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MI Real Estate Vocab
| Term | Definition |
|---|---|
| ABANDONMENT | The surrender or release of a right,claim,or interest in real property |
| ABSTRACT OF TITLE | A history of a title and the current status of a title based on a title examination |
| ACCELERATION CLAUSE | A provision in a mortgage or deed of trust that permits the lender to declare the entire principle balance of the debt immediately due and payable if the borrower is in default. |
| ACCEPTANCE | Voluntary expression by the person receiving the offer to be bound by the exact terms of the offer, must be unequivocal and unconditional. |
| ACCESS | The right to go onto and leave a property. |
| ACCIDENTAL AGENCY | An individual being led to believe by a broker/salesperson's actions and representations that the broker/salesperson is representing (is an agent for) the individual. |
| ACCORD AND SATISFACTION | A new agreement by contracting parties that is satisfied by full performance, there by terminating the prior contract as well. |
| ACCRETION | The gradual building up of land in a watercourse over time by deposits of silt, sand, and gravel. |
| ACCRUED DEPRECIATION | (a) The loss in value in a structure measured by the cost of a new replacement. (b) The amount of depreciation taken, as of a given date, for tax purposes. |
| ACCRUED EXPENSES | Expenses seller owes on the day of closing but for which the buyer will take responsibility. (such as property taxes) |
| ACKNOWLEDGEMENT | A formal statement before an authorized official (e.g., notary public) by a person who executed a deed, contract, or other document, that it was (is) his or her free act. |
| ACQUISITION | The act of acquiring a property. |
| ACQUISITION COST | The basis used by the FHA to calculate the loan amount. |
| ACRE | A land area containing 43,500 square feet. |
| ACTION TO QUIET TITLE | A lawsuit to clear a title to real property. |
| ACTUAL AGE | Chronological age. |
| ACTUAL EVICTION | The removal of a tenant by the landlord because the tenant breached a condition of a lease or other rental contract. |
| ACTUAL NOTICE | The knowledge a person has a fact. |
| AD VALOREM | Latin meaning "according to value"; real property is taxed on an ad valorem basis. |
| ADJOINING LANDS | Lands sharing a common boundary line. |
| ADJUSTABLE RATE MORTGAGE (ARM) | One in which the interest rate changes according to changes in a predetermined index. |
| ADJUSTED BASIS | Value of property used to determine the amount of gain or loss realized by owner upon sale of the property; equals acquisition cost plus capital improvements minus depreciation taken. |
| ADJUSTED SALES PRICE | The amount realized minus fix-up expenses. |
| ADJUSTMENTS | Additions or subtraction of dollar amounts to equalize comparables to subject property in the market data approach to estimating value. |
| ADMINISTRATIVE LAW JUDGE (ALJ) | A judge who hears complaints regarding violations of 1988 Fair Housing Act Amendments. |
| ADVERSE POSSESSION | A method of acquiring title to real property by conforming to statutory requirement; a form of involuntary alienation of title. |
| AGENCY | The fiduciary relationship between a principal and an agent. |
| AGENCY DISCLOSURE | The licensee is required to discuss all agency relationships allowed under Michigan law and provide the consumer with a document indicating the agency relationship they will have with the licensee (and affiliate licensees) and the brokerage. |
| AGENT | A person authorized to act on behalf of another. |
| AGREEMENT | A contract requiring mutual assent between two or more parties. |
| AIR RIGHTS | Rights in the air space above the surface of land |
| ALIENATION | Transfer of title to real property. |
| ALIENATION CLAUSE | A statement in a mortgage or deed of trust entitling the lender to declare the entire principal balance of the debt immediately due and payable if the borrower sells the property during the mortgage term. (Also know as due-on-sale clause) |
| ALLODIAL SYSTEM | The type of land ownership existing in the United States whereby individuals may hold title to real property absolutely. |
| ALLUVION | Increased soil, gravel, or sand on a stream bank resulting from flow or current of the water. |
