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Real Estate Vocab 4
ASREB Real Estate School Vocabulary for Chapter A-4
| Term | Definition |
|---|---|
| Amortization | Amortization is the paying off of debt with a fixed repayment schedule in regular installments over a period of time for example with a mortgage or a car loan. |
| Annual Percentage Rate (ARP) | An annual percentage rate (APR) is the annual rate charged for borrowing or earned through an investment, and is expressed as a percentage that represents the actual yearly cost of funds over the term of a loan. |
| Compound (Tax Rate) | For compound taxes, the total cost of a product or service is taxed at one rate, and then the total of that amount, including the first tax amount, is taxed a second time. Compound tax is also known as "stacked tax". |
| Legal Rate | The highest rate of interest that can be legally charged on any type of debt. The legal rate of interest applies to all types of debt, although this rate may differ from one type of debt to another. |
| Prime Rate | the lowest rate of interest at which money may be borrowed commercially. |
| Simple (Tax Rate) | A tax rate is the percentage at which an individual or corporation is taxed. The tax rate is the tax imposed by the federal government and some states based on an individual's taxable income or a corporation's earnings. |
| Assumption of Mortgage | Mortgage assumption is the conveyance of the terms and balance of an existing mortgage to the purchaser of a financed property, commonly requiring that the assuming party is qualified under lender or guarantor guidelines. |
| Attachment | Attachment is a legal process by which a court of law, at the request of a creditor, designates specific property owned by the debtor to be transferred to the creditor, or sold for the benefit of the creditor. |
| Beneficiary | A beneficiary is any person who gains an advantage and/or profits from something. In the financial world, a beneficiary typically refers to someone who is eligible to receive distributions from a trust, will or life insurance policy. |
| Collateral | Collateral is a property or other asset that a borrower offers as a way for a lender to secure the loan. If the borrower stops making the promised loan payments, the lender can seize the collateral to recoup its losses. |
| Construction Loan (aka) Interim, Bridge, Gap, Swing Loan | Construction loans are relatively short term and the lender takes an ownership interest in the building. At the end of construction, the loan is repaid from the proceeds of a mortgage obtained on the finished building. |
| Debt | Something, typically money, that is owed or due. |
| Deed of Reconveyance | A deed or reconveyance is a document issued by a mortgage holder indicating that the borrower is released from the mortgage debt and transfers the property title from the lender, also called the beneficiary, to the borrower, also called the trustor. |
| Deed Restrictions | Deed restrictions are private agreements that restrict the use of the real estate in some way, and are listed in the deed. LEED Leins, Encomberances, Easements, Draws |
| Default | Default is the failure to pay interest or principal on a loan or security when due. And it also refers to cases in which one party fails to perform on a futures contract as required by an exchange. |
| Discount (Points) | Discount Points are a form of prepaid interest. A borrower buys a point and in return gets a lower interest rate on the loan. Each discount point generally costs 1% of the total loan amount. |
| Docketed Judgement | A judgment docket is a listing of the judgments entered in a particular court that is available to the public for examination. Its purpose is to give official notice of the existence of liens or judgments to interested parties. |
| Draws | A draw is a predetermined amount of money that an employer advances to a salesperson against future commissions generated from sales. The idea of a draw is for the salesperson to "earn his keep" by at least equaling the draw amount for a given time period |
| Encroachment | A situation in real estate where a property owner violates the property rights of his neighbor by building something on the neighbor's land or by allowing something to hang over onto the neighbor's property. |
| Encumbrance | A claim against, limitation on or liability against real estate is an encumbrance. Include liens, deed restrictions, easements, encroachments and licenses. Can restrict the owner's ability to transfer title to the property or lessen its value. |
| Estoppel Certificate | A document used in mortgage negotiations to establish facts and financial obligations, such as outstanding amounts due that can affect the settlement of a loan. It is required by a lender of a third party in a real estate transaction. |
| Garnishment | A legal procedure by which a creditor can collect what a debtor owes by reaching the debtor's property when it is in the hands of someone other than the debtor. |
| Hypothecate | Hypothecation is an agreement whereby a person puts up collateral to secure the debt of another. This means that a person (not the debtor) agrees that a piece of real estate belonging to him/her will be collateral for a debt. |
| Inchoate | An incomplete, imperfect interest, unfinished, interrupted right. For example, a wife has an inchoate dower's right to her husband's property that cannot be completed unless she outlives her husband. |
