of depriving a person of the possession of lands in pursuance of the judgement of a court.
Exception Leaves out, withholds, or excepts a part of the real property described in the deed, e.g. Lot 5 Block 2, except the north 10 feet.
Exchange A means of trading equities in two or more real properties, so that the transactions are treated as a single transaction through a single escrow.
Exclusive Agency Listing A listing agreement employing a broker as the sole agent for the seller of real property, so that the broker is entitled to a commission if the property is sold by him or through any other broker, but not if a sale is negotiated by the owner himself.
Exclusive Right to Sell A listing agreement employing a broker to act as the sole agent for the seller of real property, so that the broker is entitled to a commission if the property is sold by anyone, including the owner directly, during the listing period.
Exculpatory Clause Clause in a lease that releases the landlord from any liability in connection with damage to the tenant's property or business as a result of an insurable casualty regardless of the landlord's negligence. Also called a hold harmless clause.
Execute To sign. To perform.
Executed Contract When both parties to the contract have fully performed the terms of the contract.
Execution of Sale When the court has property sold to pay off judgment creditors.
Executor A person named in a will to carry out its provisions as to the disposition of the estate of a deceased person.
Executory Contract A contract in which something remains to be done by one or both of the parties.
Expansion Option Gives the lessee the option to expand the amount of space leased.
Expired Listing A property that had been listed, but had not sold during the listing period. It can be discovered through the Multiple Listing Service (MLS).
Express Authority Authority to act, given orally, in writing, or by ratifying conduct of the principal.
Express Contract Contract created in words, by either written or oral agreement.
Express Grant A grant of an interest in real property either in a deed or other written agreement between the parties.
Express Reservation When the grantor of the property reserves a right, such as an easement, in the property being conveyed.
Extended Coverage Title Insurance Type of title insurance policy to expand risks normally insured against under standard type policy to include unrecorded liens, unrecorded physical easements, facts physical survey would show, water/mineral rights, rights of parties in possession.
Facilitator In states that allow it, person who represents party in transaction as non-agent, and so does not owe fiduciary duties to any party in transaction. But he generally will have duty to exercise reasonable skill and care, deal honestly and in good faith, etc
Fair Credit Reporting Act (FCRA) Law requiring persons who take adverse actions, based upon credit report received from credit bureau, to reveal to potential borrower credit reporting agency that provided credit report, gives consumers right to have errors in credit files corrected.
Fair Market Value Amount of money that would be paid for a property offered on the open market for a reasonable period of time with both buyer and seller knowing all the uses to which the property could be put and with neither party being under undue pressure to buy/sell.
Fannie Mae (FNMA) Created as the Federal National Mortgage Association in 1938 to buy mortgages on residential property.
Farming A technique of becoming the real estate "expert" in a particular geographical area.
Federal Department of Veterans Affairs (VA) A government organization that guarantees loans from private lenders to enable eligible veterans, reservists, or National Guard members to finance homes they intend to occupy.
Federal Deposit Insurance Corporation (FDIC) Agency of the federal government that insures deposits at commercial banks and savings banks.
Federal Housing Administration (FHA) An agency of the federal government that insures lenders against loss in the event of default on mortgage loans financing new and existing homes and home repairs.
Federal Land Bank System A federal mechanism providing long term loans to farmers.
Federal Reserve Bank (THE FED) Govt entity monitors economic and financial conditions, such as volume of bank deposits/withdrawals, cost of money/credit, unemployment levels, inflation rates/world economic conditions, and works to influence supply of money and credit available.
Fee Estate (Fee Simple Estate) An estate of inheritance in real property. The greatest interest that one can have in real property. An estate that is unqualified, of indefinite duration, freely transferable and inheritable.
Fee Simple Absolute Estate The most complete form of ownership our law recognizes today. The estate has no conditions and cannot be taken from the estate holder due to the occurrence of any event other than the death of the estate holder without any living heirs.
Fee Simple Defeasible Estate Fee estate subject to the occurrence of a condition subsequent whereby the estate may be terminated.
Feudal System A real property ownership system where ownership rests with a sovereign who, in turn, may grant lesser interests in return for service or loyalty. In contrast to allodial tenure.
FICO score A rating of how the applicant has handled his credit. Scores close to 800 indicate excellent credit, and result in favorable terms. Those close to 600 or below indicate poor credit, and result in higher interest rates, higher down payments, or rejection.
Created by: Joshjcreek