"ARM'S LENGTH" TRANSACTION A colloquial description of a transaction where none of the parties are related to each other or have common interests -- they have each other at "arm's length". An arms-length transaction is generally at fair market value; in a "non-arm's-length" transaction, the relationship between the parties may cause one or the other to accept less than they are entitled or pay more than fair market value.
"AS-IS" AGREEMENT A statement in the Agreement of Purchase and Sale that confirms that the Purchaser shall accept the property and all chattels included in the Purchase in the condition in which they are found at the time the Agreement is signed.
a la carte real estate services Professional real estate services that are rendered one transaction at a time instead of the conventional full-service, commission-based brokerage relationship.
ABANDONMENT Abandonment occurs when a person with a right or interest in a property voluntarily gives up that right or interest, either by physically "abandoning" the property or by showing the intention to give up the right or interest.
ABATEMENT A decrease or reduction in the price of a property (or in rent chargeable to a tenant). Usually occurs as a result of the discovery of a negative fact about the property which decreases its value from the price originally agreed upon by the parties.
ABLE Quite literally, being capable. A Purchaser is ready, willing and able to complete a transaction when she has funds and has signed the documents required to transfer title to a property. If the Vendor is not ready, willing and able to complete the transaction on the date set for completion, the Purchaser may tender upon the Vendor and sue as a result of the failure to complete the transaction.
ABSENTEE OWNER An owner of a property who lives elsewhere, leaving tenants in control and occupation of the property.
ABSORPTION RATE Expressed as a percentage, the number of properties that can be bought or sold in a particular market. May be broken down as to types and sizes of properties.
abstract of judgment The summary of a court judgment that creates a lien against a property when filed with the county recorder.
ABSTRACT OF TITLE A summary listing of the documents registered in the local land registry office and which affect title (ownership) of a particular property.
abstract or title search The process of reviewing all recorded transactions in the public record to determine whether any title defects exist that could interfere with the clear transfer of ownership of the property.
ABSTRACT PLANT See Title Plant.
ABSTRACTION (EXTRACTION) METHOD A method by which the value of land may be established. Uses comparable, improved properties and establishes a ratio of their original land value to their value after they have been developed.
ABUT Adjoin or share a common boundary, or share even a small portion of a boundary.
accelerated cost recovery system A tax calculation that provides greater depreciation in the early years of ownership of real estate or personal property.
ACCELERATED DEPRECIATION Depreciation is the reduction of the value of a property or chattel as a result of the passing of time (i.e. a new car may be worth $20,000.00, $18,000.00 after one year, $16,000.00 after two years etc.). Usually used for tax purposes, the depreciation in the value of a property may be used as a tax deduction. If a property or chattel loses its value quickly, this depreciation rate may be accelerated so that most of the value is lost in the first few years and then the depreciation rate decreases later in the property's life span. Also known as "Writing down" the value of a property (or a chattel). A bookkeeping method that depreciates property faster in the early years of ownership.
ACCELERATION CLAUSE A clause in a mortgage or loan. If the borrower fails to live up to her obligations under the mortgage, the lender has the legal right to demand that the full principal of the mortgage may become due and payable immediately upon the failure. A provision that gives a lender the right to collect the balance of a loan if a borrower misses a payment.
ACCEPTANCE A positive response to an offer or a counter-offer that creates a binding agreement between the parties. Acceptance may be conditional upon the occurrence of certain events. The seller's written approval of a buyer's offer.
ACCESS The right to enter a property. Access may be restricted to certain times, to certain persons and to certain purposes (i.e. access for the purpose of inspection). Any means by which a person can enter property.
ACCESSIBILITY The ease with which one can reach a certain place, person or thing. A property may be inaccessible because it is located far back along a winding, mountainous road that is often blocked in winter. A property may also be said to have good accessibility to highways, shopping, schools etc. The degree to which a building or site allows access to people with disabilities.
ACCESSORY BUILDING A structure on a property that serves a specific purpose, complementing the home or main building. A garage or storage shed.
ACCREDITED ASSESSMENT EVALUATOR (AAE) A professional designation. A property evaluator who has achieved the requirements of the International Association of Assessing Officers.
ACCREDITED LAND CONSULTANT (ALC) A professional designation. A person who has met the requirements of the Realtors Land Institute to aid in the marketing of real property.
ACCREDITED RESIDENTIAL MANAGER (ARM) A professional designation for a person trained to manage residential properties. A person who has earned the designation by fulfilling the requirements of the Institute of Real Estate Management (IREM), which is an affiliate of the National Association of Realtors.
ACCRETION The growth in size of a parcel of land as a result of the actions of such natural forces as wind or water. The gradual addition to the shore or bank of a waterway by deposits of sand or silt.
ACCRUED An adjective describing something that has come into existence but has not yet been claimed by or distributed to its rightful owner.
ACCRUED DEPRECIATION From a tax standpoint, the amount of value of a property or chattel which has already accumulated (but has not been claimed) as a result of the decrease in the value of that property due to the passage of time and the use of the property or chattel.
ACCRUED INTEREST Interest which has already been earned but has not yet been paid.
ACKNOWLEDGEMENT A statement by a person to the effect that they are aware of a certain fact. May also be a sworn document to the same effect, which further states that the person signing the document did so voluntarily. A written declaration affirming that a person acted voluntarily.
ACQUISITION The process of taking title to or ownership of something.
ACQUISITION COST The cost to the purchaser of obtaining title to anything, including real property. Acquisition cost includes the cost of the transaction of obtaining title, including legal fees and expenses, interest charges on mortgages, land transfer tax, etc.
acre A measurement of land equal to 43,560 square feet. An imperial measure for land. Equals 43,560 square feet; 4,047 square meters; or 0.047 hectares.
acre-foot The volume of material needed to cover an acre of land one foot deep.
ACT OF GOD When used in insurance policies, an event caused by natural forces such as rain, lightning, floods or earthquakes which results in damage to property or chattels.
ACTION TO QUIET TITLE A legal proceeding begun for the purpose of settling competing claims to property and establishing clear legal title in one party.
active solar system A system that utilizes electric pumps or fans to transfer solar energy for storage or direct use.
ACTUAL AGE As opposed to effective age. The objective age in years of a building measured simply by the passage of time since it was constructed. Effective age is a subjective measurement of the condition of a building, influenced mostly by the maintenance and upkeep carried out on the building over the years. The number of years a structure has been standing.
ACTUAL AUTHORITY With reference to an agent or representative. The limits of the power the agent or representative has to bind her principal to an agreement or to a statement.
ACTUAL CASH VALUE An insurance term, the value of a building calculated by subtracting the decrease in value caused by age and wear and tear from the cost of replacing the building entirely.
ACTUAL DAMAGES An award of the court to compensate an injured party for losses incurred as a result of the actions or omissions of another party.
ACTUAL EVICTION Wrongful removal of a tenant from possession of a premises, usually by a landlord, contrary to the terms of the lease.
ACTUAL POSSESSION As opposed to constructive possession. When the owner of a property occupies the property on a day-to-day basis. Constructive possession is when the owner takes actions to establish and maintain his ownership of a property without actually occupying it himself (i.e. leasing it to tenants, removing squatters, hiring a security firm).
AD VALOREM Latin meaning "according to value." Taxes that are said to be ad valorem are assessed according to the value of the property.
ad valorem tax Tax based on assessed property value.
ADC LOAN A loan that finances the three major phases of a land development project: (i) acquisition, (ii) development and (iii) construction.
ADDENDUM An addition to a document that forms part of it. Similar to a Schedule to an Agreement of Purchase and Sale. May be used to add specific and detailed information material to the contract or upon which contractual terms are based. An addition or change to a contract.
ADDITIONAL PRINCIPAL PAYMENT A one-time or lump-sum payment made by a borrower in addition to the regular payments on a loan or mortgage which reduces the principal owing on the debt. Extra money included in the monthly payment to help reduce the principal and shorten the term of the loan.
add-on interest The interest a borrower pays on the principal for the duration of the loan.
ADEQUATE PUBLIC FACILITIES ORDINANCE An ordinance by the local level of government controlling development by requiring that infrastructure works (roads, sewers, hydro lines) be completed prior to or concurrent with the building of dwellings or commercial buildings in a new development.
ADJACENT LAND An inexact term used to described any property which is situated near or abutting a certain piece of property. Note, an abutting property will always be adjacent but an adjacent property may not be abutting.
ADJUSTABLE RATE MORTGAGE (ARM) Also known as a Variable Rate Mortgage, a loan secured against land which has an interest rate that changes according to some outside index -- such as the federal prime rate or the interest rate paid on government bonds -- over the term of the mortgage. The change in interest rate will result in a change in the periodic payments due under the mortgage. A loan with an interest rate that is periodically adjusted to reflect changes in a specified financial index.
ADJUSTED COST BASE For the purposes of determining capital gains or losses. The acquisition cost of a property or chattel, plus the cost of any improvements to the property.
adjusted cost basis The cost of any improvements the seller makes to the property. Deducting the cost from the original sales price provides the profit or loss of a home when it is sold.
ADJUSTED SALES PRICE The result of estimating the value of a property by comparison to comparable properties. Take the actual sale price of a property comparable to the subject property, then add the value of any extras which the subject property has but the comparable property did not, then subtract the value of any deficiencies in the subject property not shared by the comparable property.
ADJUSTMENT DATE Mortgage term usually preceded by the word "Interest" (i.e. "Interest Adjustment Date"). The date soon after the completion of a purchase and mortgage transaction on which the borrower must make a payment of accumulated interest only, usually used to place the periodic payment dates for the mortgage at the first day of the month (i.e. you borrow on March 18, your interest adjustment date is April 1 and your first regular monthly payment is May 1).
ADJUSTMENT INTERVAL Also known as Adjustment Period. The period of time (i.e. week, month, year) between changes in the interest rate charged on a adjustable-rate mortgage.
adjustment period The amount of time between interest rate adjustments in an adjustable-rate mortgage.
ADJUSTMENTS In real estate sales, the changes made to the selling price to account for the advantages and disadvantages of the subject property, market conditions etc. When closing a real estate transaction, the changes to the purchase price made as a result of realty taxes over- or under-paid by the Vendor, fuel oil provided, tenant's rental payments etc. (Contained on the Statement of Adjustments).
administrator A person given authority to manage and distribute the estate of someone who died without leaving a will. A person appointed by a Court to deal with the estate of a deceased person who died without leaving a will (who dies "intestate"). Note, an executor is a person who is named in a will to deal with the estate of a deceased person.
administrator's deed A legal document that an administrator of an estate uses to transfer property.
ADVANCE Verb: to deliver a portion of money borrowed under a mortgage or loan before the loan instrument requires the money to be delivered. Noun: the money so delivered.
ADVERSE POSSESSION A method of acquiring or claiming title (ownership) to a piece of land owned by another by occupying it in defiance of the other's title. Most jurisdictions have statutes that set out a certain period of time throughout which the person claiming adverse possession must occupy the land before title passes to that person by operation of law. The acquisition of title to property through possession without the owner's consent for a certain period of time.
adverse use The access and use of property without the owner's consent.
aeolian soil Soil that is composed of materials deposited by the wind.
AESTHETIC VALUE A subjective element in the overall market value of a property created by the physical presentation of the land or buildings.
AFFIANT One who swears an affidavit. A person who makes a sworn statement.
AFFIDAVIT A sworn statement setting out facts which the affiant states are true. Sworn before a Commissioner for swearing Oaths, Notary Public or other public official.
AFFIDAVIT OF TITLE A Vendor's statement to the effect that title is good and marketable and subject to no defects other than those set out in the Agreement of Purchase and Sale or the Vendor's Deed.
affirmation A substitution for an oath granted to people based on religious reasons. Instead of a sworn oath, a solemn and formal declaration regarding the truth of a statement of facts. Often used when a person's religious convictions preclude swearing an oath.
AFFIRMATIVE FAIR HOUSING MARKETING PLAN In an initiative sponsored by the Department of Housing and Urban Development (HUD) to foster integration of races in new housing projects, such a Plan is required before a project becomes eligible for certain U.S. programs.
A-frame design An interior style that features a steeply peaked roofline and a ceiling that is open to the top rafters.
AFTER-TAX CASH FLOW The net proceeds from an income-producing property, after all costs (taxes, mortgage interest, maintenance costs etc.) of owning and operating the property have been deducted.
AFTER-TAX PROCEEDS FROM RESALE The net proceeds from the sale of a property. The sale price minus legal fees and expenses, realty commission, any taxes paid, mortgage payout etc.
AGENCY The relationship between a person (the Principal) and another person (the Agent) who was appointed, selected, empowered, given authority by the Principal to represent the interests of the Principal in dealings with third parties and to bind the Principal to statements, warranties or contracts. The relationship of trust that exists between sellers and buyers and their agents. The agency is formed through a written contract.
AGENCY BY ESTOPPEL (OSTENSIBLE AGENCY) An agency relationship created by the actions, behavior or statements of the Principal and/or the Agent upon which a third party relies. Ostensible Agency may be found by a court where no agency relationship was intended by the Principal.
AGENCY BY NECESSITY An agency relationship where the authority to represent is imputed to the Agent as a result of an emergency situation to protect the interests of the Principal.
AGENCY BY RATIFICATION An agency relationship which is created after the fact when the Principal agrees to be bound by the actions of another person who was acting without authority.
agency closing The process by which a lender uses a title company or other firm as an agent to complete a loan.
agency disclosure Laws in most states require agents who act for buyers or sellers to disclose who represents whom in a real estate transaction. Laws vary widely by state.
AGENT A person empowered by a Principal to act on behalf of the Principal in dealings with third parties. The third party is entitled to rely upon the agreement, assurances or statements of the Agent as being binding on the Principal.
agreed boundary A compromise boundary to which property owners agree in order to resolve a dispute.
AGREEMENT A legally binding contract between two or more people, representing a meeting of minds on one or more issues.
AGREEMENT OF SALE Also known as Purchase Agreement, Agreement of Purchase and Sale, Land Agreement etc. A legal contract in which one party agrees to buy and another agrees to sell a property or chattel. Contains terms and conditions of the transaction and is signed by the parties. A document the buyer initiates and the seller approves that details the price and terms of the transaction.
AGRICULTURAL PROPERTY Land zoned for agricultural or farming activities.
air handler Short for air-handling unit, the blower equipment in a furnace, heat pump, or similar appliance designed for circulating heated or cooled air through a central heating system.
air lot A designated airspace over a piece of property.
AIR RIGHTS A saleable commodity, the right to occupy or use the air space above a specific property.
air-handling unit The blower equipment in a furnace, heat pump, or similar appliance designed for circulating heated or cooled air through a central heating system.
alcove A recessed section of a room, such as a breakfast nook.
ALIENATION CLAUSE A term of a mortgage which allows the creditor to demand payment in full of principal and interest due upon the sale of the property. A provision that requires the borrower to pay the balance of the loan in a lump sum after the property is sold or transferred.
alkali Mineral salt found in soil.
alkaline soil Soil that contains a higher concentration of mineral salt than natural acid.
alley A lane behind a row of buildings or between two rows of buildings.
ALLOCATION (ABSTRACTION) METHOD Estimating the value of land only by deducting the value of the buildings etc. on the land from the actual market value of the property as a whole.
ALLODIAL SYSTEM The system of ownership of property in the United States, meaning free from any claims or rights of a monarch or a feudal lord.
allowance A budget offered by builders of new homes for the purchase of carpeting and fixtures.
ALTERATION A change made to an executed contract which has not been approved by the parties to the contract. An alteration may constitute fraud if it has the impact of significantly affecting the rights of a party to the contract and was intentionally carried out by another party. If fraud is found, the innocent party may void the contract.
alternative mortgage Any home loan that does not conform to a standard fixed-rate mortgage.
aluminum siding A metal covering that provides an alternative to paint for owners of wood homes.
aluminum-clad windows Wooden windows with aluminum covering the exterior.
amenities Parks, swimming pools, health-club facilities, party rooms, bike paths, community centers, and other enticements offered by builders of planned developments. Positive features of a particular property (such as a pool, central air conditioning, etc.) or attractions located near a particular property (highways, school, shopping, etc.) which have the effect of enhancing the property's value.
AMERICAN LAND TITLE ASSOCIATION (ALTA) Trade association of American title insurance companies, with a view to standardizing the policies nationwide.
AMERICAN RURAL APPRAISER A Professional Designation. Awarded by the American Society of Farm Managers and Rural Appraisers.
AMERICAN SOCIETY OF APPRAISERS A Professional Society, for persons involved in the appraisal of both real and personal property.
American Society of Home Inspectors (ASHI) Professional association of independent home inspectors whose members must meet the group's education and performance requirements. Call (800) 743-2744 for list of ASHI-certified inspectors in your area. A Professional Trade Organization, for persons specializing in the inspection of the physical condition of homes.
AMERICAN SOCIETY OF REAL ESTATE COUNSELORS (ASREC) A Professional Society, for persons specializing in helping people buy and sell homes.
Americans with Disabilities Act (ADA) A law passed in 1990 that outlaws discrimination against a person with a disability in housing, public accommodations, employment, government services, transportation and telecommunications.
amortization The process of paying the principal and interest on a loan through regularly scheduled installments. Initially, most of each payment is applied toward interest owed, and later in the loan term increasingly applied toward principal. The preparation of a payment plan for a loan which allows for equal payments to be made to the creditor at consistent intervals over the life of the loan (the amortization period). Each payment covers interest accrued over the interval period with the remainder of the payment being applied to reduce the principal owed. If every payment is made on time and in full over the amortization period, the loan will be completely repaid at the end of the amortization period. The period of time after which, if all periodic payments are made on time and in full, the loan will be paid out. Term may not be the same as amortization: a normal mortgage may be amortized over 25 years with just a five year term at which time the borrower has to re-finance.
AMORTIZATION SCHEDULE The printed table of the payments to be made on an amortized loan showing the date and amount of each payment, the amount of each payment which will be applied to interest and to principal and the balance of principal still outstanding on the loan after the payment is made.
amortization tables Mathematical tables that lenders use to calculate a borrower's monthly payment.
amperage The strength of an electrical current.
ampere The basic unit used to measure electric current.
ANACONDA MORTGAGE A specific kind of mortgage. Contains a clause that states that it secures all debts owed to the mortgagee by the mortgagor and applies to rules of the mortgage to all such debts. Clause is also known as a Mother Hubbard clause.
anchor bolt A large steel bolt anchored in concrete and attached to a building to prevent the structure from moving.
ANCHOR TENANT Description of a tenant in a shopping mall or center. A "name" store that will draw shoppers to the mall and, therefore, benefit the other mall stores. Usually receives a favourable lease.
annual Any kind of plant that must be planted every year.
annual assessments The process of placing a value on property for the strict purpose of taxation. May also refer to a levy against property for a special purpose, such as a street lighting or sewer assessment.
ANNUAL DEBT SERVICE The total amount required to service a loan in a given year.
ANNUAL LOAN CONSTANT Ratio of Annual Debt Service to original principal of the loan. Also known as a mortgage constant.
annual mortgagor statement A yearly statement to borrowers that details the remaining principal and amounts paid for taxes and interest. Document sent by the lender to the mortgagor each year which sets out amounts paid for principal, interest and taxes in the given year and the amount still owing on the principal of the mortgage at the end of the year.
ANNUAL PERCENTAGE RATE (A.P.R.) A rate designed to allow for the comparison of one type of loan to another. The annual cost of borrowing under a given form of loan (includes in the calculation compounded interest, cost of borrowing etc.). Required to be disclosed by the lender under the American Truth in Lending Act, Regulation Z.
annual percentage rate (APR) A measure of interest rate that expresses the cost of a mortgage as a yearly rate on the loan balance. The APR assumes the loan is held for its full term. For adjustable-rate loans, the APR assumes the loan's index doesn't change from its initial value.
annuity The payment of a fixed sum to an investor at regular intervals. A form of periodic payment. Made to the recipient at consistent periodic intervals either for life or for a fixed period of time.
ANNUITY IN ADVANCE A form of periodic payment. Payments are made at the beginning of each payment period rather than at the end of each period, as with a normal annuity.
ANTICIPATION, PRINCIPAL OF An approach to assessing the future value of land based on possible contingencies (positive or negative).
anticipatory breach A communication that informs a party that the obligations of the original contract will not be fulfilled.
antioxidant compound A substance applied to aluminum wiring connections to seal and promote conduction.
ANTITRUST LAWS Laws requiring competition and a free market, outlawing monopolies in certain businesses.
AO (ACCEPTED OFFER) A short form used by agents to designate that an offer to purchase has been accepted by the offeree.
APPARENT AUTHORITY Where an agent compels, by actions, omissions or statements, a third party to believe the agent has the authority to bind a principal. The authority to bind is apparent due to the behavior of the agent but may not actually exist.
appellant A taxpayer or representative who appeals to a higher tribunal.
APPLICATION A form filled out in order to allow a lender to consider a person for a mortgage or loan. Will contain personal and financial and personal information on the applicant. A document that details a potential borrower's income, debt, and other obligations to determine credit worthiness.
application fee Includes any fees that are paid upon application. An application fee may include charges for property appraisal and a credit report, if those fees are not reported separately. The fees the lender charges the applicant. May include costs of a property appraisal and a credit report on the applicant. May be payable by applicant even if loan is not approved.
APPOINTMENTS Chattels or decorative touches that may affect the value of a property.
APPORTIONMENT Also known as adjustment. The division of responsibility for certain costs between the parties to a transaction, such as realty taxes. In many U.S. jurisdictions, the vendor is responsible for the day of closing and all days prior to it.
APPORTIONMENT CLAUSE A clause in a policy of insurance. Allows the payment of compensation for a loss to be divided between insurers holding different policies on the same property.
appraisal An opinion of the value of a property at a given point in time. An estimation of the value of a property on a certain date given by a qualified person, usually after an inspection of the property.
appraisal fee The fee that a professional real estate appraiser charges to appraise, or estimate the market value of, a property.
APPRAISAL PRINCIPLES Elements to be considered by an appraiser in appraising the value of a property, such as competition, supply and demand.
APPRAISAL PROCESS A standardized approach to appraising a property, to allow for accuracy and consistency.
appraisal report A detailed written report on the value of a property based on recent sales of comparable sites in the area. Documentation to support an appraisal of a property. Varies in length but sets out elements considered, positive and negative aspects of property etc.
appraised value An opinion of the current market value of a property. The estimated market value of a property on a given date, given by a qualified person as a result of an inspection of the property and a consideration of other market forces.
APPRAISER A professional who has been trained to assess the value of property.
appreciation An increase in the value of a home or other property. The increase over time in the value of a property caused by many factors: market conditions, inflation, changes to area around the property, etc.
APPROACHES TO VALUE Different methods by which appraisers estimate the value of a property. Include: (1) cost approach, (2) comparison approach, and (3) income approach.
approval A thorough assessment made by a lender of a borrower's ability to pay for a home, and a confirmation of the amount the borrower may obtain.
APPROVED ATTORNEY A lawyer who meets the requirements of title insurance companies to be able to complete transactions involving title insurance and to render title opinions.
APPURTENANCE A right or entitlement which forms part of the ownership of a property and which passes to a new owner when title passes (i.e. an easement or right of way over another property).
APR (annual percentage rate) A measure of interest that expresses the cost of a mortgage as a yearly rate on the loan balance. The APR assumes the loan is held for its full term. For adjustable-rate loans, the APR assumes the loan's index doesn't change from its initial value.
apron A paved area, such as the junction of a driveway with the street.
aquastat A thermostat submerged in water and used to control the operation of a device.
arbitration A method of resolving a dispute in which a third party renders a decision. An Alternative Dispute Resolution method. Allows an objective third party to settle disputes between parties without resorting to court. Binding arbitration involves the parties agreeing to be bound by the decision of the arbitrator.
arbor An area shaded by trees, shrubs, or vines on a latticework structure.
arc A spark between two electrical points.
arch A curved structure that supports weight over an area, such as a doorway.
arch surrounds Half-round or elliptical trim mounted above a door or window for decorative purposes.
architect A licensed professional who designs homes, buildings, and other structures.
architectural fees The fee an architect charges for services. In general, architects charge for their services by the hour, by the square foot, or by a percentage of the project budget.
ARM (adjustable rate mortgage) A loan with an interest rate that is periodically adjusted to reflect changes in a specified financial index.
ARM index A publicly published number used to adjust the interest rate for an adjustable rate loan (ARM). An index (such as Treasury bills or the prime rate) reflects the lender's cost of credit, and is not controlled by individual lenders.
arpent A French measurement of land equal to .84625 acres.
array A term used by tax assessors to describe a list of properties in a certain category sold within a given period of time.
ARREARS Money which is not paid when due, under a payment plan or amortization schedule. Could lead to enforcement of loan agreement by lender
ARTERIAL STREET A main thorough fare or through road, one which is designed to carry traffic through an area where that area is not the destination of the traffic.
ARTIFICIAL PERSON As opposed to a natural person. A corporation of other legal entity which has at least some of the legal rights of a human being.
AS IS Implied in most Agreements of Purchase and Sale, suggests the Purchaser is accepting the property in its current condition and releases the Vendor from any liability for problems found before or after closing.
asbestos A fire-resistant mineral used for insulation and home products that has been found to pose a health hazard.
ASHI (American Society of Home Inspectors) A professional association of independent home inspectors whose members must meet the group's education and performance requirements. Call (800) 743-2744 for list of ASHI-certified inspectors in your area.
as-is condition The purchase or sale of a property in its existing condition.
ASKING PRICE The price at which the Vendor advertises a property. When used in the advertisement, may suggest flexibility on the part of the Vendor regarding the price. A seller's initial price for a property.
assemblage The combining of two or more adjoining lots into one larger tract to increase total value.
ASSESSED VALUE The value assigned to a given property by the municipality for the purpose of establishing realty taxes payable by the owner of the property. A tax assessor's determination of the value of a home in order to calculate a tax base.
assessment The estimated value of a piece of real estate or a levy placed on property in addition to taxes. Generally, the apportionment of liability of a general cost among individuals. The act of estimating the value of land for tax purposes or the method by which municipalities raise taxes (property tax assessment).
ASSESSMENT BASE The total of the assessed values of all properties in a municipality.
ASSESSMENT RATIO Assessed value as compared to full market value for a particular property or for all properties as set by the municipality.
ASSESSMENT ROLL Public record of the assessed values of properties. Also includes Assessment Roll Number for each property, the number by which the property is identified in the municipal records.
assessment rolls A list of taxable property compiled by the assessor.
ASSESSOR A person who is employed by the municipality to estimate the value of properties for the purpose of taxes. An official who determines the assessed value of a property.
ASSET A thing of value.
assets Items of value which include cash, real estate, securities, and investments.
ASSIGN To transfer interest in a property, contract, right etc..
ASSIGNEE The person to whom an interest is transferred. An assignee of an Agreement of Purchase and Sale may buy the property and enforce the contract in the same fashion as the original party.
assignment The transfer of rights to pay a debt from one party to another, with the original party remaining liable for the debt if the second party defaults. The transfer of any right, claim or interest to another person or corporation. Often used to refer to the transfer of a mortgage from one lender to another. Also a noun describing the document which represents the assignment of the right etc.
ASSIGNMENT OF LEASE Subject to the terms of the lease, a transfer of either the lessor's or the lessee's interest in a lease.
ASSIGNOR The person who assigns a right or interest to another person. A person who transfers rights and interests of a property.
ASSOCIATE BROKER A qualified real estate broker who works with or for another broker.
assumable mortgage A mortgage that can be transferred to another borrower. A mortgage that can be taken over ("assumed") by the buyer when a home is sold. If interest rates have risen, an assumable mortgage at a low rate may prove a selling point for the property.
assumption clause A provision that allows a buyer to take responsibility for the mortgage from a seller. The paragraph in the mortgage which sets out the borrower's right to have the mortgage assumed by a purchaser.
assumption fee A fee the lender charges to process new records for a buyer who assumes an existing loan. A charge levied by the lender (usually against the party assuming the mortgage) for the privilege of assuming a mortgage. May be a fixed amount or a percentage of outstanding principal on the mortgage at the time of the assumption.
ASSUMPTION OF MORTGAGE The agreement of a purchaser to take on personal liability for a mortgage already registered on title to the property and to make payments under the mortgage. Purchaser takes the place of the vendor in the contract with the lender.
AT-RISK RULE A limitation of the amount an investor can claim on his incomes taxes as a result of losses from real estate investments, under the Tax Reform Act of 1986.
ATTACHED HOUSING Duplex, triplex, row housing, or townhouses. Two or more dwellings that are attached physically but are owned and/or occupied by different people.
ATTACHMENT The binding by a court of a piece of property (real or personal) as security for a debt.
ATTESTATION A statement by a person who has witnessed another person signing a document to the effect that they did in fact witness the document. May include statements to the effect that the witness knew the person who signed personally, that the person who signed understood the contents of the document when he signed etc. Required in some states for deeds.
ATTORNEY AT LAW A person who has met the requirements to practice law in a particular state of the United States.
ATTORNEY IN FACT A person who holds a POWER OF ATTORNEY for another person, which gives the Attorney the power to act on behalf of that other person and bind that other person.
ATTORNEY'S OPINION OF TITLE A statement of a lawyer's conclusions with regard to the state of the legal title of a property, issued after the lawyer has completed the appropriate investigations of title.
ATTRACTIVE NUISANCE "Attractive" refers to the response of children to a feature of land (whether natural or man-made) which has the potential to be harmful (an uncovered well, a swimming pool, a swift moving stream).
AUCTION The process of selling property to the highest bidder.
AUCTIONEER A professional (real estate broker or auctioneer, depending on local laws) who sells property at public auctions. Usually paid a percentage of the sale price.
AUGMENTED ESTATE The assets of a deceased person against which a surviving spouse may claim an interest. Can include property which the deceased person disposed of while still living if the disposal was in the form of a gift or was not for value.
AUTHORITY The right of an agent, conferred by his principal, to bind the principal in dealings with third parties. See actual authority, implied authority, apparent authority, ostensible authority, inherent authority.
AUTHORIZATION TO SELL A contract between an property owner and a real estate broker or agent which allows the broker to list the property for sale and which codifies the rights and obligations of the two parties.
automatic extension A clause in a listing contract stating that the agreement will automatically continue for a certain period of time after the expiration date. This is discouraged and prohibited in many states.
automatic flue damper A device in the flue of a heating unit that closes to prevent heat loss when the unit is not in operation.
average price The price of a home determined by totaling the sales prices of all houses sold in an area and dividing that number by the number of homes.
avigation easement An easement over private property near an airport that limits the height of structures and trees.
awning windows Single-sash windows that tilt outward and up.
BACHELOR APARTMENT A small rental dwelling unit which combines living and bedroom spaces into one room (and, sometimes, kitchen space as well). Also known as "efficiency suite" or "studio apartment".
BACK END RATIO A comparison of a borrower's monthly expenses to her gross monthly income used to assess her ability to carry a mortgage or other loan.
back title letter A letter that a title insurance company gives to an attorney who then examines the title for insurance purposes.
BACK TITLE LETTER (OR CERTIFICATE) Notice by a Title Insurance Company to a person searching and certifying title that a previous search has been completed, setting out the status of title of the property as at a given date such that the person searching need only up-date the search.
back-end ratio A lender calculation that compares a borrower's total debt (principal, interest, property taxes, and insurance, plus other monthly debt payments) to gross monthly income.
backerboard A rigid board used beneath tile.
backfill Soil used to solidify the foundation of a structure.
backsplash The area behind and above a countertop, typically covered to prevent water from splashing onto the wallboard.
back-to-back escrow Arrangements that an owner makes to oversee the sale of one property and the purchase of another at the same time.
BACKUP CONTRACT An Agreement of Purchase and Sale for a particular property which is conditional (becomes binding) upon the failure of another Agreement for the same property.
backup offer A secondary bid for a property that the seller will accept if the first offer fails.
backwater valve A valve in a sewer line that prevents sewage from flowing back into a house.
baffle A device used as a heat shield to deflect the byproducts of combustion.
BALANCE Often as in "balance due", the amount of principal on a loan remaining to be paid at any given time.
balance sheet A statement that shows the assets, liabilities, and net worth of an individual. A table of figures showing the assets, liabilities and net worth of a person or corporation on a given date.
ball cock One type of inlet valve assembly inside a toilet tank that, when opened automatically, fills the tank with water.
ballcock assembly The toilet tank mechanism that controls flushing.
BALLOON (LOAN) MORTGAGE A loan which is repaid by a series of small, periodic payments until a given date, when either the balance comes due in a single, large payment or the amount of the payments rises significantly.
balloon loan A mortgage in which monthly installments are not large enough to repay the loan by the end of the term. As a result, the final payment due is the lump sum of the remaining principal.
BALLOON PAYMENT The single, large payment which pays out the balance due on a balloon mortgage. The final lump-sum payment due at the end of a balloon mortgage.
balloon-frame construction A type of framing used in two-story homes in which studs extend from the ground to the ceiling of the second floor.
baluster Intermediate vertical support for a stair railing, often made from turned hardwood.
balustrade Railing held up by a set of posts on a porch or stairway.
