Real Estate Glossary

Real Estate Glossary

 

A
A/C	Air conditioner
Acceleration clause	Usually written into a mortgage to allow the lender to accelerate or call the entire principal balance of the mortgage, plus accrued interest, when the payments become delinquent.
Affidavit	A witten statement sworn to before an officer who is authorized to aminister an oath or affirmation.
Agency	That relationship wherein an agent is employed by a principal to do certain acts on the orincipal’s behalf.
Agent	One who undertakes to transact some business or to manage some affair for another by autorority of the latter.
Agricultural	Farms,timberland,ranches,orchards,etc.
A/I	A contract that is pending with attorney and inspection contingencies.
Air rights	The right to use the open space above a property, generally allowing the surface to be used for another purpose.
Alination	The act of transferring property to another.
Amenities	Elements of property or surroundings that contribute to its attractiveness to potencial buyers and to owner satsifacition such as gym, pool. Lounge, child room, etc.
Amortization	The reduction of a loan through periodic payments in which interest is charged only on the unpaid balance.
Amortization period	The actual number of years it will take to repay a mortgage loan in full. This can be well in excess of the loan’s term. For example, mortgages often have 5-year terms, but 25-year amortization periods.
Anchor stores	Large store, often nationally known department stores, whose presence attaracts other tenants to a shopping mall.
Appraisal	An estimate of a property’s valuation by an appraiser who is usually presumed to be expert in this work.
Appraised value	An estimate of the fair market value of the property, usually performed by an appraiser.
Appurtenance	A right or priveledge associated with the property,although not neccesarily a part o
APR	Annual percentage rate. Rate of intereste charged on a loa, calculated to make into account up-front loan fees and points. Usually higher than the contract interest rate.
ARM	Adjustable-rate mortgage which the interest raty may incerase or decrease at specific intervals, following an economic indicator.
Asbestos	Commomly used insulating mineral that bcome toxic when it is exposed and fibers and dust are released into the air.
Assessment fee	Also referred to as maintenance fee. A monthly fee that condominium owners must pay, usually including management fees, costs of common property upkeep, heating costs, garbage-removal costs, the owner’s contribution to the contingency reserve fund, and so on. In the case of time-shares, the fee is normally levied annually.
“As is”	Contract words indicating that the seller makes no guarantees of warranties about the proerty ; not always effective if challenged in court.
Assignment pay	The imposition of a tax, charge, or levy, usually according to establiesed rates.
B
Balance sheet	A financial statement that indicates the financial status of a condominium corporation or apartment building, or other revenue property, at a specific point in time by listing its assets and liabilities.
Balloon mortgage	A mortgage amortized over a number of years, but which requires the entire principal balance to be paid at a certain time, short of the full amortization period.
Beneficiary	The person who receives or is to receive benefits resulting from certain acts.
Board package	There are documents that contain personal and financial information of the prospective shareholder. The board package is submitted to the board of directors for its consideration and potential acceptance of the proposed share holder.
Brokerage	The business of bringing people together in a real estate transaction.
Building permit	A document used to track compliance with codes.
C
Capital gains	Profit realized from the sale of assets such as real estate.
CERCLA	The federal Comprehensive Environmental, Responsibility, Compensation, and Liablility Act, which established procedures for remedation of contaminated areas.
C.O.I.	Certificate of Insurance.
C.of O.	Ceritificate of occupancy. Document issued by a municipal authority stating that a building complies with building, health, and safety codes and may be occupied.
Chatte	Personal property
Civil Rights Act of 1866	Federal law that prohibits racial discrimination in the sale and rental of property.
Cloud on title	An irregularity, possible claim, or encumbrance which, if valid, would affect or impair the title.
Closing date	The date on which the buyer takes title to the property.
Closing costs	The expenses over and above the purchase price of buying and selling real estate.
Closing disclosure	A final statement of loan terms and closing costs. The buyer must receive it three business days before closing. Replaced the old HUD-1 form.
CMA	This stands for Comparative Market Analysis, sometimes these are also referred to as ‘comps.’ This is a report of similar homes in the area that were recently sold or are currently on the market. This is used to help determine an accurate value for your home.
Commercial	Business property, including office space, shopping centers, stores, theaters, hotels etc.
Common area	The area in a condominium project that is shared by all of the condominium owners, such as elevators, hallways, and parking lots.
Common elements	Parts of a property normally in common use by all of the conodmiuium residents.
Commission	Payment to a broker for services rendered, such as in the sale of purchase of real property; usually a percengae of the selling price.
