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Section 1031 of the U.S. Internal Revenue Code allows investors to defer capital gains taxes on the exchange of like-kind properties. 1031, or tax-deferred, exchanges hold great advantages for both investors.

An employer-sponsored investment plan that allows individuals to set aside tax-deferred income for retirement or emergency purposes. 401(k) plans are provided by employers that are private corporations. 403(b) plans are provided by employers that are not for profit organizations.

Some administrators of 401(k)/403(b) plans allow for loans against the monies you have accumulated in these plans. Loans against 401K plans are an acceptable source of down payment for most types of loans.

--A--

The voluntary surrender or relinquishment of possession of real property with the intention of terminating one's possession or interest, but without vesting this interest in any other person.

A reduction or decrease in amount, degree, intensity or worth.     

An estimate of the rate at which a particular classification of space - such as new office space, new housing, new condominium units and the like - will be sold or occupied each year.

A concise, summarized history of the title to a specific parcel of real property, together with a statement of all liens and encumbrances affecting the property. The abstract of title does not guarantee or assure the validity of the title of the property. It merely discloses those items about the property which are of public record, and thus does not reveal such things as encroachments, forgeries, and the like.

A method of calculating the depreciation of certain property (that property which is used in a trade or business, or which is held for the production of income) at a faster rate than would be achieved from using the straight line method of depreciation.

A clause in your mortgage which allows the lender to demand payment of the outstanding loan balance for various reasons. The most common reasons for accelerating a loan are if the borrower defaults on the loan or transfers title to another individual without informing the lender.

The expression of the intention of the person receiving an offer (offeree, usually the seller) to be bound by the terms of the offer.

A general or specific right of ingress and egress to a particular property.

The valuation placed on property by a public tax assessor for purposes of taxation.

A public official who establishes the value of a property for taxation purposes.

Items of value owned by an individual. Assets that can be quickly converted into cash are considered "liquid assets." These include bank accounts, stocks, bonds, mutual funds, and so on. Other assets include real estate, personal property, and debts owed to an individual by others.

A mortgage that can be assumed by the buyer when a home is sold. Usually, the borrower must "qualify" in order to assume the loan.

The gradual and imperceptible addition to land by alluvial deposits of soil through natural causes, such as shoreline movement caused by streams or rivers.

That which has accumulated over a period of time such as accrued depreciation, accrued interest or accrued expenses.

A formal declaration made before a duly authorized officer, usually a Notary Public, by a person who has signed a document.

A measure of land equaling 43,560 square feet; 4,840 square yards; 160 square rods.

Latin for "according to valuation," usually referring to a type of tax or assessment.

A contract which is very one-sided and favors the party who drafted the document.

A mortgage in which the interest changes periodically, according to corresponding fluctuations in an index. All ARMs are tied to indexes.

The date the interest rate changes on an adjustable-rate mortgage (ARM).

The acquiring of title to real property owned by someone else, by means of open, notorious and continuous possession for the statutory period of time (20 years in Hawaii).

A sworn statement reduced to writing and made under oath before a Notary Public or other official authorized by law to administer an oath.

An agreement between the seller (vendor) and buyer (vendee) for the purchase of real property.

A relationship created when one person, the "principal," delegates to another, the "agent," the right to act on the principal's behalf in business transactions and to exercise some degree of discretion while so acting. An agency gives rise to a fiduciary relationship and imposes on the agent, as the fiduciary of the principal, certain duties, obligations and high standards of good faith and loyalty.

One who is authorized to represent and to act on behalf of another person (called the principal). A real estate broker is the agent of his client, be it the seller or buyer, to whom he owes a fiduciary obligation. A salesman is the agent of his broker and does not have a direct personal contractual relationship with either the seller or buyer.

The rights to the use of the open space or vertical plane above a property. Ownership of the land includes the right to all air above the property.

A clause in a promissory note or mortgage which provides that the balance of the secured debt becomes immediately due and payable at the option of the mortgagee upon the alienation of the property by the mortgagor.

The free ownership of land by individuals.

Features, both tangible and intangible, which enhance and add to the desirability of real estate.

The loan payment consists of a portion which will be applied to pay the accruing interest on a loan, with the remainder being applied to the principal. Over time, the interest portion decreases as the loan balance decreases, and the amount applied to principal increases so that the loan is paid off (amortized) in the specified time.

A table which shows how much of each payment will be applied toward principal and how much toward interest over the life of the loan. It also shows the gradual decrease of the loan balance until it reaches zero.

Major department or chain stores which are strategically located at shopping centers so as to give maximum exposure to smaller satellite stores.

This is not the note rate on your loan. It is a value created according to a government formula intended to reflect the true annual cost of borrowing, expressed as a percentage. It works sort of like this, but not exactly, so only use this as a guideline: deduct the closing costs from your loan amount, then using your actual loan payment, calculate what the interest rate would be on this amount instead of your actual loan amount. You will come up with a number close to the APR. Because you are using the same payment on a smaller amount, the APR is always higher than the actual not rate on your loan.