BANKRUPT A noun or adjective. Noun - a person or business which has made an assignment in bankruptcy or has been petitioned into bankruptcy. Adjective - owing more money than you have assets or income to repay.
bankruptcy A proceeding in which an insolvent debtor can obtain relief from payment of certain obligations. Bankruptcies remain on a credit record for seven to 10 years and can severely limit a person's ability to borrow. The state of being unable to pay your debts such that you submit yourself to the protection of the state. A person or business may voluntarily assign himself into bankruptcy or may be petitioned into bankruptcy by his creditors. Once in bankruptcy, the person surrenders his assets to a trustee in bankruptcy who sells the assets for the benefit of the bankrupt's creditors, first secured creditors then unsecured creditors. Once a person is discharged from bankruptcy, none of his former creditors may pursue him for his former debts.
bargain sale The sale of a piece of property for less than market value.
base loan amount The amount upon which loan payments are based. If the borrower finances his or her closing costs, those costs will be added to the base loan amount.
BASE RENT The set rent payable by a tenant under a lease, to which is added Additional rents as required by the lease (for common area maintenance, for example, or for utilities).
baseboard Any board or molding found at the bottom of an interior wall.
baseboard electric heat Heating units installed in the floor that can be controlled by a central thermostat.
basement The area of a home below ground level.
BASIS POINT One 100th of 1%. A basis point is one one-hundredth of one percentage point. For example, the difference between a loan at 8.25 percent and a mortgage at 8.37 percent is 12 basis points.
batten A narrow piece of material used on the outside of a house to cover joints in walls.
bay The opening between two columns or walls that forms a space.
bay window A window that projects outward in a curve.
BEARER INSTRUMENT A valuable document (a bond or other security) which does not bear the name of its legal owner; may be redeemed by whoever is in possession of it.
bearing wall A wall that supports its own weight in addition to other parts of a structure.
BEDROOM COMMUNITY A neighborhood or area which offers little in the way of employment opportunities but plenty of housing, similar to a "suburb" or commuter town.
BEFORE-TAX CASH FLOW Gross amount of money available for the use of the owner before taking into consideration taxes.
BEFORE-TAX INCOME A person or corporation's gross earnings before taxes are deducted. Total income before taxes are deducted.
BELOW-MARKET INTEREST RATE (BMIR) A subsidized interest rate on a mortgage or loan, often provided by a government to allow for acquisition of property or reduction in rents charged to tenants.
BENCHMARK A permanent feature on land which is used as a point of reference for a land surveyor.
beneficiary The lender who makes a loan, also called a mortgagee. The person borrowing money is the mortgagor. A person or corporate entity entitled to receive money or assets from a trust or an estate under a will.
BEQUEATH To leave an item of personal property to a certain person in a will (see "Devise", which refers to gifts of land in this context).
bequest Personal property given to a person through a will. The item bequeathed under a will.
berm A built-up lip of concrete designed to prevent runoff water from entering the garage or driveway.
betterment An improvement that increases a property's value as opposed to repairs that maintain the value. An improvement that increases the property's value. The improvement of real estate that results in a rise in market value. Also, a legal concept of civil law: when a court award, judgment or order in favor of an injured party places that party in a better position than he would have been had his original injury never taken place.
BIANNUAL Or semiannual. Occurring every six months or twice per year.
BID An offer of a certain amount of consideration.
bid out The process that contractors use to estimate the cost of a house or project before it is completed.
bidding war Offers from multiple buyers for a piece of property. Agents also sometimes compete to list a house for sale.
BIENNIAL Occurring once in every two years.
bilateral contract A contract in which the parties involved give mutual promises. Also called a reciprocal contract. A contract which has a balance of consideration promised by the parties, where each promises performance of the contract.
bi-level A home that has two levels. Typically, a garage or storage area is situated in the lower level and the home in the upper section. Most bi-level structures were built after 1950. A description of a house with two levels, where the main entrance to the house is between the two levels.
BILL OF SALE Documentary evidence that title to personal property (chattels) has passed to the Purchaser for valuable consideration. A document that transfers ownership of personal property.
bi-metal coil Part of a mechanical thermostat. Consists of two different types of metal that expand and contract at two different rates with changes in room temperature.
BINDER 1. A written commitment from an insurance company to insure a property or a certain risk; or 2. A preliminary agreement to purchase a property accompanied by a forfeitable deposit which is lost if the purchaser does not complete the purchase of the property. A preliminary agreement between buyer and seller. A report issued by a title insurance company that details the condition of a home's title and provides guidelines for a title insurance policy.
BIWEEKLY LOAN OR MORTGAGE A loan which features payments equalling one half of the usual monthly payment made every two weeks (to total 26 in a year), thus substantially reducing the life of the mortgage and the interest payable over the life of the mortgage.
biweekly mortgage A mortgage that requires payments every two weeks and helps repay the loan over a shorter term.
BLANKET INSURANCE POLICY A single insurance policy that applies to more than one person or property. A policy that covers more than one person or piece of property.
BLANKET MORTGAGE Where one loan is secured against more than one parcel of land. A mortgage that covers more than one property owned by the same borrower.
BLENDED RATE Created when an old loan is refinanced and extended at an interest rate which is different from the original rate: the old debt is still payable at the old rate; the new debt is payable at the new rate; the total amount of the debt is payable at a rate of interest that is somewhere between the two rates.
BLIGHTED AREA An area of a community where the infrastructure and buildings have been allowed to decay. A neighborhood that has deteriorated.
blind nailing Nails driven into a wall and concealed with putty.
blockbusting The illegal practice of inducing homeowners to sell their properties by making representations regarding the entry of a particular race into the neighborhood.
BLUEPRINT Construction plans, containing great detail about the particular building. The plan for a home or other structure.
blue-ribbon condition A house maintained close to its original condition. Also called mint condition.
blue-sky laws Regulations on the sale of securities to prevent consumers from investing in fraudulent or high-risk companies without being informed of the risks.
board and batten A type of siding composed of vertical boards and batten slats that cover wall joints.
board foot Measurement of lumber that is the equivalent of 144 cubic inches.
BOARD OF EQUALIZATION United States government body with a mandate to assure uniform property tax assessments. A state board charged with ensuring that local property taxes are assessed in a uniform manner.
board-and-batten siding Siding composed of 8- to 12-inch-wide wooden boards nailed vertically to create a barn-like exterior.
BOILER PLATE A standard clause or provision in a contract which appears in all similar contracts.
boilerplate Form language used in deeds, mortgages, and other documents. Details can be added by individual parties.
bona fide A legal term that refers to actions or persons that are honest and in good faith. Made in good faith, at fair market value, without deceit or fraud.
bond An agreement that insures one party against loss by acts or defaults of another party. 1. A sum of money paid into court as an assurance of the performance of some requirement or as security for payment on a claim. May be used to allow for the removal of a claim for lien from a property while the court action over the lien continues. 2. An interest-bearing instrument.
bonus room A room with no specifically designated function, unlike a living room, bedroom, or kitchen.
book value The value of a property as a capital asset based on its cost plus any additions, minus depreciation.
boot A piece of sheet metal that connects a heating or cooling duct and a vent.
boring test An analysis of soil in which holes are bored into the ground and samples are removed.
borough A section of a city that has authority over local matters.
borrow Sand, gravel, or other material used for grading.
borrow pit The hole at a site that has been excavated.
BORROWER (MORTGAGOR) The person or company that receives money from a lender (often a bank, credit union or trust company) in exchange for a written promise to pay and a registered lien on property.
BOTTOMLAND Low lying land, near a water course or in a valley or similar geographic contour.
boulevard A street lined with trees or constructed with a landscaped median.
boundary The dividing line between two adjacent properties. Edge or limit of a property. See "property line".
braced framing A construction method in two-story homes in which the frame is reinforced with posts and braces.
bracing The technique used to reinforce a structure.
branch circuit An electrical circuit with its own circuit breaker in the service panel.
breach of contract The failure to perform provisions of a contract without a legal excuse. A failure to meet one's obligations, whether under a contract or otherwise. A breach of contract allows the innocent party to enforce the contract, rescind the contract or sue for damages.
breach of covenant The failure to obey a legal agreement.
breach of warranty A seller's inability to pass clear title to a buyer.
break-even point The point in which the owner's rental income matches expenses and debt.
breezeway A roofed passageway with open sides.
brick Building material made from clay molded into oblong blocks and fired in a kiln.
brick veneer A brick facade on a wall or fireplace.
BRIDGE FINANCING Also known as a "swing loan", a loan used to fill a gap in financing, often between the purchase of a new home and the sale of the old one. If the purchase closes before the sale, the home owner needs to borrow enough money to pay for the new house for the period of time before the equity in his old house comes available as a result of the completion of the sale.
bridge loan A short-term loan for borrowers who need more time to find permanent financing.
BRITISH THERMAL UNIT (B.T.U.) A unit of heat or cooling. That required to change the temperature of a pound of water by one degree Fahrenheit.
BROKER An intermediary who brings parties together for specific purposes. A mortgage broker brings borrowers together with lenders; a real estate broker brings purchasers together with vendors. Often charges a percentage of the contract price as a fee. Specific training required to become a Real Estate Broker, a professional designation. Anyone who acts as a go-between. A real estate broker is licensed to handle property transactions and operate a brokerage firm. A mortgage broker is an individual or firm that matches borrowers to lenders and loan programs for a fee.
brokerage The act of bringing together two or more parties in exchange for a fee or commission. Real estate brokerages are firms or companies that are licensed to conduct real estate transactions.
broom clean The ideal condition of a building when it is turned over to an owner or tenant.
brownstone A vintage row house constructed of red sandstone.
BROWNSTONE, BRICK ROW HOUSE, OR EASTERN TOWNHOUSE A nineteenth-century-style row house, with up to five storeys and a front stoop, verandah or porch leading up to the front door.
BUDGET MORTGAGE A mortgage in which the borrower is required to make periodic payments not only for interest and principal, but also for insurance premiums and realty tax installments.
buffer strip A parcel of land that separates two or more properties.
BUFFER ZONE An area of land specifically designed to separate one zoning use from another, such as separating a residential neighborhood from an industrial area.
BUILD TO SUIT An offer by a landowner to develop the land in a manner dictated by a potential tenant, in return for a long-term lease from the tenant for the developed land.
buildability The feasibility of constructing a home or other structure on a piece of land. Parcels for which a building permit cannot be obtained may be considered "unbuildable."
builder upgrades Extra features or better finishing materials offered by a builder.
BUILDER WARRANTY An enforceable guarantee of the quality of construction given by a builder or developer.
building and loan association An organization that raises money to helps its members purchase real estate or construct a building.
building code A comprehensive set of laws that controls the construction or remodeling of a home or other structure. Set of regulations established by a municipality to govern the standards of construction in that municipality.
building inspector A city or county employee who enforces the building code and ensures that work is correctly performed.
BUILDING LINE OR SETBACK The minimum distance a building or other improvement may be constructed from a property line. May be established by agreements, title documents or municipal by-laws or ordinances. Guidelines that limit how close an owner can build to the street or an adjacent property.
building moratorium A halt on home construction to slow the rate of development.
building paper A thick, water-resistant paper that serves as insulation.
building permit A permit issued by a local government agency that allows the construction or renovation of a house. A document obtained from the local government, allowing for the construction of a structure in accordance with the terms of the permit.
BUILDING RESTRICTIONS Limiting rules which may appear in building codes or in title documents which control the size, placement, materials, design or location of new construction. Regulations that limit the manner in which property can be used.
built-ins Appliances or other items that are framed into a home or permanently attached. Items which could be chattels but which are installed so as to form part of a building.
bulkhead A retaining wall designed to hold back water from the ocean or other body of water.
bundle of rights The various interests or rights an owner has in a property.
bungalow A small one-story house or cottage. A small, one-storey home built in a turn of the century style, often with a prominent front verandah.
BUSINESS DAY A day in which normal business is transacted. Generally, Monday to Friday but not weekends or holidays.
butt The way in which two boards meet so that the ends touch in a continuous line.
butterfly roof A roof formed by two gables that dip in the middle to resemble a butterfly's wings.
BUY DOWN (ACCOUNT OR MORTGAGE) The payment of extra money on a loan now so as to reduce the interest rate over a given period or over the life of the loan. This extra payment may be made by the borrower, by the lender (as an incentive to the borrower to borrow from the lender) or by the vendor/builder (as an incentive to the borrower to buy a certain property).
BUY-BACK AGREEMENT A contract between a purchaser and vendor in which the vendor agrees to repurchase the property from the purchaser if a certain event occurs within a specified period of time. The buy-back price is usually set out in the agreement.
buydown mortgage A home loan in which the lender receives a premium as an inducement to reduce the interest rate during the early years of the mortgage.
buyer's agent An agent representing a buyer in a home purchase, either as a single agent or as an exclusive buyer's broker.
buyer's broker A real estate broker who exclusively represents the buyer's interests in a transaction and whose commission is paid either by the buyer or through the seller or listing broker at closing. A real estate broker who contracts to represent the interests of a person wishing to purchase a home. (see also "selling agent", "Purchaser's agent").
Buyers' Home Finding Network National referral service for buyer's brokers only. Call (800) 500-3569 for information and referrals.
BUYER'S MARKET A condition of the real estate market where there are more properties for sale than people interested in buying them. Buyer's have more choice and less competition for the available properties, resulting in lower prices. A slow real estate market in which buyers have the advantage.
buyer's remorse An emotion felt by first-time homebuyers after signing a sales contract or closing the purchase of a house.
Buyers Resource Real Estate National buyer's brokerage company with offices in 13 states. Call (800) 359-4092 for information and referrals.
BUY-SELL AGREEMENT A pact between partners in a business or shareholders in a company, obliging one to buy the other's interest (and obliging the other to sell) upon the occurrence of some event stated in the agreement.
bylaws The rules and regulations that a homeowners association or corporation adopts to govern activities.
BY-LAWS Rules enacted by a governing body of general application.
CALIFORNIA BUNGALOW Compact, early twentieth-century single-storey house.
CALIFORNIA RANCH One-storey house, in a post-Second-World-War style, known for its ground hugging design and low, pitched roof.
California Real Estate Inspection Association Also known as CREIA. A trade organization of home inspectors whose members must meet the group's education and performance requirements. Call (800) 388-8443 for list of CREIA-certified inspectors in your area.
call option A clause in a loan agreement that allows a lender to ask for the balance at any time.
CALL OPTION (PROVISIONS, RIGHTS) A lender's right to demand payment of the outstanding balance of the loan at a time specified in the loan agreement.
can light An incandescent light inside a metal can that is mounted flush with the surface.
can lights Cylindrical chambers with bulbs recessed into the ceiling.
CANCELLATION CLAUSE Provision in a contract that gives one or more parties the right to terminate the contract if a specific event occurs. A clause that details the conditions under which each party may terminate the agreement.
cantilever A projecting structure supported on one end, such as a balcony.
cap A limit on the amount the interest rate or monthly payment can increase in an adjustable rate mortgage. A limit. In variable rate mortgages, a limit as to how high periodic payments may go or how much the interest may change within a given time period or over the life of the mortgage.
CAP RATE Short form for capitalization rate.
CAPACITY OF PARTIES Legal competence to sign and be bound by a contract. One might lack capacity as a result of being a minor, being mentally challenged or not being of right mind. A contract signed by an incapable person is not binding.
CAPE COD COLONIAL A one-storey house, compact in design and in an early-American-style. Symmetrical layout with a central entrance. Steep, gable-type roof, usually shingled, with a low central chimney.
Cape Cod style A wood-frame or shingled house with a steep roof and several windows projecting from the second floor.
capital Money used to create income, such as funds invested in rental property. The decorative top of a column or pilaster. The working money in a business venture.
CAPITAL ASSET A property to which certain tax rules (capital gains and capital losses) apply.
capital expenditure The cost of making improvements on a property. Money spent to improve a property and enhance its value over an extended period of time (as opposed to a repair). May be added to the adjusted cost base of the property improved or depreciated over the useful life of the improvement.
capital gain Profit an investor makes from the sale of real estate or investments. increase in value of a capital property (a property other than a principal residence) upon which tax is payable, either upon disposition of the property or the deemed disposition of the property under tax rules.
capital gains tax A tax placed on profits from the sale of real estate or investments.
CAPITAL IMPROVEMENT Value enhancing work carried out on a capital property. Any improvement that extends the life or increases the value of a piece of property.
CAPITAL LOSS Decrease in value of a capital property (a property other than a principal residence). May be set off against capital gains or against regular income according to the tax rules.
capitalization A mathematical formula that investors use to compute the value of a property based on net income.
capitalization rate The percentage rate of return estimated from the net income of a piece of property.
CAPTURE RATE A comparison of the sales or leasing rate of a particular real estate development to the sales or leasing rate of all developments in the same market.
caravan A group of real estate agents who tour a house that has been recently listed for sale.
carport A roof that covers a driveway or other parking area.
carryback financing Financing in which a seller agrees to take back a note for a set amount of the sale of the home.
CARRYING CHARGES (COSTS) The expense required to maintain a property over a given period of time, including property taxes, maintenance, insurance payments, interest charges on financing, etc.
casement window A window hinged on its sides to allow it to swing open vertically.
CASH EQUIVALENT The amount a vendor would have realized on the sale of a property had she not accepted unfavourable (or favourable) financing of the purchaser but received cash instead.
cash flow The amount of cash a rental property investor receives after deducting operating expenses and loan payments from gross income. Description of the net income from a property after all expenses of holding and carrying the property are paid.
CASH METHOD An accounting method, based on actual cash moving in and out of the company over a given period. See accrual method.
CASH RESERVE An amount of money that the purchaser of a property still has after the transaction closes. Some lenders require a certain level of cash reserve (equal to two payments) before granting a mortgage.
CASH THROW-OFF See cash flow.
cashier's check A check the bank draws on itself rather than on a depositor's account.
CASH-OUT REFINANCE When an owner renegotiates or negotiates a new mortgage and the proceeds of the new financing exceed the money required to pay out the old mortgage and any other costs, liens or expenses, leaving money for the borrower. The refinancing of a mortgage in which the money received from the new loan is greater than the amount due on the old loan. The borrower can use the extra funds in any manner.
casing The trim that encircles a window or door opening, hiding the gap between the door or window jamb and the wall's surface.
cathedral ceiling A high, open ceiling formed by finishing exposed roof rafters.
caulk An acrylic or silicon sealant used to fill cracks, crevices, and holes in a home.
caveat A formal notice asking a court to suspend action until the party that filed the challenge can be heard.
caveat emptor A legal principle stating that a buyer is responsible for ensuring the quality of goods purchased. From Latin, "let the buyer beware." Latin, meaning "Let the Buyer beware". Maxim which applies to real estate transactions where the onus is on the Purchaser to satisfy herself as to the suitability and condition of the property she is considering for purchase. Vendor is not responsible to the Purchaser for the condition of the property and, unless he is specifically asked, does not generally have an obligation to reveal problems to the Purchaser (except where the defect is hidden, serious and could not be discovered by the Purchaser after reasonably prudent inquiries and investigations).
cavedium A courtyard or atrium.
CC&R'S Short form for "covenants, conditions, and restrictions", which are the rules of general application governing the relations between land owners in a specific subdivision, development, condominium development or cooperative housing facility. May be registered on title.
CD (certificate of deposit) A document showing that the bearer has a specified amount of money on deposit with a bank, stock-brokerage firm, or other financial institution.
CEILING The limit over which the interest rate on a variable rate mortgage may not rise over the life of the loan.
ceiling fan A large, ceiling-mounted paddle fan. Also known as a Casablanca fan.
ceiling height The standard height of a ceiling is eight feet.
center mullion A cabinetry term referring to the vertical piece of wood on the front that divides the opening into two parts.
central air conditioning A device that generates cold air through an outside unit connected to ductwork inside the house.
central business district The area of a city where most large businesses are located.
CENTRAL BUSINESS DISTRICT (CBD) The business and commercial "core" of a municipality (also known as "Downtown").
certificate of deposit (CD) A document showing that the bearer has a specified amount of money on deposit with a bank, stock-brokerage firm, or other financial institution.
certificate of deposit index An index based on the interest rates on six-month CDs. It used to determine the interest rate for some adjustable rate mortgages.
certificate of eligibility A document issued by the Veterans Administration that verifies the eligibility of a veteran for a loan program. Document issued by the Department of Veteran's Affairs to qualifying veterans which entitles them to apply for subsidized or guaranteed loans.
CERTIFICATE OF INSURANCE A document, issued by the insurance company, setting out the particulars of the insurance coverage for a particular property.
CERTIFICATE OF NO DEFENSE  Document which sets out a certain set of facts which the issuer is agreeing to be bound by. Same as estoppel certificate.
CERTIFICATE OF OCCUPANCY Document issued by the local municipality indicating that a new dwelling is suitable for occupation. Generally confirms that the dwelling complies with local building, safety and health by-laws. A document stating that a home or other building has met all building codes and is suitable for habitation.
CERTIFICATE OF REASONABLE VALUE (CRV) Document issued by the Department of Veterans Affairs (VA). Based on an appraisal, sets out market value of a particular property for the purposes of establishing maximum principal amount available for a VA mortgage on the property.
certificate of sale A document issued at a judicial sale that entitles the buyer to receive a deed after court confirmation of the purchase of the property.
CERTIFICATE OF SATISFACTION Document registered on title which provides evidence from the lender that a loan instrument (deed of trust, mortgage, other lien) has been paid out and released.
CERTIFICATE OF TITLE A written opinion of the quality of a person's ownership of property, issued by a lawyer or a title insurance company after a search of the title records has been conducted. May contain qualifications to the certification regarding defects found or potential defects not investigated.
CERTIFICATE OF VETERAN STATUS Document issued by Department of Veteran's Affairs confirming that the person named in the Certificate has served at least 90 days of continuous active duty (including training time) and is eligible for certain VA benefits (such as a VA mortgage).
CERTIFIED COPY A copy of a document which bears some form of declaration (usually by the holder of the original document) that it is a true copy of the original.
CERTIFIED GENERAL APPRAISER A person who has met the requirements to be licensed to appraise the value of property. Qualification requirements may vary from one jurisdiction to the next.
CERTIFIED HOME INSPECTOR A person who has met the requirements to be "certified" to inspect the physical condition of homes. Qualification requirements may vary from one jurisdiction to the next.
Certified International Property Specialist (CIPS) An advanced designation issued by the National Association of Realtors (NAR) to members who meet specific performance and education requirements for handling international real estate transactions.
CERTIFIED PROPERTY MANAGER (CPM) A person who has met the requirements of the Institute of Real-Estate Management.
Certified Real Estate Brokerage Manager (CRB) An advanced designation issued by the National Association of Realtors (NAR) to members who meet specific performance and education requirements for real estate office management.
CERTIFIED RESIDENTIAL APPRAISER A person who has met the requirements to be licensed to appraise the value of residential properties of no more than four units.
CERTIFIED RESIDENTIAL BROKER (CRB) A person who has met the requirements of the Realtors National Marketing Institute.
CERTIFIED RESIDENTIAL SPECIALIST (CRS) A person who has met the requirements of the Realtors National Marketing Institute. An advanced designation issued by the National Association of Realtors (NAR) to members who meet specific performance and education requirements for handling residential real estate transactions.
CESTUI QUE TRUST The beneficiary of a trust, the person who is the beneficial/equitable owner of the property held in trust for which the trustee holds legal title.
CHAIN An old unit of measurement of land, measuring 66 feet in length. A chain equals 100 links, each 0.66 feet in length.
chain of title The official record that details the ownership history of a piece of property. A part of a title search. A listing, in chronological order, of successive legal owners of a property, often listing as well the registration particulars of the document by which title is transferred from each owner to his successor in title.
chair railing Decorative trim installed on a wall about 32 inches above the floor to protect against scuffs from furniture.
change frequency The adjustment schedule on an adjustable rate mortgage. Term describing the period of time between changes in the interest rate and/or payments of a variable rate (adjustable rate) mortgage or loan (i.e. one week, one month etc.).
change order A modification of a construction contract to authorize a change in the work, an adjustment in the amount of the contract, or a change in the contract time. The owner, architect, and contractor must sign the change.
chase A shielded vertical shaft that houses various pipes, drains, ducts, and flues.
chattel Personal property such as furniture, clothing, or a car. An item of personal property which is not affixed to the land or building (as opposed to a fixture, an item which is a part of the land or building). Chattels are generally not included in the sale of property unless specifically included in the Agreement of Purchase and Sale.
chattel mortgage A lien on personal property used as collateral for a loan. A debt secured against items of personal property rather than against land, buildings and fixtures.
chimney back The back wall or lining of a fireplace or furnace chimney.
chimney cap A concrete cap that surrounds the top of the chimney brick. The cap protects the masonry from rain and other elements.
chimney flue The passage inside a chimney that channels smoke and heat to the outside.
chimney pot A short pipe at the top of a chimney that increases ventilation to the fireplace and reduces smoke.
chipboard A board made of wood chips glued together under pressure.
cinder block A block made of ash and cement, used in construction.
cinder fill Cinders used below a basement or around a foundation to promote drainage.
circuit Short for electrical circuit, a complete circuit requires two electrical conductors (wires), an electrical source, and an electrical device such as a light. Electricity travels through one "hot" wire from the source to the device where it is converted into light, heat, or energy, then it returns along the other "neutral" wire to the source.
circuit breaker A switch-like device in an electrical circuit that is designed to shut down the circuit in the event of an electrical overload or short circuit. Circuit breakers are normally installed in main electrical panels or subpanels.
cistern A tank used to store rainwater.
CLAIM A right asserted against another party. One might register a claim on title to the property to which the claim applies, file a claim under an insurance policy or file a Statement of Claim in court to assert one's rights.
clapboard A type of siding, typically cedar, composed of overlapping horizontal boards.
CLASS ACTION A legal proceeding which presents the related or similar claims of an identifiable group against a single or group of defendants, usually by using one representative claimant to assert the claims on behalf of the group.
classified property tax A tax that varies in rate depending on the use of the property.
cleanout An opening in the drainage system for the removal of obstructions. It also refers to the part of a fireplace from which ashes can be removed. A Y-shaped fitting with a cap or plug on one of the arms of the Y that can be removed in the event of a drain clog to snake out the drain line.
clear title A title to property that does not have liens, defects, or other legal encumbrances. Ownership of land which is marketable and free of competing claims, liens, mortgages or other encumbrances.
clevis Part of the assembly needed to raise and lower a sink or tub pop-up. The clevis is a pin that connects to a pivot rod.
CLIENT Customer. The person who hires a professional (broker, banker, lawyer, investment counsellor, etc.)
CLOSED MORTGAGE A land loan that cannot be prepaid or re-negotiated before the end of its term without the payment of an interest penalty.
CLOSED-END MORTGAGE A mortgage with a set principal amount which cannot be increased or extended during the life of the mortgage.
closing The final procedure in which documents are signed and recorded and the property is transferred. The culmination of any transaction in which the interested parties (or their representatives) meet to exchange documents, funds, and property and, if necessary, to register the transfer of title.
closing costs Expenses incidental to the sale of real estate, including loan, title, and appraisal fees. These costs exist in addition to the price of the property and are paid at closing. Some are one-time expenses and some are recurring. Moneys expended by a party in completing a transaction, over and above the purchase price, including: legal fees, taxes, mortgage application charges, interest adjustments, registration fees, appraisal fees, etc.
CLOSING DATE Also known a Completion Date. The date set in the Agreement of Purchase and Sale upon which the transaction is to be completed, the purchase price paid and the transfer of title registered.
closing statement A document which details the final financial settlement between a buyer and seller and the costs paid by each party. Also known as HUD-1 statement. A document which sets out the financial agreement between the parties, the costs each must pay, and all other similar information regarding a transaction (may be joint or separate for each party).
cloud on title An invalid encumbrance on real property. Any unresolved claim against ownership of all or part of a property, affecting the owner's title to the property and marketability of that title.
cluster development A method of squeezing more homes into less space.
CLUSTER HOUSING Development design which places attached dwelling in close proximity to each other, with nearby open spaces set out for common use of the dwelling owners.
CO/ALR A designation on special light switches and outlets intended to be installed with aluminum wiring.
CODE OF ETHICS A set of rules governing the behavior of members of the organization that has established the Code. Lawyers and real estate brokers/agents both have their own Codes.
codicil A change to a will that adds or subtracts provisions or clarifies portions of the document.
co-housing Individual housing units that are clustered around a common building where residents share cooking and other activities.
COINSURANCE A technique used to share the risk of a larger development between several insurance companies, each company covering a certain percentage of the total value of the insured property. Each policy may include a clause setting a minimum percentage of the total value of the insured property which the owner must keep insured in order to be eligible for payment under the policy.
co-insurance Coverage that involves the use of two or more insurers.
COLD CANVASS Also known as "Cold Call". Contacting home owners out of the blue to solicit business or, in the case of a real estate broker or agent, listings.
collar beam The structural element that connects roof rafters.
COLLATERAL Property (real or personal) which is pledged to secure a loan or mortgage. If the debt is not paid, the lender has the right to sell the collateral to recoup the outstanding principal and interest on the loan.
COLLATERAL MORTGAGE A loan which is secured by some sort of written note of indebtedness (such as a Promissory Note) which is secondarily secured by a mortgage registered against a property.
collateral security Additional security that a borrower supplies to obtain a loan.
collection The series of steps a lender takes to bring a delinquent mortgage up to date. The act of pursuing a debtor who is delinquent on his loan payments.
collusion The action of two or more people to break the law.
colonia Unincorporated communities along the border between the United States and Mexico.
column A slender upright structure that consists of a base, a round or square shaft, and a capital.
column footing The support base for a load-bearing column. The footing is usually made of reinforced concrete.
co-maker A person who signs a promissory note with the borrower and assumes responsibility for the loan. Also known a "Guarantor". Someone who signs a loan document along with the principal borrower, pledging to be responsible for the loan should the borrower fail to pay it.
combination door An outer door with interchangeable screen and glass panels.
combination window A window with interchangeable screen and glass panels.
combustion gases The fumes or exhaust from a gas- or oil-burning appliance such as a water heater or furnace. Combustion gases are usually vented through a flue.
commercial bank A financial institution that provides a broad range of services, from checking and savings accounts to business loans and credit cards.
COMMERCIAL BROKER A real estate professional who deals in properties with commercial (business, retail, etc.) uses.
commercial property An area that is zoned for businesses. As opposed to residential or industrial property. Property zoned, designed or intended for use retail, office, or similar users.
COMMINGLE To allow to mix, as in money belonging to two or more people deposited to the same account and used by each person regardless of the amount they have deposited.
commingling The mixing of money held in trust with other funds.
COMMISSION Payment to a salesperson (a listing real estate agent or broker) for her efforts in marketing and selling a property, usually expressed as a percentage of the purchase price. A negotiable percentage of the sales price of a home, paid to the agents of the buyer and seller.
COMMISSION SPLIT The division of the payment made to the listing agent between that agent and her broker, or between the listing agent and agent representing the Purchaser (the selling agent).
commitment A promise by a lender to make a loan with specific terms for a specified period. A promise, usually in writing, to provide a mortgage or other loan. May also be used in insurance field. Sets out details of mortgage, insurance. Often referred to as Commitment Letter or Binder.
commitment fee A fee charged by the lender to guarantee a specific set of loan terms to be honored at some future date. The fee charged by the lender to commit itself to a mortgage or loan on specific terms.
common area An area inside a housing development that is owned by all residents.
COMMON AREA ASSESSMENTS Also known as Common Element Fees. A periodic charge levied against all of the owners of units in a condominium or planned unit development (PUD) project which is used by the condominium corporation or homeowner's association to pay for repair, maintenance and other expenses of the common areas in the development.
COMMON AREAS Portions of the property and buildings owned by a condominium corporation or planned unit development (PUD) homeowners' association, or a cooperative development's association that are available for the use of all unit owners. Also used in rental properties to refer to those facilities for the use of all tenants.
COMMON ELEMENTS A common area in a condominium project which is owned by the condominium corporation and for the use of all unit owners.
common law A body of laws based on custom, usage, and rulings by courts in various jurisdictions. As opposed to statute law. Laws or legal principles that have been established by courts over the years. May be codified into a statute or overruled by a statute passed by the government.
common-area assessments Fees paid by the owners of a condominium project or planned-unit development to maintain, repair, improve, or operate common areas.
common-interest development A project composed of individually owned units that share usage and financial responsibility for common areas.
COMMUNITY ASSOCIATION Any organization established and run by property owners in a particular area, often to represent the common interests of the owners in dealings with government, planning bodies, developers or other outside parties.
COMMUNITY HOME BUYER'S PROGRAM Program established to find creative ways to finance home purchases for people with modest income.
community property Property accumulated through the joint efforts of husband and wife. It is a classification of property peculiar to certain states. The principle that property accumulated by the joint efforts of a married couple should be considered to be owned by both of them in equal shares, no matter who has legal title to the property.
Community Reinvestment Act A federal law that encourages financial institutions to loan money in the neighborhoods where minority depositors live.
commute The distance and time it takes a person to reach his or her workplace.
comparables Properties used as comparisons to determine the value of a certain property. Used in assessing or establishing the fair market value of a property, a property which has been sold recently that is similar in size, condition, location and amenities to the subject property.
comparative market analysis An estimate of the value of a property based on an analysis of sales of properties with similar characteristics.
competent A term for a buyer who is legally fit to enter into a sales contract.
COMPETENT PARTIES People who are legally capable of entering and being bound by a contract (i.e. of age, mentally capable).
COMPLETION DATE See Closing Date.