Comparable Market Analysis	An evaluation of similar, recently sold homes (called comparables) that are near a home intended to be bought or sold. It establishes a price estimate based on current market activity that can be used as a guide for pricing a home. Buyers, sellers, and real estate agents perform a CMA when they are preparing to buy or sell a home.
Condominium	The absolute ownership of an apartment of a unit + an undivided interest in the ownership of the common elements, which are owned jointly with the other conodmiuium unit owners.
Contingency	A provision in a contract that requires that a certain act be done of a certain event occur before thae contract boebomes binidng.
Conversion	The changing of a structure from some other use, such as changing a rental apartment to a condominium apartment.
Cooperative	A resideintial multiunit building whose titile is held by a corporation owned by and operatied for the benefit of persons living within the building, who are the stockholders of the corporation, each possessing a proprietary lease.
Couteroffer	Offer made as a reply to an offer received.
Covenants	Agreements written into ddes and other instruments promising performance or nonperformance of certain acts.
Conveyancing	The transfer of property, or title to property, from one party to another.
Credit report	Includes all of the history for a borrower’s credit accounts, outstanding debts, and payment timelines on past or current debts.
Credit score	A score assigned to a borrower’s credit report based on information contained therein.
D
Deed	A document that conveys the title.
Deed book	A book among the public records in which deeds are recorded.
Deductable	As it relates to insurance policies, represents the monetary portion of the damages the property owner will bear if and when a convered loss occurs.
Defect	A blemish, imperfection or deficiency. A defective title is one that is irregular and faulty.
Deferred payment mortgage	A mortgage allowing for payments to be made on a deferred or delayed basis. Usually used where present income is not sufficient to make the payments.
Depreciation	The amount by which you write off the value of your real estate investment over the useful life of the investment. Does not include the value of your land.
Development	Involves the construction of improvements on the land.
Disclosures	Federal, state, county, and local requirements of disclosure that the seller provides and the buyer acknowledges.
Discounted mortgage	The selling of a mortgage to another party at a discount or an amount less than the face value of the mortgage.
DOM	Days on market.
Down payment	Percentage of real estate investment as equity. An initial amount of money (in the form of cash) put forward by the purchaser. Usually it represents the difference between the purchase price and the amount of the mortgage loan.
Depreciation	Loss in value occasioned by ordinary wear and tear, destructive action of the elements, or functional or economic obsolescence.
DTI	Debt-to-Income. The total percent of a borrower’s income that is paid toward debt each month calculated as a ratio of a borrower’s gross monthly income over his debts including car payments, student loans and credit card bills. A borrower’s DTI affects his credit rating.
E
Easement	The right to use the land of another.
Earnest deposit money	A partial payment by a buyer when submitting a contract that demonstrates the buyer’s commitment to the deal. The money, which is held in an escrow account, goes toward closing costs.
Eminent Domain	Goverments right to take property.
Encroachment	Extension of an improvement across a boundary.
Encumbrance	A claim, right or lien upon the title to real estate, held by someone other than the real estate owner.
Enforcement	Ensuring observance of or obedience to.
Equity	The amount remaining after subtracting the amount of a mortgage loan from the sales price of the home.
Escrow	A trust in which any money, documents, or other interests are held to secure the home purchase. Typically, the seller’s agent or attorney posts the items in an escrow account.
Escheat	Reversion of property to the state.
Escrow	A neutral or third party who handles the exchange of money and documents on behalf of two other parties before the closing of a sale.
Estate	The title or interest one has in property such as real estate and personal property that can, if desired, be passed on to survivors at the time of one’s death.
Eviction	Expulsion of someone, especially a tenant, from a property.
Exclusive agency listings	A signed agreement by a seller in which he or she agrees to co-operate with one broker. All other brokers must go through the listing broker.
F
Fair market value	The value established on real property that is determined to be one that a buyer is willing to pay and a seller is willing to sell.
Fee simple	A form of property ownership where the owner has the right to use and dispose of property at will.
Fee simple absolute	An estate without conditions.
FHA	Federal Housing Administration.
Financing	Is the business of providing the funds that make real estate transactions possible.
Fiscal year	The 12-month period in which financial affairs are calculated.
Fixture	Personal property that is attached to real estate.
Foreclosure	Legal proceeding for the collection of real estate mortgages and other types of liens on real estate, which results in cutting off the right to redeem the mortgaged property and usually involves a judicial sale of the property to pay the mortgage debt.
Free hold	An interest in land that has no time limit.
FSBO	For Sale By Owner. The owner of the property is selling without a real estate agent.
G
Good faith estimate	Under the Real Estate Settlement Procedures Act, within three days of an application submission, lenders are required to provide in writing to potential borrowers a good faith estimate of closing costs.