The form used to apply for a mortgage loan, containing information about a borrower's income, savings, assets, debts, and more.

A written justification of the price paid for a property, primarily based on an analysis of comparable sales of similar homes nearby.

An opinion of a property's fair market value, based on an appraiser's knowledge, experience, and analysis of the property. Since an appraisal is based primarily on comparable sales, and the most recent sale is the one on the property in question, the appraisal usually comes out at the purchase price.

An individual qualified by education, training, and experience to estimate the value of real property and personal property. Although some appraisers work directly for mortgage lenders, most are independent.

The increase in the value of a property due to changes in market conditions, inflation, or other causes.

Belonging to; adjunct; appended or annexed.                                

The non-judicial submission of a controversy to selected third parties for their determination in the manner provided by agreement or by law.

The value of real property as established by the state government for purposes of computing real property taxes.

The placing of a value on property for the purpose of taxation.

When ownership of your mortgage is transferred from one company or individual to another, it is called an assignment.

The term applied when a buyer assumes the seller's mortgage.

The act of acquiring title to property which has an existing mortgage on it and agreeing to be personally liable for the terms and conditions of the mortgage, including payments.

The legal process of seizing the real or personal property of a defendant in a lawsuit, by levy or judicial order, and holding it in the custody of the courts as security for satisfaction of the judgment which the plaintiff may recover in any action upon a contract, express or implied.

One who is authorized by another to act in his place under a power of attorney.

The act of a tenant formally agreeing to become the tenant of a successor landlord; as in attorning to a mortgagee who has foreclosed on the leased premises.

--B--

A mortgage loan that requires the remaining principal balance be paid at a specific point in time. For example, a loan may be amortized as if it would be paid over a thirty year period, but requires that at the end of the tenth year the entire remaining balance must be paid.

The final lump sum payment that is due at the termination of a balloon mortgage.

By filing in federal bankruptcy court, an individual or individuals can restructure or relieve themselves of debts and liabilities. Bankruptcies are of various types, but the most common for an individual seem to be a "Chapter 7 No Asset" bankruptcy which relieves the borrower of most types of debts. A borrower cannot usually qualify for an "A" paper loan for a period of two years after the bankruptcy has been discharged and requires the re-establishment of an ability to repay debt.

A deed which recites a consideration and conveys all of the grantor's interest in the property to the grantee.

An imaginary set of lines used by surveyors to locate and describe land under the Rectangular Survey Method of property description used in most mainland states.

The financial interest which IRS attributes to the owner of an asset for purposes of determining annual depreciation and gain or loss on sale of the asset.

A mark affixed to a permanent reference or monument, such as an iron post or a brass marker (usually embedded in a cement sidewalk), used to establish elevations and altitudes over a surveyed area.

A person who receives the benefits from the gifts or acts of another, such as one who is designated to receive the proceeds from a will, insurance policy or trust.

A contract in which each party promises to perform an act in exchange for the other party's promise to perform.

A written document that transfers title to personal property. For example, when selling an automobile to acquire funds which will be used as a source of down payment or for closing costs, the lender will usually require the bill of sale (in addition to other items) to help document this source of funds.

A mortgage in which you make payments every two weeks instead of once a month. The basic result is that instead of making twelve monthly payments during the year, you make thirteen. The extra payment reduces the principal, substantially reducing the time it takes to pay off a thirty year mortgage. Note: there are independent companies that encourage you to set up bi-weekly payment schedules with them on your thirty year mortgage. They charge a set-up fee and a transfer fee for every payment. Your funds are deposited into a trust account from which your monthly payment is then made, and the excess funds then remain in the trust account until enough has accrued to make the additional payment which will then be paid to reduce your principle. You could save money by doing the same thing yourself, plus you have to have faith that once you transfer money to them that they will actually transfer your funds to your lender.

A mortgage which is secured by several structures or a number of lots. A blanket mortgage is often used to finance proposed subdivisions or development projects, especially cooperatives.

State securities laws designed to protect the public from fraudulent practices in the promotion and sale of securities, e.g., through limited partnerships, syndications, bonds.

Usually refers to the daily buying and selling of thirty year treasury bonds. Lenders follow this market intensely because as the yields of bonds go up and down, fixed rate mortgages do approximately the same thing. The same factors that affect the Treasury Bond market also affect mortgage rates at the same time. That is why rates change daily, and in a volatile market can and do change during the day as well.

Money or other property given to make up any difference in value or equity between two exchanged properties.

The perimeters or limits of a parcel of land as fixed by legal description which is usually a metes and bounds description.

Violation of any of the terms or conditions of a contract without legal excuse; default, non-performance, such as failure to make payment when due.

Not used much anymore, bridge loans are obtained by those who have not yet sold their previous property, but must close on a purchase property. The bridge loan becomes the source of their funds for the down payment. One reason for their fall from favor is that there are more and more second mortgage lenders now that will lend at a high loan to value. In addition, sellers often prefer to accept offers from buyers who have already sold their property.