| AMENITIES | Benefits resulting from the ownership of specific property. |
| AMERICANS WITH DISABILITIES ACT (ADA) | A federal law protecting the rights of individuals with physical or mental impairments. |
| AMORTIZATION SCHEDULE | Designation of periodic payments of principal and interest over a specific term to satisfy a mortgage loan. |
| AMORTIZING | |
| CONTRIBUTION | The principle that for any given part of a property, its value is the result of the contribution that part makes to the total value by being present, or the amount that it subtracts from the total value as a result of its absence. |
| AMORTIZING LOAN | One in which uniform installment payments include payment of both the principal and interest. |
| ANCHOR STORE | A well-known commercial retail business, such as a national chain store or regional department store, placed in a shopping center to generate the most customers for all stores in the shopping center. |
| ANNEXATION | Addition of an area into a city |
| ANNUALl | Yearly |
| ANNUAL PERCENTAGE RATE (APR) | The actual effective rate of interest charged on a loan expressed on a yearly basis; not the same as simple interest rate. |
| ANTICIPATION | The principal that property value is based on expectations or hopes of the future benefits of ownership. |
| APPRAISAL | An estimate of value of a particular property, at a particular time for a specified purpose. |
| APPRAISAL PROCESS | An organized and systematic program for estimating real property value. |
| APPRAISAL REPORT | Documentation containing an estimate of property value and the data on which the estimate is based. |
| APPRAISER | An individual engaged in or offering to engage in the development and communication of appraisals of real property. |
| APPRECIATION | An increase in property value. |
| APPROACHES TO VALUE | Methods of estimating real property value: market data, income, and cost. |
| APPURTENANCES | All rights or privileges that result from ownership of a specific property and move with the title. |
| APPURTENANT EASEMENT | See easement appurtenant. |
| ARREARS | Delinquency in meeting an obligation; or, paid at the end of a period (e.g., at the end of the month) for the previous period; payments in arrears include interest for using the money during the previous period. |
| ARTIFICIAL PERSON | A corporation or other legally recognized entity. |
| ASKING PRICE | The price of a property specified in a listing contract. |
| ASSESSED VALUE | The dollar amount of worth to which a local tax rate is applied to calculate the amount of real property tax. |
| ASSESSMENT | A levy against property |
| ASSESSOR | An official of local government who has the responsibility for establishing the value of property for tax purposes. |
| ASSIGNEE | One to whom contractual rights are transferred. |
| ASSIGNMENT | Transfer of legal rights and obligations by one party to another. |
| ASSIGNMENT OF LEASE | Transfer by a lessee of the entire remaining term of a lease without any reversion of interest to the lessee |
| ASSIGNOR | The person transferring contractual rights |
| ASSOCIATION OF REAL ESTATE LICENSE LAW OFFICIALS ( ARELLO ) | Founded in 1929, a group of real estate license law officials that regulates more than 2 million real estate licensees. |
| ASSUMABLE MORTGAGE | One that does not contain an alienation clause. |
| ATTESTATION | Witnessing of a document. |
| ATTORNEY AT LAW | A person licensed by the state to practice law. |
| ATTORNEY IN FACT | A person appointed to perform legal acts for another under a power of attorney. |
| AUCTION | A form of property sale in which people bid against each other. |
| AVAILABILITY | An economic characteristic of land denoting that land is a commodity with a fixed supply base. |
| AVULSION | Sudden loss or gain of land as a result of water or a shirt in a bed of a river that has been used as a boundary. |
| BAIL BOND | A bond given by a defendant under criminal charges to obtain release from custody. |
| BAILMENT | Holds a person temporary in possession of someone else's personal property liable for any damages to the personal property. |