Gross income	Income or cash flow before expenses.
Gross sale price	The sale price before any concessions.
H
Heir	A person who inherits or who is entitled to inherit real estate by provisions of law or under the provisions of a will.
Heterogenity	Uniqueness of land.
High-ratio mortgage	A conventional mortgage loan that exceeds 75% of the appraised value or purchase price of the property. Such a mortgage must be insured.
Home owner’s insurnace	Protection from damages to the home and liability protection from accidents that may occur at the owner’s property.
HUD	U.S. Department of Housing and Urban Development.
I
Improvement	To improve the value of a property.
Industrial	Warehouses,factories,power plants etc.
Interest only mortgage	Payments to interest only are made. There is no principal reduction in the payment.
Interim financing	The temporary financing by a lender during the construction of real property for resale, or while other funds are due in.
Intestate	Dying without leaving a legal will.
J
Joint tenants	Two or more persons who hold title to real estate jointly, with equal rights to share in its enjoyment during their respective lives with the provision that upon the death of a joint tenant, his share in the property passes to the surviving tenants, and so on, until the full title is vested in the last survivor. A joint tenant cannot legally sell or encumber his interest without the consent or joinder of all of the other joint tenants.
Judgement	A conclusion or determination by a court of law usually awarding the payment of money or relief of some kind to one of the parties to a lawsuit.
L
Lease	An agreement granting the use or occupancy of land during a specified period in exchange for rent.
Lessee	The tenant in rental space.
Lessor	The owner of the rental space.
Letter of intent	Used in place of a formal written contract with a deposit. The prospective purchaser informs the seller, in writing, that he or she is willing to enter into a formal purchase contract upon certain terms and conditions if they are accept¬able to the seller.
Lien	A claim against a property.
Loan-To-Value ratio	The loan expressed as a percentage. In other words, it is the mortgage value that the bank is willing to give you.
LTV	Loan-to-Value. The ratio of the amount of money borrowed over the appraised value of the home. It is a key risk factor that lenders consider when evaluating a loan application.
M
Market value	An average between the highest price that a buyer, willing but not compelled to buy, would pay and the lowest price a seller, willing, but not compelled to sell, would accept.
Marginal tax rate	That point in income at which any additional income will be taxed at a higher tax rate.
Mechanic’s lien	A lien on real estate, created by operation of law, which secures the payment of debts due to persons who perform labor or services or furnish materials incident to the construction of buildings and improvements on the real estate.
Metes and bounds	Describing boundaries by using courses, directions, distances and monuments.
MLS	Multiple Listings Service.
Mortgatee	The lender.
Mortgagor	The borrower.
Mortgage broker	An independent individual (or company) who brings together borrowers and lenders together. Unlike a mortgage banker, a mortgage broker does not fund the loan. Instead, the broker originates and processes the loan, and places it with a funding source, such as a bank.
N
NAA	The Federal National Housing Act.
NAR	National Association Of Realtors.National association comprised of real estate professionals.
National Housing Act Loan	A mortgage loan that is insured by CMHC to certain maximums.
Net income	Income or cash flow after expenses (but generally before income tax).
O
Offer	The price the buyer offers to pay the seller. If it’s accepted, the seller’s legal team drafts the sales contract.
Open listings	A listing given to one or more brokers, none of whom have any exclusive rights or control over the sale by other brokers or the owner of the property.
Operating cost	Those expenses required to operate an investment property, generally excluding mortgage payments.
P
PIT	Principal, interest, and taxes due on a mortgage.
PMI	Private Mortgage Insurance. Insurance that protects a lender against loss if a borrower defaults on a loan. PMI is required for conventional loans that have less than a 20 percent down payment.
Power of attorney	A legal instrument authorizing one to act as another’s agent or attorney.
Points	A one-time fee paid to a lender equal to 1 percent of the loan amount to reduce the interest rate.
Promissory note	A written promise to pay or repay a specified sum of money at a stated time, or on demand, to a named person. In addition to the payment of principal, a promissory note usually provides for the payment of interest.
Preapproved	A buyer completes an application, pays a fee and supplies the necessary documentation to the lender who performs an extensive financial background check. The lender will issue a conditional commitment in writing for an exact loan amount. Preapproval does not guarantee a loan.
Premium	The amount payable for an insurance policy.
Prequalified	An informal estimate of how much a buyer can afford to borrow for a mortgage. It does not include an analysis of a buyer’s credit report or an in-depth look at his ability to purchase a home.
Principal	The amount you actually borrowed, or the portion of it still owing on the original loan.