Broker has several meanings in different situations. Most Realtors are "agents" who work under a "broker." Some agents are brokers as well, either working form themselves or under another broker. In the mortgage industry, broker usually refers to a company or individual that does not lend the money for the loans themselves, but broker loans to larger lenders or investors. (See the Home Loan Library that discusses the different types of lenders). As a normal definition, a broker is anyone who acts as an agent, bringing two parties together for any type of transaction and earns a fee for doing so.

That aspect of the real estate business which is concerned with bringing together the parties and completing a real estate transaction. Brokerage involves exchanges, rentals, trade-ins and management of property, as well as sales.

A mortgage with payments set up to cover more than interest and principal reductions.

A strip of land separating one parcel from another.                                   

A written permission granted by the County Building Department and required prior to beginning the construction of a new building or other improvement (including fences, fence walls, retaining walls and swimming pools).

A method of determining the value of an improvement normally used in appraising income property.

Any transfer in bulk, and not in the ordinary course of the seller's business, of a major part of the materials, inventory or supplies of an enterprise.

An ownership concept describing all those legal rights which attach to the ownership of real property, including the right to sell, lease, encumber, use, enjoy, exclude, will, etc.

Days of the week excluding Saturdays, Sundays, and holidays; normal working days.

Any type of business which is for sale.                                    

Usually refers to a fixed rate mortgage where the interest rate is "bought down" for a temporary period, usually one to three years. After that time and for the remainder of the term, the borrower's payment is calculated at the note rate. In order to buy down the initial rate for the temporary payment, a lump sum is paid and held in an account used to supplement the borrower's monthly payment. These funds usually come from the seller (or some other source) as a financial incentive to induce someone to buy their property. A "lender funded buydown" is when the lender pays the initial lump sum. They can accomplish this because the note rate on the loan (after the buydown adjustments) will be higher than the current market rate. One reason for doing this is because the borrower may get to "qualify" at the start rate and can qualify for a higher loan amount. Another reason is that a borrower may expect his earnings to go up substantially in the near future, but wants a lower payment right now.

--C--

Similar to the acceleration clause.                                                 

A projecting beam or overhanging portion supported at one end only.

Adjustable Rate Mortgages have fluctuating interest rates, but those fluctuations are usually limited to a certain amount. Those limitations may apply to how much the loan may adjust over a six month period, an annual period, and over the life of the loan, and are referred to as "caps." Some ARMs, although they may have a life cap, allow the interest rate to fluctuate freely, but require a certain minimum payment which can change once a year. There is a limit on how much that payment can change each year, and that limit is also referred to as a cap.

The percentage selected for use in the income approach to valuation of improved property. The cap rate is designed to reflect the recapture of the original investment over the economic life of the improvement, to give the investor an acceptable rate of return (yield) on the original investment, and to provide for the return on borrowed capital.

The taxable profit derived from the sale of a capital asset.           

Any structure which is erected as a permanent improvement to real property; any improvement which is made to extend the useful life of a property, or to add to the value of the property.

A mathematical process for converting net income into an indication of value, commonly used in the income approach to appraisal.

When a borrower refinances his mortgage at a higher amount than the current loan balance with the intention of pulling out money for personal use, it is referred to as a "cash out refinance."

A time deposit held in a bank which pays a certain amount of interest to the depositor.

One of the indexes used for determining interest rate changes on some adjustable rate mortgages. It is an average of what banks are paying on certificates of deposit.

A document issued by the Veterans Administration that certifies a veteran's eligibility for a VA loan.

Once the appraisal has been performed on a property being bought with a VA loan, the Veterans Administration issues a CRV.

A check which the bank guarantees to be good, and against which a stop payment is ineffective.

A professional property manager who has qualified for membership in and is a member of the Institute of Real Estate Management, and is designated a CPM.

An analysis of the transfers of title to a piece of property over the years.

Personal property which is tangible and moveable.                         

A title that is free of liens or legal questions as to ownership of the property.

An account set up by a broker to keep client's monies segregated from the broker's general funds.

This has different meanings in different states. In some states a real estate transaction is not consider "closed" until the documents record at the local recorders office. In others, the "closing" is a meeting where all of the documents are signed and money changes hands.

Closing costs are separated into what are called "non-recurring closing costs" and "pre-paid items." Non-recurring closing costs are any items which are paid just once as a result of buying the property or obtaining a loan. "Pre-paids" are items which recur over time, such as property taxes and homeowners insurance. A lender makes an attempt to estimate the amount of non-recurring closing costs and prepaid items on the Good Faith Estimate which they must issue to the borrower within three days of receiving a home loan application.

See Settlement Statement.                                                            

Any conditions revealed by a title search that adversely affect the title to real estate. Usually clouds on title cannot be removed except by deed, release, or court action.

The grouping of housing units on less than normal size homesites, with the remaining land being devoted to common areas.

An additional individual who is both obligated on the loan and is on title to the property.