COMPONENT DEPRECIATION For tax purposes, allocating a portion of the total cost of renovation to each component of the renovation (roof, plumbing, electrical, foundation, etc.) and then depreciating the cost of each component separately.
COMPOUND INTEREST As opposed to simple interest. The accumulation of interest on a loan over time where interest is charged not only on the principal of the loan but also on all interest accrued against the principal to the end of the last compound period. The interest paid on the principal balance of a mortgage plus accrued interest.
compressor Motorized equipment in a refrigeration (or air conditioning) system that circulates coolant through the system.
CONCESSIONS Sacrifices made by a party to convince another party to enter a contract.
concrete tilt-up The process of pouring concrete into forms on the ground, allowing the forms to harden, and then raising the material to a vertical position to form walls.
condemnation The process the government uses to take private property for public use without the consent of the owner. 1. The taking of private land for public use by a municipal or other government body through a court action under the principal of Eminent Domain. See also Expropriation. 2. An order made by a health or building department barring the use of a dangerous or hazardous property.
condensate drain A drain required by a dehumidifier, high-efficiency furnace, or similar appliance to carry away condensation.
condensate pump A small pump used with high-efficiency furnaces or other appliances that create significant condensation. It activates when water collects to a certain level and pumps it out to a drain.
condenser Part of a refrigeration (or air conditioning) system that pressurizes refrigerant to cool it by changing it from a vapor to a liquid. On a refrigerator, the condenser is the coil on the outside of the unit; an air conditioner's condenser is usually outside the house.
CONDITION(S) Clauses in the Agreement which must be fulfilled before the Agreement becomes firm and binding. If the condition is not fulfilled, the Agreement will usually become null and void and any deposit paid returned to the Purchaser.
conditional commitment A promise by a lender to make a loan if the borrower meets certain conditions.
CONDITIONAL OFFER An offer to purchase a property which is contingent on the fulfillment of certain conditions before it becomes firm and binding. Also known as "Conditional Sales Contract".
conditional sale A contract for the sale of property stating that the title will remain invested in the seller until the conditions of the contract have been fulfilled.
condominium Individual units in a building or development in which owners hold title to the interior space while common areas such as parking lots, community rooms, and recreational areas are owned by all the residents. A development where individuals own dwelling units but share common areas with the other unit owners of the complex. The maintenance of the common areas etc. is taken care of by the Condominium Corporation in which every unit owner owns a share and has voting rights. The Condominium Corporation is created by the registration of a Declaration and by-laws on title to the property and all individual units.
condominium conversion The change in title from a single owner of an entire project or building to multiple owners of individual units.
CONDOMINIUM OWNERS ASSOCIATION An organization made up of unit owners in a condominium development established to govern relations between the owners and to administer the rules, by-laws and covenants of the condominium
conduit A metal pipe that houses electrical wiring.
CONFORMING Complying with the requirements of a certain statute, by-law or organization.
conforming loan Any loan that meets the qualifications to be purchased by Fannie Mae or Freddie Mac. The current conforming loan limit is $252,700.
consent judgment A binding written agreement between two parties to have a judgment entered and recorded.
conservator A court-appointed guardian. Also called a Committee, Personal Representative or Guardian, a person appointed by the Court to administer the property of a person who is not capable of managing his own affairs.
consideration Anything that is legal, has value, and induces a person to enter into a contract. The value, asset, service, information etc. which is offered to another party in a contract in exchange for that party's agreeing to enter the contract. A contract is not binding if each party does not offer at least some consideration to the other party(ies).
CONSTANT PAYMENT LOAN A type of loan which requires equal, periodic payments over a certain term, at the end of which the amount owing under the loan will be completely paid out.
construction budget Funding arranged by an owner for the construction of a project.
construction documents Drawings and specifications from an architect that provide detailed requirements for the construction of a project.
construction loan A short-term loan for home or building construction. The lender disburses the funds in stages. A structured, short-term loan to a builder or developer to allow for the development of land. Funds are advanced at certain stages of the development project to pay for specific expenses, fees or costs.
construction-to-permanent loan A construction loan that is converted to a longer-term traditional mortgage after construction has been completed.
CONSTRUCTIVE EVICTION Actions of a landlord (or third party) which interfere with a tenant's use and enjoyment of the rented premises to such an extent that the tenant is, at law, considered to have been improperly forced out of the premises.
CONSTRUCTIVE NOTICE The legal principle that deems that a person has knowledge of a certain fact once that fact is made a part of a public record. The registration of a lien on title to a property represents constructive notice to all persons interested in that property of that lien, whether they have investigate the title records or not.
Consumer Credit Counseling Service (CCCS) A nationwide, nonprofit organization that helps consumers get out of debt and improve their credit profile. National headquarters: 8701 Georgia Avenue., Suite 507, Silver Springs, MD 20910. Phone: (800) 388-2227.
CONSUMER REPORTING AGENCY (OR BUREAU) Also known as Credit Bureau. The source to which the banks or other lenders turn for information on the credit history of an applicant.
contemporary style A design that features streamlined shapes, large unadorned windows, and industrial materials.
CONTIGUOUS See also Abutting. Sharing a common boundary, touching.
contiguous lots Pieces of property that are adjoined.
contingency A condition specified in a purchase contract, such as a satisfactory home inspection. An event which may (or may not) happen in the future, a condition that must be fulfilled before a contract becomes firm and binding.
contingency listing A property listing with a special condition attached.
contingent fee A fee that must be paid if a certain event occurs.
continuity tester A simple, battery-powered tool that indicates whether an electrical circuit is complete or incomplete by lighting or buzzing when you touch its two probes to the wires.
CONTRACT A legally binding agreement (oral or written) between two or more persons regarding an exchange of some sort. A legally binding contract must include consideration passing between the parties, an intention on the part of all parties to be bound to the contract, a meeting of the minds of the parties as to the contents of the contract, and an element of clarity such that the terms of the contract may be interpreted, understood and enforced by a court. An agreement between two or more parties that creates or modifies an existing relationship.
contract for deed A contract in which the seller agrees to defer all or part of the purchase price for a specified period of time. Also known as a Land Contract or Land Installment Contract. Transfer of a property where the title remains in the Vendor's name until the Purchaser makes the final payment to the Vendor of the Purchase Price.
CONTRACT OF SALE Also known as Agreement of Purchase and Sale, Offer to Purchase, Contract of Purchase. The written agreement between the Vendor and Purchaser for the sale of property which contains all of the terms, conditions and financial details of the transaction.
CONTRACT RENT The periodic rental payment as set out in the lease contract.
contract to purchase A contract the buyer initiates which details the purchase price and conditions of the transaction and is accepted by the seller. Also known as an agreement of sale.
contractor The individual who contracts for the construction of a home or project. A tradesman who works in the construction industry under a contract with the owner of the property. See also "sub-contractor".
contractual lien A voluntary obligation such as a mortgage or trust deed.
controlled growth Any restrictions imposed on the amount or type of new development in an area.
conventional loan A long-term loan a lender makes for the purchase of a home. 1. A loan or mortgage to which the normal rules of such transactions apply without the inclusion of a government program (i.e. VA or FHA insurance). 2. A loan or mortgage with a fixed interest rate, fixed payments and a fixed term.
conversion The exchange of personal or real property of one character for another. 1. a change in the use of a property, or in the way a property is owned (i.e. from private to condominium ownership) 2. the improper taking of the property of another for one's own use;
CONVERSION CLAUSE A provision in a variable rate mortgage (adjustable rate mortgage) which allows the borrow to change the mortgage to a fixed rate mortgage upon the occurrence of certain events.
CONVERTIBILITY CLAUSE 3. In Ontario, the transfer of a property from the Registry System of land registration to the new Land Titles Conversion Qualified (LTCQ) computerized system by the agents of the Ontario government. See "Conversion Clause".
convertible adjustable-rate mortgage A mortgage which starts as an adjustable rate loan, but allows the borrower to convert the loan to a fixed-rate mortgage during a specified period of time.
CONVEY To transfer title to (or any other interest in) a property to someone else.
conveyance The transfer of title of property. The act of transferring an interest in property to someone else or the document which effects the transfer.
conveyance tax A tax imposed on the transfer of real property.
CO-OP Short for Cooperative, a mode of land ownership where the occupiers of individual units in a building own an interest in the Cooperative Corporation that owns the whole property.
COOPERATING BROKER A Broker who is involved in a real estate transaction and is, therefore, entitled to share in the commission from the transaction. A real estate broker who finds a buyer for a property listed by another broker.
COOPERATIVE (CO-OP) See "Co-op".
cooperative corporation A business trust that holds the title to a cooperative residential building and grants occupancy rights to shareholders in the corporation.
cooperative mortgage Any loan related to a cooperative residential project.
cooperative project A project in which a corporation holds title and sells shares representing individual units to buyers who then receive a proprietary lease as their title.
corbel A short block or bracket projecting from a wall and providing support for a horizontal member.
corner bead A reinforcement placed in the corner where two walls intersect.
corner influence The effect on the value of a property because it is situated on a corner or near a corner.
cornice A horizontal molding that projects from the top of a structure or wall.
CORPORATE RELOCATION The movement of an employee of a corporation to a new city (or other location) as part of the normal business of the corporation. The employee's moving expenses (including the costs of selling and buying a home) may be paid by the corporation and are tax deductible. An arrangement by which employers pay to transfer and move employees.
CORPORATION A legal entity created by the registration of appropriate incorporating documents with the supervising government office. May be private (ownership held by specific individuals and not traded on a public stock exchange) or public (shares traded on stock exchange). Shareholders are protected from liability for the actions of the corporation. Corporations may enter contracts and own property.
CORPOREAL Tangible.
corrective work Necessary or desired repairs to remedy problems uncovered by a home or specialized inspection.
co-signer A second party who signs a promissory note and takes responsibility for the debt.
COST APPROACH An appraisal method where a property's value is estimated using the cost of the property plus cost of all improvements, minus depreciation.
COST ESTIMATING Predicting the total cost of a construction project by estimating, in advance, the actual costs of all elements in the project, including legal fees, labor, permits, materials etc.
COST PLUS CONTRACT An agreement with a contractor or builder which sets the contractor's compensation for the project as a percentage of the total cost of all labor and materials.
cost-plus contract A construction contract that determines the builder's profit based on a percentage of the cost of labor and materials.
CO-TENANCY When more than one person owns a piece of property. Title will be held by the owners as Joint Tenants (each owns the land equally and, in the event of the death of one of the owners, the survivors continue to share title equally by right of survivorship) or as Tenants in Common (each owner has title to a specific percentage of the land and may sell, mortgage, or bequeath her interest to a third party without consent of the other owners).
cottage A small, one-story house.
counterbore A hole drilled to recess the head of a screw.
COUNTEROFFER An answer to an offer. If a prospective Purchaser presents an offer to purchase a property to the owner of the property, that owner may accept the offer as it stands, reject it outright or respond with a "counteroffer" which changes certain terms of the original offer. Making a counteroffer, at law, entails rejection of the original offer. The Purchaser may then counteroffer back, making changes to the owner's counteroffer. Sometimes, the process of counteroffering is referred to as "signing back" the offer. A response to an offer.
COUNTY A territorial division of land in a geographic region (state or province). Similar to Regions and Regional Municipality.
courier fee Fee charged at closing to cover the delivery of documents between lenders, escrow companies, and other parties during a real estate transaction.
covenant A legal assurance or promise in a deed or other document, or implied by law. A promise contained in a contract or agreement.
COVENANT RUNNING WITH THE LAND A covenant that is literally attached to the land and binds present and future owners to the requirements of the covenant. In new developments, such covenants may be restrictive: the owner is not allowed to alter grading patterns of the land, or erect new fences, or put up TV aerials, or to change the color of the exterior of the house. Such restrictive covenants may be enforced by a Homeowners' Association.
covenants, conditions, and restrictions (CC&Rs) Rules and regulations for a development, such as those pertaining to acceptable landscaping or improvements that can be made to individual units.
craftsman style An architectural style that evolved as part of the Arts and Crafts movement near the turn of the century.
crawl space The space between the ground and the first floor of a home, usually no higher than four feet.
creative financing Innovative home-financing arrangements that help sell a property. An arrangement for the financing of the purchase of a property which is outside the normal practice of residential financing.
credit The money a lender extends to a buyer for a commitment to repay the loan within a certain time frame. 1. The ability to access money, to use money prior to earning it. 2. The accounting term for a liability or for equity, entered on the right side of the ledger. 3. As a verb, to allot for the benefit of a person (i.e. You must credit the Purchaser on closing for the deposit paid).
credit history A record of an individual's current and past debt payments. A statement of the debts and obligations, whether current or past, of a person which helps a lender to assess the risk of a loan to that person.
credit life insurance Insurance that pays off a mortgage in the event of the borrower's death. A form of insurance which is designed specifically to pay out the debts of the insured person in case of their death.
CREDIT LIMIT The maximum amount available to a person under a loan, credit card or other borrowing arrangement.
credit rating The degree of creditworthiness assigned to a person based on credit history and financial status. Based on an analysis of a person's credit history, an evaluation of that person's ability to manage a new debt or debts overall.
credit report A detailed account of an individual's credit, employment, and residence history. A lender uses this report to determine a loan applicant's creditworthiness.The three largest credit bureaus are Trans Union Corp., Equifax, and Experian (formerly TRW).
credit repository Large companies that gather financial and credit information from various sources about individuals who have applied for credit.
CREDIT RISK The potential for a borrower to fail to live up to her obligations under a loan arrangement.
credit union A nonprofit cooperative organization that provides banking and financial services such as mortgages, home improvement loans, and home equity loans to its members.
creditor An individual or institution to whom a debt is owed. Any person to whom money is owed. May be secured (the debt has been registered against the property of the debtor) or unsecured.
CREIA Abbreviation of California Real Estate Inspection Association, a trade organization of home inspectors whose members must meet the group's education and performance requirements. Call (800) 388-8443 for list of CREIA-certified inspectors in your area.
cross-bridging The strengthening of a structure by bracing cross members between beams.
crown A piece of molding around the top of a room.
CU/AL A designation on standard light switches and outlets that intended to be installed with copper wiring.
cul-de-sac A street or alley that is closed at one end. French term for a "dead-end street". A street which meets another street at one end but is closed at the other, such that little traffic will travel down it and the property owners enjoy excellent privacy.
CUMULATIVE INTEREST The total amount charged as interest on a loan or mortgage to a certain date.
cupola A dome-like structure that sits on top of a roof.
curable defect A deficiency in a property that is easy or inexpensive to fix, such as chipping paint.
curb appeal The first impression of a house as seen from the street.
current value The value of a home at the time of appraisal.
curtain wall An exterior wall that encloses a yard or other area but does not provide any structural support to a home.
custom builder A builder who constructs a home or building based on plans created by the owner. A builder or developer who specializes in creating homes to the specifications and requirements of individual land owners.
custom home A structure designed by an architect hired by the owner.
cylindrical lockset The familiar type of doorknob mechanism found on most interior (and some exterior) doors, designed to fit into a large hole bored through the face of a door's stile.
DAMAGES The estimated monetary value of the injury a person suffers as a result of an unlawful act or negligent act of another person. Once proven, damages may be awarded by a Court.
damper A movable plate in a fireplace that allows smoke and fumes to travel up the chimney's flue.
DATE OF APPRAISAL The precise day, month and year upon which an assessment of the value of a property has been given.
DATE OF INSTRUMENT The specific day, month and year a legal document was signed or prepared.
DATE OF REGISTRATION The specific day, month and year upon which an instrument was registered on title to the property.
days on the market The period of time a property is listed for sale prior to being sold or taken off the market.
deadbolt lock A lock that requires a key to open from the outside and a turn button from the inside.
DEAD-END STREET Also known as "Cul de Sac". A street which is closed at one end so that traffic cannot flow through it.
DEALER Similar to a car dealer, a person who offers a collection of properties for sale to the public.
DEBIT An entry on a financial statement which reflects payments or disbursements made on behalf of a party for which the party is responsible (opposite of "Credit").
debt Any amount one person owes to another. 1. An obligation to another person. 2. That obligation which is created by borrowing. 3. The total of all financial obligations of a person or corporation.
debt assumption letter The formal transfer of debt from one party to another, backed by a contract of assumption signed by both parties. Also known as assignment of debt.
DEBT COVERAGE RATIO (DCR) A comparison of the net income of a property with the cost of payments (principal and interest) on the mortgage on the property, used to assess the ability of the property to generate enough income to pay for itself.
DEBT EQUITY RATIO A comparison of the amount owing on a property with the equity (value of property minus amount owing).
DEBT FINANCING Paying for the purchase of a property with credit.
DEBT RATIO Also known as Debt-to-Income ratio. A comparison of the total monthly payments of all of the borrower's debts (including the mortgage) with the gross monthly income of the borrower, used to assess borrower's ability to pay mortgage.
DEBT SERVICE The mortgage payment for a given period of time.
DEBTOR A person who has borrowed and therefore owes (opposite of Creditor).
deck A roofless, floored area that adjoins a house.
DECLARATION OF RESTRICTIONS A Statement made by a developer of a new subdivision which sets out the restrictions of general application throughout the new development.
DECLARATION OF TRUST A signed statement by a trustee acknowledging that she holds legal title to property on behalf of someone else (the beneficiary of the trust).
decorating allowance An amount of money supplied by the seller and held in escrow for the buyer, to be applied toward negotiated decorating changes.
DECREE OF FORECLOSURE An order of the Court setting out the amount outstanding on a delinquent mortgage and ordering the sale of the property to pay the mortgagee.
DEDICATION Often required under subdivision or development agreements, the donation of parcels of land to the municipality for a public use, such as a street, a park or a school.
deed The legal document that transfers ownership of a piece of property. The instrument by which title to property is conveyed from one person to another.
DEED BOOKS The permanent record of deeds registered in a particular jurisdiction. Also known as "libers".
DEED IN LIEU OF FORECLOSURE A legal instrument in which a borrower conveys property to a lender under a mortgage to save the expense of foreclosure. See also quit-claim deed.
DEED IN TRUST A legal instrument conveying legal title to a property to a trustee, may contain statements as to powers of trustee, duties of trustee etc.
DEED OF RECONVEYANCE A legal instrument which conveys title from a trustee back to the borrower under a mortgage once the mortgage has been paid out.
DEED OF RELEASE A legal instrument signed by lien claimants or mortgagees which gives up their claim to the property. See Discharge and Quit Claim Deed.
DEED OF SURRENDER A legal instrument in which a person with a life interest gives up that interest to the person with underlying title.
DEED OF TRUST A legal instrument which secures the payment of a loan or mortgage, used in some states instead of mortgages. A document that gives a lender the right to foreclose on a piece of property if the borrower defaults on the loan.
DEED POLL A legal instrument which conveys title and is made by only one party.
DEED RESTRICTION A clause in a deed which limits the use of the property in certain respects.
deep-seal floor drain A drain used to dispose of water from the basement floor to a sewer line.
default The failure to fulfill a duty or discharge an obligation, such as making monthly mortgage payments. Failure. In mortgages, the failure to make payments in full, on time or at all or to live up to any other obligations placed on the borrower by the loan agreement.
DEFAULT JUDGMENT A decision rendered by a Court when the defendant has failed to respond to the claim.
DEFEASANCE CLAUSE A clause in a mortgage which ensures that, once the borrower has met all of her obligations under the terms of the mortgage and paid out the entire principle and interest borrowed, the lender's legal interest in the property is extinguished.
DEFEASIBLE Able to be revoked in the case of the occurrence (or non-occurrence) of a certain event or the performance (or failure) of a condition.
DEFECT OF RECORD A registered claim on title which serves to interfere with the marketability of the owner's title to the property.
DEFECTIVE TITLE Ownership of property which is subject to some competing claim.
DEFENDANT The person against whom a claim is asserted in a Court action.
DEFERRED INTEREST Interest which is not paid as it accumulates but which is added, instead, to the loan principle.
DEFERRED INTEREST MORTGAGE A technique for reducing the amount of each periodic payment on a mortgage monthly by postponing the payment of a portion of the interest until a certain date in the future (or to when the property is sold), at which time the interest postponed is added to the principle owing.
deferred maintenance Any repair or maintenance of a piece of property that has been postponed, resulting in a decline in property value. A nice way to say that the property has not been kept up and is depreciating both physically and in value.
DEFICIENCY JUDGMENT A Court order against a borrower under a mortgage to pay to the lender an amount sufficient to make up for the difference between what the borrower owes under the mortgage and the amount the lender sold the property for under a mortgage remedy action.
DEGREE One 360th of a circle. One 90th of a right angle. Used in astronomic bearings in metes and bounds descriptions of land.
DELINQUENCY The condition of being late on a payment but not yet in default.
delinquent mortgage A mortgage that involves a borrower who is behind on payments. If the borrower cannot bring the payments up to date within a specified number of days, the lender may begin foreclosure proceedings.
DELIVERY The act of turning over any legal document (including a Deed) to another party so as to make it legally operative and no longer revocable.
DEMAND LOAN A type of loan where the lender may require payment in full of the principal (and accumulated interest) at any time.
DEMISE A conveyance of an interest in property for a set period of time (such as in a lease).
DEMISED PREMISES The portion of the entire property which is leased to a particular tenant.
DENSITY A measure of the number of a certain thing within a defined space. Population density, for example, measures the number of people in a given area (a square-mile, an acre etc.)
density test An analysis of soil to determine if the surface can support the foundation of a house.
dentils Small rectangular blocks that project from a building, usually under cornices or along rooflines.
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT (HUD) A federal agency focusing on programs regarding housing and renewal of city communities.
DEPARTMENT OF VETERANS AFFAIRS (VA) An independent federal agency which oversees programs for military veterans, including loan and mortgage programs.
deposit Money given by the buyer with an offer to purchase property. Also called earnest money. 1. The money paid up-front by a purchaser as security for her completing the transaction. Also known as "good faith money" or "earnest money". 2. An instrument which is not registered on title but placed in the records for a given piece of land for information purposes.
DEPOSIT OF TITLE DEEDS When a lender requires ownership documents to be left with it as further security for a loan.
DEPRECIABLE BASIS The initial acquisition cost of an improvement on land, used for income tax purposes. Land may not be depreciated but the improvements (buildings, etc.) may be.
DEPRECIABLE LIFE An estimation of the useful, valuable life of certain assets (such as buildings or production machinery).
depreciation The decline in value of a piece of property. 1. The lessening of the value of a property over time. 2. A tax adjustment accounting for the reduction in value of an asset (a building or a piece of machinery) over time.
DERELICTION The gradual receding of water, leaving more land than was there previously.
DERIVATIVE CONVEYANCE A transfer of property made to correct or confirm an earlier conveyance.
DESCENT The conveyance of property to those heirs of a deceased person as dictated by the laws of the jurisdiction when no will is left behind.
DESCRIPTION Also known as "Legal Description". The manner in which a piece of land is identified. May involve metes and bounds measurements using astronomic bearings or may simply set out Lot and Plan numbers in a specific municipality. Most jurisdictions require description of land to be included in all instruments to be registered on title to that property.
design/build A project in which the owner contracts directly with an individual or company to perform design and construction.
DESIGNATED REAL ESTATE BROKER Person designated by a corporation to oversee all real estate activities of that corporation. Must meet requirements for real estate broker's license.
DESIGNATED REAL ESTATE INSTRUCTOR (DREI) Any person who has met the requirements of the Real Estate Educators Association for this designation.
designer Unlike architects, designers are limited to drawing blueprints.
DETACHED SINGLE-FAMILY HOME A free-standing dwelling that is designed to house one family unit.
DETERIORATION The impact of time and wear and tear on a dwelling or other building which results in a decrease in its value if nothing is done to counteract it.
DEVELOPER A person or company who makes a business of turning vacant or underused parcels of land into new housing (or business, commercial or industrial) surveys.
DEVELOPMENT LOAN A loan specifically designed to finance the transformation of a vacant tract into a new survey. May provide for money to be advanced as the stages of the development are completed.
DEVELOPMENT RIGHTS The legal ability to develop a parcel of land, usually purchased from the owner of a vacant tract of land by the developer. Title to the property does not change hands until the new survey of properties is sold to third-party purchasers.
DEVISE The act of leaving a piece of land to another person in a will.
DEVISEE The beneficiary under a will who receives a gift of real estate under the will.
DEVISOR The deceased person under whose will the beneficiary receives real estate. More commonly called the "testator".
digital images Images that are incorporated into house listings to give potential buyers a view of the property.
dimension plans Plans which show the layout of a house but are less detailed than full blueprints.
dimensional lumber Single pieces of lumber sawed to standard dimensions.
dimmer A light switch that controls the brightness of one or more lights. Most allow a full range of control from full off to full on.
dimple To create a slight dent with a light blow of a hammer when driving a nail. This technique is typically used when hanging drywall to provide a tiny pocket for receiving drywall compound.
DINK Short form for "Double Income, No Kids". A description of a type of Purchaser in the real estate market.
dip tube An extension of the water supply line into a storage tank. This delivers water close to the heat source on the bottom of a water heater.
DIRECT COSTS Those expenses in the improvement of property which can be directly attributed to the improvement itself (i.e. labor, material, taxes, etc.). Also known as "hard costs".
DIRECT REDUCTION MORTGAGE A kind of mortgage where the principal and interest to be paid are based on the principal remaining. An amortized mortgage.
DIRECTION 1. A document containing written instructions to a person to do a certain thing in a certain way. 2. A point on a compass, used in legal descriptions.
DIRECTION REGARDING FUNDS A direction made by a party who is entitled to money to the party who is obligated to pay the money which sets out how the receiving party wishes the money paid.
DIRECTION REGARDING TITLE Also known as "Title Direction". A direction made by the Purchaser to the Vendor of property setting out how the Purchaser wishes to take title. May include the full legal name, the birthdate (if necessary), the address for service of the Purchaser and, if there are more than one Purchaser, the capacity in which they wish to share title ( i.e. as Joint Tenants or Tenants in Common).
DIRECTIONAL GROWTH A factor in the value of undeveloped land, the direction in which an urban center tends to expand.
disability insurance An insurance policy that covers an individual's ability to produce income.
DISAFFIRM To refuse to accept a decision already made, to revoke consent, assent or agreement already given.
DISBURSEMENT An expenditure of money.
DISCHARGE 1. A document registered to remove a mortgage from title to a property. 2. To payout out a debt. 3. To meet one's obligations.
DISCLAIMER A statement of refusal of responsibility of a legal right etc.
DISCLOSED PRINCIPAL The person on whose behalf an agent is acting when that person's identity is made know to the person with whom the agent is dealing.
disclosure A statement to a potential buyer listing information relevant to a piece of property, such as the presence of radon or lead paint. Sometimes known as "Vendor's Disclosure", a legal requirement in some jurisdictions in which the Vendor of a property must provide a written statement to a prospective purchaser setting out defects in the property known to the Vendor.
DISCLOSURE STATEMENT A document issued by a lender to a borrower in which the lender sets out the terms and conditions of the loan. Often required under legislation.
DISCOUNT A sum of money held back from a mortgage advance as prepaid interest.
DISCOUNT POINT See point. Each point is equal to 1% of the principal.
discount points Fees that a borrower pays when the lender makes the loan, to get a lower interest rate. Lenders offer various rate/point combinations, and borrowers pay points to adjust the interest rate to the market rate. One point equals one percent of the loan amount.
DISCOUNT RATE A benchmark for interest rates, the rate charged by the Federal Reserve System on loans to banks.
DISCOUNT REAL ESTATE BROKER A licensed real estate broker who charges a commission at a lower rate.
DISPOSSESS To remove a person from occupation of a property by a legal action.
DISPOSSESS PROCEEDINGS The legal action taken to dispossess a person of property.
DISTRAINT A landlord's action for recovering arrears in rent by taking possession of and selling the tenant's personal property.
DISTRESS The right of a party to sell the real or personal property of another party to pay for arrears in rent or loan payments.
distressed property Property that is in poor physical or financial condition. A property which is to be sold in order to pay arrears on a mortgage.
DISTRICT A terms used to classify neighborhoods according to their use: residential, commercial, industrial, etc.
DOCUMENT 1. Noun: a paper which establishes certain facts or attempts to bring about a certain result. 2. Verb: to set out events, facts or beliefs in written form.
document needs list A list of documents a lender requires from a potential borrower submitting a loan application. The required documents range from paycheck stubs to credit card statements.
DOCUMENTARY STAMP A levy paid to the local government for registration of a document (a deed or mortgage) in the public records, often calculated as a percentage of the purchase price or the value of the mortgage.
documentation preparation A fee charged by the settlement agent (escrow company or attorney) to ready the necessary paperwork for closing.
DOG A slang term for a property that, as a result of factors such as poor condition, poor location or poor design, is slow to sell.
domed ceiling A hemispherical ceiling that projects upward without support.
domicile A person's primary or permanent home. The place where a person legally resides.
DOMINANT ESTATE The property which enjoys the benefit of an easement over another property (known as the servient estate).
DONEE The person who receives a gift, bequest, or who is named an attorney in a power of attorney.
DONOR The person who gives a gift, bequest, gives power of attorney or who settles property in a trust for another person (the beneficiary).
dormer A window set upright in a sloping roof.
double-hung window A window that consists of two sashes that slide up and down.
DOUBTFUL TITLE Ownership of land which is questionable as a result of a possibly valid competing claim.
dovetail joints Joints that lock two pieces of wood together with meshed teeth.
dowel A length of wood that is round in profile and made of hardwood (round lengths of softwood are called rounds).
dowel plug A short piece of a wooden dowel typically fitted into a counterbored hole to hide the head of a screw.
DOWER The interest enjoyed by a wife in real property her husband acquired during his life time. The right becomes exercisable upon the death of the husband. Dower still exists in some jurisdictions but has been abandoned in most.
down payment The difference between purchase price and the portion of the purchase price financed by a lender. Most lenders require that the down payment come from the buyer's own funds, but may also allow gifts from relatives. The amount of money provided by the Purchaser toward the total price of the property (not including legal fees or other acquisition costs). In general, downpayment plus mortgage equals purchase price.
downspout A vertical gutter that empties water from the roof to the ground.
DOWNZONING The reduction of the density allowed for a certain property under zoning by-laws, such as from high density (high rise apartment) to medium density (low rise or individual homes).
DRAGNET CLAUSE A term of a mortgage which establishes the subject property as security for the present and for all future debts of the owner to the lender.
DRAIN A means, whether natural or otherwise, by which water is allowed to flow off a property.
drain auger Also called a snake. A long, coiled-wire tool that you can unwind and push into a drain line to free a clog.
drain flange The round metal trim that fits into the hole at the bottom of a sink or bathtub. The stopper or pop-up fits into this flange to retain water in the sink or tub.
drain valve A valve used to drain a water storage tank in order to perform maintenance or replacement.
drainage A system of gutters and drainpipes that carry water away from the foundation of a house.
drainpipe Part of a home's plumbing system that carries waste to the sewer or septic system. Most residential drainpipes are from 1½ to 4 inches in diameter.
draw A payment made to subcontractors or suppliers from a construction loan.
drip caps Angled strips of metal flashing that are designed to protect the eaves from water damage. With an L-shaped profile, they tuck under the first course of shingles and extend down over the fascia.
drip loop A loop in the service conductor that minimizes the chance of water penetration.
dropped ceiling A flat ceiling built lower than the original ceiling.
DRY MORTGAGE Also known as "non-recourse loan" because the lender has no personal right of action against the property owner in the event of default. The lender may only sell the property to enforce the loan obligation.
dry rot A fungal decay that causes wood to become brittle and crumble.
drywall A construction material composed of gypsum or plaster wrapped in paper and produced in large sheets that can be nailed to wall studs.
dual agency A relationship in which a real estate agent or broker represents both parties in a transaction. A breach of agency rules which must be disclosed to the parties. Where one agent (often a real estate broker or agent) represents both sides in a contract (i.e. the Vendor and the Purchaser) such that the agent has a conflict of interest.
dual agent An agent who represents both the buyer and the seller in a transaction. Some states require strict disclosure of this arrangement to consumers.
duct A rigid metal or flexible insulated tube, designed to deliver air to and from a furnace or other air-handling unit. Any kind of pipe or channel that carries water, wiring, or conditioned air through a house.
ductwork A system of large tubes, pipes, or channels (ducts) designed to deliver air to and from a furnace or other air-handling unit.
DUE DATE The date established in the loan agreement upon which all moneys then outstanding on the loan become due and payable in full.
DUE ON SALE CLAUSE A clause in a mortgage which requires that the mortgage be paid out in full upon the sale of the property against which it is secured. A mortgage with this clause may not be assumed by a purchaser.
due-on-sale clause Standard language in a mortgage which states that the loan must be paid when a house is sold.
DUMMY Slang term for the trustee in an undisclosed trust situation where a nominee holds legal title of property for an unnamed principal.
duplex A structure that consists of two separate family units. A building which houses two separate dwelling units.
duplex receptacle An electrical outlet that accepts two lighting or appliance plugs.
DURESS A state in which the improper, threatening or coercive actions of another place a person in a disadvantage psychological position. A person is not bound by a contract she enters while under duress.
Dutch colonial style A design that features a barn-like gambrel roof, a ground-level front porch, and dormers.
DWELLING A house, home, living unit. Generally refers to a building designed for use as a living space.
early occupancy The condition in which buyers can occupy the property before the sale is completed.
earnest money Money a buyer gives with an offer to purchase a property. Also called a deposit.