Property tax	An annual or semi-annual tax paid to one or more government agencies based on the property value assessment.
Property management	A person or company hired to maintain and manage property on behalf of it’s owner
Public records	The transcriptions in a recorder’s office of instruments that have been recorded, including the indexes pertaining to them.
PUD	Planned Unit Development. Mixed-use development that sets aside areas for residential use, commercial use, and public areas such as schools, parks, and so on.
Q
Quiet title suit	A lawsuit brought by an owner of real estate for the purpose of cancelling, wiping out, and putting a quietus upon supposedly immaterial, inconsequential, and unenforceable claims and interests that cloud the owner’s title.
Quit claim deed	A deed that does not imply the grantor holds title, but which surrenders and gives to the grantee any possible interest or rights that the grantor may have in the property.
R
Radon	A natural gas.
Real estate broker	A person who is authorized to act as an agent for the sale of land.
Real estate	Land and all it’s improvements.
Realtor	A Realtor is a real estate agent that is a member of the national association of Realtors. This means they uphold the standards and code of ethics of the organization. Not all agents are Realtors.
Real property	The interest,benifits,and rights that are automatically included in ownership of the land and real estate.Legal bundle of rights.
Record title	The aspects of a title that appear in the public records as distinguished from unrecorded title aspects and interests.
Resident manager	An individual, usually living in the building, who handles all of the day-to-day problems in the building.
R&I	Estimated and actual repair and improvement costs.
Riparian rights	The many rights of a person in, to, and over the banks, bed, shallows, shore, and water of a stream or body of water upon which his land borders.
S
Scarcity	The usable supply of land in an area.
Second mortgageg	A mortgage placed on a property in second position to an already existing first mortgage.
Secondary market	An institutional investment market that purchases mortgages from mortgage lenders.
Set back	Space between a property and a building line
Severance	An item of real property can become personal property. EX: a tree is real property til the owner cuts it down.
Special assessement	A special and additional charge to a unit in a condominium or cooperative. Also a special real estate tax for improvements that benefit a property.
Special purpose	Churches,schools,cemetaries,& goverment-help lands.
Subdivision	An area of land divided into lots, blocks and building sites, and in which public facilities are laid out, such as streets, alleys, parks and easements for public utilities.
Sublease	The lessee leases part of his or her premises to another user.
T
1031 Exchange	The delayed exchange of properties that qualifies for tax purposes as a tax-deferred exchange.
1099	The statement of income reported to the IRS for an independent contractor.
Tax shelter	The tax write-off possible through the depreciation benefits available on investment real estate ownership.
Tax lien	The lien that is imposed upon real estate by operation of law that secures the payment of real estate taxes.
Tenancy by entireties	An estate or interest in real estate predicated upon the legal fiction that a husband and wife are one person. A conveyance or devise to them (unless contrary intent is expressed) vests title in them as one person. Upon the death of either husband or wife, full title passes to the survivor.
Tenants in common	Two or more persons in whom title to a single piece of real estate is vested in such a manner that they have a common or equal right to possession and enjoyment of the property, but each holds a separate individual interest or estate in the property. Each owner may sell or encumber his respective interest or dispose of it by will, and if he dies without leaving a will, his heirs inherit his undivided interest.
Title	The legally recognized interest someone has in land.Evidence of ownership.
Title insurance	This insurance covers the purchaser or vendor, in case of any defects in the property or title that existed at the time of sale, but were not known about until after the sale.
Title search	An examination of the public records to determine the ownership and encumbrance affecting real property.
Trade fixtures	Items owned by and attached to leased property, by a tenant who is conducting a business.
Trust account	Escrow account for money belonging to another.
U
Underwriter	An insurance company that issues insurance policies either to the public or to another insurer.
Under contract	A property that has an accepted real estate contract between seller and buyer.
Uniform commercial code	A condition of commercial law, adopted in most states, that attempts to make uniform all laws relating to commecial transactions, including chattel mortgages and bulk transfers.
V
Violation	An infraction of the law less serious than a misdemeanor.
W
W2	The Internal Revenue form issued by employer to employee to reflect compensation and deductions to compensation.
W9	The Internal Revenue form requesting taxpayer identification number and certification.
Warranty deed	A deed containing one or more title covenants.
Weighted Average Cost of Capital	This formula basically summarises and is expressed as a percentage the weighted average of both the costs of debt and equity, respectively.
Waiver	The renuncition, abandonment, or surrender of some claim, right , or privilage.
W/D	Washer Dryer
Walk through	A showing before closing or escrow that permits the buyers one final tour of the property they are purchasing.
Z
Zoning	Rules for land use established by local governments.