A written system of standards of ethical conduct. The Code of Ethics of the National Association of Realtors, first written in 1913, establishes the high standards of conduct for members of the Realtor community.

In a home loan, the property is the collateral. The borrower risks losing the property if the loan is not repaid according to the terms of the mortgage or deed of trust.

When a borrower falls behind, the lender contacts them in an effort to bring the loan current. The loan goes to "collection." As part of the collection effort, the lender must mail and record certain documents in case they are eventually required to foreclose on the property.

A condition which has the appearance of good title, but which in fact is not valid title, as where title is founded on some written document which on its face appears valid and effective, but which is actually invalid.

A loan for financing commercial property such as an office building.

A classification of real estate which includes income producing property such as office buildings, gasoline stations, restaurants, shopping centers, hotels and motels, parking lots and stores, and other similar uses.

To mingle or mix; for example, to deposit client funds in the broker's personal or general account. A licensee found guilty of commingling can have the license suspended or revoked by the Real Estate Commission.

Most salespeople earn commissions for the work that they do and there are many sales professionals involved in each transaction, including Realtors, loan officers, title representatives, attorneys, escrow representative, and representatives for pest companies, home warranty companies, home inspection companies, insurance agents, and more. The commissions are paid out of the charges paid by the seller or buyer in the purchase transaction. Realtors generally earn the largest commissions, followed by lenders, then the others.

A pledge or promise to do a certain act, such as the promise of a lending institution to loan a certain amount of money at a fixed rate of interest to a qualified buyer, provided the loan is obtained on or before a certain date.

In some areas they are called Homeowners Association Fees. They are charges paid to the Homeowners Association by the owners of the individual units in a condominium or planned unit development (PUD) and are generally used to maintain the property and common areas.

Those portions of a building, land, and amenities owned (or managed) by a planned unit development (PUD) or condominium project's homeowners' association (or a cooperative project's cooperative corporation) that are used by all of the unit owners, who share in the common expenses of their operation and maintenance. Common areas include swimming pools, tennis courts, and other recreational facilities, as well as common corridors of buildings, parking areas, means of ingress and egress, etc.

Parts of the property which are necessary or convenient to the existence, maintenance and safety of the condominium, or are normally in common use by all of the condominium residents.

An unwritten body of law based on general custom in England and used to an extent in some states.

A wall separating two living units.                                                       

In some states, especially the southwest, property acquired by a married couple during their marriage is considered to be owned jointly, except under special circumstances. This is an outgrowth of the Spanish and Mexican heritage of the area.

Recent sales of similar properties in nearby areas and used to help determine the market value of a property. Also referred to as "comps."

Recently sold properties which are similar to a particular property being evaluated, and which are used to indicate a reasonable fair market value for the subject property.

Interest which is computed upon the principal sum plus accrued interest.

Discounts given by landlords to prospective tenants to induce them to sign a lease.

Either a judicial or administrative proceeding to exercise the power of eminent domain, i.e., the power of the government to take private property for public use.

A type of ownership in real property where all of the owners own the property, common areas and buildings together, with the exception of the interior of the unit to which they have title. Often mistakenly referred to as a type of construction or development, it actually refers to the type of ownership.

Changing the ownership of an existing building (usually a rental project) to the condominium form of ownership.

A condominium project that has rental or registration desks, short-term occupancy, food and telephone services, and daily cleaning services and that is operated as a commercial hotel even though the units are individually owned. These are often found in resort areas like Hawaii.

An estate in real property consisting of an individual interest in an apartment or commercial unit, and an undivided common interest in the common areas such as the land, parking areas, elevators, stairways, and the like.

An act or forbearance, or the promise thereof, which is offered by one party to induce another to enter into a contract; that which is given in exchange for something from another.

A short-term, interim loan for financing the cost of construction. The lender makes payments to the builder at periodic intervals as the work progresses.

Acts done by a landlord which so materially disturb or impair the tenant's enjoyment of the leased premises that a tenant is effectively forced to move out and terminate the lease without liability for any further rent.

Notice of certain facts which are implied bylaw to a person because he could have discovered the fact by reasonable diligence or by inquiry into public records.

A condition that must be met before a contract is legally binding. For example, home purchasers often include a contingency that specifies that the contract is not binding until the purchaser obtains a satisfactory home inspection report from a qualified home inspector.

A provision placed in contract which requires the completion of a certain act or the happening of a particular event before a contract is binding.

An oral or written agreement to do or not to do a certain thing.

Refers to home loans other than government loans (VA and FHA).

An adjustable-rate mortgage that allows the borrower to change the ARM to a fixed-rate mortgage within a specific time.

The transfer of title to real property by means of a written instrument such as a deed or an assignment of lease.

A broker who joins with another broker in the sale of real property.

A type of multiple ownership in which the residents of a multiunit housing complex own shares in the cooperative corporation that owns the property, giving each resident the right to occupy a specific apartment or unit.