| BALLOON MORTGAGE | One in which the scheduled payment will not fully amortize the loan over the mortgage term; therefore, to fully satisfy the debt, it requires a final payment called a balloon payment, larger than the uniform payments. |
| BALLOON PAYMENT | See balloon mortgage |
| BARGAIN AND SALE DEED | A form of deed with or without covenants of title. |
| BASE RENT | The fixed or minimum rent portion in a percentage lease. |
| BASELINE | An east-west line in the rectangular method of property description. |
| BASIS | The value of property for income tax purposes; consists of original cost plus capital improvement less accrued depreciation. |
| BENEFICIARY | (A) Recipient of a gift of personal property by will. (B) Lender in a deed of trust. |
| BEQUEST | A gift of personal property by will. |
| BILATERAL CONTRACT | An agreement based on mutual promises that provide the consideration. |
| BILL OF SALE | An instrument transferring ownership of personal property. |
| BLANKET MORTGAGE | One in which two or more parcels of real property are pledge to secure payment of the note. |
| BLOCKBUSTING | For profit, to induce or attempt to induce any person to sell or rent any dwelling by representations regarding the entry or prospective entry into the neighborhood of a person or persons of a particular race, color, religion, sex, or national origin. |
| BOARD OF REAL ESTATE BROKERS AND SALESPERSONS | The governing board for real estate licensees in Michigan. |
| BONA FIDE | In good faith. |
| BONA FIDE PURCHASER | A buyer of property who relies on the records and is unaware of an unrecorded prior document. |
| BOOK VALUE | Dollar worth as it appears on the owner's books, usually for tax purposes; also known as historic value. |
| BOOT | Recipient of the cash in an exchange. |
| BREACH OF CONTRACT | Failure, without legal excuse, to perform any promise that forms the whole or part of a contract. |
| BROKER | A person or a nonperson ( partnership, association, corporation, common law trust, or combination ) acting as against for others in negotiating the purchase and sale of real property or other commodities for a fee. |
| BROKERAGE | The business of bringing buyers and sellers together and assisting in negotiations for the terms of sale of real estate. |
| BROWNFIELDS | Abandoned , idled, or underused properties where expansion or redevelopment is complicated by environmental contamination. |
| BUDGET | A plan for systematic spending and receiving of income. |
| BUDGET MORTGAGE | The lender requires one-twelfth of the estimated cost of the annual property taxes and hazard insurance on the mortgaged property in addition to paying monthly principal and interest . |
| BUILDING CODES | Public controls regulating construction. |
| BUNDLE OF RIGHTS | The rights of an owner of a freehold estate to possession, enjoyment, control, and disposition or real property. |
| BUYER AGENCY AGREEMENT | The document setting forth the terms and conditions of the brokerage relationship with the purchaser. |
| BUYER BROKERAGE | An agency relationship between a buyer and a broker. |
| BUYER'S CONTRACT | A contract in which a buyer hires a broker to obtain property that he or she may purchase; the broker is the agent of the buyer, who is his or her principal. |
| CAPITAL GAIN | Tax laws allowing investors to exclude a percentage of their profit on real estate investments on taxation. |
| CAPITAL IMPROVEMENT | An item that adds value to the property, adapts the property to new uses, or prolongs the life of property; maintenance is not a capital improvement. |
| CAPITAL RESERVE BUDGET | Projected budget over the economic life of improvements on the property for repairs, decorating, remodeling, and capital improvements. |
| CAPITALIZATION | The process of converting future income into an indication of the present value of a property by applying capitalization rate to the net annual income. |
| CAPITALIZATION FORMULA | Investment or value of real estate times the capitalization rate equals the annual net income of the real estate. |
| CAPITALIZATION RATE | The rate of interest appropriate to the investment risk as a return on the investment. |
| CARRYOVER PROVISION | A statement in a listing contract protecting the broker's commission entitlement for a specified period of time after the contract expires; also called extender clause. |