EARNEST MONEY DEPOSIT A sum of money paid by a potential purchaser as proof of her intention to complete the purchase transaction. Held in trust, usually by the Listing Agent, and credited to Purchaser off purchase price. May be forfeited if Purchaser fails to complete transaction.
earthquake insurance A policy that provides coverage against damage to a home from an earthquake.
EASEMENT The right of the owner of one parcel of land to use all or part of the land of another for a specific purpose. Runs with the land. Requires one property to be in dominant position (enjoys the benefit of the easement) and one property to be in servient position (is subject to the right). A right given to a third party to use a portion of the property for certain purposes, such as power lines or water mains.
EASEMENT BY NECESSITY A land owner's right to make use of the property of another (or a portion of it) for a specific purpose, when such use is required to allow the land owner to enjoy his own land.
EASEMENT BY PRESCRIPTION The continuing, unchallenged use of all or part of a property by the owner of a neighboring or nearby property for a specific period of time (20 years in many jurisdictions) such that, by law, the using owner gains a legal right to continue that use.
EASTLAKE HOUSE A house which is remarkable for its three-dimensional ornamentation following a nineteenth-century style.
eaves The projecting overhang at the lower edge of a roof.
ECONOMIC BASE The commercial or industrial foundation of a community which provides opportunities for employment.
ECONOMIC DEPRECIATION The decline in value of a property which is caused by reasons outside of the property itself.
ECONOMIC LIFE The length of time an improvement to real estate can be expected to provide more value than its operating or upkeep costs.
effective age The age of a structure estimated by its condition rather than its actual age. An appraisal term for the age of improvements to a property based on an assessment of their current condition (i.e. a well-maintained 100-year-old house could have an effective age of 10 years while a ramshackle, unmaintained 20-year-old house could have an effective age of 50 years). Opposite of "actual age".
effective gross income Additional income that a lender considers when assessing the loan application of a potential borrower. 1. For borrowers, the actual amount of money earned from stable sources over a set period (i.e. a month) before taxes and expenses are deducted. 2. For rental properties, the amount of income the property will produce if leased at market value before costs, taxes, upkeep and discounts for vacancy are deducted.
EFFECTIVE RATE The actual rate (or interest or return) once all factors are accounted for (factors include compounding of interest or costs of earning the return).
EFFICIENCY RATIO A comparison of the space in a building available for lease to the total space of the building.
EFFICIENCY UNIT OR APARTMENT A term for a small dwelling unit in which kitchen and sometimes bath areas are combined with the living area. Also known as "bachelor apartment" or "studio apartment".
efflorescence White, powdery substance on concrete, stucco, or other masonry caused by water-soluble salts leaching to the surface.
EGRESS Means of exit from a room, building or property (often to a road).
EJECTMENT Legal proceeding to evict a tenant without a lease.
electric service panel A panel that transfers power from the utility line into a house to be distributed through fuses or circuit breakers.
electronic transfer The process of having a mortgage payment automatically deducted from a borrower's checking or savings account. Many lenders offer this service.
elevations The exterior view of a home design that shows the position of the house relative to the grade of the land.
ELIZABETHAN OR HALF TIMBER STYLE A two-storey or two-and-a-half storey, English-style house which has the upper storey overhanging the first, often with stone and stucco walls and half-timber beams.
ell An extension or wing of a house that is at right angles to the main structure.
eminent domain The government's right to condemn private land for public use, such as the routing of a public highway. The right of a body of government (often a state) to expropriate private property, while paying appropriate compensation to the owner.
employer-assisted housing Programs which help employees purchase homes through special plans developed with lenders.
empty nesters Potential buyers who have raised their families and want to move into a smaller home. Middle-aged or older couples whose children have grown up and "left the nest" to live on their own. Often looking to sell a larger house and buy a smaller one.
ENCROACHMENT The intrusion across the property line and into one property of an improvement to a neighboring property. May result in a claim for adverse possession if the encroachment is unchallenged for a long period of time. Fences or other structures that extend into the property of another owner.
encumbrance A claim or lien on a property which complicates the title process. Any right or interest in property interfering with its use or transfer. Any right, interest or other claim against land which is registered on title and affects the owner's ability to sell the property.
end loan The conversion from a construction loan to permanent financing a condominium buyer secures after all units in a project have been completed.
endorser A person who signs over ownership of property to another party. The person who signs a document to represent the transfer of property to another.
ENERGY EFFICIENT A description of a property which has special features aimed at reducing use of electrical or heating power (i.e. insulation, double-insulated windows, high-efficiency furnace, etc.).
ENERGY TAX CREDITS A tax break given to property owners who took steps to save energy in their property such as installing insulation.
English Tudor style An architectural design that features stone or brick exterior walls and exposed beams.
ENTITLEMENT 1. The legal right to a benefit or program. 2. Name for the VA home loan benefit.
environmental impact statement A government-mandated evaluation of all aspects and effects a development will have on the environment of a proposed site.
ENVIRONMENTAL IMPACT STATEMENT (EIS) A report on the anticipated effect of a development on the local environment. May be required for federal funding for the development.
ENVIRONMENTAL PROTECTION AGENCY (EPA) U.S. government agency for the protection of the environment.
environmentally friendly home construction A method of construction that utilizes recycled materials.
EQUAL CREDIT OPPORTUNITY ACT U.S. federal law aimed at affording people of all races, genders, religions, ages etc. an equal chance to borrow money.
Equal Credit Opportunity Act (ECOA) Federal law that prohibits a lender or other creditor from refusing to grant credit based on the applicant's sex, marital status, race, religion, national origin, or age, or because the applicant receives public assistance.
equalization A mass appraisal or reappraisal of all property within a jurisdiction for the purpose of equalizing values to assure that each taxpayer is bearing a fair share of the tax load.
EQUALIZATION BOARD Agency with a mandate to ensure fairness in property tax assessments.
Equifax Equifax Credit Information Services, Inc., is one of the "Big Three" credit-reporting bureaus that operate nationwide. Address: P.O. Box 740249, Atlanta, GA 30374. URL: http://www.equifax.com. Phone: (800) 685-1111.
EQUITABLE CONVERSION A common law doctrine which treats a Vendor under an Agreement for the sale of property as holding the property in trust for the Purchaser even before the transaction has been completed such that the Vendor is liable to the Purchaser for any damage negligently caused to the property.
EQUITABLE TITLE The common law interest of the Purchaser in the property for which she has entered an Agreement to Purchase prior to the completion of the transaction.
equity A determination of the value of a property after existing liens are deducted. The difference, in dollars, between the market value of a property and the principal owing on debts secured against the property. The amount of money the owner will be able to keep from a sale transaction once the mortgages are paid out. Also known as "owner's interest".
EQUITY BUILDUP The increase over time of the owner's interest in a property, the difference between the value of the property and the amount owed on the mortgage.
EQUITY LOAN A loan to a home owner secured against the equity the owner enjoys in the property.
EQUITY OF REDEMPTION The right a borrower has to pay out in full a mortgage against a property that has gone into foreclosure or power of sale proceedings, thus redeeming the property.
EROSION The gradual diminishing of land or soil as a result of the action of water, wind, rain, etc.
ERRORS AND OMISSIONS INSURANCE Professional protection from liability for mistakes, negligence, etc. A policy that pays for mistakes made by a builder or architect.
ESCALATOR CLAUSE Part of a net lease. A provision that increases the rent payable under a lease when certain costs of the building increase (i.e. taxes, utility charges, etc.).
ESCAPE CLAUSE Any provision in a contract that allows one or more parties to end the contract upon the occurrence of certain events.
ESCHEAT The reversion of title to a property to the state. Can occur when an owner dies with no legal heirs or when a corporate owner is dissolved by act of law or by voluntary act while holding legal title to the property. A situation in which the ownership of property reverts to the state when the owner dies without leaving a will.
ESCROW A state wherein consideration, benefits, legal rights, money, documents or other valuables are transferred to another party in advance of that party's legal entitlement to them, on the basis that the legal entitlement will arise at a given point in the future. A form of trust. A neutral third party holds documents and money for a real estate transaction and ensures that all conditions of a sale are met. Also refers to a special account that a lender uses to hold a borrower's monthly payments on property taxes and insurance.
ESCROW ACCOUNT A form of trust account in which advance payments are held on behalf of the payor until the contract allows their use by the payee or a third party. An account that a lender or mortgage servicer establishes to hold funds for the payment of expenses such as homeowners insurance and property taxes. Also known as an impound account.
ESCROW AGENT Any independent third party who receives items to be held in escrow, holds such items until transfer is allowed, and then delivers them. A neutral third party who ensures that all conditions of a real estate transaction are met.
escrow analysis A lender's periodic examination of an escrow account to determine if the lender is withholding enough funds from a borrower's monthly mortgage payment to pay for expenses such as property taxes and insurance.
escrow closing Escrow closes when all conditions of a real estate transaction are met and the title of the property is transferred to the buyer. The completion of a transaction whereby documents, consideration etc. are held in trust (either by the parties and their representatives or by an independent third party) pending the completion of certain conditions, at which time the items held in escrow are released and the transaction is completed.
ESCROW COLLECTIONS Moneys taken in by the agent and set aside for future payments as required by the contract (i.e., in a mortgage situation, for taxes, insurance, etc. on the property). Also known as "escrow deposits", "impounds" or "reserves".
escrow company A firm that acts as a neutral third party to ensure that all conditions established by the buyer, seller, and lender in a real estate transaction are met.
ESCROW DEPOSIT Similar to "escrow collections", the deposit of funds for the purpose of future payments required under the contract.
ESCROW DISBURSEMENTS The payment out of escrow funds of taxes, insurance, etc. as required by the contract. Also known as "escrow payments".
escrow payment Funds that a mortgage servicer withdraws from a borrower's escrow account to pay property taxes and insurance.
ESCROW REIMBURSEMENT The return to the borrower of left over funds held in escrow once the debt has been paid out.
estate The total assets of a person, including real property, at the time of death. 1. The nature and extent of a person's interest in real property. 2. The term used to described the collection of assets of a deceased person.
ESTATE AT SUFFERANCE The continued occupation of a premises by a tenant after the lease has expired or after the landlord has taken legal and appropriate steps to remove the tenant.
ESTATE AT WILL The occupation of a premises by a tenant for an undefined period, which either party may terminate at will.
ESTATE FOR LIFE Also known as "Life Estate". A legal interest in property which ends with the death of the person who is entitled to the interest.
ESTATE FOR YEARS Entitlement to land which allows a person to occupy, use and enjoy the land for a specified period of time.
ESTATE IN REVERSION The right of an owner to re-occupy land once the estate he has granted to another person (such as an estate for years or an estate for life) has come to an end.
ESTATE TAX A government levy against the property in the estate of a deceased person, payable out of the estate.
estimated closing costs An estimate of expenses incidental to the sale of real estate, including loan, title, and appraisal fees. These costs are in addition to the price of the property, and are prepaid at closing. Some are one-time expenses and some are recurring.
estimated hazard insurance An estimate of hazard insurance, also known as homeowner's insurance or fire insurance, to cover physical risks such as fire and wind damage. Lenders usually require coverage at least equal to the replacement value of the home.
estimated property taxes An estimate of property taxes to be paid semiannually, or monthly if the lender requires. The amount is based on local tax rates and assessed property value, which is based on the most recent sale price plus assessment updates (subject to local policies).
estimated taxes and insurance A calculation of monthly estimated taxes and insurance, used by a lender to evaluate a borrower's effective monthly housing expense.
estoppel Agency situation in which one party incorrectly states that another person is the agent, and a third person relies on that representation. A legal doctrine which blocks a person from taking a position on any fact which is contrary to a position that same person previously took on that same fact. Also blocks a party from re-opening an issue that has previously been decided by a court.
ESTOPPEL CERTIFICATE A document issued by an interested party setting out certain facts to which the issuer agrees to be bound. May be issued by a Condominium Corporation (setting out the common element fees for a particular unit, the amount in the corporation's reserve account, any special assessments against unit owners, etc.), by a mortgagor or mortgagee (setting out the terms, conditions, interest rate and principal outstanding) or by a tenant in a building to be purchased (setting out amount of rent, the amount of any rental deposit, etc.).
ET AL Latin meaning "and others".
ET CON Latin meaning "and husband".
ET UX Latin meaning "and wife".
European style A cabinetry term referring to a style of cabinet without a face frame. Also known as box cabinets.
EVALUATION An analysis of a property regarding its potential uses rather than its current value.
evaporator A system of coils in a refrigeration (or air conditioning) system that, when filled with cold refrigerant, cools the air around it. On a refrigerator, the evaporator is the coil inside the unit; an air conditioner's evaporator is inside the plenum on the furnace or air-handler.
EVICTION The forced removal of a tenant from occupation of a property. Also known as "Actual eviction". See also "constructive eviction". A legal procedure to remove a tenant for reasons including failure to pay rent.
EVIDENCE OF TITLE Instruments or documents that provide any proof or information regarding ownership of land.
examination of title An inspection by a title company of public records and other documents to determine the chain of ownership of a property. Similar to a subsearch: a review of the current title to a property for the purposes of establishing current apparent owners and encumbrances.
excavation The process of clearing trees, removing topsoil and grading land before a foundation is laid.
EXCEPTION An exclusion from coverage in a policy of insurance, usually referring to a known risk or defect for which the insurer assumes no responsibility.
exceptional depreciation A term used to describe damages to a building that are not the result of normal wear and tear.
exclusive agency An agreement to employ a particular broker. If another broker makes the sale, both are entitled to commissions.
EXCLUSIVE AGENCY LISTING A contract whereby the owner of a property grants a single agent or broker the right to market the property for sale.
exclusive buyer's agent (EBA) An agent, company, or franchise working exclusively for buyers as a fiduciary agent. EBAs do not represent sellers or list properties.
exclusive listing A contract that gives an agent the exclusive right to market a property for a specific period of time.
EXCULPATORY CLAUSE The term of a mortgage giving the borrower the right simply to surrender the property to the lender as payment for the loan without personal liability to the borrower for any shortfall.
executed contract A contract in which all parties have fulfilled their promises. 1. A contract which has been completely carried out by the parties. 2. A contract which has been signed by the parties.
EXECUTION 1. The act of signing a legal document. 2. A writ filed with a Sheriff of a jurisdiction evidencing a legal claim against the person named in the Writ. May attach to real property owned by the person named in the writ.
executor A person appointed to carry out the instructions in a will. If no executor is named in the will, a probate court will appoint an executor. The person or people appointed in a will to give effect to the wishes of the testator (the maker of the will) as set out in the will. A female executor may be called "Executrix".
EXECUTORY CONTRACT A contract which has not yet been completely fulfilled by one or more of the parties.
exemption The removal of property from the tax base. An exemption may be partial or complete.
exfiltration Air leakage from a building's interior to the environment.
exhaust fan Ventilating devices that remove water vapor, undesired smells, or smoke.
EXPENSE RATIO A comparison of the costs of owning and operating something to its potential gross income.
Experian Experian, formerly known as TRW Information Systems & Services, is one of the "Big Three" credit-reporting bureaus. Address: 505 City Parkway West, Orange, CA 92868. Phone: (800) 392-1122.
EXPOSURE (MARKET) A term used to describe the presence, through advertising, of a property that is for sale in the marketplace.
express agreement An contract in which the parties express their intentions in words.
EXTENSION The postponement of the completion date of an Agreement, agreed to by the parties to the Agreement.
FACADE An exterior wall of a building or house.
façade The part of a building facing a street or courtyard.
FACE LIFT Slang term for cosmetic changes to the appearance of a property which may improve the selling price.
FACE RATE OF INTEREST The rate of interest chargeable on a loan as set out in the loan document.
FACE VALUE The value of an item as set out in the instrument creating it or representing it.
facilitator A real estate professional who assists in a transaction but does not have a agency relationship with that party. Also known as transaction broker or intermediary.
Fair Credit Billing Act A federal law that governs credit and charge card billing errors. If a credit or charge card company violates any provision, consumers can sue to recover damages.
FAIR CREDIT REPORTING ACT A law which standardizes the form and rules of disclosure of credit reports created by consumer/credit reporting agencies and establishes procedures for the correction of errors on a person's credit report. A federal law designed to regulate procedures and prevent old or inaccurate information from staying in consumer credit files. The act gives individuals the right to inspect their own credit files, although the credit bureau may charge a fee.
Fair Debt Collection Practices Act A federal law which outlaws debtor harassment, and regulates collection agencies, original creditors' collection offices (if separate), and creditors' lawyers. The original creditor may be covered by state law.
Fair Housing Act Landmark federal law that makes it illegal to refuse to rent or sell to anyone based on race, color, religion, sex, or national origin. The 1988 amendments to the act expanded the protections to include family status and disability.
FAIR MARKET VALUE The value of an item as established by a consideration of how much an independent buyer would pay to an independent seller in a completely free transaction for the item.
Fannie Mae The official name of the Federal National Mortgage Association, it is a congressionally chartered, shareholder-owned company that buys mortgages from lenders and resells them as securities on the secondary mortgage market.
FARM MORTGAGE A mortgage secured against agricultural land.
FARMER'S HOME ADMINISTRATION (FMHA) U. S. Department of Agriculture agency providing financing for farmers, residents of rural areas, etc. A U.S. Department of Agriculture agency that provides credit to farmers and rural residents.
FARMLAND A category of land for zoning or other legal purposes, denoting property used for agricultural purposes.
fascia A flat board that runs horizontally along the eaves of a roof, typically capping the ends of the roof rafters to give the roof edge a more finished look and provide a base for attaching gutters.
FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC) A U.S. Government agency providing insurance to depositors of money into financial institutions up to a certain amount.
FEDERAL HOME BOARD U.S. board that regulates federal savings and loan associations.
Federal Home Loan Mortgage Corporation (FHLMC) The Federal Home Loan Mortgage Corporation is commonly known as Freddie Mac. The company buys mortgages from lending institutions, pools them with other loans, and sells shares to investors.
FEDERAL HOUSING ADMINISTRATION (FHA) Division of the Department of Housing and Urban Development, sets standards for the underwriting of private mortgages. Also insures residential mortgages made by private lenders. This government agency operates a variety of home-loan programs. Its most popular is the Section 203(b) program, which provides low-rate mortgages to buyers who make a down payment as small as 3 percent.
FEDERAL LAND BANKS Local banks providing long-term mortgages to farmers and owners of agricultural lands.
Federal National Mortgage Association (FNMA) Now officially dubbed Fannie Mae, this federally chartered agency buys mortgages from lending institutions, pools them with other loans, and sells shares to investors. The U.S.'s largest supplier of mortgages to home buyers and owners, a corporation established by Congress. The Federal National Mortgage Association (FNMA).
FEDERAL RESERVE BANK One of a set of twelve banks servicing one of twelve reserve districts in the U.S.A.
Federal Reserve Board A group of economists and other experts who set the nation's monetary policy. Its chief tool to control inflation is the power to control interest rates.
FEDERAL RESERVE SYSTEM (FRS) The central bank of the United States, controls supply of money, credit availability and benchmark interest rates. Made up of the twelve Federal Reserve Banks.
FEDERAL REVENUE STAMP Stamp affixed to deeds evidencing payment of the tax on the transfer of land required to be paid up until January 1, 1968.
Federal style The American home architecture style that evolved after the Revolutionary War. Details include bigger windows and a front doorway surrounded by glass and topped with an arched window.
FEDERAL TAX LIEN An encumbrance registered on title to a property securing a tax debt owed by the property owner to the national government.
Federal Trade Commission (FTC) The government agency that regulates companies and industries, from credit bureaus and collection agencies to timeshare operators and some creditors. National headquarters: Sixth and Pennsylvania Avenue NW, Washington, D.C. 20580. Phone: (202) 326-2222.
FEE APPRAISER A person who estimates the value of a property for a fee.
FEE SIMPLE The best title to property available, representing the absolute ownership of a parcel of land. This type of ownership, also called fee simple absolute, is the maximum interest a person can have in a piece of real estate. It entitles the owner to use the property in any manner they see fit, in accordance with state and local laws.
fee simple absolute This type of ownership, also called fee simple, is the maximum interest a person can have in a piece of real estate. It entitles the owner to use the property in any manner they see fit, in accordance with state and local laws.
fee simple defeasible The owner of the property holds a fee simple title subject to certain conditions.
FEE SIMPLE DETERMINABLE An estate in land where the owner's title to a property in fee simple is dependent on the occurrence (or non-occurrence) of a particular event. Usually represented by the inclusion of "As long as" in the deed.
FEE SIMPLE SUBJECT TO A CONDITION SUBSEQUENT An estate in land where the owner's title in fee simple may be terminated by the former owner or her heir's upon the occurrence of a particular event. The termination must be carried out by the former owner and is not automatic upon the occurrence of the event.
FEE SIMPLE SUBJECT TO AN EXECUTORY LIMITATION An estate in land where the owner's title in fee simple may be terminated by the occurrence or non-occurrence of a particular event, at which time title passes to a named third party.
FEE TAIL An archaic form, an estate in land where title to the property was limited to the owner and his descendants with no power to transfer. Usually created by a transfer to the person "and the heirs of his body".
FEES 1) The money required at the outset by a lender from the borrower or held back from the mortgage advance. 2) The amounts charged by a professional for services rendered.
fenestration A term referring to the way windows are arranged in a building.
feng shui An ancient Chinese design philosophy in which the positioning and physical characteristics of the home are believed to affect the fortunes of the owner.
FHA loans Mortgages that are insured by the Federal Housing Administration (FHA). The FHA operates loan plans for investors and purchasers of rural property, and provides low-rate mortgages to buyers who make a down payment as small as 3 percent.
FIDUCIARY A person charged by law and equity with a higher duty of care for another person. A person who, as a result of a relationship with another person, is required by law to place the other person's interests equal to or ahead of his own in all dealings involving that other person. The relationship is often created when the other person approaches the fiduciary to use the fiduciary's special skills and knowledge, for a fee, to benefit the other person. Real estate agents, lawyers, trustees, investment brokers etc. are often fiduciaries.
fiduciary duty The relationship of trust that buyers and sellers expect from a real estate agent. The term also applies to legal and business relationships.
FIDUCIARY RELATIONSHIP A relationship of trust and confidence between two people in which one person (the fiduciary) holds much more power, knowledge or skill than the other and is, therefore, held by the law to a higher standard of conduct.
field changes Modifications made on the construction site that do not match blueprints.
FIFTEEN-YEAR MORTGAGE A loan with payments amortized over a fifteen-year period, rather than the usual twenty-five-year amortization period.
fill dirt Soil brought in to solidify a finished foundation.
filled land An area where the ground has been raised by adding dirt, gravel, or other fill material.
FILTERING DOWN PROCESS The gradual decline in the value of a property, whether due to market forces, changes in desirability of neighborhood or deterioration of condition of the home, such that a property once owned by a high-income family might eventually be owned by a low-income family.
FINAL VALUE ESTIMATE The product of a real estate appraiser's completed work, an assessment of the value of a property based on all factors and taking into consideration the different evaluation methods available.
FINANCE CHARGE The total cost, in dollars, of a loan or mortgage over its life, including appraisal/application/commitment fees, financing insurance, interest paid over the life of the loan.
financed closing costs Closing costs that are added to the loan amount. This practice saves the borrower cash up front, but increases the borrower's monthly payment.
FINANCIAL INSTITUTION A generic term for banks, trust companies, credit unions, and perhaps other investment companies that deal with money, hold money, invest money and lend money.
FINANCIAL RISK An assessment of the possibility that a given investment or loan will fail to bring a return and may result in a loss of the original investment or loan.
FINANCIAL STATEMENT A document which sets out the assets, income, expenses and debts of a person or company to allow a third person to assess that person or corporation's financial health (i.e. when considering lending money to that person or corporation).
FINANCING The manner in which a proposed purchaser intends to make up the difference between cash on hand and the purchase price.
FINANCING STATEMENT A form of lien filed by a lender or creditor and registered against the personal property (all or specific items) of a debtor. Generally filed when a loan is secured against personal property.
FINDER'S FEE Commission paid to a mortgage broker for placing a mortgage with a specific institution. A fee in any amount that is paid to someone.
finish grade A finish that prepares a lot for landscaping.
FIRE AND EXTENDED COVERAGE INSURANCE A promise issued by a registered insurance company to compensate the owner of a particular property for losses as a result of specified risks (i.e fire, flood, storms, vandalism, etc.).
fire wall A buffer composed of fire-resistant material.
FIRM AND BINDING Description of a legal contract once all conditions have been removed. It is now legally enforceable by the parties to it.
firm commitment A promise made by a lender to loan money for the purchase of property. A promise from a lender to lend a specific borrower a specified amount of money on specified terms to be secured against a specific property.
FIRM OFFER An offer to purchase delivered to the potential Vendor by a potential Purchaser who will not negotiate any changes to the offer.
FIRM PRICE An indication in a real estate advertisement that the price asked for the property is not open for negotiation.
FIRST LIEN The registered legal claim which stands first in line to enjoy the proceeds of a sale of the property. Liens generally are ordered according to time or registration but various statutes allow some liens (realty taxes) to jump to the head of the line.
FIRST MORTGAGE A mortgage that, when registered, is first in line on the property, giving the lender superior right to the proceeds of the sale of the property over other, later claimants. The primary mortgage on a property. The first mortgage takes priority over all other voluntary liens.
FIXED EXPENSES Costs of owning and operating a property that are not discretionary and, except for occasional increases, do not change from month to month. Examples are realty taxes, insurance costs, etc.
FIXED INSTALLMENT The periodic payment made for principal and interest on a loan. The monthly payment on a home loan.
FIXED RATE MORTGAGE (FRM) A loan registered on title to the property against which it is secured which charges an interest rate that does not change over the term of the mortgage.
fixed time The specific weeks in a year that an owner of a timeshare arrangement has access to accommodations.
fixed-rate mortgage A home loan with an interest rate that will remain at a specific rate for the term of the loan. About 75 percent of all home mortgages have fixed rates.
fixer-upper A house that needs refurbishment or remodeling and usually sells at a below-market price.
FIXING-UP EXPENSES Moneys spent on minor repairs to improve the marketability of a property
fixture Personal property permanently attached to a house, such as drapery rods, toilets, built-in bookcases, or a furnace. An item which is attached to and forms part of the buildings or land itself and are, therefore, included in the sale or property unless specifically excluded in the contract.
FLAG LOT Description of the shape of a property, where access to a road is provided along the long, narrow "flag pole" and the usable land itself is the rectangular flag at the tend of the pole.
flashing Metal strips placed around chimneys, skylights, vents, windows, doors, beneath shingles, and along seams in the roof to prevent water seepage.
FLAT English term for apartment. A portion of a building designed to serve as a home for a single family group.
flat fee A set fee charged by a broker instead of a commission.
flat roof A roof with a level surface.
FLEA BAG Slang term for a cheap, run-down property.
FLIP The rapid turnover of a piece of property by one person who buys it for a certain price then sells it soon thereafter for more.
flip switch An electrical switch operated by pushing the control knob up or down.
float arm A wire-like device in some types of toilets that attaches a float ball to the ball cock.
float ball A round or oval ball that floats on top of the water inside the tank of some toilets. When it reaches its highest position, it shuts off the flow of water.
float floor drain A drain that diverts water from the basement to a collection area. Water is then removed with a sump pump.
FLOATING RATE Rate of interest chargeable on a loan that is variable according to a specified index or the national prime rate. The loan rate is said to "float" on top of the specified index by a set amount: i.e. the loan may be set at Prime Rate plus 2%, meaning if the Prime Rate is 6%, the loan interest rate will be 8%.
floating slab A concrete floor that is not connected to the foundation wall.
floating wall Walls built to withstand movement in the basement floor.
flood certification The process of determining whether a property is located within a known flood zone. If the property is in a flood zone, the lender will probably require federally provided flood insurance.
flood insurance Hazard coverage that is required in designated flood areas. A policy of insurance that specifically covers damage due to flood waters, required in designated flood areas.
flood plain Flat, flood-prone areas located along waterways. The area around a body of water which may at times be under water and may at other times be dry land, depending on the level of the water in the lake, river, pond, etc.
FLOOR The lowest the interest rate on a variable or adjustable rate mortgage may go.
FLOOR AREA The total space covered by all floors in a building.
FLOOR AREA RATIO (FAR) A comparison of the total area of the floor of a building with the total area of the land upon which it stands. Maximum or minimum FARs may be established by local zoning rules. The calculation of the floor area of all homes or buildings in a project. It is used in the planning and development of a site.
FLOOR PLAN A sketch of an existing or proposed building showing the design and layout of the building and the specifications of each room. May also show doors, windows, stairways and other features.
Florida rooms Enclosed porches built on the side or back of a home.
flue A chimney, usually made of metal, designed to exhaust unwanted gasses and byproducts from a combustion appliance such as a furnace or water heater. A fireplace also has a flue to carry away smoke.
flush door A flush door has smooth surfaces, as opposed to a panel door, which has raised or recessed panels.
flush valve The passageway between a toilet tank and bowl. When you flush a toilet, water rushes through the flush valve into the bowl.
flush valve seat The seal in the passageway between a toilet tank and bowl. A stopper, flapper, or seat ball plugs the flush valve seat .When you flush a toilet, the seat is opened and water rushes through the flush valve into the bowl.
FNMA (FANNIE MAE) The largest single lender on residential properties in the United States, generally purchases mortgages from primary lenders.
FOLIO The page upon which a land instrument is record in the public record. The Book is the "liber", the page is the "folio".
footing A concrete foundation that supports a structure.
FOR RENT BY OWNER (FRBO) Indication that the owner of a property is attempting to find a tenant for his property on his own, without employing an agent.
For Sale By Owner (FSBO) The seller acts as the selling agent and handles the sales process directly with the buyer or buyer's agent. In this situation, the seller does not pay a listing commission. Indication that the owner of a property is attempting to find a purchaser for her property on her own, without employing an agent. The owner acts as the agent to avoid paying a sales commission.
forbearance A course of action a lender may pursue to delay foreclosure or legal action against a delinquent borrower. Any indulgence a party gives to another party to a contract who is late in meeting her obligations under the contract.
FORCED SALE The marketing of a property as a result of some outside influence, such as bankruptcy, where the price obtained might not be optimum.
foreclosure Legal process by which a lender ends the borrower's interest in a property after a loan is defaulted. The lender may sell the property and keep the proceeds for mortgage and legal costs, using excess proceeds to satisfy other liens or return to the borrower. An enforcement process in which the lender under a defaulted mortgage takes title to the property for the purposes of selling it to recoup moneys owed under the mortgage.
FORESHORE The land on a water-side property that lies between the high-water mark and the low-water mark.
FORFEITURE The loss of a right, claim, interest or item of property as a result of one's failure to meet one's legal obligations. The relinquishing of property rights by a delinquent borrower.
FORGERY A document that is false, either as a result of being signed by someone other than the person represented to have signed it or as a result of being a false, worthless replica of a document that has value.
FORM REPORT A standardized appraisal document which requires the appraiser to present her findings in a prescribed form.
FORMAL CONTRACT A contract under seal.
FORWARD COMMITMENT A lender's promise to make a loan in the future.
foundation The support structure of a house.
four-way switch A device that uses three switches to permit an appliance or outlet to be operated from all three switches.
foyer The entrance hall to a home or building.
FRACTIONAL APPRAISAL An estimate of the value of one portion of a property.
FRACTIONAL INTEREST A legal claim or right to a portion of a property.
framing The construction of the skeletal framework of a house.
FRAUD The act of leading a person to believe something which you know to be false in a situation where you know the person will rely on that thing to their detriment.
FREDDIE MAC (FHLMC) Federal Home Loan Mortgage Corporation. A US agency which purchases first mortgages on residences. The common name for the Federal Home Loan Mortgage Corporation (FHLMC), a congressionally chartered institution that buys mortgages from lenders and resells them as securities on the secondary mortgage market.
FREE AND CLEAR A description of title to property which is unencumbered and subject to no competing claims.
FREEHOLD As opposed to leasehold. A right to or interest in property.
freehold estate An estate in which ownership is for an indeterminate length of time.
FREEHOLDER She who has a freehold interest in a property.
free-market lots Owners of these types of lots may hire any builder to construct their home.
FREE-STANDING BUILDING A structure which does not depend on other structures for support, an independent structure.
French doors Two adjoining doors inlaid with glass that open from the middle.
FRONT FOOT A measurement of the property line which runs along the side of a street.
front footage The measurement of a parcel of land by the number of feet of street frontage.
frontage The portion of property that borders a roadway or body of water. The measurement of a property's boundary that runs along the side of a particular feature (street, lake, ocean, river, etc.).
FRONTAGE ASSESSMENT A levy by a local government, usually to pay for the costs of building and maintaining roads and sidewalks, which is based on the frontage of each property along the street.
FRONT-END FEE A lender's charges to the borrower for the costs of the borrower's application for the loan.
front-end ratio A lender calculation that compares a borrower's monthly housing expense (principal, interest, taxes, and insurance) to gross monthly income. A comparison of a borrower's monthly cost of housing with that borrower's monthly gross income.
FULL DISCLOSURE The revelation to another party in a contract or legal dispute of all relevant information in one's possession. An agent acting for both parties in a real estate purchase must fully disclose this conflict of interest to all parties.