Cooperative ownership of an apartment unit means that the apartment owner has purchased shares in a corporation which holds title to the entire apartment building.

One of the indexes that is used to determine interest rate changes for certain adjustable-rate mortgages. It represents the weighted-average cost of savings, borrowings, and advances of the financial institutions such as banks and savings & loans, in the 11th District of the Federal Home Loan Bank.

A form of concurrent property ownership in which two or more persons own an undivided interest in the same property.

A new offer made as a reply to an offer received from another; this has the effect of rejecting the original offer, which cannot thereafter be accepted unless revived by the offeror's repeating it.

The practice of sharing commissions with cooperating brokers.

A written agreement or promise of two or more parties by which either pledges to perform or not to perform specified acts on a property, or which specifies certain uses or non-uses of the property.

Covenants are promises contained in contracts, the breach of which would entitle a person to damages. Conditions, on the other hand, are contingencies, qualifications or occurrences upon which an estate or property right would be gained or lost.

Covenants which become part of the property and benefit or bind successive owners of the property.

An agreement in which a borrower receives something of value in exchange for a promise to repay the lender at a later date.

A record of an individual's repayment of debt. Credit histories are reviewed my mortgage lenders as one of the underwriting criteria in determining credit risk.

A report of an individual's credit history prepared by a credit bureau and used by a lender in determining a loan applicant's creditworthiness.

An organization that gathers, records, updates, and stores financial and public records information about the payment records of individuals who are being considered for credit.

A person to whom money is owed.                                                 

A street which is open at one end only, and which usually has a circular turnaround; a blind alley.

An impound account maintained for the purpose of setting up a reserve to pay certain periodic obligations such as real property taxes, insurance premiums, lease rent, and maintenance fees.

--D--

An IRS designation for a person who regularly buys and sells real property.

An amount owed to another.                                                         

The amount of money needed to meet the periodic payments of principal and interest when a debt is amortized.

A statement of all the covenants, conditions and restrictions ("CC&R's") which affect a parcel of land.

The application of privately owned land to the public for no consideration, with the intent that the land will be accepted and used for public purposes.

The legal document conveying title to a property.                               

Short for "deed in lieu of foreclosure," this conveys title to the lender when the borrower is in default and wants to avoid foreclosure. The lender may or may not cease foreclosure activities if a borrower asks to provide a deed-in-lieu. Regardless of whether the lender accepts the deed-in-lieu, the avoidance and non-repayment of debt will most likely show on a credit history. What a deed-in-lieu may prevent is having the documents preparatory to a foreclosure being recorded and become a matter of public record.

Some states, like California, do not record mortgages. Instead, they record a deed of trust which is essentially the same thing.

Failure to make the mortgage payment within a specified period of time. For first mortgages or first trust deeds, if a payment has still not been made within 30 days of the due date, the loan is considered to be in default.

Commissions which are earned but not yet fully paid.

A judgment against a borrower, endorser, or guarantor for the balance of the debt issued when the security for a loan is insufficient to satisfy the debt.

Failure to make mortgage payments when mortgage payments are due. For most mortgages, payments are due on the first day of the month. Even though they may not charge a "late fee" for a number of days, the payment is still considered to be late and the loan delinquent. When a loan payment is more than 30 days late, most lenders report the late payment to one or more credit bureaus.

A term, frequently used in connection with zoning requirements, which means the maximum number of building units per acre or the number of occupants or families per unit of land area (acre, square mile, etc.); usually the ratio of land area to improvement area.

A sum of money given in advance of a larger amount being expected in the future. Often called in real estate as an "earnest money deposit."

A decline in the value of property; the opposite of appreciation. Depreciation is also an accounting term which shows the declining monetary value of an asset and is used as an expense to reduce taxable income. Since this is not a true expense where money is actually paid, lenders will add back depreciation expense for self-employed borrowers and count it as income.

A loss in value due to any cause; any condition which adversely affects the value of an improvement.

For tax purposes, depreciation is an expense deduction taken for an investment in depreciable property.

Tables of percentage designed to provide a uniform system of measuring the additional value to lots which accrues because of added depth, with the extra depth valued according to the added utility which it creates.

The acquisition of an estate by inheritance, where an heir succeeds to the property by operation of law. Descent literally means the hereditary succession of an heir to property of an ancestor who dies intestate.

The portion of a conveyance document which defines the property being transferred.

One who attempts to put land to its most profitable use by the construction of improvements.

A transfer of real property under a will.                                           

A statement denying legal responsibility, frequently found in the form of, "There are no promises, representations, oral understandings or agreements except as contained herein."

The act of making a distinction against or in favor of a person on the basis of the group or class to which the person belongs; the failure to treat people equally.

The right of a landlord, pursuant to a court order, to seize a tenants belongings for rents in arrears.

The state where an individual has his true, fixed, permanent home and principal business establishment and to which place he has the intention of returning whenever he is absent.

An escrow set up to handle the concurrent sale of one property and purchase of another property by same party.