| CASH FLOW | Income produced by an investment property after deducting operating expenses and debt service. |
| CAVEAT EMPTOR | Latin word meaning "let the buyer beware"; applies to "sales talk" and not to statements of material facts. |
| CERTIFICATE OF ELIGIBILITY | A statement provided to veterans of military service setting forth the amount of loan guarantee to which they are entitled at that time. |
| CERTIFICATE OF OCCUPANCY | A document issued by a local government agency, after a satisfactory inspection of a structure, authorizing that the structure can be occupied. |
| CERTIFICATE OF REASONABLE VALUE (CRV) | A document setting forth the value of a property as the basis for the loan guarantee by the Veterans Administration to the lender. |
| CERTIFICATE OF TITLE OPINION | A report , based on a title examination, setting forth the examiner's opinion of the quality of a title to real property. |
| CHAIN | In land measurement, a distance of 66 feet. |
| CHAIN OF TITLE | Successive conveyances of title to a specific parcel of land. |
| CHANGE | The principle stating that change is continually affecting land use and therefore continually altering value. |
| CHATTEL | Personal property. |
| CHATTEL MORTGAGE | One in which personal property is pledged to secure payment of a debt. |
| CHATTEL REAL | Non-freehold interest in real property; also includes fixtures. |
| CHRONOLOGICAL AGE | Actual age of an item. |
| CITY CERTIFICATION | City ordinances that require an inspection by the city when property is transferred. |
| CIVIL ACTION | A lawsuit between private parties. |
| CIVIL RIGHTS ACT OF 1866 | A federal law that prohibits all discrimination on the basis of race. |
| CIVIL RIGHTS ACT OF 1968 | See Fair Housing Act of 1968 |
| CLEAN AIR ACT ( CAA ) | Sets out primary and secondary ambient air quality standards to protect human health, safety, and the environment. |
| CLEAN WATER ACT ( CWA ) | Governs discharge of oil and hazardous substances into US waters. |
| CLIENT | The principal in a real estate transaction. |
| CLOSED MORTGAGE | One that imposes a prepayment penalty. |
| CLOSED-END MORTGAGE | One that cannot be refinanced. |
| CLOSING | The consummation of a real estate contract, also called settlement. |
| CLOSING ( OR SETTLEMENT ) STATEMENT | An accounting of the funds received and disbursed in a real estate transaction. |
| CLOSING COST | Expenses incurred in the purchase and sale of real property paid at the time of settlement or closing. |
| CLOUD ON A TITLE | A claim against a title to real property. |
| CLUSTER ZONING | A form of zoning providing for several different types of land use within a zoned area. |
| CODE OF ETHIC | A standard of conduct required by license laws and by the National Association of Realtors |
| COINSURANCE CLAUSE | A requirement of hazard insurance policies that property be insured for a certain percent of value to obtain the full amount of loss. |
| COLLATERAL | Property pledged as security for payment of a debt. |
| COLOR OF TITLE | Deceptive appearance of claim to a title. |
| COMMERCIAL PROPERTY | Property producing rental income or used in business. |
| COMMINGLING | An agent's mixing money or property of others with the agent's personal or business funds or other property. |
| COMMISSION | A fee paid for the performance of services, such as a brokers commission. |
| COMMITMENT | A promise, such as promise by a lending institution to make a certain mortgage loan. |
| COMMON AREAS | Property to which co-owners hold title as a result of ownership of a condominium unit. |
| COMMON LAW | Law by judicial precedent or tradition as contrasted with a written statute. |
| COMMUNITY PLANNING | A plan for the orderly growth of a city or county to result in the greatest social and enemies benefits to the people. |
| COMMUNITY PROPERTY | A form of co-ownership limited to husband and wife; does not include the right of survivorship. |
| COMMUNITY-BASED PLANNING | A form of land use control originating in the grass roots of a community. |
| COMPARABLE | A property that is similar to a property being appraised by the market data approach. |
| COMPARISON APPROACH | See market data method |