FULL-PRICE OFFER A proposal by a purchaser to buy a property at the price and on the terms asked by the vendor in her property listing.
full-service broker A real estate broker who performs all transaction services including listing and selling.
fully amortized adjustable-rate mortgage A mortgage that amortizes, or pays down, the balance of a loan.
FULLY AMORTIZING PAYMENT A periodic mortgage payment which, if paid consistently throughout the amortization period of the mortgage, will result in the total principal and interest owing on the loan being retired at the end of the amortization period.
FULLY ASSUMABLE MORTGAGE A land loan that may be transferred to a new owner without any change to the terms, as long as the new owner qualifies.
FULLY EXECUTED SALES CONTRACT An agreement in which all parties have agreed and signed to all terms of the agreement.
FULLY INDEXED INTEREST RATE The interest rate as set out in the variable or adjustable rate mortgage, equaling the index rate plus the float of the mortgage.
FUNCTIONAL OBSOLESCENCE The loss of use or value of an asset due to a change in the market demands. A property in Buffalo with no furnace may be considered to be functionally obsolete and, therefore, difficult to sell. A loss in value to an improvement resulting from functional problems caused by age or poor design.
FUNDING FEE The charge paid by the borrower to the VA for the mortgage insurance provided by the VA on a veteran's mortgage.
furnace An enclosed heating device powered by coal, oil, propane or natural gas.
furring strips Strips of wood used to support walls, ceilings, or floors on irregular or masonry surfaces.
fuse A small device in an electrical circuit that is designed to shut down the circuit in the event of an electrical overload or short circuit.
FUTURE ADVANCES Monetary payments under an already registered mortgage as a result of the occurrence of certain events, as in a construction loan where more money is advanced once the framing is completed, etc.
gable A triangular wall enclosed by the sloping ends of a ridged roof or a triangular decorative feature.
gable decoration A triangular filigree or panel fitted into the rake end of a gable roof.
GABLE ROOF An angled roof, triangular in shape. A ridged roof that forms a triangle at each end.
gag rule A provision in contracts signed by new buyers that prohibits the owners from publicizing complaints about the builder.
GAIN Any increase in value or monetary holdings.
GAMBREL ROOF A roof that has two, differently angled slopes on each side of the peak, the upper slope being flatter while the lower slope is steeper. A roof with two slopes, often seen on barns.
gap A defect in the chain of title; a missing document that raises doubt as to the true owner of the property.
GARDEN APARTMENTS A description of a kind of apartment unit which enjoys direct access to a lawn or other garden-like area.
gas valve A small faucet-like device that controls the flow of gas to an appliance such as a gas water heater, dryer, or oven. When the handle is turned in line with the gas pipe, the valve is open; when it is perpendicular to the pipe, it's closed.
GENERAL CONTRACTOR The central figure in most construction pyramids, the person hired by the owner to plan and oversee the entire job. Often hires subcontractors who specialize in the various trades required for the job (i.e. plumbers, electricians, framers, carpenters, etc.). The person who hires all of the subcontractors and suppliers for a project.
GENERAL LIEN A registered claim against property which, instead of attaching just to one property, attaches to all properties owned by the party against whom the claim has been made.
general plan A government's long-range land-use plan.
GENERAL WARRANTY DEED Instrument which transfers legal title to property in which the Grantor warrants clear title to the Grantee.
general-purpose circuit An electric circuit that supplies a number of outlets for lighting or appliances.
GENTRIFICATION The process in which a neighborhood is transformed from low-value to high-value properties.
geodesic dome A structure constructed of lightweight bars forming a grid of polygons.
GEORGIAN A classic looking, English-style house, rectangular in shape, large, with two or three storeys complemented by classic lines.
Georgian style Popular throughout the 18th century, this type of architecture is distinguished by a symmetrical façade, a prominent front entrance, and quoins (decorative blocks of masonry or wood set in the corners of the house).
GI LOAN Also known as "VA loan".
gift A cash gift a buyer receives from a relative or other source. Lenders usually require a "gift letter" stating that the money will not have to be repaid.
GIFT DEED Instrument which transfers legal title to property for no consideration (except perhaps natural love and affection).
gingerbread decoration An intricate, almost lacy, wood trim.
GINNIE MAC (GNMA) Government National Mortgage Association. Assistance in obtaining purchase mortgages.
girders Crossbeams that support floor joists.
glazed A window that has been fitted with a glass pane. "Double glazed" refers to a window with double panes.
glazier's point A small pointed metal clip that helps hold a pane of glass in a window frame.
GOOD AND MARKETABLE TITLE Ownership of a property which is free of competing claims and interests.
GOOD FAITH A term to describe a party's legitimate and honest efforts to meet her obligations in a given situation.
GOOD FAITH ESTIMATE A written statement of the anticipated costs of completing a loan transaction which must be provided by a lender to a borrower within 72 hours of the submission of the loan application.
good-faith estimate An estimate from an institutional lender that shows the costs a borrower will incur, including loan-processing charges and inspection fees.
Government National Mortgage Association (GNMA) Commonly known as Ginnie Mae, this agency buys home loans from lenders, pools them with other loans and sells shares to investors. Unlike similar agencies Fannie Mae and Freddie Mac, Ginnie Mae only purchases loans backed by the federal government.
GOVERNMENT RECTANGULAR SURVEY A regularized system of surveying land using 24-square-mile quadrangles which are then further divided into 6-square-mile parts called "townships", which are in turn subdivided into 36 1-square-mile "sections".
GPM (graduated-payment mortgage) A mortgage that requires a borrower to make larger monthly payments over the term of the loan. The payment is unusually low for the first few years but gradually rises until year three or five, then remains fixed.
grace period A specified amount of time in which a borrower may make a loan payment after its due date without penalty. The time a borrower is allowed after a payment is due to make that payment without incurring penalties.
grade The elevation of land above level ground. The contour of the land, usually around a building, which affects drainage patterns on the property.
grade level The flat or sloping surface upon which a house is built.
GRADIENT Expressed as a percentage, the rate of increase or decrease in the legal of land, the slope.
Graduate Realtor® Institute (GRI) A designation issued by the National Association of Realtors (NAR) to members who meet specific performance and education requirements for residential real estate sales.
GRADUATED LEASE A rental agreement in which the periodic rental payments increase at specified points in time.
GRADUATED PAYMENT MORTGAGE (GPM) A land loan in which the periodic payments increase at a stated rate over a stated period of time before levelling off for the remainder of the term of the loan.
graduated-payment mortgage A mortgage that requires a borrower to make larger monthly payments over the term of the loan. The payment is unusually low for the first few years but gradually rises until year three or five, then remains fixed.
GRADUATION PERIOD The interval between increases in the payments on a GPM.
GRADUATION RATE The rate at which the payments increase in a GPM, expressed as a percentage.
GRANDFATHER CLAUSE A provision in a law that ensures that the law is not retroactive, that it does not render a previously legal thing illegal. For example, a new zoning by-law requiring all houses to be at least five feet from the side lot line would not render illegal a 20-year-old house that stands three feet from the side lot line. The property would be described as "legal non-conforming".
granny flat Slang term for a separate unit in a house or above the garage, which in the past may have been occupied by an elderly relative.
GRANT The act of giving title to another. May also be used as a noun, meaning the instrument that transfers title.
grantee A person to whom an interest in a piece of property is conveyed. One who receives title.
grantor The person who conveys an interest in a piece of property to another person. One who gives title to another.
GRANTOR/GRANTEE INDEX An alphabetical listing of the parties to all transfers of land, cross-indexed by grantor, grantee and the property transferred.
Greek Revival style A style introduced in the United States at the end of the 18th century. Its most prominent feature is a pillar-anchored pediment forming a portico in the front of the house.
greenbelt Any stretch of park, open space or other natural setting in a community.
GROSS AREA The total floor space of a building, including unusable space, measured from the outside walls.
GROSS INCOME A person's earnings from all sources in a given period before expenses are deducted. The total income of a household before taxes or expenses are subtracted.
GROSS LEASABLE AREA The total usable, rental space in a building.
GROSS LEASE A rental agreement for the use of the property where the tenant pays a certain periodic amount which does not change as a result of changes in the various expenses of the property, which are the sole responsibility of the landlord.
GROSS MARGIN The difference between the interest rate chargeable on a variable or adjustable rate mortgage and the rate set by the index rate upon which the mortgage rate is based.
ground fault circuit interrupter A device that detects leakage of electrical current to the ground and prevents accidental shock.
GROUND LEASE A long-term lease of land (often 99 years) in which the tenant is allowed to improve the land and use it for the term of the lease at the end of which the land and all improvements revert to the control and occupancy of the owner.
ground rent The amount of money paid for the use of a piece of property that is a leasehold estate. Portion of rent attributable to the land alone.
group home A single-family residence used as a living space for unrelated people who require special care or supervision. A dwelling which has been adapted to house a number of un-related persons who share a common characteristic.
grout A type of mortar used to fill areas between tiles, stone, or marble.
growing-equity mortgage A fixed-rate mortgage that increases payments over a specific period of time. The extra funds are applied to the principal.
GROWING-EQUITY MORTGAGE (GEM) A mortgage with a fixed interest rate which has periodic payments which increase at intervals, the added money per payment being applied directly to the outstanding principal on the mortgage.
GUARANTEE 1. An enforceable warranty on the continuing usefulness of a product. 2. An agreement by a third party to a loan transaction to join in the transaction and to be held liable for the moneys secured by the loan instrument should the principal debtor fail to pay.
GUARANTEE MORTGAGE A land loan that has a third party added to provide added assurance that the obligations under the loan will be met. A loan guaranteed by a third party, such as a government institution.
guaranteed sales program A real estate brokerage program to purchase the seller's equity if the property does not sell during a predetermined period of time.
GUARANTY FEE Fannie Mae's fee for insuring a mortgage
gutters Horizontal channels installed at the edge of a roof to carry rainwater or melted snow away from the house.
guy A cable that guides or holds something, such as an antenna.
HABENDUM CLAUSE A clause or series of clauses in an instrument of conveyance (i.e. a Deed) which defines the extent of title (i.e. fee simple or such other title) being transferred to the new owner of land. From Latin "habendum et tenendum", meaning "to have and to hold". The "to have and to hold" clause that defines the quantity of the estate granted in the deed.
HABITABLE A description of a dwelling or property that is appropriate for human occupancy.
half-bath Also called a powder room, a half-bath contains a toilet and a sink but no bathtub or shower stall.
HALF-SECTION 320 acres of land, 72 half-sections make up a township.
HAMLET 1. A tragic prince of Denmark 2. A small community, smaller than a village.
HANDYMAN'S SPECIAL A descriptive term for a property which requires significant work to bring it up to normal standards of condition and repair. Often marketed at a lesser price. A house in fixer-upper condition.
HARBOR LINE A boundary set by local authorities marking the extent of the area allowed for development along the sides of a navigable river or other body of water.
HARD SELL A description of a style of salespersonship in which the potential purchaser is placed under extreme pressure and bombarded with information and sales pitches.
hardboard A material made from wood fibers that is designed to simulate wood.
hardwood Wood that comes from deciduous trees such as oak, walnut, and maple; typically used for fine interior finishes.
hazard insurance Also known as homeowner's insurance or fire insurance, hazard insurance covers physical risks such as fire and wind damage. Lenders usually require coverage for at least the replacement value of the home. A type of insurance designed to cover damage caused by a peril specified in the policy of insurance (i.e. fire, flood, etc.).
head jamb The top horizontal member in a door or window frame.
header A crossbeam above a window or door.
heat anticipator A component of a mechanical thermostat that shuts off the furnace or boiler just before the set temperature is reached to prevent overheating.
heat pump An electric cooling and heating system.
HEAVY HITTER Slang term for any person with substantial resources.
hectare The equivalent of 2.471 acres.
HEIGHT ZONING The establishment of local by-laws or ordinances which restrict the height of buildings in a certain area. May be used in areas near airports (for safety reasons) or natural attractions (to maintain the view) or simply to allow the flow of air or sunlight.
HEIR A person who is entitled by law to the property, rights, privileges or position of another person if that other person dies without a will (intestate).
HEREDITAMENT A descriptive term for any property that one is able to inherit.
HIATUS A break or gap. In discussions of land, an area of land that lies between two parcels of land but appears from legal descriptions and public records not to be a part of either. A gap between two parcels of land that is not included in the legal description of either property.
HIDDEN AMENITIES Qualities of a property which may not be immediately noticeable but add to the value of the property, such as high quality materials used in construction.
high density The concentration of housing units in a specific area or on a specific property.
HIGH RATIO MORTGAGE A mortgage in which the amount of money borrowed is equal to or greater than 75% of the purchase price/appraised value of the property against which it is secured. Will require some sort of insurance, usually provided by a government agency.
HIGH RISE A descriptive term for any building that has enough floors to make an elevator a necessity.
HIGH WATER LINE OR MARK The highest point on the shoreline to which water in a lake, river, stream or other body of water will rise under normal weather conditions.
HIGHEST AND BEST USE STUDY An analysis of a property which is aimed at discovering the most profitable way to develop the property.
high-rise Any building taller than six stories.
HIGHWAY In common parlance, a road which offers higher speed limits than a normal urban street. In legal parlance, any road which is available to use by the public.
hip roof A pitched roof with sloping sides.
HISTORIC DISTRICT A classification (whether under zoning, heritage or other authority) of a specific area of a community in which the buildings and improvements have a historical value or significance which may not be reflected in their market value. Designation as such a district may also involve strict rules regarding the way the buildings and properties are dealt with.
historic preservation The physical rehabilitation of a historic home or building, and the movement of the same name begun in the 1960s in the United States to preserve and protect landmarks and urban neighborhoods.
historic structure A home or building listed in the National Register of Historic Places and certified as historic by the U.S. Secretary of the Interior.
HISTORICAL COST A term describing the original cost of a project, stated in dollars of the time in which the project was completed, with no adjustment for inflation.
HISTORICAL SCENARIO An attempt to predict the interest rate fluctuations of a Variable or Adjustable Rate Mortgage on the basis of the behaviour of interest rates in a previous period.
HOLD HARMLESS CLAUSE Also known as "save harmless clause". A clause in a contract in which one party releases another party for legal liability for a stated risk.
HOLDBACK A percentage of a contract price which is retained by a contractor or lender until the project is complete and all bills for that project are paid. The percentage may be set by custom or by statute.
HOLDER IN GOOD FAITH A person who takes title to a property without being notified of a defect on title or a competing claim.
HOLDING OVER Also known as "overholding", the term used to describe the action of a tenant who retains possession of a premises after the lease has expired.
HOLDING PERIOD The span of time in which a particular party holds title to a property. May be expressed as the total time (i.e. five years) or as a specific period (May, 1999 to July, 2004).
hollow-core door A door with a hollow interior.
HOLOGRAPHIC WILL A testamentary document which is written entirely in the hand of the testator (the person making the will). Is a valid will in many jurisdictions despite the fact that it may not be properly witnessed, so long as it shows an intention on the part of the writer that the document be her will, it deals with the person's assets and there are no concerns with regard to fraud, coercion or lack of capacity. Originally recognized to aid soldiers in the field who, in the face of death, wished to settle their estate.
home equity conversion mortgage Loans made to older owners who want to convert equity into money. Because borrowers are qualified on the basis of the value of their home, the loan is not the same as a home equity loan. Also known as reverse mortgages.
HOME EQUITY CONVERSION MORTGAGE (HECM) Also known as a "reverse mortgage", a loan designed specifically for people without income but with a great deal of equity in their home (i.e. retired people). The loan may require periodic payments or may simply accumulate interest on the original principal until the property is sold (by the borrower or after the death of the borrower).
HOME EQUITY LINE OF CREDIT A special kind of loan (also known as a "revolving loan") which is secured against a property and allows the owner to borrow and repay money at her leisure. Periodic payments of at least accumulated interest are required but the loan is fully open: may be paid out in whole or in part at any time and, if there is still money available under the loan ceiling, the borrower may take more money for her use. An open-ended line of credit based on a homeowner's accumulated equity. Most loan amounts are limited to 75 to 85 percent of home's appraised value; withdrawals can be made at any time within the credit line's guidelines.
home equity loan A loan that allows owners to borrow against the equity in their homes.
HOME IMPROVEMENT LOAN A loan made for the purposes of making improvements to a property.
home inspection An examination of a home's construction, condition, and internal systems by an inspector or contractor prior to purchase.
HOME INSPECTION (REPORT) The written statement of the results of the inspection of a given property by a professional home inspector. Will show problems and potential problems with the property not always visible to an average purchaser (i.e. a deteriorating roof, an ancient furnace, termites, wood rot, basement seepage). Many purchasers make their offer to purchase conditional upon obtaining a satisfactory Home Inspection report.
HOME INSPECTOR A person who offers a service of making a physical inspection of homes. Qualifications may vary. A professional who evaluates the structural soundness and operating systems of a residence.
HOME KEEPER SM A form of Home Equity Conversion Mortgage offered by Fannie Mae to older homeowners to allow them to use the equity in their home to provide either a lump sum or periodic payments to themselves.
HOME OWNER ASSOCIATION A cooperative effort by property owners in a given neighborhood aimed at improving quality of life, providing a unified political voice or combatting identified ills.
HOME OWNER'S INSURANCE Liability coverage for property owners covering both loss/damage to property or dwelling and personal liability.
home price The price agreed upon by a buyer and seller, usually based on an appraisal of the house's market value. If there's a difference between price and appraised value, lenders will base their loan on the lower amount.
HOME RULE Common name for the state's transferring of power to the local governments to pass regulations regarding land use. The power of a local government to adopt its own land-use regulations.
home warranty A type of insurance that covers repairs to certain parts of a house and some fixtures.
HOMEOWNER'S (HOMESTEAD) TAX EXEMPTION A tax break for home owners offered in certain jurisdictions which sees property tax assessments reduced by a certain percentage as a result of the fact that the taxpayer resides in the property. May require evidence of the status of ownership to be filed periodically with taxing authority.
HOMEOWNERS' ASSOCIATION The non-profit organization that oversees the common elements in a planned unit development (PUD) or condominium project.
homeowners' association (HOA) A group that governs a subdivision, condominium, or planned community. The association collects monthly fees from all owners to pay for common area maintenance, handle legal and safety issues, and enforce the covenants, conditions, and restrictions set by the developer.
homeowners' association dues Monthly payments due to a homeowners' association, to be used for maintenance and communal expenses. Condominiums, townhouse complexes, and planned unit developments (PUDs) may require monthly homeowners' association dues.
homeowner's insurance This insurance includes hazard coverage for any damages that may affect the value of a house, in addition to personal liability and theft coverage.
HOMEOWNER'S ONCE-IN-A-LIFETIME TAX EXCLUSION A capital gain exemption of the first $125,000.00 in gains earned from the sale of a principal residence by a qualified taxpayer.
homeowners' warranty A special insurance policy that covers certain home repairs for a specified amount of time.
HOMEOWNER'S WARRANTY (HOW) PROGRAM A warranty program offered by a division of the National Association of Home Builders through certain builders. The program sets standards for construction and requires warranties ranging from one to ten years in duration on everything from minor defects in workmanship to major structural problems.
homestead A parcel of land used by the owner as a primary residence.
HOMESTEAD DEED A method of protecting some assets from creditors by registering a declaration on title to the owner's homestead property.
homesteading A document that to protects some of a home's equity from lawsuits.
HOMESTYLE MORTGAGE LOAN A mortgage specifically designed to allow owners to improve their existing homes.
homogenous A term used to describe an area or neighborhood where the property types and uses are similar and compatible.
hopper window A window that contains a single sash that tilts inward.
hose bibb A threaded faucet connection for devices such as a washing machine.
hot wire An ungrounded conductor that carries electrical current from the source. Hot wires usually (but don't always) have black or red insulation.
house wrap A polyethylene barrier wrapped around a house to save energy.
HOUSE-POOR A description of the state of having very little disposable income after paying the financing and carrying costs of one's home.
HOUSING AFFORDABILITY INDEX National Association of Realtors analysis, issued on a monthly basis, of the ability of the average family to afford the average home with only 20% down.
HOUSING AND URBAN DEVELOPMENT (HUD) Federal Agency charged with the duty of overseeing a number of enactments relating to housing in America.
HOUSING ASSISTANCE COUNCIL (HAC) Funded by HUD, an agency designed to support low-income housing development in rural areas.
HOUSING CODE Municipal rules setting minimum standards for dwellings.
housing discrimination The illegal practice of denying an individual or group the right to buy or rent a home based on race, color, religion, national origin, sex, disability, or family status.
HOUSING EXPENSE RATIO A comparison of a family's monthly gross income with the carrying costs of their home. The percentage of gross monthly income devoted to housing costs.
HOUSING FINANCE AGENCY State body whose function is to provide loans to citizens who cannot obtain home ownership loans through normal channels.
HOUSING STARTS An economic indicator, the number of dwelling units (including apartments) on which construction is begun in a given period of time.
HUD Abbreviation of (the U.S. Department of) Housing and Urban Development, a federal agency that oversees the Federal Housing Administration (FHA) and a variety of housing and community development programs.
HUD I SETTLEMENT STATEMENT The form in which the costs of purchasing a home are itemized.
HUD MEDIAN INCOME Used in determining eligibility for various HUD programs, the average income for a family in a specific area.
HUD-1 STATEMENT See "HUD I Settlement Statement".
HUD-1 Uniform Settlement Statement A closing statement or settlement sheet that outlines all closing costs on a real estate transaction or refinancing.
hugger A type of ceiling fan that uses little vertical space. It is usually used in homes with low ceilings.
humidistat Thermostat-like device that measures the amount of water vapor in the air and turns a humidifier or dehumidifier on and off accordingly.
HUNDRED PERCENT LOCATION The benchmark for comparisons, the property location which provides the best rental income per square foot for a particular type of building.
HVAC Heating, ventilation, and air conditioning.
HYBRID MORTGAGE A form of mortgage in which the compensation to the lender may include receiving income directly from the use of the property.
HYPOTHECATE To pledge as security for a mortgage an asset of which the pledgor retains possession (i.e. the dwelling upon which a mortgage is registered).
impact fees Fees collected from developers of new homes to pay for schools, parks, and other facilities.
IMPLIED CONTRACT An agreement which is not reduced to writing but is created, under the common law, on the basis of the behavior of the parties which suggests that they are acting under an agreement.
IMPLIED WARRANTY A guarantee of the condition of a thing or the truth of a statement which is created as a result of the actions of a party but not written down.
implied warranty of habitability Legal doctrine stating that all new homes are assumed to be fit for human habitation and meet all building codes.
IMPOUND The portion of a borrower's periodic payment on a loan that is collected to pay for items other than principal, interest or penalties (such as realty taxes, insurance premiums, etc.).
IMPOUND ACCOUNT The trust account held by a lender into which payments for insurance, taxes, etc., paid by the borrower are placed prior to being disbursed by the lender.
impounds A portion of the monthly mortgage payment that is placed in an account and used to pay for hazard insurance, property taxes and private mortgage insurance.
IMPROVED LAND Also known as "developed land". Opposite of "raw or vacant land". Land which someone has, by dint of their labour, taken out of the state of nature.
improvement A change that adds value to a house, prolongs its useful life, or adapts it to new uses.
IMPROVEMENT RATIO A comparison of the value of the improvements of a property with the value of the property without the improvements.
IMPROVEMENTS Things added to vacant land with the view to increasing its usefulness and value, such as buildings, parking areas, drainage works, etc.
IMPUTED INTEREST Interest which is deemed to have been charged on a loan by a court.
IN REM Latin term meaning "Against the thing." Used to describe a legal action which is taken against land rather than against the land owner, such as a bank's foreclosure on a defaulted mortgage.
INCHOATE Describes something that has been begun but never completed or a right that has arisen but is not yet enforceable (such as Dower rights).
INCOME APPROACH An appraisal technique whereby the potential of the property to produce income is used to assess its value.
INCOME PROPERTY A property which is owned or developed specifically to produce income for its owner. Property that is not occupied by the owner but is used to generate income.
INCOMPETENT Not capable, usually in the mental sense. When referring to a contract or will, a person who is not legally capable of signing and being bound to such a document.
INCORPOREAL PROPERTY Real estate in which a person has a legal interest but no right of possession and occupation.
incurable defect A defect in a property that cannot be fixed, such as an adjacent hazardous waste site, or one that would cost too much to repair relative to the value of the property.
INCURABLE DEPRECIATION The presence of a defect in an asset (i.e. a building) which is too costly to fix.
INDEMNIFY To take responsibility for the losses and damages suffered by another person.
INDEMNITY A document in which one party agrees to take responsibility for the losses and damages suffered by another party or parties.
INDENTURE Similar to a contract. An agreement between two or more parties, often referring to land.
INDEPENDENT APPRAISAL An estimate of the value of a property prepared by someone who has no interest in the property or, if a mortgage is involved, in the lender.
INDEPENDENT CONTRACTOR A legal term for a person who is hired to do work for another person but who is not an employee or agent of that person. The hiring person is not responsible for the actions of the Independent Contractor nor does she owe that Independent Contractor the same legal duties owed by an Employer to an Employee under labor and employment laws. A person hired to do a particular job, subject to the direction of a supervisor. An independent contractor pays for his or her own expenses and taxes, and receives no employee benefits. Most real estate agents are independent contractors.
INDEX Any rate published by an independent third party (the government, the federal bank, etc.) which serves as the base for calculating a variable item in a contract. (A Variable or Adjustable Rate Mortgage may use the Federal Bank's monthly prime interest rate as the index for the interest charged under that mortgage). Financial tables used by lenders to calculate interest rates on adjustable mortgages and on Treasury bills.
INDEXED LEASE A rental agreement where the amount of the rent to be paid changes in accordance with changes in a specified index (i.e. the cost of living index).
INDEXED LOAN Any loan whose interest rate is adjusted in accordance with a rate published by an independent third party (an "index").
INDIRECT COSTS Also known as "soft costs", those costs which are not automatically considered in a construction project.
Individual Retirement Account (IRA) A tax-deferred savings account in which a person may accrue retirement funds.
INDUSTRIAL PARK A parcel of land specifically developed to provide lots for industrial activities.
INDUSTRIAL PROPERTY A plot of land used for a factory or other industrial use.
in-file credit report A computer-generated report drawn from credit repositories and generally regarded as an objective history.
infill development Any significant new construction in an established area.
infill housing Home construction in established areas.
infiltration Air from the environment that penetrates a building.
inflation Inflation occurs when there is more money available than there are goods and services to be purchased. Mortgage rates, which are determined by the marketplace and the actions of the Federal Reserve Board and Wall Street, are sensitive to inflation fears.
INFRASTRUCTURE Term for the public-use improvements made to an area such as sewers, roads, bridges, and public utility installations. The roads, schools, parks, utilities, bridges, and communications systems in a community.
INGRESS The right to enter over a parcel of land not owned by you but not to occupy the land.
INHERITANCE TAX An assessment payable to a level of government based on the value of assets inherited.
INITIAL INTEREST RATE The rate chargeable on a mortgage on the day it is signed. The original interest rate on an adjustable rate mortgage.
initial rate cap A specific limit defined by some adjustable rate loans (ARMs) for the maximum amount the interest rate may increase at the expiration of the initial interest rate.
initial rate duration Most adjustable rate loans (ARMs) offer an initial interest rate below the current market rate. This initial or "teaser" rate expires after a period called the initial rate duration, which may last months or years.
INITIAL RATE PERIOD The period of time for which the "initial interest rate" is guaranteed on a Variable or Adjustable Rate mortgage before it begins to change according to its "index".
INJUNCTION An order of a court to stop a party from committing the act specified in the order.
inlet valve The mechanism inside a toilet tank that automatically fills the tank with water when the tank empties. The inlet valve is connected to the shutoff valve under the toilet.
INNER CITY A slang term for the older, central residential area of a municipality which, in many cases, has deteriorated into poverty.
INSIDE LOT Term for a property that is not on a corner at the intersection of two roads.
INSPECTION A physical examination of a person, document or other thing, such as a home.
inspection fee A fee paid to determine the present physical condition of the home, required by the lender in order to supplement the information contained in the appraisal report.
inspection report An examination of a home's exterior, foundation, framing, plumbing, electrical system, heating, air conditioning, fireplace, kitchen, bathroom, roof, and interior.
INSPECTOR Any person charged with the task of making a physical examination of a person, document or other thing. Could be employed by a government body (i.e. an electrical inspector, fire inspector) or by a potential purchaser (a home inspector).
INSTALLMENT A regular periodic payment.
INSTALLMENT CONTRACT Same as land contract. A purchase agreement in which the buyer does not receive the title to the property until all installments are paid.
INSTALLMENT LOAN A loan which is paid back in periodic payments.
INSTALLMENT SALE The sale of a property with the Vendor taking back a mortgage from the purchaser and paying the taxes on the sale proceeds as they are collected. A real estate transaction in which the sales price is paid in installments.
INSTITUTIONAL LENDER An accredited financial organization (i.e. a bank, trust company, credit union, etc.) which offers loans.
INSTITUTIONAL MORTGAGE A loan secured against real property offered to the land owner by a bank, credit union, trust company or other accredited financial organization. Opposite of "private mortgage".
INSTRUMENT A legal document in written form setting out certain rights of parties to it. A written legal document.
insulation Materials that slow heat loss, such as cellulose, glass fiber, rock wool, polystyrene, urethane foam, and vermiculite.
INSURABLE INTEREST A legal right to a property which results in the holder of that right suffering damages in the event of the destruction of the property.
INSURABLE TITLE Ownership of land which a Title Insurance Company is willing to insure. Title to property that a company agrees to insure against defects and disputes.
INSURABLE VALUE The cost of replacement of all improvements to a property which could conceivably be destroyed.
INSURANCE A contract in which one party agrees to compensate another party for any losses or damages caused by risks identified in the contract in exchange for the payment of a lump sum or periodic amounts of money to the first party. Owners and buyers can purchase various types of insurance including hazard, private mortgage, and earthquake. The policies guarantee compensation for specific losses.
INSURANCE BINDER Written evidence that insurance is in effect with regard to the property and the risks set out in the binder. Temporary in nature, the binder assures coverage until permanent coverage can be arranged. A temporary insurance arrangement usually put in force until a permanent policy can be obtained.
INSURANCE COVERAGE Term to describe the monetary limits and risks covered as set out in a contract or policy of insurance.
INSURED CLOSING LETTER A promise by a Title Insurance Company to a lender to pay for all costs and losses to the lender which might result from the actions of the Company's closing agent while closing a transaction.
INSURED MORTGAGE A loan secured against land for which an insurance policy exists promising to compensate the lender for all losses and costs resulting from the borrower's failure to meet her obligations under the loan agreement.
INTER VIVOS Latin meaning "during life". Used to describe a gift made during a person's lifetime (as opposed to a bequest in a will) or a trust.
INTEREST 1. A person's legal right to an asset or property. 2. The cost of borrowing money, charged as a percentage of the outstanding amount owed. The fee borrowers pay to obtain a loan. It is calculated based on a percentage of the total loan.
INTEREST ACCRUAL RATE The rate, stated as a percentage, at which interest accumulates on a mortgage. The rate at which interest accrues on a mortgage.
INTEREST ADJUSTMENT DATE The date upon which the borrower is required to pay accrued interest on the borrowed principal under a mortgage, which date falls one full payment interval before the first payment date as set out in the agreement. For example, if a mortgage is advanced on May 15 to be paid on the first day of each month, June 1 would be the interest adjustment date and July 1 the first payment date. On June 1, the borrower would be required to pay the interest that has accrued on the principal since the date of the advance (May 15).
interest paid over life of loan The total amount paid to the lender for the use of money during the time the money is borrowed.
INTEREST PAYMENT The portion of each periodic payment on a loan, expressed in dollars, which is allocated toward accrued interest.
interest rate The fee, expressed as a percentage, charged for a loan. The interest rate also helps determine the monthly payment. For adjustable-rate loans, the interest rate may change from its initial level.
INTEREST RATE ADJUSTMENT PERIOD The length of time between changes in interest rate on an Adjustable or Variable Rate Mortgage.
INTEREST RATE BUY DOWN PLAN A method of reducing the effective interest charged to a borrower. A third party (often a vendor) deposits a lump sum into an account, portions of which are then used to reduce the amount required from the borrower for each periodic payment over a set period of time.
interest rate buy-down plans For cash-short buyers, some sellers are willing to advance funds from the sale of the home to buy down the interest rate and reduce the buyer's monthly obligation.
INTEREST RATE CAP A clause in an Adjustable or Variable Rate Mortgage which limits the change in the interest rate charged. May limit change within a single adjustment period or over the life of the mortgage. The maximum interest rate charge allowed on the monthly payment of an adjustable rate mortgage during an adjustment period.
INTEREST RATE CEILING The highest rate of interest chargeable under a Variable or Adjustable Rate Mortgage, as set out in the mortgage contract. The highest interest a lender can charge for an adjustable rate mortgage.
INTEREST RATE FLOOR The lowest rate of interest chargeable under a Variable or Adjustable Rate Mortgage, as set out in the mortgage contract.
INTEREST-ONLY LOAN A debt for which the periodic payments are enough to pay only the interest which accumulates on the principal over the payment period. Principal is due at maturity. The borrower pays only the interest that accrues on the loan balance each month. Because each payment goes toward interest, the outstanding balance of the loan does not decline with each payment.