The legal right or interest a wife acquires in property her husband held or acquired anytime during marriage.

The part of the purchase price of a property that the buyer pays in cash and does not finance with a mortgage.

Representing both principals (buyer and seller) to a transaction.

A form of acceleration clause found in some mortgages, especially savings and loan mortgages, requiring the mortgagor to pay off the mortgage debt when selling the secured property, thus resulting in automatic maturity of the note at the lender's option.

The part of the purchase price of a property that the buyer pays in cash and does not finance with a mortgage.

A structure that provides housing accommodations for two families by having separate entrances, kitchens, bedrooms, lanais, living rooms and bathrooms. A two-family dwelling.

Unlawful constraint or action exercised upon a person whereby he is forced to perform some act against his will. A contract entered into under duress is void.

--E--

A deposit made by the potential home buyer to show that he or she is serious about buying the house.

A property interest which one person has in land owned by another entitling the holder of the interest to limited use or enjoyment of the other's land.

The limited right of one person to use another's land (servient estate), which right is not created for the benefit of any land owned by the owner of the easement; that is, there is no dominant estate, as the easement attaches personally to the owner, not to the land.

An appraiser's estimate of the physical condition of a building. The actual age of a building may be shorter or longer than its effective age.

Growing crops (called "fructus industriales"),such as rice and taro, which are produced annually through labor and industry

The right of a government to take private property for public use upon payment of its fair market value. Eminent domain is the basis for condemnation proceedings.

An improvement that intrudes illegally on another's property.       

Anything that affects or limits the fee simple title to a property, such as mortgages, leases, easements, or restrictions.

A form of joint ownership of property between husband and wife with the right of survivorship

A report which includes a detailed description of a proposed development project with emphasis on the existing environment setting, viewed from both a local and regional perspective, and a discussion of the probable impact of the project on the environment during all phases.

A federal law that requires lenders and other creditors to make credit equally available without discrimination based on race, color, religion, national origin, age, sex, marital status, or receipt of income from public assistance programs.

A homeowner's financial interest in a property. Equity is the difference between the fair market value of the property and the amount still owed on its mortgage and other liens.

A form of insurance which covers liabilities for errors, mistakes and negligence in the usual listing and selling activities of a real estate office or escrow company.

The reversion of property to the state when a decedent dies intestate and there are no heirs capable of inheriting, or when the property is abandoned.

An item of value, money, or documents deposited with a third party to be delivered upon the fulfillment of a condition. For example, the earnest money deposit is put into escrow until delivered to the seller when the transaction is closed.

Once you close your purchase transaction, you may have an escrow account or impound account with your lender. This means the amount you pay each month includes an amount above what would be required if you were only paying your principal and interest. The extra money is held in your impound account (escrow account) for the payment of items like property taxes and homeowner's insurance when they come due. The lender pays them with your money instead of you paying them yourself.

Once each year your lender will perform an "escrow analysis" to make sure they are collecting the correct amount of money for the anticipated expenditures.

The use of escrow funds to pay real estate taxes, hazard insurance, mortgage insurance, and other property expenses as they become due.

The ownership interest of an individual in real property. The sum total of all the real property and personal property owned by an individual at time of death.

A legal doctrine by which a person is prevented from asserting rights or facts which are inconsistent with a previous position or representation he had made by his act, conduct or silence.

A system of moral principles, rules and standards of conduct.

The legal process of removing a tenant from possession of the premises for some breach of the lease contract.

The report on the title of a property from the public records or an abstract of the title.

A transaction in which all or part of the consideration for the purchase of real property is the transfer of property of a like kind.

A written listing agreement giving one agent the right to sell property for a specified time, but reserving to the owner the right to sell the property himself without payment of any commission.

A written contract that gives a licensed real estate agent the exclusive right to sell a property for a specified time.

The act of making a document legally valid, such as formalizing a contract by signing, or acknowledging and delivering a deed.

A person named in a will to administer an estate. The court will appoint an administrator if no executor is named. "Executrix" is the feminine form.

A contract in which one or both of the parties has not yet performed.

A "carry over" clause (referred to as a safety clause) contained in a listing which provides that a broker is still entitled to a commission for a set of period of time after the listing has expired if the property is sold to a former prospect of the broker.

An agreement to continue the period of performance beyond the specified period.

--F--

A consumer protection law that regulates the disclosure of consumer credit reports by consumer/credit reporting agencies and establishes procedures for correcting mistakes on one's credit record.

The highest price that a buyer, willing but not compelled to buy, would pay, and the lowest a seller, willing but not compelled to sell, would accept.

The Federal National Mortgage Association, which is a congressionally chartered, shareholder-owned company that is the nation's largest supplier of home mortgage funds. For a discussion of the roles of Fannie Mae, Freddie Mac (FHLMC), and Ginnie Mae (GNMA), see the Library.

An income-based community lending model, under which mortgage insurers and Fannie Mae offer flexible underwriting guidelines to increase a low- or moderate-income family's buying power and to decrease the total amount of cash needed to purchase a home. Borrowers who participate in this model are required to attend pre-purchase home-buyer education sessions.