| COMPENSATORY DAMAGES | The amount of money actually lost, which will be awarded by a court in case of a breached contract. |
| COMPETENCE | The mental / emotional capacity to enter into contracts. |
| COMPETITION | The principle stating that when the net profit a property generates is excessive, very strong competition will result. |
| COMPLETE PERFORMANCE | Execution of a contract by virtue of all parties having fully performed all terms. |
| COMPREHENSIVE ENVIRONMENTAL RESPONSE COMPENSATION AND LIABILITY ACT (CERCLA) | This law created a tax on the chemical and petroleum industries and provided broad federal authority to respond directly to releases or threatened releases of hazardous substances that may endanger public health or the environment. |
| CONCURRENT OWNERSHIP | Simultaneous ownership of real property by two or more people. |
| *CONDEMNATION | Exercise of the power of eminent domain; taking private property for public use. |
| CONDEMNATION VALUE | Market value of condemned property. |
| CONDITION | Any act or event that, if it occurs or fails to occur, automatically creates or extinguishes a legal obligation. |
| CONDITION CONCURRENT | When the parties are to exchange performances at the same time. |
| *CONDITION PRECEDENT | An act or event that must exist or occur before a duty of immediate performance of a promise arises. |
| *CONDITION SUBSEQUENT | Any fact, the existence or occurrence of which, by agreement of the parties, operates to discharge a duty of performance after it has become absolute. |
| CONDITIONAL SALES CONTRACT | See Land contract. |
| CONDOMINIUM | A form of ownership of real property, recognized in all states, consisting of individual ownership of some aspects of the property. |
| CONDOMINIUM DECLARATION | The document that, when recorded, creates a condominium; also called a master deed. |
| CONFIDENTIALITY | The duty of agents not to disclose any information about their clients. |
| CONFORMING LOANS | Those processed on uniform loan forms and according to FNMA / FHLMC guidelines. |
| CONFORMITY | Homogeneous use of land within a given area, which result in maximizing land value. |
| CONSIDERATION | Anything of value, as recognized by law, offered as an inducement to contract. |
| CONSTRUCTION LEIN ACT AND RECOVERY FUND | Protects and enforces, by lien, the rights of persons performing labor or providing material or equipment for the improvement of real estate. |
| CONSTRUCTION LOAN | A short term loan, secured by a mortgage, to obtain funds to construct an improvement on land. |
| CONSTRUCTION MORTGAGE | A temporary mortgage used to borrow money to construct an improvement on land. |
| CONSTRUCTIVE CONDITION | A condition in a contract imposed by a court. |
| CONSTRUCTIVE EVICTION | Results from some action or inaction by the landlord that renders the premises unsuitable for the use agreed to in a lease or other rental contract. |
| CONSTRUCTIVE NOTICE | One in which all affected parties are bound by the knowledge of a fact even though they have not been actually notified of such fact. |
| CONSUMER PRICE INDEX (CPI) | An index of the change in prices of various commodities and services, providing a measure of the tax rate of inflation. |
| CONTINGENCY | A condition in a contract relieving a party of liability if a specified event occurs or fails to occur. |
| CONTRACT | An agreement between competent parties upon legal consideration to do, or abstain from doing, some legal act. |
| CONTRACT BUYER'S POLICY | Title insurance that protects contract buyer against defects in contract seller's title. |
| CONTRACT FOR DEED | See Land contract. |
| CONVENTIONAL LIFE ESTATE | One created by intentional act of the parties. |
| CONVENTIONAL MORTGAGE LOAN | One in which the federal government does not insure or guarantee payment to the lender. |
| CONVERSION | Change in a form of ownership, such as changing rental apartments to condominium ownership. |
| CONVEY | To pass to another ( as in title ) |
| CONVEYANCE | Transfer of title to real property. |
| COOLING OFF PERIOD | A three day right of rescission for certain loan transactions. |
| COOPERATING BROKER | One who participates in the sale of a property through the listing broker. |