INTERIM FINANCING 1. A construction loan to pay for costs up to completion; 2. Another name for a bridge loan, a short-term loan designed to cover a gap of time between the purchase of a new home and the sale of the old when equity becomes available. Short-term financing used by sellers to bridge the gap between the sale of one house and the purchase of another (also known as bridge or swing loans). A construction loan is also a form of interim financing.
INTERNATIONAL ARCHITECTURE Simple style of house, with little or no ornamentation.
INTERSTATE LAND SALES ACT Federal law administered by HUD regulating the practice of the sale of land between people in different states.
INTERVAL OWNERSHIP Where title in a property is shared among a group of people, each of whom is entitled to occupation of the property for a specified period of time each year. Also known as "time-sharing".
INTESTATE 1. A person who dies without leaving a will. 2. A description of having died without leaving a will.
INVERSE CONDEMNATION A court remedy for a private land owner whose interest or ownership in land has been interfered with or taken away outright by a governmental body.
INVESTMENT PROPERTY A piece of real estate that is owned for the purposes of financial gain, either through appreciation in value or through income from the property Real estate that generates income, such as an apartment building or a rental house.
INVOLUNTARY CONVERSION Loss of land through natural forces or through government action.
INVOLUNTARY LIEN A claim registered against a property without the consent (and sometimes without the knowledge of) the owner of the land.
IRREVOCABILITY DATE Time and day specified in an offer until which the offeror may not retract the offer, until which the offeree may accept the offer.
IRREVOCABLE Unchangeable. Not able to be recalled.
ITALIAN VILLA A large, two- or three-storey house in the Latin style, with overhanging eaves and masonry construction.
jack plane A woodworker's tool designed for shaving off small amounts of wood. The workhorse of the plane family, a jack plane is a good length for truing up boards, fitting doors, and similar tasks.
jalousie window A window that consists of vertical rows of horizontal glass slats that operate together by a crank mechanism that connects all the slats.
jamb A surface that lines an opening for a door.
JOINT AND SEVERAL LIABILITY When two or more people agree to take on the same obligation (such as a loan), they may each be responsible for a certain portion of the obligation or they may each be responsible for the entire obligation. When the contract states that liability is "joint and several", it means that all parties together are responsible for the obligation ("joint") but also that each party individually is responsible for the entire obligation on their own ("several"). The creditor may sue all of them or just one for the debt.
joint liability The responsibility of two or more people to fulfill the terms of a home loan or debt.
JOINT OWNERSHIP AGREEMENT A contract between two or more people who have an interest in the same piece of property which sets out their respective rights and obligations with regard to the property and also may set out the way in which the parties agree to manage the property.
JOINT TENANCY A way in which two or more people may hold title to property together. Owning as joint tenants means each owner has an equal right to the entire property, that none of the owners may sell, bequeath or encumber their portion of the property without the consent of the other owners and that, in the event of the death of one of the owners, the surviving owners automatically retain title to the entire property by "Right of Survivorship". Compare with "tenants in common". Ownership by two or more people that gives equal shares of a piece of property. Rights pass to the surviving owner or owners.
JOINT TENANTS See "joint tenancy".
JOINT VENTURE A project which two or more persons undertake together, sharing the cost, the risk and the reward.
JOINTURE Made in lieu of dower, a freehold estate created in a property which lasts for the life of the widow which takes effect upon the death of the husband.
joist Part of the framing that provides the structure for a floor. In most homes, floor joists are made of 2-by-8s or larger lumber set on edge and spaced 16 inches apart, from center to center.
JUDGMENT A decision rendered by a court. If a monetary award is involved, it may become a lien on property owned by the losing party. The decision of a court or law. If a court decides that a person must repay a debt, a lien may be placed against that person's property.
JUDGMENT CREDITOR A party who, by virtue of a court decision, is entitled to a monetary payment from another party.
JUDGMENT DEBTOR A party who, by virtue of a court decision, is required to make a monetary payment from another party.
JUDGMENT LIEN A general lien which applies to all property owned by a judgment debtor located in the county where the judgement is recorded.
JUDICIAL FORECLOSURE An enforcement action by a lender, the act of selling the property to recover the mortgage debt after obtaining judgment of a court. A procedure to handle foreclosure proceedings as civil matters.
JUMBO LOAN (MORTGAGE) A loan for more money than the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation will fund under its mandate. Loans that exceed the conforming limits for mortgage loans. In 2003 the conforming limit was set at $322,700 for first-time mortgages on single-family homes in the continental United States, and at $484,050 for those loans in Alaska and Hawaii. Fannie Mae and Freddie Mac update the conforming limits on an annual basis.
JUNIOR LIEN (MORTGAGE) A claim against property which is behind at least one other lien in priority.
junior mortgage A loan that is subordinate to the primary loan.
JUNK FEES Slang term for extra fees charged by a lender on a mortgage loan.
JURISDICTION The extent of authority: 1) of a court over a certain matter or person; 2) of a government organization over a territory.
JUST COMPENSATION Payment of a fair and reasonable amount for property taken from a private person by a government body.
key A groove in the top of a footing.
KEY LOT A piece of property which is pivotal to the success of a proposed development.
KEY TENANT For a commercial or office development, the resident who attracts other residents or customers, such as a major chain store in a mall or a law firm in an office building. May gain favorable lease provisions as an incentive to lease space.
keys Little fingers of plaster that squeeze through lath. When they harden, these hold the plaster in place.
keystone An angular block centered over a door or window in a header or mantle.
KICKBACK Gratuitous payment made to a person for a referral of business.
KICKER Additional compensation for a lender or investor, the right to share in the income from the property in addition to payments of principal and interest. Also known as "equity kicker" or "lender participation".
kick-out clause A clause in a sales contract that allows a seller to accept one buyer's contingent offer, then back out without penalty if a second buyer makes a better offer.
KIOSK Any small structure that stands alone, usually for the purpose of supplying a product or service (i.e. the attendant's booth in a parking lot, a lottery booth in the center of the promenade of a mall).
kit home A structure that contains prefabricated components and is put together by a contractor.
knee wall A wall-like structure that supports roof rafters.
knob-and-tube wiring An old-fashioned wiring system that has been replaced by fuses and circuit breakers.
L/V Short form for "Loan-to-value ratio".
lally column A circular pipe filled with concrete that supports girders and beams.
laminate Plastic material used to seal countertops. Also known by the trademark name Formica.
lanai A porch-like room or open-sided living room commonly found in homes in warm climates.
LAND BANKING The practice of acquiring land now for future use.
LAND CONTRACT See "Contract for Deed".
LAND LEASE A rental agreement for the use of land but not the improvements thereon.
LAND SALE LEASEBACK An arrangement where a person sells property to another but immediately rents it from the purchaser.
LAND SURVEYOR A qualified professional who is trained to establish, measure and draw out the boundaries of properties and the improvements (buildings and other features) located thereon based on land records and site examinations.
LAND USE PLANNING (REGULATION) An effort by a municipality to establish guidelines for the use and development of land within its boundaries.
LAND USE SUCCESSION The gradual change in the use of land in a neighborhood over a period of years.
LAND/BUILDING RATIO A comparison of the value of the land with the value of the improvements to that land.
LANDLOCKED A term describing a property that does not border on any public road.
LANDLORD Also known as "lessor". The owner of a property who allows other persons to occupy a property in exchange for periodic payments of rent.
LANDMARK Any object which is fixed to the ground and may serve as a guidepost for a survey or boundary. Also known as "monument".
landscape A home's surroundings can range from a shrub-studded emerald lawn to a native-plant xeriscape. It is a major component of curb appeal.
LANDSCAPE ARCHITECT A professional designer of ground works who takes into consideration the need for drainage, utilities installations, buildings, grading while creating a pleasing appearance. A professional who holds a degree in landscape architecture and is trained in horticulture, design, and planning.
landscape contractor A professional who carries out the plans of a landscape architect or a landscape designer.
landscape designer A landscape designer has training in horticulture and landscape planning, but does not necessarily hold a degree.
lap siding A type of siding composed of horizontal boards with the bottom of one piece overlapping the top of the piece below it.
LATE CHARGE A fee or penalty to be paid to a lender for a payment which is delivered after it is due. A fee imposed by a lender when the borrower does not make a payment on time.
late payment A payment a lender receives after the due date has passed.
LATENT DEFECTS Problems with a property or building which are not visible to the casual observer but which may surface later. A vendor must disclose to a purchaser any serious latent defects of which he has knowledge. An invisible problem in a piece of property such as bad wiring, termite damage, or lead paint.
lead A metallic chemical element present in older dwellings, primarily in the form of lead-based paint and lead plumbing. Exposure to lead has been found to be a health risk.
leader A pipe that carries rainwater from the gutters to the ground, sewers, or wells.
LEASE A written agreement to rent a property or part of a property from the owner. Sets out premises rented ("demised premises"), amount to be paid, payment period, and other rights and obligations of the landlord and tenant. A binding agreement that contains the terms and conditions of a renter's occupancy.
lease option A lease that contains the right to purchase the property for a specific price within a certain time frame.
lease purchase A type of delayed closing. The lease purchase contract sets the closing date and provides remedies to the seller if the buyer defaults.
LEASE WITH OPTION TO PURCHASE A rental contract which allows the tenant to purchase the property during the period of the lease. Payments under the lease may be credited (in whole or in part) against the purchase price.
LEASED FEE Description of the ownership interest in a property of a landlord who has rented the property to a tenant.
leasehold The limited interest in a property held by a tenant; primarily the right to inhabit it for a specified period of time. At the end of the lease, the property reverts to the owner or landlord.
LEASEHOLD ESTATE An interest in a property for a period of time as specified under a rental contract. An arrangement in which the borrower does not own a specific piece of property but possesses a long-term lease.
LEASEHOLD IMPROVEMENTS Additions to a rented premises made by the tenant, often in the nature of a fixture, which may be removed by the tenant at the end of the lease term if no damage ensues to the premises and if the lease permits.
leasehold interest The limited interest in a property held by a tenant; primarily the right to inhabit it for a specified period of time. At the end of the lease, the property reverts to the owner or landlord.
LEASEHOLD MORTGAGE A loan secured against a tenant's interest in a property.
LEASE-PURCHASE MORTGAGE LOAN A Fannie Mae loan which allows qualified persons to lease a property from a nonprofit organization with an option to purchase the home. Payments are made against the loan principal and interest but with a portion going into a savings account toward the purchase price.
LEGAL AGE Set by statute, the age at which a person ceases to be a minor and is able to contract on his own behalf.
legal blemish Blemishes on a piece of property, such as a zoning violation or fraudulent title claim.
LEGAL DESCRIPTION A description of a piece of real estate that is drafted according to legal requirements and which clearly and adequately establishes the identity of the property so described. Found in most instruments for registration on title to land. A specific way of identifying and locating a piece of real estate that is acceptable to a court.
LEGAL NAME Usually a person's full name as given at birth, may be changed by filing the proper forms and paying the appropriate fee.
LEGAL NOTICE Informing one or more persons of a fact, action or intention in a period of time and in a fashion required by a statute, contract or court order.
LEGAL RESIDENCE The place where one resides (may refer to a street address or, for income tax purposes, a country of residence).
LEGAL TITLE The bundle of rights of ownership that a person acquires in purchasing a piece of property, which may be defended against competing interests.
LEGATEE The beneficiary under a will.
LENDER Any individual or company which provides money to third parties in return for periodic payments of interest and principal over time. A bank, savings institution, or mortgage company that offers home loans.
LENDER OPTION COMMITMENTS A contract between a lender and potential borrower which allows a lender to provide certain loans at certain times on terms set out in the contract but also allows the lender to choose not to provide such loans.
LENDER'S TITLE INSURANCE A policy of Title Insurance which covers the interest of a lender on a mortgage registered on title to a property.
LESS THAN FREEHOLD ESTATE An interest in land which is limited to a certain period of time.
LESSEE A tenant under a lease. A person to whom property is rented under a lease.
LESSOR A landlord under a lease (the owner of the property being rented). A person who rents property to another under a lease.
LET 1. (Verb) To lease or rent part or all of a property to a third party. 2. (Noun) A served ball that strikes the net but still falls in to the service court in tennis.
LETTER OF COMMITMENT See "commitment Letter".
LETTER OF CREDIT An agreement between a bank and a borrower which allows the borrower to use money on the bank's credit.
LETTER OF INTENT A written indication to the owner of property that the writer will be making an offer to purchase the property. A formal statement that the buyer intends to purchase the property for a certain price on a certain date.
LEVEL-PAYMENT MORTGAGE A land loan which requires regular, even payments.
leverage The use of a small amount of cash (for example, a 5 percent down payment) to buy a piece of property.
LEVY To charge or assess a tax or charge. The amount of money a governing body certifies to be raised from the property tax.
LIABILITIES The debts or obligations of a person. A borrower's debts and financial obligations.
LIABILITY INSURANCE A contract made with an insurance company to cover costs arising out a person's responsibility for injuries to others. A policy that protects owners against any claims of negligence, personal injury, or property damage.
LIABLE To be legally obligated or responsible for something or to someone.
LIBER Latin for "book", the volume in which land records are held.
LIBOR Acronym for "London Interbank Offered Rate." An index used to determine interest rate changes for adjustable rate mortgages.
LIEN A legal claim against property for moneys owed. A claim laid by one person or company on the property of another as security for money owed.
LIEN HOLDER The person who has the claim against the property.
LIEN WAIVER The surrender or passing up on one's right to a claim.
LIFE CAP The maximum interest rate chargeable under an adjustable or variable rate mortgage over its life. Limits the amount that a loan rate can change during the mortgage term. For example, if the rate on an adjustable-rate mortgage begins at 5 percent and has a life cap of 6 percentage points, it can't go over 11 percent.
LIFE ESTATE A limited right in a property, to use or occupy the property for the life of the person holding the estate after which title reverts to the grantor or a named third party.
LIFE TENANT A person who enjoys rights of occupation of property for life.
life-cycle cost analysis An analysis of a building project's expected operating, maintenance and replacement costs, calculated by an architect.
LIFETIME PAYMENT CAP The maximum increase or decrease in the amount of each periodic payment allowable over the life of an adjustable or variable rate mortgage.
lifetime rate cap In an adjustable rate loan (ARM), a maximum interest rate or "ceiling" that may not be exceeded under any circumstances over the entire life of the loan.
LIGATION BOND A written promise made by a borrower for a sum of money in excess of the principal amount of the loan. The lender may sue the borrower on this promise.
LIKE-KIND PROPERTY Similar property.
LIMITED LIABILITY Responsibility or obligation which is restricted to the limits set out.
limited partnership Real estate syndicates and other investment groups use this type of ownership.. A general partner makes the group's investment decisions, oversees the investment and is principally liable for any losses.
LINE OF CREDIT A very flexible form of loan in which the lender agrees to make a certain amount of money available to the borrower at a certain rate of interest. The borrower may use as much of the amount available as she wishes and may pay out all or any part of the amount owing at any time or re-borrow such funds at her leisure.
LINEAL MEASUREMENT The distance from one point to another measured in a straight line, along the ground.
LINK A lineal measurement equaling 7.92 inches.
lintel A horizontal piece over a door or window that carries the weight of the structure above it.
liquid assets Cash and all other assets that can be converted to cash relatively quickly. Liquid assets can include money in savings and checking accounts, money-market accounts, and most certificates of deposit.
liquidated damages A sum of money specified in the purchase contract to be paid by one party to the other in the event of a breach of contract.
liquidity The ability to sell an asset at a price close to its true value and convert it into cash in a short period of time.
LIS PENDENS Latin meaning "suit pending", a recorded notice of a legal claim which may affect ownership of a parcel of land.
LIST To place a property up for sale in the public forum, to add it to the list of properties for sale.
LISTING The agreement that allows a real estate professional to market a property or the actual notice of the property's availability and features. A piece of property placed on the market by a listing agent.
listing agent A broker or sales agent who has contracted with a seller to handle the marketing and sale of a piece of property.
listing broker A real estate broker responsible for the listing of the property and representing the interest of the seller. (Also called a listor or seller's broker.)
LISTING BROKER (AGENT) The real estate professional who acts for the vendor in marketing a property for sale. As opposed to Selling Broker (Agent) -- the agent representing the purchaser.
listing inventories The known number of houses for sale within a given market.
LITIGATION Legal action in pursuit or furtherance of a claim.
live-in partnership An arrangement in which two unrelated people purchase a home.
live-work space An officially designated dwelling in which the occupant conducts a home-based business or enterprise.
load-bearing wall A wall that supports not only its own weight, but the weight of other parts of a home. Also called a bearing wall.
LOAN See also "mortgage". A transfer of money or other property from one party to another upon the expectation that the money or other property will be returned (often with additional payments as well).
LOAN APPLICATION The form completed by a potential borrower which provides information the prospective lender requires to assess the borrower's suitability for a loan. The first step toward submitting a home loan requires the borrower to itemize basic financial information.
LOAN APPLICATION FEE The charge paid by the borrower for the honour of requesting a loan and of having the lender consider the request. A fee charged by lenders to cover expenses incidental to a loan application.
loan commitment A promise by a lender or other financial institution to make or insure a loan for a specified amount and on specific terms.
loan officer An official lending institution representative who is empowered to act on behalf of the lender within certain limits.
loan origination fee The lender requires a loan origination fee (or points) to cover the direct costs of arranging the loan.
loan term The time set by a lender for a buyer to pay a mortgage. Most conforming loans have 30-year or 15-year terms. In the case of balloon loans, payments are based on the amortization period and a final payment due at term.
loan type The type of loan determines its borrowing limit, down payment requirements, and qualifying rules. Available loan types include conforming, jumbo, FHA, and VA.
loan-to-value ratio (LTV) The ratio of the total loan amount to the value of the property. For lending purposes, the value is equal to the purchase price or the appraised value, whichever is lower.
local improvement district (LID) A legal district established by state law to benefit a specific area. Districts issue bonds to finance improvements such as sidewalks and sewer systems, then levy assessments on real estate in the affected area to repay funds.
LOCATION The most important factor in the value of a property.
LOCK OR LOCK IN Obtain a commitment from a lender to guarantee a certain interest rate or other loan feature for a set period of time.
LOCK PERIOD The time span over which the lender guarantees a feature of a loan.
lock-in A lender's commitment to a borrower to guarantee (or "lock in") a specific interest rate for a limited amount of time.
lock-in period A period of time during which the borrower is guaranteed an agreed-upon interest rate, even if market rates rise. The longer the period, the higher the cost (in points) to the borrower.
loft A living space not partitioned into rooms or a small space built above a larger room.
LOG CABIN A dwelling made of unfinished logs, rough in texture, old-fashioned, rustic. Homes constructed of rough-hewn timbers; a standard form of housing during the settlement of the United States.
LOSS MITIGATION The duty of any person claiming damages against another person, actions designed to alleviate the injury suffered or to reduce the cost of that injury to that injured party.
LOT A measured section of land, often a particular parcel of land on a registered plan.
LOT LINE The legal perimeter of a parcel of property, often shown on a survey of the property.
louvers Slatted panels mounted in the upper portion of a gable wall to provide attic ventilation.
low density A low concentration of housing units in a specific area.
low down-payment loan A home loan that requires the borrower to make only a small down payment before obtaining the financing needed to purchase a house.
lowball offer An offer made to a seller that is substantially below market value.
LOW-BALL OFFER A slang term for an offer to purchase a property with an offered purchase price much lower than that asked for. An attempt to take advantage of pressures on the vendor to sell by asking him to accept much less than the property may be worth.
low-documentation loan A mortgage that requires only minimal verification of income and assets.
low-emissivity A coating or film applied between panes of glass in high-efficiency glazing; abbreviated "low-E."
LTV (loan-to-value ratio) The ratio of the total loan amount to the value of the property. For lending purposes, the value is equal to the purchase price or the appraised value, whichever is lower.
main girder The main support running between foundation walls to carry the weight of a floor.
main water shut-off valve The primary valve that halts the flow of water from the water meter into the home.
MAINTENANCE COSTS The expense of keeping a property in a good state of repair.
MAINTENANCE FEE Charge to a unit holder in a condominium or cooperative complex for that person's share of costs of keeping the common-use portions of the complex in a good state of repair. The monthly assessment paid by homeowners' association members for the repair and maintenance of common areas.
MAJORITY 1. More than 50%. 2. The age of majority is the age in years at which a community considers a human being capable of handling his own affairs and legally liable for his actions.
MALL Commonly used to refer to the entire shopping complex but properly a reference to the pedestrian area of the mall that connects shopping areas.
managed-competition lots Lots in which buyers choose between one of several builders.
MANAGEMENT AGREEMENT A contract between an owner of a property and a property management firm in which the firm accepts periodic payments for acting as supervisor of the affairs of the property.
MANAGEMENT FEE The property manager's compensation.
MANAGEMENT PLAN A written document in which the property manager sets out its goals and the approaches it will use to accomplish those goals in a given period of time for the property.
MANDATORY DELIVERY COMMITMENT A lender's written promise to deliver certain funds at specified dates upon terms set out in the commitment.
mansard roof A roof with four sides that slope upward from the roof edge to a square peak.
mantel The facing of stone, marble, or other material around a fireplace.
MANUFACTURED HOUSING Known as "pre-fab" housing, any dwelling that is assembled out of components (i.e. walls, floors, roof) constructed off-site and then brought to the building lot. Prefabricated homes that can range from simple trailers to large dwellings.
MARGIN The difference or the added amount. In mortgages, the difference between the index interest rate and the interest rate charged on the variable or adjustable rate mortgage. Expressed in the contract as a percentage (i.e. "prime plus three per cent"). A percentage added to the index and fixed for the life of the loan. When the initial interest rate on an adjustable-rate loan has expired, the interest rate moves toward the sum of its index plus a margin.
MARGINAL LAND Land whose value is limited. The cost of making it capable of producing income is generally very close to the income it would produce.
MARINA A facility located on a body of water which provides docking, storage, maintenance and other facilities for boats.
market conditions Factors affecting the sale and purchase of homes at a particular point in time.
MARKET PRICE The consideration actually paid for an asset in an arm's-length transaction.
MARKET RENT Also known as economic rent, the amount the owner could charge and obtain for the lease of a property in the current economic circumstances.
MARKET RENTAL RISK The possibility that the market rent for a property will change due to changing market forces, making a long-term, fixed rent lease more or less desirable.
MARKET SEGMENTATION Analyzing sub-markets within a greater market.
MARKET STUDY An analysis of the reaction of the market to influences such as location, demand, extra-market economic events, etc.
MARKET VALUE An estimation of the price that could be obtained for a particular asset if it were sold in an arm's length transaction on the current market. The price that a piece of property sells for at a particular point in time.
MARKETABLE TITLE Ownership of land that is without competing claims or other defects, such that it could be sold without complication. A good or clear title that is free of defects.
MARKETING PLAN A written description of how a salesperson intends to advertise a given property to obtain the best price within a reasonable time.
masonry The brick or stone work on a building.
MASTER ASSOCIATION An organization of homeowners in a large condominium or planned unit development (PUD) which includes representatives from other, smaller homeowner organizations.
MASTER LEASE The dominant lease in a property, under which one or more sub-leases may exist.
master-planned community A suburban plan that includes homes and commercial, work, educational, and community facilities.
mastic Construction adhesive, usually applied with a caulking gun.
MATERIAL BREACH A contravention of the terms of a contract by one of the parties that is so large that it changes the very nature of the agreement between the parties and allows the innocent party to treat the contract as being at an end and pursue legal remedies (recision, damages, specific performance) from the contravening party.
material defect Any defect in a specific property that could either affect a buyer's decision to purchase it or affect the property's value, such as a cracked foundation.
MATERIAL FACT An important fact about one or more of the issues involved in the contract which, if known to all parties, may result in a different contract or no contract at all. Any information about a specific property that could affect a buyer's decision to purchase it, such as an upcoming zoning change in the neighborhood.
MATURITY DATE The date upon which a mortgage loan comes due and payable.
maximum financing A loan amount within 5 percent of the highest loan-to-value ratio allowed for a property.
MEAN HIGH TIDE The level to which the water rose on an average day over a previous period of time (years or decades).
MEANDER LINES A vivid description of the measurement used in surveying to set out the boundary of a water course (i.e. a stream or river).
mechanical systems A home's plumbing, wiring, heating, and cooling systems.
MECHANIC'S AND MATERIALMAN'S LIENS A claim against property that arises as a statutory right of any person who supplies work or materials to a property and is not compensated for that work. See also "construction lien".
mechanic's lien Subcontractors or suppliers sometimes will file an encumbrance, or mechanic's lien, against a property to seek payment.
median price The price of the house that falls in the middle of the total number of homes for sale in an area.
mediation A dispute-resolution process in which a neutral party works to resolve contract differences.
MEETING OF THE MINDS In order for a contract to be enforceable, the parties to it must come to a common understanding of the terms of their agreement. If no such common understanding has occurred with regard to a material clause in the contract, the contract may be voidable. This common understanding is referred to at common law as a "meeting of the minds".
MEGALOPOLIS A spiffy new term for urban sprawl, situations where the expansion of several cities in a particular area has created one continuous city, even if the different parts retain their own name (Boston, New York, Philadelphia, etc.).
MENACE Coercion, pressure. A threatening act which is aimed at forcing a person to act against their wishes.
merged credit report A report that draws information from the Big Three credit-reporting companies: Equifax, Experian, and Trans Union Corp.
MERGER The combining of two or more independent bodies into a single body.
MERIDIANS Used in government survey method, lines which form the north-south portion of the grid.
METER Also known as metre. The metric system's basic unit for linear measurement, equal to 39.37 inches. 1/10th of a meter is a decimeter; 1/100th is a centimeter; 1/100th is a millimeter. A device that measures electrical current or water flow to a property.
meter pan A piece of equipment through which the service conductor runs.
METES AND BOUNDS An older way of describing land in registered instruments. Starting at a recognizable point (the meeting of two roads, the corner of a lot), the description then describes the boundaries of the land by indicating distances and directions for each boundary (i.e. "South 100 feet" or "South 73 degrees, five minutes west for a distance of 100 feet"), returning at the end of the description to the beginning point. A time-honored land surveying method of describing land in terms of shape and boundary dimensions.
METROPOLITAN AREA The land which is located in a city and in the surrounding areas which can be said to be still part of the economic or political sphere of the city.
MIDDLEMAN A slang description for a person who acts to bring together the parties to a transaction.
MILE Linear measurement equaling 5,280 feet, 1,760 yards, 1,609 kilometers, or 8 furlongs. Note, a nautical mile is equal to 6,080 feet.
MILITARY CLAUSE A term of a residential lease which allows a tenant who is a member of the military to terminate the lease upon being transferred to another place without suffering any penalty.
MILL 10 per cent of a penny. In many jurisdictions, property tax assessments are based on a mill rate.
MINERAL DEED An instrument which transfers to the purchaser only an interest in the subsurface portion of the property, while retaining to the vendor the surface and air rights.
MINERAL LEASE A contract between the owner of a property and another party allowing the other party to explore and exploit any mineral deposits found on the property for a limited period of time in return for a periodic payment.
MINERAL RIGHTS The legal interest in the valuable items found below the surface of a property.
MINIMUM DOWNPAYMENT The least amount of money a purchaser can provide toward the purchase price of a house under a mortgage loan program.
MINIMUM LOT SIZE The smallest size allowable for an independent parcel of property under a zoning by-law or ordinance provision.
MINIMUM PAYMENT The lowest amount a borrower is allowed to pay toward a loan, line of credit or other debt in a given period of time.
MINIMUM PROPERTY STANDARDS The bare essentials in the way of construction and lot location required by the Federal Housing Administration (FHA) before it will underwrite a mortgage on a residential property.
MINIMUM RENT The lowest amount the landlord will accept under a lease contract with a variable rent.
MINIMUM-GUARANTEED PERCENTAGE LEASE A lease whereby the landlord is paid periodic rent as a percentage of the gross (or net) sales of the tenant of the premises but where the tenant agrees that the rental payments shall not drop below a specified amount.
MINOR A person who is too young to be considered legally competent according to the laws of the jurisdiction.
mint condition Mint condition, or blue-ribbon condition, refers to a house that looks as close to new as possible.
MISNOMER An error regarding a name.
MISREPRESENTATION A statement of a fact that turns out to be false. May be innocent, negligent or fraudulent.
MISTAKE An innocent error. If a mistake is made by all parties to a contract about a material fact, the contract may be voidable.
miter The manner in which two boards that meet at right angles are cut so that ends do not show. Miters are usually 45-degree cuts.
mixed-income housing A neighborhood that contains houses of widely varying prices.
MIXED-USE COMMERCIAL PROJECT A development which is designed to mix two or more "uses" of land together (i.e. a shopping center which offers office space for dentists, etc.)
mixed-use development A project that combines several different functions, such as residential space above a commercial establishment or an entire development combining commercial, residential, and public accommodations.
MLS (multiple listing service) The service combines the listings for all available homes in an area, except For Sale By Owner (FSBO) properties, in one directory or database.
MOBILE HOME A dwelling that sits on wheels and may be moved, often under its own power.
MOBILE HOME PARK An area specifically designed to allow for permanent or semi-permanent stationing of mobile homes.
MODEL HOME A dwelling built first by a developer to allow potential purchasers to see what the finished product will look like once the other homes in the development are completed.
MODIFICATION A change to the terms of a contract. A change in the terms of a loan agreement.
modified annual percentage rate (APR) The modified APR is an index of loan cost based on the standard APR and adjusted for the time the borrower expects to hold the loan.
MODULAR HOUSING See "manufactured housing".
molding Decorative trim applied to walls, ceilings, and window and door openings.
money market account Accounts that work like money market funds and allow individual investors to participate in managed investments and withdraw funds under most conditions.
money market funds A mutual fund that pools the resources of individuals to invest in certain managed investments.
monolithic slab A slab that is part of the footings.
monthly association dues A payment due monthly to a homeowners' association, to be used for maintenance and communal expenses. Condominiums, townhouse complexes, and planned unit developments (PUDs) may require monthly homeowners' association dues.
MONTHLY DEBT SERVICE The periodic payments required to remain current on all outstanding loans.
MONTHLY FIXED INSTALLMENT Periodic payment that is applied toward accumulated interest and reduction of principal.
MONTHLY HOUSING EXPENSE The total of the costs of maintaining a home per month, including financing, realty taxes and house insurance.
MONTHLY TOTAL EXPENSES The total when monthly housing expense is added to monthly debt service.
MONUMENT Any kind of marker to indicate the boundary or corner of a parcel of land, used by surveyors.
MORATORIUM A temporary ban or halt to a specific activity.
MORE OR LESS A term used in metes and bounds descriptions and in Agreements between Vendors and Purchasers of land to indicate that the measurement given may not be exact.
mortar Cement-based material that provides the base for brick, stone, and other masonry materials.
MORTGAGE A loan which is secured against property (i.e. registered on title as a claim or encumbrance on the property). Often used to purchase the property itself. In casual use, a sum of money borrowed to purchase a home at a certain interest rate using the property as collateral. In formal use, a mortgage is the legal document that pledges property as collateral for a loan.
mortgage acceleration clause A clause that allows a lender to demand repayment of the entire loan balance in a lump sum under certain circumstances, such as when the home is sold, title is changed, the loan is refinanced, or the borrower defaults on a scheduled payment.
MORTGAGE BACK Also known as a "vendor take-back mortgage". Financing of a purchase of property whereby the vendor accepts only a portion of the purchase price up front and accepts a mortgage (with periodic payments and interest chargeable) for the remainder.
MORTGAGE BANKER A firm that offers mortgages for property purchases but, at times, may require financial support from larger institutions to help cover the outlay of cash. A company that provides home loans using its own money. The loans are usually sold to investors such as insurance companies and Fannie Mae.
MORTGAGE BROKER A middleman who serves to bring borrowers together with lenders. Offers the service of doing the shopping for the borrower while often collecting a fee from the chosen lender rather than from the borrower. A company that matches lenders with prospective borrowers who meet the lender's criteria. The mortgage broker does not make the loan, but receives payment from the lender for services.
MORTGAGE COMMITMENT See "commitment letter".
MORTGAGE CORRESPONDENT An authorized agent of a lender for a geographic area.
MORTGAGE DISABILITY INSURANCE A policy of insurance which promises to pay periodic mortgage payments for the borrower during any future period that borrower may be disabled from working and, therefore, incapable of making the payments himself.
MORTGAGE INSURANCE A policy of insurance which promises to pay out the amount owing in the event that the borrower defaults. Required by lenders on some loans to protect lenders from a possible default. Most conventional loans with down payments or home equity percentages that are less than 20 percent of the home value require private mortgage insurance (PMI).
MORTGAGE INTEREST DEDUCTION A tax break for people who pay mortgage interest on their homes.
MORTGAGE LIFE INSURANCE A policy of insurance which promises to pay out the remaining balance owing on a mortgage should the borrower die. The amount payable by the insurer declines as the mortgage is paid down and the policy ends upon the paying out of the mortgage. A special type of insurance that will pay off a mortgage if the borrower dies before the debt is retired.
MORTGAGE LOAN SERVICING The lender's actions in collecting mortgage payments, allocating payments to principal, interest and escrow accounts, paying out property taxes and insurance over the life of the loan.
MORTGAGE LOAN UNDERWRITING The action of reviewing an application for a loan and then advising the lender as to the risk factor in making the loan.
MORTGAGE PROGRAM The bundle of features of a particular kind of mortgage offered to the public.