A selected geographical area or one specific building to which a real estate salesperson devotes special attention and study.

An analysis of a proposed project with emphasis on the attainable income, probable expenses, and most advantageous use and design.

An agency of the U.S. Department of Housing and Urban Development (HUD). Its main activity is the insuring of residential mortgage loans made by private lenders. The FHA sets standards for construction and underwriting but does not lend money or plan or construct housing.

A federal lien which attaches to real property, either if the federal estate tax is not paid, or if the taxpayer has violated the federal income tax or payroll tax laws.

A federal agency created to investigate and eliminate unfair and deceptive trade practices in business.

The greatest possible interest a person can have in real estate.

An unconditional, unlimited estate of inheritance that represents the greatest estate and most extensive interest in land that can be enjoyed. It is of perpetual duration. When the real estate is in a condominium project, the unit owner is the exclusive owner only of the air space within his or her portion of the building (the unit) and is an owner in common with respect to the land and other common portions of the property.

A mortgage that is insured by the Federal Housing Administration (FHA). Along with VA loans, an FHA loan will often be referred to as a government loan.

A relationship which implies a position of trust or confidence wherein one is usually entrusted to hold or manage property or money for another. Among the obligations a fiduciary owes to the principal are duties of loyalty; obedience; full disclosure; the duty to use skill, care and diligence; and the duty to account for all monies.

An area where the grade has been raised by depositing or dumping dirt, gravel or lava rock.

The total of all costs imposed directly or indirectly by the creditor and payable either directly or indirectly by the customer, as defined under the federal Truth-in-Lending Law.

A mortgage brokerage fee to cover the expenses incurred in placing the mortgage with a lending institution; a mortgage service charge or origination fee.

A formal statement of the financial status and net worth of a person or company, setting forth and classifying assets and liabilities as of a specified date.

The use of a third party's money to acquire real estate.                

A fee paid to someone for producing a buyer to purchase or a seller to list property; also called a referral fee.

A lender's agreement to make a loan to a specific borrower on a specific property.

The mortgage that is in first place among any loans recorded against a property. Usually refers to the date in which loans are recorded, but there are exceptions.

The right of a person to have the first opportunity either to purchase or lease real property.

A business year used for tax, corporate or accounting purposes, as opposed to a calendar year.

A mortgage in which the interest rate does not change during the entire term of the loan.

Personal property that becomes real property when attached in a permanent manner to real estate.

A land parcel having the configuration of an extended flag and pole. The pole represents access to the site which is usually located to the rear of another lot fronting a main street.

The purchase and resale of a property for a profit, usually within a short time frame such as twelve months.

Insurance that compensates for physical property damage resulting from flooding. It is required for properties located in federally designated flood areas.

The ratio of floor area to land area expressed as a percent or decimal, which is determined by dividing the total floor area on a zoning lot by the lot area.

A frequent practice in real estate brokerage offices of assigning one sales agent the responsibility for handling all telephone calls and office visitors for a specified period of time.

The legal process by which a borrower in default under a mortgage is deprived of his or her interest in the mortgaged property. This usually involves a forced sale of the property at public auction with the proceeds of the sale being applied to the mortgage debt.

Any form of deceit, trickery, breach of confidence or misrepresentation by which one party attempts to gain some unfair or dishonest advantage over another.

Title to real property which is absolute and unencumbered by any liens, mortgages, clouds or other encumbrances.

The length of a property abutting a street or body of water; that is, the number of feet that "front" the street or water.

A loss in value of an improvement due to functional inadequacies, often caused by age or poor design.

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A legal process designed to provide a means for creditors to safeguard for themselves the personal property of a debtor which is in the hands of a third party ("garnishee").

One who is authorized to perform any and all acts associated with the continued operation of a particular job or a certain business.

A construction specialist who enters into a formal construction contract with a land owner or master lessee to construct a real estate building or project.

A co-owner of a partnership who is empowered to enter into contracts on behalf of the partnership and who is fully liable for all partnership debts.

A graduated federal tax paid by a donor upon making a gift.      

An act is done in good faith if it is in fact done honestly, whether it be done negligently or not.

An intangible, salable asset arising from the reputation of a business.

A mortgage that is insured by the Federal Housing Administration (FHA) or guaranteed by the Department of Veterans Affairs (VA) or the Rural Housing Service (RHS). Mortgages that are not government loans are classified as conventional loans.

A system of land description in which large blocks of land are divided into tracts bounded by imaginary lines conforming to the true meridian.

A government-owned corporation within the U.S. Department of Housing and Urban Development (HUD). Created by Congress on September 1, 1968, GNMA performs the same role as Fannie Mae and Freddie Mac in providing funds to lenders for making home loans. The difference is that Ginnie Mae provides funds for government loans (FHA and VA).

A lease in which the rent payments commence at a fixed, often low rate, but "step up" or increase at set intervals as the lease term matures.