| Judgement | What is 'Judgment Lien' A court ruling that gives a creditor the right to take possession of a debtor's real property if the debtor fails to fulfill his or her contractual obligations. |
| Laches | Laches is based on the maxim that "equity aids the vigilant and not those who slumber on their rights." A legal right or claim will not be enforced or allowed if a long delay in asserting the right or claim has prejudiced the adverse party. |
| Legal Title | At common law equitable title is the right to obtain full ownership of property, where another maintains legal title to the property. When a contract for the sale of land is executed, equitable [interest/title] passes to the buyer. |
| Level Payments | A mortgage on real estate that is paid off by making a series of nearly equal payments at regular intervals where a part of the payment goes to interest and the remainder goes to reduce the amount of the unpaid principal. See Amortized Loan. |
| Variable Payments | Allows for increases in the rental charges during the lease period. One of the more common is the graduated lease which provides for specified rent increases at set future dates. |
| Lien - classification | A right to keep possession of property belonging to another person until a debt owed by that person is discharged. |
| Specific Lien | A lien upon specific property as security for the payment of a debt or the satisfaction of some other obligation arising out of a transaction or agreement involving that property —called also specific lien. |
| General Lien | Tax lien or judgment lien that attaches to all personal and real property of a person or firm (the lienee). It covers not only the goods or property that gives rise to the debt, but all the goods or property of the lienee. |
| Lien Theory | A property-law doctrine that a mortgage transfers title to a property to the mortgagee, who holds it until the mortgage has been paid off, at which time title passes to the mortgagor. Only a few US states have this theory. |
| Lienor | A person or organization whose property is officially kept by someone to whom they owe money, until the money is paid back |
| Lienee | One whose property is subject to a lien. |
| Lis Pendens | A pending legal action, or a formal notice of this. |
| Lot Releases | Releasing a lot, usually with a release clause in the contract stating the the parcel of land can be released and sold separately. |
| Mechanic's Lien | A guarantee of payment to builders, contracters and construction firms that build or repair structures. Mechanic's liens also extend to suppliers of materials and subcontractors and cover building repairs as well. |
| Mortgage - Assumption | is the conveyance of the terms and balance of an existing mortgage to the purchaser of a financed property, commonly requiring that the assuming party is qualified under lender or guarantor guidelines. |
| Mortgage - clauses | A section in a real estate contract that transfers ownership of a property with no restrictions. ... Because the clause begins with the phrase, "To have and to hold," the habendum clause is sometimes called the "to have and to hold clause." |
| (Mortgage) Acceleration | A contract provision that allows a lender to require a borrower to repay all or part of an outstanding loan if certain requirements are not met. An acceleration clause outlines the reasons that the lender can demand loan repayment. Acceleration covenant |
| (Mortgage) Alienation | A clause in a mortgage contract that requires full payment of the balance of a mortgage at the lender's discretion if the property is sold or the title to the property changes to another person. Nearly all mortgages have an alienation clause. |
| (Mortgage) Default | Is the failure to pay interest or principal on a loan or security when due. Default occurs when a debtor is unable to meet the legal obligation of debt repayment, and it also refers to cases in which one party fails to perform on contract features. |
| (Mortgage) Defeasance | Instead of paying cash to the lender, the defeasance option allows the borrower to exchange another cash flowing asset for the original collateral for the loan. |
| (Mortgage) Due-on-sale | A provision in a mortgage contract that requires the mortgage to be repaid in full upon a sale or conveyance of partial or full interest in the property that secures the mortgage. Mortgages with a due-on-sale clause are not assumable. |
| (Mortgage) Escalation | An escalation clause is a real estate contract, sometimes called an escalator, that lets a home buyer say "I will pay x price for this home, but if the seller receives another offer that's higher than mine, I'm willing to increase my offer to y price." |
| (Mortgage) Estoppel | Estoppel certificate is a document used in mortgage negotiations to establish facts and financial obligations, such as outstanding amounts due that can affect the settlement of a loan. It is required by a lender of a third party in a R.E. transaction. |
| (Mortgage) Locked-in | The period of time during which a loan may not be prepaid.(2) The period of time during which a lender will guarantee a certain interest rate on a loan to be extended by it in the future. |
| (Mortgage) Or More | A clause in a promissory note that permits the borrower to payoff the loan at any time with no penalty. |
| (Mortgage) Prepayment | Prepayment clause is a loan-document provision that permits a borrower to satisfy a debt before it is due date. |