| COOPERATIVE | A form of ownership in which stockholders in a corporation occupy property owned by the corporation under a lease. |
| CO-OWNERSHIP | Title to real property held by two or more persons at the same time, also called concurrent ownership. |
| CORPORATION | A form of organization existing as an entity. |
| CORPOREAL | Tangible |
| CORRECTIVE MAINTENANCE | Repairs of a nonfunctioning item. |
| COST APPROACH | An appraisal method whereby the cost of constructing a substitute structure is calculated, depreciation is deducted, and land value is added. |
| COUNTEROFFER | A new offer made by an offer or rejecting an offer. |
| COVENANT | A promise in writing. |
| COVENANT AGAINST ENCUMBRANCES | A promise in a deed that the title causes no encumbrances except those set forth in the deed. |
| COVENANT FOR FURHER ASSURANCES | A promise in a deed that the grantor will execute further assurances that may be reasonable or necessary to perfect the title in the grantee. |
| COVENANT OF QUIET ENJOYMENT | A promise in a deed (or lease) that the grantee (or lessee) will not be disturbed in his or her use of the property because of a defect in the grantor's (or lessor's) title. |
| COVENANT OF SEISIN AND RIGHT TO CONVEY | A promise to in a deed assuring the grantee that the grantor has the title being conveyed. |
| COVENANT OF WARRANTY | A promise in a deed that the grantor will guarantee and defend the title against lawful claimants. |
| CREDIT | In closing statement, money to be received or credit given for money or an obligation given. |
| CREDITOR | One to whom a debt is owed. |
| CUBIC FOOT METHOD | A means of estimating reproduction or replacement cost, using the volume of the structure. |
| CUL DE SAC | A dead end street with a circular turn around at the dead end. |
| CUMULATIVE ZONING | A type of zoning permitting a higher-priority use even though it is different from the type of use designated for the area. |
| CURABLE DEPRECIATION | A condition of property that exists when correction is physically possible and the cost of correction is less then the value increase. |
| CURTESY | A husband's interest in the real property of his wife. |
| CUSTOMER | The titled party in a real estate transaction. |
| DAMAGES | The amount of financial loss incurred as a result of another' s action |
| DEBIT | In a closing statement, an expense or money received against a credit. |
| DEBT SERVICE | Principal and interest payments on a debt. |
| DECEDENT | A dead person |
| DECLARATION | Master deed containing legal description of the condominium facility, a plat of the property, plans and specifications for the common areas, and the degree of ownership in the common areas available to each owner. |
| DECLARATION OF RESTRICTIONS | The instrument used to record restrictive covenants on the public record. |
| DECREE | A court order. |
| DEDICATION | An appropriation of land or an easement therein by the owner to the public. |
| DEED | A written instrument transferring an interest in real property when delivered to the grantee. |
| DEED IN LIEU OF FORECLOSURE | Conveyance of title to the mortgage by a mortgagors in default to avoid a record of foreclosure. Also called a friendly foreclosure. |
| DEED IN TRUST | A deed transferring title to a trustee in a land trust |
| DEED OF BARGAIN AND SALE | A deed with or without warranties except an implied covenant that the grantor has title and possession. |
| DEED OF TRUST | A form of mortgage wherein there is a third party, who is called a trustee. |
| DEED RESTRICTION | Limitation on land use appearing in deeds. |
| DEFAULT | Failure to perform an obligation |
| DEFEASANCE CLAUSE | A statement in a mortgage or deed of trust giving the borrower the right to redeem the title and have the mortgage lien released at any time prior to default by paying the debt in full. |
| DEFEASIBLE | Subject to being defeated by the occurrence of a certain event. |
| DEFEASIBLE FEE | A title subject to being lost if certain conditions occur. |
| DEFERRED GAIN ROLLOVER | A homeowner who wanted to defer the tax obligation on resale profit had to purchase a replacement home of essentially equal or greater value. |
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