Common expression used to convey the idea that something which was once permissible continues to be permissible despite changes in the controlling law.

The person to whom an interest in real property is conveyed.

The person conveying an interest in real property.                      

The total floor area of a building measured from the exterior of the walls (excluding those unenclosed).

A useful rule of thumb to estimate market value of income producing residential property. The multiplier is derived by using comparable sales divided by the actual or estimated monthly rentals and arriving at an acceptable average.

A lease of property under which the lessee pays a fixed rent, and the lessor pays the taxes, insurance, and other charges regularly incurred through ownership.

One who is given the lawful custody and care of another (called a ward).

--H--

That part of the deed beginning with the words "to have and to hold," following the granting clause and reaffirming the extent of ownership that the grantor is transferring.

Being fit to live in. The residential landlord has an obligation to keep the leased premises in a habitable condition.

Insurance coverage that in the event of physical damage to a property from fire, wind, vandalism, or other hazards.

A person who inherits under a will or a person who succeeds to property by the laws of descent if the decedent dies without a will (intestate).

A popular expression for a condominium or apartment building generally higher than six stories.

A concept in real estate appraisal. It states that the value of a property is directly related to the use of that property; the highest and best use is the reasonably probable use that produces the highest property value. This use, the Highest and Best Use, may or may not be the current use of the property.

A clause inserted in a contract whereby one party agrees to indemnify and protect the other party from any injuries or lawsuits arising out of the particular transaction.

One who stays on the leased premises after his lease has expired. The landlord normally has the choice of evicting the holdover tenant or permitting him to remain and continue to pay rent.

Usually referred to as a reverse annuity mortgage, what makes this type of mortgage unique is that instead of making payments to a lender, the lender makes payments to you. It enables older home owners to convert the equity they have in their homes into cash, usually in the form of monthly payments. Unlike traditional home equity loans, a borrower does not qualify on the basis of income but on the value of his or her home. In addition, the loan does not have to be repaid until the borrower no longer occupies the property.

A mortgage loan, usually in second position, that allows the borrower to obtain cash drawn against the equity of his home, up to a predetermined amount.

A thorough inspection by a professional that evaluates the structural and mechanical condition of a property. A satisfactory home inspection is often included as a contingency by the purchaser.

A nonprofit association that manages the common areas of a planned unit development (PUD) or condominium project. In a condominium project, it has no ownership interest in the common elements. In a PUD project, it holds title to the common elements.

An insurance policy that combines personal liability insurance and hazard insurance coverage for a dwelling and its contents.

A type of insurance often purchased by homebuyers that will cover repairs to certain items, such as heating or air conditioning, should they break down within the coverage period. The buyer often requests the seller to pay for this coverage as a condition of the sale, but either party can pay.

A home which is used as a personal residence.                          

A building or group of attached or detached buildings containing dwelling or lodging units in which 50 percent or more of the units are lodging units, usually distinguished by a front desk, dining and other common facilities.

Rules of conduct adopted by a board of directors of a condominium and designed to promote harmonious living among the owners and occupants.

A federal cabinet department officially known as the Department of Housing and Urban Development.

Median family income for a particular county or metropolitan statistical area (MSA), as estimated by the Department of Housing and Urban Development (HUD).

A document that provides an itemized listing of the funds that were paid at closing. Items that appear on the statement include real estate commissions, loan fees, points, and initial escrow (impound) amounts. Each type of expense goes on a specific numbered line on the sheet. The totals at the bottom of the HUD-1 statement define the seller's net proceeds and the buyer's net payment at closing. It is called a HUD1 because the form is printed by the Department of Housing and Urban Development (HUD). The HUD1 statement is also known as the "closing statement" or "settlement sheet."

To pledge specific real or personal property as security for an obligation, without surrendering possession of it.

--I--

A legal doctrine imposing on the landlord a duty to make the leased premises acceptable to live in and ready for occupancy and to continue to maintain them in a state of repair throughout the entire term of the lease.

A trust account established to set aside funds for future needs.

Real property whose value has been enhanced by the addition of on-site and off-site improvements such as roads, sewers, utilities, buildings, etc.; as distinguished from raw land.

Valuable additions made to property, amounting to more than repairs, costing labor and capital and intended to enhance the value of the property. Improvements of land would include grading, sidewalks, sewers, streets, utilities, etc. Improvements on land would include buildings, fences, and the like.

Interest implied by the federal tax law.                                                              

An approach to the valuation or appraisal of real property as determined by the amount of net income the property will produce over its remaining economic life.

Property purchased primarily for the income to be derived plus certain tax benefits, such as accelerated depreciation. Income property can be commercial, industrial or residential.

Intangible or non-possessory rights in real property such as easements, licenses, profits and the like.

One who is retained to perform a certain act, but who is subject to the control and direction of another only as to the end result and not as how he performs the act. The critical feature, and what distinguishes an independent contractor and an employee or agent, is the right to control.

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