MORTGAGE VALUE The estimate worth of a particular asset which is established for the purposes of obtaining financing secured against that asset.
MORTGAGEE The lender in a mortgage transaction. Also known as "chargee". A bank or other financial institution that lends money to the borrower. The borrower is considered the mortgagor.
MORTGAGEE IN POSSESSION A lender that has taken over control and occupancy of a property upon default of the borrower to collect income from the property and prepare for foreclosure and sale.
mortgage-interest deduction The tax write-off that the Internal Revenue Service allows most owners to claim for annual interest payments made on real estate loans.
MORTGAGOR The borrower, purchaser or homeowner in a mortgage transaction. Also known as "chargor". The person who borrows money to purchase a house. The lender is called the mortgagee.
mortise lockset A doorknob and latch set designed to fit into a rectangular pocket cut into the edge of a door.
MOST PROBABLE SELLING PRICE An estimation of the price a property is most likely to realize in a given market.
motivated buyer A buyer with a strong incentive to make a purchase.
motivated seller A seller with a strong incentive to make a deal.
move-in condition A house that is ready for a new occupant.
move-up buyer A buyer who has purchased a home before and is looking for a bigger or more expensive home.
mullion A vertical dividing bar between windowpanes or panels.
multidwelling property A property that contains individual units for several households but carries only one mortgage.
MULTI-DWELLING UNITS A property which may have one owner but offers a number of homes for separate people or families.
MULTIFAMILY HOUSING Similar to multi-dwelling units, a building which features two or more family dwellings within the same structure. May require special zoning.
multifamily mortgage A mortgage on a multifamily dwelling (typically an apartment building) with more than four families.
MULTIPLE DWELLING Also known as multi-dwelling unit.
MULTIPLE LISTING SERVICE (MLS) A service created and run by real estate professionals which gathers all of the property listings into a single place so that purchasers may review all available properties from one source. The MLS also deals with commission splitting and other relations between brokers and agents. A service that combines listings of all available homes in an area into one directory or database, with the exception of For Sale By Owner (FSBO) properties.
multiple offers More than one purchase offer made on a property. Multiple offers commonly occur in seller's markets or hot neighborhoods.
MUNICIPAL ADDRESS The city, street and number on the street by which a property is known. Also known as "mailing address" but not the same as "legal description".
municipal housing inspector Inspectors employed by cities or counties to check all construction sites and verify that contractors are meeting building codes.
MUNICIPAL ORDINANCE A rule set down by a local government.
MUNICIPALITY A generic name for any organized local government (a city, town, etc.).
MUNIMENTS OF TITLE Written documents which may be used to prove an owner's title to a property.
muntin A wooden division that separates panes of glass in a multi-paned window or door.
MUTUAL ASSENT A shared acceptance by two or more parties.
MUTUAL RESCISSION The act of ending a contract by obtaining the agreement of all parties to the contract to treat the contract as being at an end.
NAHI (National Association of Home Inspectors) A professional association of independent home inspectors whose members must meet the group's education and performance requirements. Call (800) 448-3942 for list of NAHI-certified inspectors in your area.
nail pops Nails in load-bearing parts of new homes that pop out slightly due to settling of the structure.
NAR (National Association of Realtors) A trade organization for real estate agents and brokers who become members by agreeing to abide by the organization's code of ethics. Members may call themselves Realtors.
NAR Code of Ethics A formal code of ethics and standards of practice established by the National Association of Realtors (NAR) and by which its members must abide.
NATIONAL APARTMENT ASSOCIATION (NAA) Organization of apartment owners.
NATIONAL ASSOCIATION OF CORPORATE REAL ESTATE EXECUTIVES (NACORE) Organization of business people involved in transactions dealing with property owned by corporations.
National Association of Exclusive Buyer Agents National trade organization of buyer's brokers whose members do not accept property listings. Call (800) 986-2322 for information and referrals.
NATIONAL ASSOCIATION OF HOME BUILDERS (NAHB) Organization of home builders.
National Association of Home Inspectors (NAHI) A professional association of independent home inspectors whose members must meet the group's education and performance requirements. Call (800) 448-3942 for list of NAHI-certified inspectors in your area.
NATIONAL ASSOCIATION OF INDEPENDENT FEE APPRAISERS (NAIFA) Organization of real estate appraisers, offering professional designations to qualified persons.
NATIONAL ASSOCIATION OF MASTER APPRAISERS Organization of real estate appraisers, offering the professional designation of "master appraiser".
NATIONAL ASSOCIATION OF REAL ESTATE BROKERS (NAREB) Organization of real estate salespersons and brokers.
NATIONAL ASSOCIATION OF REAL ESTATE LICENSE LAW OFFICIALS (NARELLO) Organization of members of state real estate licensing agencies.
NATIONAL ASSOCIATION OF REALTORS (NAR) Organization of Realtors. A trade organization for real estate agents and brokers who become members by agreeing to abide by the organization's code of ethics. Members may call themselves Realtors.
NATIONAL ASSOCIATION OF REVIEW APPRAISERS AND MORTGAGE UNDERWRITERS Organization offering professional designations.
National Council of State Housing Agencies Nonprofit clearinghouse of information on local and state housing agencies. Consumers may call for names of agencies in their area. Phone: (202) 624-7710.
National Foundation for Consumer Credit Nonprofit clearinghouse of information on nonprofit credit counseling centers nationwide. Consumers may call for names of centers in their area. Phone: (301) 589-5600.
NATIONAL REALTY COMMITTEE Government lobby group for large land owners and developers.
NATIONAL SOCIETY OF REAL ESTATE APPRAISERS Organization of real estate appraisers, offering professional designations.
NATURAL VACANCY RATE The normal, average or traditional percentage of rental properties in a community that are not leased or occupied.
needs-based pricing An asking price based on factors such as the funds required to pay off the seller's mortgage, the cost of remodeling, or the purchase of another house.
NEGATIVE AMORTIZATION When the periodic payments on a loan are not sufficient to pay the interest which has accumulated during the previous period resulting in an increase rather than a decrease in the amount owing on the mortgage. Occurs when a borrower's monthly payment is too small to cover both the principal and interest of a loan, so the outstanding balance of the loan actually grows larger with each payment. Many adjustable rate mortgages are susceptible to this.
NEGATIVE AMORTIZATION CAP A limit, expressed as a percentage of the principal, of the negative amortization allowed under a variable or adjustable rate mortgage.
NEGATIVE CASH FLOW When a business or property generates less money in a given period than the cost of operating and maintaining it.
negative-slope driveway A driveway that drops from street level to the garage.
NEGOTIABLE INSTRUMENT A document which has a cash value which may be traded, given or sold.
NEGOTIABLE RATE MORTGAGE See adjustable rate mortgage or variable rate mortgage.
NEGOTIATION The act of discussing an issue between two or more parties with competing interests with an aim of coming to an agreement.
NEIGHBORHOOD An area of a municipality which is identifiable by a common use, a common atmosphere or a common business area.
NEIGHBORHOOD LIFE CYCLE The pattern of development and change of a neighborhood over a period of time.
neo-traditional planning Planning of a community that favors new home development with such traditional features as grid-street patterns, prominent front porches, backyard garages, multi-use buildings, and housing clustered near commercial service areas.
NET CASH FLOW The amount of money leftover from the income of a property after all costs and expenses of the property have been paid. Income from an investment property after expenses such as principal, interest, taxes, and insurance are subtracted.
NET EFFECTIVE INCOME A person's gross pay minus federal taxes.
NET INCOME The amount of money left over after all costs and expenses have been paid.
NET LEASABLE AREA The area in a building which is available for rent to tenants (excludes common areas, wasted space, etc.).
NET LEASE A rental agreement wherein the tenant pays a portion of the expenses of the property in addition to the rent set out in the agreement; the landlord receives the full amount of the rent paid with no liability for expenses.
NET LISTING The marketing for sale of a property under an agreement between the agent and the owner in which the parties agree to a sale price (the net price). The vendor is guaranteed to receive the net price while the agent's commission is equal to the amount in excess of the net price for which the property actually sells. May not be legal in some jurisdictions. A listing agreement in which the broker's commission consists of the amount above a net price set by the owner. If the net price is not met, a commission is not earned.
NET OPERATING INCOME (NOI) The income from a property or business left over after the costs of operating the property or business have been paid.
net worth The worth of a person or company based on the difference between total assets and liabilities.
neutral bus bar Grounded metal bar inside an electrical service panel or subpanel to which all neutral and grounding wires are connected.
neutral wire A grounded conductor that carries electrical current back to the source from an electrical device. Neutral wires usually (but don't always) have white or gray insulation.
NEW ENGLAND COLONIAL A two and a half storey, early-American house which is generally symmetrical in shape with a shingle-covered gable roof, often made of clapboard siding.
NEW ENGLAND FARMHOUSE Another simple, symmetrical, early-American house, often with a steeply inclined roof and white siding.
NEW TOWN A planned community in which a large, undeveloped parcel of land is designed and built as an independent community along a carefully structured plan.
new urbanism A community design philosophy that favors the return of new home development with such traditional features as prominent front porches, backyard garages, multi-use buildings, and housing clustered near commercial service areas.
niche A small recessed area in a wall, traditionally arched at the top.
NO BID Where the VA chooses not to acquire a property in foreclosure upon default but instead to pay out on the amount it has guaranteed of the mortgage (generally 60% of the principal).
NO CASH-OUT REFINANCE The replacement of a matured loan with a new loan where no additional principal is borrowed and added to the loan.
NO CHANGE SCENARIO A method of calculating the future payments required under a variable or adjustable rate mortgage on the assumption that the index (and therefore the interest chargeable on the mortgage) will not change.
NO MONEY DOWN Slang description of real estate purchase strategies which allow the purchaser to obtain title to a property while paying little or no money of her own.
no-cash-out refinance The amount of the new mortgage covers the remaining balance of the first loan plus closing costs and any liens, and yields no more than 1 percent of the new loan's principal in cash.
no-competition lots A lot in which the buyer's home will be constructed by a preselected builder.
no-documentation loan A loan application that does not require verification of income but typically is granted in cases of large down payments.
NOMINAL LOAN RATE The interest rate stated on the loan agreement.
NON-ASSUMPTION CLAUSE A term of a mortgage contract that forbids the transfer of the mortgage to a new owner without prior consent of the lender. A loan provision that prohibits the transfer of a mortgage to another borrower without lender approval.
non-conforming loan A non-conforming loan is any loan that doesn't meet the qualifications or is too large to be purchased by Fannie Mae or Freddie Mac. The current conforming loan limit is $252,700.
NON-CONFORMING LOAN/MORTGAGE A mortgage or loan that is not eligible for Fannie Mae (FNMA) or Freddie Mac (FHLMC) programs.
NON-CONFORMING USE The occupation and use of a property in a fashion which is contrary to the zoning regulations for the property. A Legal Non-conforming Use is one where the non-conforming use predates the zoning by-law such that, as long as it is continued, it is legal.
NONDISTURBANCE CLAUSE A term of a mortgage which guarantees that leases regarding the subject property will be allowed to continue uninterrupted in the event of mortgage default.
NONEXCLUSIVE LISTING A real estate listing to which no one agent or broker has claim.
non-liquid asset An asset such as a house that is not easily turned into cash.
NON-PERMANENT RESIDENT ALIEN A category of person who lives and works in the U.S. but is expected to return to her country of origin in the future. May face certain restrictions when it comes to qualifying for a mortgage.
nonrecurring closing costs One-time-only fees for items including an appraisal, loan points, credit report, title insurance, and home inspection.
non-solicitation order An order issued by the secretary of state to brokers and agents, prohibiting them from soliciting listings in a designated area.
NORMAL WEAR AND TEAR Damage to the condition of an asset which results from use and the passage of time.
nosing The front edge of a stair tread that extends over the riser.
not in my back yard (NIMBY) A response sometimes given by neighborhoods and communities to proposed changes or development.
NOTARIAL COPY A facsimile of a document which has been examined by a Notary Public and certified to be an accurate reproduction of the original.
NOTARIZE To confirm the signature of another in one's official capacity as a notary public.
NOTARY PUBLIC A designation authorized by law and administered by the government, allowing a designated person to verify and certify signatures and copies of documents.
NOTE A written instrument of indebtedness, promising to pay a certain person a particular sum of money upon stated terms. A legal document that requires a borrower to repay a mortgage at a certain interest rate over a specified period of time.
NOTE RATE The interest rate as set out in the mortgage/loan contract. The interest rate specified in a mortgage note.
NOTICE Written warning to another of a person's intention to do something or take some (legal) action.
NOTICE OF DEFAULT The written notice sent by a lender to a borrower stating that the borrower has not met his obligations under the loan contract and the lender may take legal action to enforce the agreement. A lender's initial action when a mortgage payment is late and attempts to reconcile the issue out of court have failed.
NOTICE TO QUIT A notice from a landlord to a tenant ordering the tenant to leave the property.
NOTORIOUS POSSESSION Occupation and control of a property which is obvious and accepted by the public. May lead to a claim of title under the rules of adverse possession if the possessor is not the owner of the property.
NOVATION The substitution of a new person for one of the parties to an agreement, on consent of all people involved. A release of liability to the first borrower of a loan, and the substitution of a subsequent borrower with the lender's approval.
NUISANCE A legal term referring to any use of land which interferes with the use and enjoyment of neighboring lands. A nuisance may be actionable by the injured party.
NULL AND VOID Unenforceable, no longer of any effect. A contract for which a condition precedent has failed is considered "null and void".
OBJECTION The statement by the Purchaser of a concern regarding title to the subject property which the Purchaser requires the Vendor to correct before closing. Also known as "requisition".
OBLIGEE The lender in a loan transaction -- the person to whom, as a result of her actions, another person owes an obligation. See also "mortgagee" or "chargee".
OBLIGOR The borrower in a loan transaction -- the person who owes an obligation to another.
OBSOLESCENCE The loss of value or usefulness resulting from advances in technology and the passage of time. Loss in value because a home's design and construction have become obsolete.
OCCUPANCY The physical control and possession of a building or property.
OCCUPANCY PERMIT Issued by local building departments, permission to enter and occupy a newly built or renovated dwelling after an inspection has established that there are not potential threats to the safety of occupants.
OCCUPANCY RATE The percentage of available rental space that is actually rented and in use in a given building or community.
OFFER To make available, to express a willingness (whether in writing or orally), in the case of real estate, to inform another party of your willingness to sell or buy a specific property on terms set out in your offer. An offer, once made, may be accepted at any time before it is rescinded. Once accepted, the offer and acceptance generally form a binding contract.
OFFER AND ACCEPTANCE Components of a contract, applicable to the real estate situation where a Purchaser may make an offer on a property and the Vendor may accept that offer.
OFFER TO PURCHASE A written expression of a person's willingness to purchase a certain property on terms expressed in the offer.
OFFER TO SELL In general, a written expression of a person's willingness to sell a certain property on terms expressed in the offer.
OFFEREE The person who receives an offer.
OFFEROR The person who makes an offer.
OFFICE OF INTERSTATE LAND SALES REGISTRATION A HUD agency which has the responsibility for enforcing the Interstate Land Sales Full Disclosure Act.
OFFICE PARK Similar to an industrial park but for offices, a property designed and developed specifically to attract corporate offices and provide them with all facilities required to carry on business.
OFFICIAL MAP The pictorial depiction of the land-use control areas of a municipality used by the local government.
OFF-SITE COSTS Expenditures for facilities required by a particular development but located elsewhere (such as streets, schools, sewers and waste disposal facilities).
OFF-SITE IMPROVEMENTS Facilities which are required for the use and development of a particular property but which are located elsewhere.
OFF-STREET PARKING Spaces for cars which are located on private property rather than on public streets. Local by-laws may require that any new commercial, residential or retail development provide a certain number of parking spaces as part of the development.
OIL AND GAS LEASE An agreement in which a property owner allows another person to exploit any oil or gas deposits on the land for a certain period of time in exchange for periodic payments.
ON OR ABOUT Legalese way of noting that the exact date of an event has not been determined.
online real estate listings Properties listed for sale on the Internet.
ON-SITE IMPROVEMENTS Work completed on a property which adds to its value or utility.
OPEN AND NOTORIOUS See "notorious".
OPEN END MORTGAGE A loan which is specifically drafted to allow the borrower to borrow further funds at a later date without requiring the preparation and registration of new mortgage documentation.
OPEN HOUSE An advertised period of time in which a property which is for sale is available for inspection by prospective purchasers. A marketing tool in which a listing agent opens a house to the public for viewing.
OPEN LISTING An agreement whereby the owner of the property may enlist more than one broker to attempt to sell the property and the commission is payable only to the successful agent. A property given to a number of brokers to market at the same time.
OPEN MORTGAGE A mortgage which may be prepaid in full or in part at any time during that life of the mortgage without notice, bonus or penalty.
OPEN SPACE Empty or vacant land, often parkland which is considered an amenity for surrounding residences. Undeveloped land or common areas in a planned community reserved for parks, walking paths, or other natural uses.
OPERATING EXPENSES Periodic expenses payable on an income-producing property that are directly attributable to the use of the property for the purpose of producing income.
OPERATION OF LAW The effect of a given statute or rule upon a situation. For example, a joint tenant becomes the sole owner of a property by operation of law upon the death of the other joint tenant.
option A situation in which a buyer puts down money for the right to purchase a piece of real estate within a set time period but does not have an obligation to buy.
option listing A listing agreement with a clause that gives the listing broker the right to purchase the property.
OPTION RISK The downside of giving a borrower an option, such as the possibility that she may prepay an open mortgage and reduce the income generated to the lender by the accumulation of interest over the life of the mortgage.
OPTION TO PURCHASE LEASED PROPERTY A clause of a rental agreement allowing the tenant the right to buy the leased property upon terms and conditions set out in the agreement.
ORAL CONTRACT A legally binding agreement crated by spoken words rather than reduced to writing. In many jurisdictions, oral contracts with regard to land are unenforceable in any circumstance. Contractual arrangements that are not in writing and are usually not legally binding.
orange peel A type of wallboard finish with a texture like that of an orange peel.
ORDINANCE A rule or by-law enacted by a local government.
oriented-strand board Often abbreviated "OSB," this is a relatively inexpensive manufactured wood panel that, like plywood, is sold typically in a 4-by-8-foot size and used for roof and wall sheathing.
ORIGINAL EQUITY The owner's original downpayment on a property.
ORIGINAL FACE VALUE The principal amount owed on a mortgage on the date of its negotiation as shown on the "face" of the agreement.
original principal balance The amount of principal owed on a loan before a borrower makes any payments.
origination fee A fee charged by most lenders to cover the direct costs of arranging the loan; also called points. A point is 1 percent of the total loan amount.
O-ring A small rubber ring that provides a water seal in faucets and other plumbing fittings.
ostensible agency An implied agency relationship not involving a written agreement or documentation.
OSTENSIBLE AUTHORITY The suggestion that one person has the right to act on behalf of another person created by the actions of the "agent" and the inactivity or lack of protest of the "principal".
OUTBUILDING A structure that is not a part of the main building but is necessary to the full enjoyment of the property (i.e. a shed, garage, etc.). Any barn, shop, shed, or other structure located on a lot in addition to a house or other main building.
OUTSTANDING BALANCE The amount of money (including principal and interest) owing at a given date on a loan or mortgage.
overflow plate A small plate that covers an outlet near the rim of a sink or tub. If the water is left running, this allows it to drain away to prevent overflows.
overflow prevention switch A special air-pressure switch in a dehumidifier that turns the unit off when water in the reservoir rises to a certain level.
overhang A protruding structural feature.
overimproved property Property that could not be sold at a price high enough to recoup the costs of improvements.
owner financing A transaction in which the seller of a property agrees to finance all or part of the purchase.
OWNER OCCUPIED Any property where the owner resides in all or part of the property.
OWNER'S TITLE INSURANCE A title insurance policy which covers the owner of the property from title defects and other flaws which were not apparent at the time of the purchase.
PACKAGE MORTGAGE A loan secured against both land and chattels.
PAD SITE An independent location for a retailer that may be near to but not part of a mall or shopping center.
panel Electrical distribution box with circuit breakers, fuses, and terminals, to which household wiring is connected. A section or division of a wall, ceiling, or flat piece of building material that forms part of the surface of a wall, door, or cabinet.
panel door A door with a frame of horizontal rails and vertical stiles that surround raised or recessed panels-a type of construction that allows a door to expand and contract with changes in moisture and weather without cracking or warping.
paneling Strips of wood or wood-like material applied as a finish to a wall.
PAPER Slang term for a loan note given instead of a cash payment.
PAPER PROFIT A description of the increase in the value of an asset that has not been realized (i.e. the asset has not been sold so that owner does not enjoy the profit).
PARCEL Another word for a piece of land. An officially described piece of land.
PARCEL REGISTER The abstract index for a property registered in the Torrens System of land registration.
parget A coating applied to a foundation wall to prevent water leakage.
parking strip The strip of grass between the sidewalk and the street in front of a house.
PAROL Not written, verbal.
PAROL CONTRACT An agreement that is not reduced to writing, that is created through spoken words.
PAROL EVIDENCE RULE A legal rule of evidence. A court will not allow evidence of oral discussions which purport to modify a written contract.
PARTIAL INTEREST Ownership of property that is less than 100% or on a lower level than fee simple.
PARTIAL PAYMENT Any payment which is insufficient to meet the full amount required.
PARTIAL RELEASE A document signed by the mortgagees holding a blanket mortgage registered on title to several properties which removes the mortgage from title to just one of the properties.
PARTIAL TAKING Where a government body takes only a portion of a landowner's land or rights to land by condemnation.
PARTIALLY AMORTIZED MORTGAGE A very common form of mortgage in which the term is less than the amortization period such that, at the maturity date, the mortgage is not fully paid out and either refinancing or a large balloon payment is required.
PARTICIPATION (OR PARTICIPATING) MORTGAGE A mortgage in which the lender is entitled to a stated share of the income of the property or of sale proceeds.
particleboard A board composed of wood chips glued together under pressure. It is similar to chipboard, but has a higher density.
PARTITION An court ordered division of property owned by two or more owners, may take the form of a physical division of the property or a forced sale and division of the proceeds. Any kind of structure dividing one room or space from another.
PARTNERSHIP A form of business enterprise where two or more persons join together without forming a corporation. The partners are capable of binding each other to contracts, are liable for each other's actions. Unmarried individuals who buy a piece of property have several options, such as a live-in partnership (in which both buyers share the residence) or a shared-equity partnership (one buyer lives in the home and the other is an investor in the property).
PARTY WALL A shared wall between two pieces of property, most often in row-houses, semi-detached houses, or townhouses. The shared wall generally stands on the property line. A wall built along the boundary between two properties.
passive loss A tax term that refers to any loss from a passive activity, such as the ownership but not the operation of a piece of rental real estate.
PASSIVE SOLAR HEATING The maximization of the sun's heating abilities through careful design of a building.
passive solar system A system that supplies solar heat without the use of electric fans or pumps.
pass-through An opening in a wall between the kitchen and breakfast or dining room used to pass dishes.
PATENT The initial transfer of title to land from government to private ownership.
patent defect A visible deficiency in a piece of property, such as a cracked basement slab or a sagging porch.
patio An interior courtyard or a paved backyard area.
PAY OUT To provide the lender with the total amount then required to retire a loan obligation.
PAYMENT ADJUSTMENT INTERVAL The period of time between changes in the amount of each periodic payment on a variable or adjustable rate mortgage.
PAYMENT CAP A term of some variable or adjustable rate mortgages in which the level to which the monthly payment may rise is limited to a certain dollar figure. A legal limit on the amount a monthly payment can increase on an adjustable rate mortgage.
PAYMENT CHANGE DATE The date when the amount of each payment under an adjustable, variable or graduated payment mortgage changes.
PAYMENT DECREASE CAP A contractual limit on the amount of each periodic payment may drop at any one payment change date. Expressed as a percentage.
PAYMENT INCREASE CAP A contractual limit on the amount of each periodic payment may rise at any one payment change date. Expressed as a percentage.
PAYMENT PENALTY Also known as "prepayment penalty" or "early payment penalty", the fee paid by a borrower when she pays out some or all of the principal of a loan at a time when such a payment is not allowed under the terms of the loan.
pediment Peaked, rounded, or other decorative panel above a doorway.
PENALTY Fine for breaching a rule, term of a contract or law.
PENTHOUSE The dwelling(s) located at the top of a tall building, often luxurious.
PER STIRPES Latin term, meaning by representation. A method of dividing an estate equally among the heirs of the deceased. If an heir has predeceased, her share is divided equally by her linear descendants.
PERC TEST (PERCOLATION) A method of determining the ability of the soil of a property to absorb liquids, used in construction projects and for septic systems.
PERCENTAGE LEASE A rental agreement in which the tenant's monthly payment is a percentage of the gross sales of the tenant's business (although a minimum payment is usually set out in the agreement).
percolation test A test used to determine the ability of soil to accommodate a septic system.
per-diem interest Interest charged or accrued daily.
perennial Any plant that produces leaves, flowers, and seeds from year to year, such as an iris or peony.
PERFORMANCE Meeting one's obligations under a contract or agreement.
PERFORMANCE BOND A written promise from an insurance company, stating that if a given person does not complete work required under a contract, the insurer will pay someone else to complete the work or pay damages.
pergola An arbor with an open roof of rafters supported by posts or columns.
PERIODIC PAYMENT CAP See "payment cap".
PERIODIC RATE CAP See "rate cap".
PERMANENT LOAN/MORTGAGE A long-term mortgage, often registered after construction is complete and the property is occupied. Also known as "end loan."
PERMIT The government body's written permission to do something which is regulated by that body.
PERPETUITY Endlessness. Forever. Many jurisdictions have laws against tying up a title to a property in perpetuity.
PERSON A legal term referring to any entity which is capable of entering a contract or suing and being sued. Generally, an adult, mentally capable human being, an incorporated company, a partnership or a government body.
PERSONAL PROPERTY Items owned by someone which are not land. Any movable property in a house such as furniture or appliances.
PERSONAL RESIDENCE A person's home, used to establish their place for voting, taxation and other civic issues.
PERSONALTY See "personal property".
pest-control inspection A common pest-control inspection is a termite inspection, which is required in some states, such as California.
photoelectric switch A switch that turns lights or other electrical devices on or off depending upon the light. An example of a photoelectric switch is a switch that turns on outdoor lights at dusk.
pier A rectangular masonry support column.
pigtail A short wire connected to another wire, usually with a wire nut. Normally two or more pigtails are connected to a single wire for the purpose of making connections to multiple objects (two sockets, two switches, etc.).
pigtail cord A short electrical cord with an integral plug, designed to be attached to an appliance.
pilasters Decorative vertical columns attached to the wall or frame at each side of a doorway.
pilot The flame or electronic control that ignites gas or oil burners.
pilot light A small, continually burning gas flame inside a gas-fired water heater, dryer, range, or similar appliance. This flame ignites the appliance's gas burner.
PIPELINE RISK Slang term describing the possibility that a lender will lose money as a result of committing to a loan at a given interest rate only to see interest rates rise in the interim before the loan transaction is closed.
PIPESTEM LOT See "flag pole lot". A piece of land connected to a street by a long, narrow strip of land. A lot connected to the street by a narrow strip of land.
pitch The slope of a roof. Pitch is the ratio of vertical rise to horizontal run.
PITI (principal, interest, taxes, and insurance) A payment amount calculated by the lender to include the principal, interest, taxes, and insurance on an amortizing loan. The figure is designed to represent the borrower's actual monthly mortgage-related expenses.
PITI RESERVES The amount of extra money a borrower must have to cover the cost of principal, interest and taxes on a mortgage for a set number of months.
pivot rod On a sink or tub pop-up assembly, a rod that runs through a rubber pivot ball and that slopes slightly uphill to the tailpiece of the stopper. Pushing the knob and the lift rod down causes the pivot rod to push the stopper up; pulling the knob causes the pivot rod to pull the stopper down.
PLAINTIFF The person who sues in court. The person who makes a legal claim. As opposed to "defendant".
plane A woodworker's tool designed for shaving off small amounts of wood. Several different types are available. The longer the plane, the more evenly it will flatten a surface.
planned community A concept dating back to the 19th century that describes any town or neighborhood built with certain guidelines or goals in mind.
PLANNED UNIT DEVELOPMENT (PUD) A housing development where a homeowner's association administers common property owned and shared by all dwelling owners in the project. Dwellings are often clustered to allow for more common space and special zoning is required for this kind of development. A highly designed residential project that features relatively dense clusters of houses, which are usually surrounded by areas of commonly owned open space maintained by a nonprofit community association.
PLANNING COMMISSION An appointed board which conducts hearings to consider applications for minor variances of planning ordinances. Also known as "Planning Board, "Zoning Board", etc.
plaster A labor-intensive wall finish consisting primarily of lime, sand, and water.
PLAT A detailed map which sets out lots, streets, common areas and other features of a tract of land.
PLAT BOOK A public record of plans, street maps, etc. A public record containing maps showing the division of streets, blocks, and lots, and indicating the measurements of the individual parcels.
plate The bottom or top piece of a wall.
PLEDGED ACCOUNT MORTGAGE (PAM) The payment of funds into a pledged account to be used to reduce mortgage payments at a later date.
plenum Heat distribution box on a furnace or central air-handling unit. The ductwork that delivers heated or cooled air to the home connects to this.
PLOT PLAN A survey-like diagram of a property showing current or planned improvements and uses of the land.
PLOTTAGE The act of acquiring a number of smaller, adjacent parcels to create one larger, more useful plot of land.
PMI (private mortgage insurance) A form of insurance required by a lender when the borrower's down payment or home equity percentage is less than 20 percent of the home value. This insurance partially protects the lender if the borrower defaults on the loan.
POCKET CARD Identification required by most state's licensing commissions for real estate salespersons and brokers.
pocket door A sliding door that recesses into the wall when opened. A type of interior door that slides into a pocket in a wall.
POINT Equal to 1% of the principal of a mortgage, a charge levied on the borrower by the lender for originating the mortgage as prepaid interest. Also known as "loan discount points". An amount equal to 1 percent of the loan amount. Points may be paid by the borrower at the time the loan is made to get a lower interest rate. Lenders offer various rate/point combinations.
POOL 1. Gather into a group for greater effectiveness. 2. An artificial body of water for recreational swimming.
porch A structure that can be a simple covered entrance to a home or a fully enclosed room on the outside of a residence.
porte-cochère A porch-like roof extending over a driveway.
portfolio lender A lender that makes loans with its own funds and keeps the loans on the company's books-in other words, inside the institution's portfolio-rather than selling loans on the secondary market.
portico A porch supported by a row of columns.
POSSESSION The state of occupying, controlling, using property to the exclusion of all others, exhibiting one's right or title to property. A buyer officially takes possession of a house upon signing the closing papers and receiving the keys.
POTENTIAL GROSS INCOME The amount of money that a property will generate if it is fully utilized with no gaps, vacancies or other interruptions in income.
POWER OF ATTORNEY A document, signed by the donor in front of witnesses, authorizing another person to act on the donor's behalf and to bind the donor to those actions. A document that authorizes an individual to act on behalf of someone else.
POWER OF SALE Generally the fastest and cheapest mortgage enforcement method open to lenders. A common clause in a mortgage agreement which gives the lender the right to take over and sell the property to cure the borrower's default. The sale proceeds are allocated first to principal and interest, then to penalties, then to the lender's costs in exercising the power, then to other registered claimants and finally to the borrower if there is any left.
PRAIRIE HOUSE A long low house of the early twentieth century style, with a row of windows across the front and a plain exterior.
pre-approval A thorough assessment made by a lender of a potential borrower's ability to pay for a home, and a confirmation of the amount to be borrowed. The completion of a loan application is necessary to close the loan.
pre-approval letter A letter from a lender that states the amount of money a potential buyer can obtain.
PRE-APPROVED MORTGAGE A commitment from a lender to provide a mortgage loan on stated terms to a borrower before the borrower has found a property to buy. The pre-approved mortgage allows the borrower to make a firm, cash offer on the property of choice.
PREARRANGED REFINANCING AGREEMENT An arrangement between lender and borrower in which the lender agrees to favorable terms for the borrower on a future refinance as an inducement to the borrower to place the original mortgage with the lender.
PRECLOSING A meeting of the parties to a transaction prior to the scheduled closing date to allow some or all of the documents to be signed and more complicated issues settled prior to closing.
PREFABRICATED Descriptive term for a building that is put together on site from components (walls, floors, roof, etc.) built off-site (in a factory, for example).
PRE-FORECLOSURE SALE The sale of a property by a delinquent borrower under an agreement with the lender. The sale may not produce enough proceeds to pay out the loan but the lender will save the costs of foreclosing and selling.
PRELEASE To find tenants for a property before construction is completed.
PREMISES A descriptive term for the land, building or parts thereof involved in a particular transaction.
PREMIUM 1. The periodic payment on a policy of insurance. 2. The value of a debt instrument in excess of it face value. 3. Of highest quality.
PREPAID EXPENSES Payments made on account of costs and disbursements that are not yet incurred, may be placed in an escrow account. Expenses including taxes, insurance, and assessments that are paid before the due date.
prepaid fees Funds collected by the lender from the borrower to pay certain recurring items in advance, including interest, property taxes, hazard insurance, and, if applicable, private mortgage insurance (PMI).