| (Mortgage) Subordination | A mortgage subordination agreement is a document frequently used when there are two mortgages on a home, and the homeowner is looking to refinance the first mortgage. This specifies which mortgage takes precedence over the other. |
| Mortgagee | A mortgagee is an entity that lends money to a borrower for the purpose of purchasing a piece of real property. By accepting a mortgage on the real property, the lender creates security in the full repayment of the loan in the future. |
| Mortgagor | The person who borrows money secured by conceding a mortgage against his interest in real property. Related Terms: Mortgagee, Mortgage. A term peculiar to mortgage and contract law to refer to the borrower of money secured by a mortgage. |
| Note | Mortgage note (AKA a real estate lien note, borrower's note) is a promissory note secured by a specified mortgage loan; it is a written promise to repay a specified sum of money plus interest at a specified rate and length of time to fulfill the promise. |
| Novation | Novation is the act of replacing one party in a contract with another, or of replacing one debt or obligation with another. It extinguishes (cancels) the original contract and replaces it with another, requiring the consent of all parties involved. |
| Obligatory Advance | The disbursements of money over the period of a construction loan which the lender is bound to make under the terms of the loan. |
| Origination Fee | An origination fee is an upfront fee charged by a lender for processing a new loan application, used as compensation for putting the loan in place. Origination fees are quoted as a percentage of the total loan and are generally between 0.5 and 1% |
| Priority | Something having a higher level of importance or ranking. in property law is that liens have priority in the order that they are filed in the county records office. This is known as the first in time, first in right rule. |
| Promissory | conveying or implying a promise. a signed document containing a written promise to pay a stated sum to a specified person or the bearer at a specified date or on demand. |
| Recording | Recording is the act of putting a RE document into the official records at the County Recorders or Recorder of Deeds Office. Commonly a deed, mortgage, easement, judgment, lien, foreclosure, or request for notice of default. |
| Reduction Certificate | A document signed by a lender stating the outstanding amount on a mortgage loan. Properties that are encumbered by mortgages are frequently sold before the debt is satisfied. |
| Release Clauses | A release clause is a mortgage term that refers to a provision within a mortgage. The release clause allows for the freeing of part of a property from the mortgage after a proportional amount of the mortgage has been paid. |
| Repayment Plans | An arrangement by which a borrower agrees to make additional payments to pay down past due amounts while still making regularly scheduled payments. |
| (Repayment Plans) Balloon | A balloon payment mortgage is a mortgage which does not fully amortize over the term of the note, thus leaving a balance due at maturity. The final payment is called a balloon payment because of its large size. |
| (Repayment Plans) Budget | An estimate of income and expenditure for a set period of time. |
| (Repayment Plans) Equity Participation | The ownership of shares in a company or property. The greater the equity participation rate, the higher the percentage of shares owned by stakeholders... to own shares ties the stakeholders' success with that of the co. or R.E investment. |
| (Repayment Plans) Flexible | A Loan that Employs a computerized method of calculating the payments requires by a pledge account mortgage. Often interest rates are initially lower than ordinary mortgage and initial payments are below those of an amortized mortgage. |
| (Repayment Plans) Interest Only | Borrower only pays the interest on the mortgage through monthly payments for a term that is fixed on an interest-only mortgage loan. Usually 5-7 years. Many refinance their homes, make a lump sum payment/ begin paying off the principal of the loan. |
| (Repayment Plans) Level | A Mortgage scheduled to be repaid in equal periodic payments that include both interest and principal |
| (Repayment Plans) Open-End | An open-end mortgage is a type of mortgage that allows the borrower to increase the amount of the mortgage at a later time. Open-end mortgages permit the borrower to go back to the lender and borrow more money if certain conditions have been met. |
| (Repayment Plans) Percentage | A standard rule for lenders is that your monthly housing payment (principal, interest, taxes and insurance) should not take up more than 28 percent of your income before taxes. This debt-to-income ratio is called the "housing ratio" or "front-end ratio." |
| (Repayment Plans) Straight | Straight Mortgage is a mortgage in which the mortgagor is obligated to pay interest during the mortgage term along with a final payment of principal at the end of the term. |
| (Repayment Plans) Term | Short-term (usually 5 yrs or less) standing mortgage in which the loan is not amortized over a fixed period; only interest is paid over the term. When the loan term ends (mortgage matures) the principle becomes payable in lump sum called balloon payment. |
| (Repayment Plans) Variable | A mortgage loan with the interest rate on the note periodically adjusted based on an index which reflects the cost to the lender of borrowing on the credit markets. The loan may be offered at the lender's standard variable rate/base rate. |
| (Mortgage - Types) Blanket | Type of loan used to fund the purchase of more than one piece of real property. Blanket loans are popular with builders and developers who buy large tracts of land, then subdivide them to create many individual parcels to be gradually sold one at a time. |
| (Mortgage - Types) Chattel | Chattel mortgage is a legal term used to describe a loan arrangement in which an item of movable personal property is used as security for the loan. The movable property, or chattel, guarantees the loan in this type of mortgage. |
| (Mortgage - Types) Junior | A mortgage that is subordinate to a first or prior (senior) mortgage. A junior mortgage often refers to a second mortgage, but it could also be a third or fourth mortgage. In the case of foreclosure, the senior mortgage will be paid down first. |
| (Mortgage - Types) Open-End | An open-end mortgage is a type of mortgage that allows the borrower to increase the amount of the mortgage at a later time. Open-end mortgages permit the borrower to go back to the lender and borrow more money if certain conditions have been met. |
| (Mortgage - Types) Package | A package mortgage is a loan secured by real estate and in which the personal property and furniture is included in the purchase price of the house. |
| (Mortgage - Types) Reverse | A financial agreement in which a homeowner relinquishes equity in their home in exchange for regular payments, typically to supplement retirement income. |
| (Mortgage - Types) Subordinate | An agreement document that is frequently used when there are two mortgages on a home, and the homeowner is looking to refinance the first mortgage. The mortgage subordination agreement specifies which mortgage takes precedence over the other. |
| Satisfaction Piece - types | a formal written acknowledgment by an obligee (as a mortgagee) that an obligation has been satisfied and that the obligor is discharged |
| Satisfaction of Mortgage | A document generated and signed by a mortgage lender, acknowledging that the borrower has paid off the mortgage loan in full and that the mortgage is not a lien on the property. |
| Satisfaction of Judgement | Once a judgment is paid, whether in installments or a lump sum, a judgment creditor (the person who won the case) must acknowledge that the judgment has been paid by filing a Satisfaction of Judgment form with the court clerk. |
| Security | Evidence of obligations to pay money or of rights to participate in earnings and distribution of corporate, trust, or other property. A security is usually where investors subject their money to the risks of an enterprise they exercise no management. |
| Statue of Limitations | A statute prescribing a period of limitation for the bringing of certain kinds of legal action. |
| Subject to the Mortgage | assignment or transfer of real estate where the purchaser agrees to take over monthly payments of principal and interest, but does not assume personal liability for the obligation. |
| Trust Deed | In RE in the US, a deed of trust or trust deed is a deed wherein legal title in real property is transferred to a trustee, which holds it as security for a loan (debt) between a borrower and lender. The equitable title remains with the borrower. |
| Trustee | In real estate in the US, a deed of trust or trust deed is a deed wherein legal title in real property is transferred to a trustee, which holds it as security for a loan (debt) between a borrower and lender. The equitable title remains with the borrower. |
| Trustor | The borrower is referred to as the trustor, while the lender is referred to as the beneficiary. |
| Vendee | Legal Definition. n. A purchaser, especially in a contract to purchase real estate; a buyer. |
| Vendor | Person who transfers property by sale, particularly RE, "seller" being more commonly used for one who sells personalty. He's the vendor who negotiates the sale, becomes recipient of the consideration, though title comes to the vendee from another source. |
| Voluntary Lien | A voluntary lien is a type of lien that exists because of an action taken by a debtor. This is the opposite of an involuntary lien that occurs by law, such as a tax or special assessment lien that is imposed by a regulatory authority. |
| Involuntary Lien | Claim imposed against a property without the consent of its owner(s). Involuntary liens are placed usually by government revenue authorities for unpaid duties or taxes. |
| Land Contract | A case in which a seller allows a buyer to use land but does not give title until debt is paid. The note and Security Instrument are in this one document. |
| Assigned (regarding loan) | When a loan is sold from one lender to another lender. The loan is assigned. |
| Assignor | Person, co. or entity who transfers rights to another entity. The assignor transfers to the assignee. E.G the assignor that enters into a contract to sell a piece of property can assign the proceeds/benefits of contract, to a 3rd party (the assignee). |
| Assignee | a person to whom a right or liability is legally transferred. |
| Lender | An organization or person that lends money. |
| Lendee | The person to whom something is lent. |
| Wraparound (loan) | A new loan created to balance out previous debt.(Vendor pays for underlying loan) *** |
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