PREPAID INTEREST Charges for interest that are paid in advance of their accrual (i.e. point charges, etc.). Interest paid before it is due. For example, at the close of a real estate transaction the borrower may prepay interest that will accrue between closing and the first monthly payment.
PREPAYMENT Payment of all or part of the principal of a mortgage or loan before it comes due.
PREPAYMENT CLAUSE A term in a mortgage that establishes the rules regarding extra payments toward principal.
PREPAYMENT PENALTY A fee charged to a borrower for paying out all or part of the principal of the mortgage or loan before it comes due. A penalty that a lender may impose on a borrower who pays a loan off before its expected end date.
PREPAYMENT PRIVILEGE The right of the borrower to pay out all or part of the outstanding principal before it comes due.
prequalification A lender's preliminary assessment of a buyer's ability to pay for a home, and an estimate of how much the buyer may borrow.
PRE-QUALIFICATION The act of going through the mortgage application process before the borrower is ready to borrow, to establish how much money the borrower could obtain under a loan.
PRESALE Marketing of properties under construction or simply in the planning stages.
PRESCRIPTION A legal term describing the acquisition of rights or obligations through the passage of time (such as adverse possession).
PRESCRIPTIVE EASEMENT A legally enforceable right to make use of all or part of the property of another as a result of continuous and uninterrupted use of that property for a period of time as established by statute.
pre-sold home A home that is sold before it is built.
pressure relief valve A safety vent that relieves excess pressure in a water heater.
price range The upper and lower limit of what a buyer is willing to pay for a home.
PRICE-LEVEL-ADJUSTED MORTGAGE An adjustable or variable payment loan which uses the rate of inflation as an index.
PRIMARY LEASE The main lease, under which other sub-leases exist.
prime lending rate The minimum short-term interest rate charged by commercial banks to their most creditworthy clients. Home loan rates typically are several points above the prime rate, which is also used as the basis for mortgages, business loans, and personal loans.
PRIME RATE The best rate charged on loans, usually saved for the best clients of the lenders. May also be set by a national institution as a benchmark or index for other lenders.
PRIME TENANT The biggest tenant in a commercial complex. Also known as "key tenant" or "anchor tenant".
primer The initial coat of paint or sealant applied to a surface to prepare it for painting.
PRINCIPAL 1. The amount of money borrowed or still owed on a loan, without including interest. 2. The person on whose behalf an agent acts. The amount of money originally borrowed in a mortgage, minus any payments made subsequently. The seller, the broker, or the agent's client.
principal and interest Principal (the capital sum) and interest on the principal are combined in the mortgage payment to result in full repayment at the end of the loan's term (except in the case of balloon loans).
PRINCIPAL AND INTEREST PAYMENT (P&I) A blended, periodic payment that is enough to pay off accumulated interest and a portion of the principal.
PRINCIPAL BALANCE The outstanding amount owing on a mortgage without including accumulated interest.
PRINCIPAL BROKER The head of a real estate brokerage, licensed as a broker, who is responsible for all transactions run through the firm.
principal paid over life of loan The sum of scheduled principal payments are calculated by the lender to equal the face amount of the loan.
PRINCIPAL RESIDENCE The dwelling in which a person resides for the majority of the time.
PRINCIPAL, INTEREST, TAXES AND INSURANCE (PITI) The four parts of many periodic loan payments.
principal, interest, taxes, and insurance (PITI) A payment amount calculated by the lender to include the principal, interest, taxes, and insurance on an amortizing loan. The figure is designed to represent the borrower's actual monthly mortgage-related expenses.
principle of conformity The idea that a house will more likely appreciate in value if its size, age, condition, and style are similar to (or conform to) other houses in the neighborhood.
principle of progression An appraisal term which states that real estate of lower value is enhanced by the proximity of higher-end properties.
principle of regression An appraisal term which states that the value of higher-end real estate can be brought down by the proximity of lower-end properties.
privacy fence A structure erected between two pieces of property.
PRIVATE MORTGAGE INSURANCE (PMI) A policy of insurance issued by a non-governmental entity which protects a lender against the default of the borrower. A form of insurance required by a lender when the borrower's down payment or home equity percentage is less than 20 percent of the home value. This insurance partially protects the lender if the borrower defaults on the loan.
probate The process of establishing the validity of a will before a duly authorized court or person. Once validity is confirmed, the probate court then administers the sale of property as directed by the will or as authorized by the court to settle any financial obligations.
PROBATE OR PROVE Establishment of the validity of a will through a court process.
processing fee A fee charged by some lenders for gathering information necessary to process the loan.
procuring cause Legal term used to determine whether a broker is entitled to a commission.
production home Homes that are mass-produced by one builder.
PRO-FORMA STATEMENT Latin meaning a statement "according to form". Financial projections.
programming A written summation by an architect of a project's design objectives, constraints, and criteria.
PROGRESS PAYMENTS Loan advances issued to a builder as construction of a building moves forward.
project budget A fiscal outline that includes the construction budget and all costs for land, furniture, equipment, financing, professional services, contingencies, and owner-furnished goods and services.
PROMISSORY NOTE A document signifying an indebtedness.
PROPERTY 1. The rights of ownership in lands or goods. 2. Land.
property line The official dividing line between properties.
property report A disclosure filed with the state when a time-share project or subdivision is sold.
PROPERTY TAX Also known as "realty tax", the tax levied on ownership of property. Tax paid on privately owned property. Property taxes are usually paid semiannually, or monthly if the lender requires. The amount is based on local tax rates and assessed property value.
property tax deduction The U.S. tax code allows homeowners to deduct the amount they have paid in property taxes.
property value The value of a piece of property, based on the price a buyer will pay at a given time.
PROPRIETARY LEASE A rental agreement between a cooperative housing corporation and a share holder allowing use of a certain unit in the premises.
PRORATE To apportion a divisible item among parties according to their share. To allocate percentages of certain expenses to be paid by the buyer and seller at the time of closing.
PROSPECT 1. To investigate land for valuable mineral deposits. 2. A potential buyer.
PUBLIC AUCTION A public meeting at which properties are sold to pay defaulted mortgages.
PUBLIC HOUSING Accommodation offered by the government to low income people for nominal rents.
PUBLIC SALE See "public auction".
PUD (planned unit development) A highly designed residential project that features relatively dense clusters of houses, which are usually surrounded by areas of commonly owned open space maintained by a nonprofit community association.
punch list A list compiled by a buyer prior to a sale detailing items to be fixed before closing.
purchase agreement A document that details the purchase price and conditions of the transaction.
purchase contract A legal document that binds a buyer to purchase a piece of property for a set price, and also binds the seller to sell that property to the buyer.
PURCHASE MONEY MORTGAGE (PMM) See "mortgage back". A loan from the vendor to the purchaser to help finance the purchase of the property.
PURCHASE PRICE The consideration paid for the purchase of a property as set out in the agreement.
purchase-money mortgage (PMM) A mortgage obtained by a borrower as partial payment for a property.
PURCHASER The person who buys a property.
QUADRAPLEX A building containing four dwelling units.
QUALIFICATION RATE The rate of interest used to calculate whether or not a borrower qualifies for a mortgage.
QUALIFICATION REQUIREMENTS Those guidelines set by lenders to be used when deciding whether or not an applicant will be given a loan.
QUALIFIED ACCEPTANCE Also known as "conditional acceptance". Agreeing to enter a contract provided certain conditions are met.
QUALIFIED BUYER A purchaser who has been pre-approved for financing.
QUALIFIED FEE ESTATE A legal interest in land which is limited.
qualifying ratio A ratio calculated by a lender to determine how much a potential buyer can borrow.
QUANTUM Literally, the amount.
QUARTER SECTION A measurement from the Government Survey Method, measuring 2,640 feet on each side and containing 160 acres.
Queen Anne style A Victorian-era style that originated in England during the reign of Queen Anne and was revived in both England and America in the late 19th century.
QUIET ENJOYMENT The legal right of an owner or tenant to have uninterrupted use of the property or premises without interference. The right of an owner to use his or her property without interference.
quiet title suit A lawsuit filed to ascertain the legal rights of an owner to a certain parcel of property.
QUIT CLAIM DEED A conveyance which releases any interest the conveying party may have in a property without any warranty as to that party's claim.
quitclaim deed A document that releases a party from any interest in a piece of real estate.
quoin The outer corner of a building, or the rectangular stone block used to form that corner.
R VALUE A method of measuring the insulation capabilities of materials.
radiant heating A form of home heating delivered by electric-resistance elements--either wall registers or cables or foils beneath the flooring or above the ceiling--or via hot water circulated through in-the-floor tubing or room radiators.
RADON A radioactive gas which may cause health problems for occupants of some buildings. A ground-generated radioactive gas that seeps into some homes through sump pumps, cracks in the foundation and other inlets. A serious health hazard.
rafter One of a series of beams that form the slope of a pitched roof and are analogous to floor joists.
rails The horizontal structural members of a door. Most doors have a top rail, a bottom rail, and a center rail connected at both ends to vertical stiles.
rammed-earth construction An alternative building process in which dirt is compacted into large structural frames to create walls.
RANCH HOUSE A description of a one-storey house, developed from the old, western-style homes.
ranch style A modern style of home popularized in the 1950s and championed by architect Frank Lloyd Wright, among others.
RANGE LINES From Government Surveying Method, lines which run parallel to the principal meridian six mile apart to create "ranges" of land.
RATE CAP A limit of how much an interest rate can change in a variable of adjustable rate mortgage either in a given period or over the life of the loan. The maximum interest rate charge allowed on the monthly payment of an adjustable rate mortgage during an adjustment period.
RATE COMMITMENT A written promise by a lender to lend money to a borrower at a stated rate of interest -- usually time limited.
rate lock A lender's commitment to a borrower to guarantee (or "lock in") a specific interest rate for a limited amount of time.
RATE LOCK-IN See "rate commitment". A written agreement in which the lender guarantees the borrower a specified interest rate, provided the loan closes within a set period of time.
rate type Rate type determines if and how payments adjust over the loan term. Available rate types include fixed-rate, balloon, and adjustable-rate.
rate-improvement mortgage A loan with a clause that entitles a borrower to a one-time interest rate cut without going through refinancing.
RATIFIED SALES CONTRACT A firm and binding agreement for the purchase and sale of land.
RAW LAND Property that has not been developed or improved.
READY, WILLING, AND ABLE A term of art meaning in a position to complete a contract. In order to enforce a contract against another party, you must be ready, willing and able to complete the contract yourself.
REAL ESTATE Term for land and all fixtures to land, including buildings and other improvements. Land and anything permanently affixed to it, including buildings.
REAL ESTATE AGENT A trained professional involved in the purchase, sale and marketing of real property. The "listing agent" acts for the vendor, the "selling agent" for the successful purchaser. A person licensed by a state to represent a buyer or a seller in a real estate transaction in exchange for a commission. Unless they are also brokers, agents must work in association with a real estate broker or brokerage company.
REAL ESTATE BROKER A real estate professional who is licensed to run a real estate firm, to hold trust funds, etc. A person, corporation, or partnership licensed by a state to represent a buyer or seller in a real estate transaction in exchange for a commission. Brokers supervise licensed sales agents, who then act for the broker (who is legally the principal agent in any transaction).
REAL ESTATE COMMISSION 1. The fee paid to the real estate agents after a transaction. 2. An agency that enforces real estate license laws.
REAL ESTATE EDUCATORS ASSOCIATION An organization of post-secondary teachers of real estate courses.
real estate investment trust (REIT) Publicly traded companies that own, develop, and operate commercial properties.
REAL ESTATE MARKET A term for the pool of potential buyers and sellers of property at a given time.
real estate professional Any real estate broker, sales agent, or attorney who holds a real estate license.
REAL ESTATE SALES PROFESSIONAL See "real estate agent" or "real estate broker".
REAL ESTATE SETTLEMENT PROCEDURES ACT (RESPA) Statute requiring lenders to provide advance notice to borrowers of fees and charges to be paid at closing. A federal law designed to make sellers and buyers aware of settlement fees and other transaction-related costs. RESPA also outlaws kickbacks in the real estate business.
REAL PROPERTY Also known as "real estate". Land, property, plus improvements to land. Land and any permanent fixtures on it, including buildings, trees, and other fixtures.
Realtist A designation for an agent or broker who is a member of the National Association of Real Estate Brokers.
REALTOR Professional designation for a member of the National Association of REALTORS or its affiliated local groups. Must be a real estate broker. A designation for an agent or broker who is a member of the National Association of Realtors.
REALTOR'S ASSOCIATE Professional designation of a licensed real estate agent or salesperson who is a member of the National Association of Realtors but who has not been licensed as a broker.
REALTY See "real estate".
REAPPRAISAL LEASE A rental agreement in which the periodic payment is adjustable according to scheduled re-appraisals of the rental value of the premises.
REASSESSMENT A change in the estimated value of a property for realty, municipal or ad valorem tax purposes.
REBATE Any refund of all or a portion of money paid.
RECAST PAYMENT Adjustment of the periodic payment on an adjustable or variable rate mortgage to ensure that the mortgage will be paid out by maturity date.
RECASTING Adjusting the terms of a loan agreement in light of new developments (i.e. lower rates, possible default).
RECITAL An unsworn statement of fact included in a document. In many jurisdictions, recitals in registered documents are deemed true and unassailable if unchallenged after a certain period of time.
RECONVEYANCE The return of title to property to its original owner. May occur as a result of the pay-out of a mortgage or at the end of a limited estate. A lender's act of conveying a property back to a borrower who has completely paid off his or her mortgage.
recorder A public official responsible for keeping record of all real estate transactions.
recording The act of entering title instruments in the public records, thus giving notice to any interested parties of the existence of the instrument. The filing of property-related documents into the public record.
recording fee A fee charged by real estate agents for conveying the sale of a piece of property into the public record.
RECORDING FEES The fees paid to have an instrument recorded in the public record.
RECOURSE The right of a lender to pursue a borrower personally for moneys owed.
RECOVERY FUND A pool of money made up of contributions from licensed brokers used to compensate members of the public with claims against brokers.
RECTANGULAR SURVEY See "government rectangular survey method".
REDEEM To bring mortgage payments up-to-date after the lender has begun default proceedings. Once a borrower (or other lien holder) redeems, the mortgage is back in good standing and the relationship continues as before the default.
REDEMPTION PERIOD The length of time during which the borrower may redeem a mortgage.
REDEVELOP To remove existing improvements and buildings on a parcel of property and replace them with new, more useful and profitable improvements.
REDLINING An illegal practice, refusing to lend money to owners of property in certain neighborhoods or to owners on the basis of their race, color, religion, creed, age, gender, etc. An illegal practice by a bank or insurance company that denies credit or insurance to people based on ethnic background or neighborhood.
REDUCTION CERTIFICATE A mortgage statement setting out the amount owing on the loan as of a given date. May be used for discharges or assumptions.
REEVALUATION LEASE See "reappraisal lease".
REFERRAL A recommendation, a suggestion to a client of the value of the services of a person or firm. (i.e. a real estate agent may refer a purchaser to a particular banker or lawyer.)
REFINANCE To replace an existing and perhaps mature mortgage with a new mortgage on the same property. New mortgage may have different terms than the old one.
refinancing The process of replacing an older mortgage with a new mortgage that has better terms.
REGENCY HOUSE A two-storey or three-storey house in a traditional English style of the Regency Period, symmetrical in construction with a hip roof. May have a small, eight-sided window above the front door.
REGISTRAR The person who has the task of collecting, recording, and maintaining instruments related to title of land. May also have responsibility of ruling on the acceptability of documents submitted for registration and for making decisions as to how to correct title defects.
REGISTRATION The submission for recording in the public records of instruments relating to title in land. Each jurisdiction may have specific requirements as to documents which will be accepted for registration; once registered, documents will be given a registration number and recorded on the title abstract index for the property to which the apply.
regression The principle that the value of a better-quality property is adversely affected by the proximity of a lesser-quality property.
REGULATION Z A federal rule which requires lenders to provide borrowers with full disclosure of the terms of a loan. A federal code issued under the Truth in Lending Act that requires that a borrower be advised in writing of all costs associated with the credit portion of a financial transaction.
REHABILITATE To restore, refurbish, bring back to original condition.
rehabilitation mortgage A mortgage that provides for the costs of repairing and improving a resale home or building.
REHABILITATION TAX CREDIT A tax provision allowing a tax credit of up to 20% for the refurbishing of historic properties.
REISSUE RATE See "re-insurance rate".
RE-ISSUE RATE A reduction in the fee for title insurance on a property which was previously title insured.
REIT (real estate investment trusts) Publicly traded companies that own, develop, and operate commercial properties.
RELEASE CLAUSE A term of a mortgage which allows the borrower to pay out the loan and have the mortgage removed from title. A provision in a purchase contract that allows a seller to continue marketing their home and accept other offers.
RELEASE OF LIEN A document which, once registered, removes certain kinds of claims from title to property.
RELICTION The gradual migration of a body of water such that additional dry land is left behind.
relocation benefits Employer-provided benefits for new employees. These benefits can include moving costs, reimbursement for temporary housing and transportation, real estate agent assistance, and discounted loans.
RELOCATION CLAUSE A term in a lease which allows the landlord to move the tenant to a new unit, within the same building or elsewhere.
relocation company A firm that administers all aspects of relocating new employees from one location to another.
RELOCATION NETWORK An organization of real estate professionals in a number of different areas specifically designed to allow information to be shared to allow easier movement of clients from one area to another.
RELOCATION SERVICE A firm that specializes in helping employees who are transferred by their employer to a new area take care of the move.
REMAINDER An interest in property that only arises once another interest ends.
remaining balance The amount of unpaid principal on a home loan.
remaining term The original loan term minus the number of payments made.
REMODEL To refurbish, redesign, redecorate.
RENEWAL OPTION A right which arises out of a term in a contract and takes effect at or near the termination date of a contract; the party who enjoys the right may choose to continue the agreement on terms as set out in the option clause or to treat the contract as at an end upon the termination date.
RENOVATE Similar to remodel, with an emphasis on upgrading the existing property.
RENT 1. Verb -- to lease premises from the owner or a representative of the owner. 2. Noun -- the periodic payments made by a tenant to the landlord for the right to occupy the premises.
RENT CONTROL Government initiative to control raises in the amount charged for the lease by tenants of residential premises.
rent loss insurance A policy that covers any loss of rent or rental value in the event that fire or other damage renders the property uninhabitable.
RENTABLE AREA See "net leasable area".
RENTAL RATE The amount charged for the occupation of a property.
renter's insurance A policy for renters that covers the replacement value of possessions.
RENT-FREE PERIOD An inducement to enter a lease, a specified number of months at the beginning of the lease in which the tenant is not required to pay the periodic rental payments.
REPAYMENT PLAN A schedule arranged between a lender and borrower to set out how a debt is to be paid out. When a borrower falls behind in mortgage payments, many lenders will negotiate a repayment plan rather than go to court.
REPLACEMENT COST An insurance term, the total cost of erecting a new home or building which adequately takes the place of the existing one. The current cost of rebuilding a structure to its original specifications.
replacement reserve fund Money that is set aside from homeowners' assessments to replace common property such as furniture in a planned development's community room.
repointing Replacing damaged mortar in the joints between bricks or stones.
REPORT A document sent by a lawyer to a bank certifying that title to the subject property is clear and marketable.
REPORTING LETTER A letter sent by a lawyer to a client after a transaction is completed (or when sent during the process of the transaction, called "interim reporting letter") in which the lawyer certifies title to the property and informs the client of all other matters relating to the transaction.
repossess To take back property. A lender holding a mortgage may repossess a property if the buyer fails to make payments.
REPRODUCTION COST The cost of making an exact duplicate of a property.
REQUIRED CASH Collective term for the total sum of money required to complete a transaction, including purchase price, taxes, legal fees, mortgage fees, etc.
resale value A property's future value, which can be affected by many factors including the surrounding neighborhood, school district scores, and economic and housing market conditions.
RESCIND To treat a contract as being at an end, to withdraw one's offer or acceptance of an agreement.
RESCISSION The act of treating a contract as being at an end as a result of the failure, breach or misconduct of another party. The cancellation of a contract by law or consent from the parties involved.
RESCISSION OF CONTRACT The act of declaring a contract null and void and taking the necessary actions to return the parties to the position they were in prior to entering the contract.
RESERVE FUND A pool of money held for use for future contingencies, usually in the management of a building, condominium corporation or cooperative unit. Money set aside by a homeowners' association for major repairs or improvements.
RESERVE PRICE The amount set prior to an auction which must be met in the bidding for a particular item before the item will be sold. Also known as "reserve bid".
RESIDENCE The dwelling in which a person lives, may also refer to the country or state where a person lives.
RESIDENTIAL BROKER A real estate professional who deals in dwelling properties.
RESIDENTIAL PROPERTY Real estate that is occupied by the owner.
RESIDENTIAL SERVICE CONTRACT A warranty or insurance contract which covers services such as electrical, plumbing etc. in a resale home.
resilient channel A channel run across wall studs underneath wallboard to reduce sound transmission.
RESPA (Real Estate Settlement Procedures Act) A federal law designed to make sellers and buyers aware of settlement fees and other transaction-related costs. RESPA also outlaws kickbacks in the real estate business.
RESTORE To refurbish a building or other asset to its original condition.
RESTRAINT ON ALIENATION Any limit on the ability of an owner to sell or transfer property.
RESTRICTION Any limit or control on the owner's ability to use the property. May be contained in a deed and be binding on the land and future owners of it. Any limitation on the use of property.
RESTRICTIVE COVENANT See "restriction".
restructured loan A mortgage in which new terms are negotiated.
RETIRE (A DEBT) To fulfill one's obligations under a loan or mortgage so that the lender has no further claims against the borrower.
return on investment The amount of profit a property generates.
REVERSE ANNUITY MORTGAGE (RAM) A type of mortgage where the equity in the home serves as security for periodic payments made by the lender to the borrower. Mortgage is generally paid out upon the sale of the property.
REVERSE LEVERAGE A term for the situation where the income from ownership of property is lower than the rate of interest paid to finance the ownership.
reverse mortgage A special type of loan available to equity-rich, older owners. Repayment is not necessary until the borrower sells the property.
REVERSION The return of a property to the original grantor upon the occurrence of an event specified in the grant.
REVERSIONARY INTEREST The legal right to a property of a person under a reversion clause.
REVERSIONARY VALUE The value of the property at the time of reversion.
REVOCATION Taking back, recalling. One might revoke a power of attorney or a consent given.
REZONING The amendment of the classification of a property under use and building by-laws or ordinances. A property may rezoned from industrial to residential to allow a warehouse to be converted into condominiums.
RIDER A document which contains additional or amending clauses to a contract.
ridge board A horizontal board that serves as the apex of the roof structure.
ridge vent A vent located along the ridge board of the roof that allows moisture to escape.
RIGHT OF FIRST REFUSAL The ability to make an offer for a property before the owner puts it up for sale on the open market. An agreement by a property owner to give another person the right to buy or rent the property before it goes on the open market.
RIGHT OF REDEMPTION See "equity of redemption".
RIGHT OF SURVIVORSHIP The legal term for the right of a surviving joint tenant to take title to a property alone upon the death of the other joint tenant.
right of way The right to pass over or use another's land.
RIGHT TO RESCISSION Being legally entitled to treat a contract as being at an end. A provision in the federal Truth in Lending Act that allows borrowers to cancel certain kinds of loans within three days of signing.
RIGHT-OF-WAY A form of easement, the legal entitlement to pass over a portion of the land of another.
RIPARIAN OWNER A person who has title to land bordering on a body of water.
RIPARIAN RIGHTS The rights of an owner of land bordering a body of water to use or control that body of water or a part thereof. An owner's right to use a river, stream, or lake bordering the owner's property.
riser Vertical boards between the steps of a stairway.
rocker switch An electrical switch operated by tapping the top or bottom of the control plate.
ROD 160 feet measured in a line, a unit of measurement.
rollback A limitation on annual assessed value increases or a reduction in the amount of property tax paid.
ROLLOVER LOAN A loan where the amortization period is much longer than the term and the borrower is allowed to refinance at the end of the term at the interest rate then applicable.
roof sheathing Flat boards nailed to the rafters to which a covering is fastened.
ROOT DEED The first conveyance in a chain of title. If a jurisdiction has legislation which cures any title defects that are older than a certain number of years, the root deed will be the first deed beyond that period.
ROOT OF TITLE Any defect in ownership of property which throws into question the very basic issue of who actually owns the property. An unresolved problem going to the root of title is grounds for rescission of the Agreement of Purchase and Sale no matter when it is discovered before closing.
rough-in The installation of plumbing, electrical, and other mechanical systems.
ROW HOUSE A dwelling that is attached to its neighbors by way of common walls.
RULE OF 72'S To calculate the number of years it will take to double money while earning compound interest, divide the interest rate into 72. Money invested at 10 percent compound interest will take 7.2 years to double.
RUN WITH THE LAND A legal term which suggests that a rule, restriction, right or obligation forms part of the land itself and is transferred to each new owner along with the land.
RURAL A term to describe something which is not of an urban center.
Rural Housing Service A U.S. Department of Agriculture program that provides financing to farmers and certain borrowers to purchase rural property when other funds are not available.
RV pad A large concrete pad designated for parking a recreational vehicle.
R-value A measure of a material's resistance to heat loss, usually applied to insulation products. The higher the R-value, the slower the rate of heat loss.
sacrificial anode A metal rod inserted into a water heater to extend the life of the tank.
SALE AGREEMENT Also known as "Agreement of Purchase and Sale" or "Purchase Agreement:. The contract that sets out the terms and conditions agreed to by the purchaser and the vendor in the sale of land.
SALE AND LEASEBACK (SALE-LEASEBACK) Where the vendor sells the property to the purchaser, then leases it back immediately for a long term.
SALE OF PERSONAL RESIDENCE BY ELDERLY An income tax forgiveness program on capital gains realized by the elderly on the sale of their homes.
SALE PRICE Also known as "purchase price", the amount of money paid by the purchaser to the vendor for the property under the agreement.
sale-leaseback A real estate transaction in which the buyer leases back the property to the seller for a specific period of time. Also called seller rent-back.
SALES ASSOCIATE A real estate professional in the employ of another such real estate professional.
SALES COMPARISON APPROACH Method of estimating value of a property by comparing similar properties that have been sold recently.
sales concession A cost paid by the seller, even though the cost is customarily paid by the buyer.
sales contract A contract signed by the buyer and seller that details the terms of a home purchase.
saltbox style A design that dates to colonial times and takes its name from the shape of saltboxes.
SANDWICH LEASE A slang term for a sublease, where the tenant is sandwiched between the owner and the subtenant, acting both as lessor and lessee at the same time.
sanitary sewer The drain line in a house that carries away wastewater to a municipal sewer system or a septic system.
sash One of two windows in a double-hung window.
SATELLITE TENANT A smaller shop in a mall.
SATISFACTION OF MORTGAGE Written evidence from the lender that a loan has been paid out in full and the borrower released from any obligation to the lender.
SAVINGS AND LOAN ASSOCIATION (S&L) Another form of mortgage lender.
SAVINGS ASSOCIATION INSURANCE FUND (SAIF) The Federal Deposit Insurance Corporation (FDIC) insurance fund for deposits in savings and loan associations.
SCARCITY The idea that price is driven by availability of the product. If there is not enough product to meet demand (the product is scarce), the price of the product will rise.
SCENIC EASEMENT A right to the use of land which is given for the purpose of ensuring that the land is never developed and the natural beauty of the area is, as a result, preserved.
SCHEDULE A document attached to an instrument for registration or to a contract or agreement, which may contain information required in the instrument or extra terms of the contract.
SCHEDULED MORTGAGE PAYMENT The periodic payment the borrower is obliged to pay on a loan.
schematic designs Renderings of floor plans and the exterior of a house.
sconce A wall-mounted light fixture.
SEARCH An investigation, a review of public records for problems, concerns or simply for information. See "title search".
SEASONED MORTGAGE An old loan under which the borrower has proven herself capable of meeting loan obligations.
SECOND One sixtieth of a minute which is one sixtieth of a degree which is one 360th of a circle. Used in metes and bounds descriptions when astronomic bearings are used to describe directions.
SECOND MORTGAGE A mortgage loan which is registered on title after another mortgage (the first mortgage) and, therefore, is behind the first mortgage in priority. In the event of default and sale of the property, the second mortgagee will only be paid if there are funds left after the payment of the first mortgagee. A second loan placed upon a piece of property.
SECONDARY FINANCING Another term for a second mortgage; a loan which stands behind the principal loan.
SECONDARY MARKET The purchase and sale of mortgages among lenders.
secondary mortgage market A market of packaged home loans that are resold as securities to investors. Major players in this market are Fannie Mae and Freddie Mac.
SECTION A square mile in the Government Survey Method, contains 640 acres.
secured loan A loan backed by collateral.
SECURITY An asset held as a guarantee of payment of a loan. A piece of property designated as collateral.
SECURITY DEPOSIT Money held by the landlord to ensure the tenant meets his obligations under the lease.
SECURITY INTEREST Legal term for the claim the lender has against the borrower's property which has been pledged under a loan.
SEE-THROUGH BUILDING Slang term for a property which is mostly empty of tenants.
SELF-AMORTIZING MORTGAGE LOAN A loan which will be paid off by the end of its term, such that its term equals its amortization period.
seller carry-back An agreement in which the seller provides financing for a home purchase.
SELLER FINANCING Also known as "vendor take-back mortgage" or "mortgage back", where the seller of a property agrees to payment of part of the purchase price over time with the debt to the seller registered on title as a mortgage. The seller allows the borrower to use a portion of the equity in the property to finance the purchase.
seller rent-back A real estate transaction in which the buyer leases the property back to the seller for a specific period of time. Also called sale-leaseback.
seller take-back An agreement in which the seller provides financing for a home purchase.
SELLER'S MARKET Demand is greater than supply, such that the vendor may demand a higher price. A hot real estate market in which sellers have the advantage and multiple offers are common.
SELLER-TAKE-BACK See "seller financing".
SELLING AGENT The real estate professional who brings the eventual purchaser to the property and the vendor. As opposed to "listing agent". A real estate broker or salesperson who writes the purchase offer for a buyer in a real estate transaction, but may not actually represent the buyer.
SEMIANNUAL Occurring twice per year.
semi-custom home The buyer of a semi-custom home is free to make changes to some design aspects of the home, but not to the home's structural plan.
SEMIDETACHED HOUSING A dwelling that shares one side wall with another dwelling.
SEPARATE PROPERTY Property owned by one spouse solely, rather than jointly with the other spouse.
SEPTIC SYSTEM A manner of dealing with sewage of a dwelling, through pipes into a septic tank. A self-contained sewage treatment system that holds wastewater in an underground storage area and relies on bacterial action to decompose solid waste matter.
SERIOUS DELINQUENCY The condition of being far behind in mortgage payments such that mortgage enforcement by the lender is imminent.
service conductor The wires extending from the home's service equipment to the utility company's line.
service entrance conductor The wire between the terminals of the panel and the connection with the service conductor.
servicer A firm that collects mortgage payments and manages borrowers' escrow accounts.
SERVICING (THE LOAN) The act of collecting periodic payments toward a debt.
SERVICING FEE The fee charged to the borrower for the lender's costs of collecting payments and administering a loan.
SERVIENT ESTATE The piece of land which is subject to an easement. As opposed to the "dominant estate".
SERVIENT TENEMENT The piece of land which is subject to an easement. As opposed to the "dominant tenement".
SET BACK ORDINANCE/BYLAW A municipal government rule that establishes the minimum distance a building or other improvement must stand from property lines.
setback The minimum distance a house or building must be from the lot line.
SETTLEMENT BOOK An information pamphlet given by lender to borrower which explains the process of the loan, settlement of the loan, etc.
SETTLEMENT COSTS See "closing costs".
settlement or closing fees Fees paid to the escrow agent (and often a title insurance company) for carrying out the written instructions of the agreement between buyer and seller and/or borrower and lender.
SETTLEMENT SHEET The information sheet which sets out the allocation of funds on closing.
settlement statement A document that details who has paid what to whom.
SEVER To divide one piece of property from another to be sold or used separately.
SEVERALTY Ownership of land by an individual. Ownership of real property by one person. Also known as sole ownership.
SEVERANCE The word for the act of dividing one property from another or splitting a property into pieces. Changing an item from real property to personal property by detaching it from the land.
shake A thick wood (often cedar) shingle used for roofs and siding.
SHARED APPRECIATION MORTGAGE (SAM) A loan arrangement which allows the lender to share, in exchange for a reduced interest rate, in any gain in the value of the property against which the mortgage is secured.
shared-appreciation mortgage A loan that allows a lender or other party to share in the borrower's profits when the home is sold.
shared-equity transaction A transaction in which two buyers purchase a property, one as a resident co-owner and the other as an investor co-owner.
sheathing Sheets of material applied across floors, rafters, or studs.
shed ceiling A ceiling that pitches upward at one end.
shed roof A roof that pitches up further on one side than the other.
SHELL LEASE A rental agreement wherein the tenant rents the incomplete building and agrees to complete the interior work, such as plumbing, wiring, interior walls, floors, etc.
SHERIFF Enforcement officer in a jurisdiction, person charged with the responsibility of enforcing writs and liens against people.
SHERIFF'S DEED The instrument of conveyance for property sold to satisfy a court judgment.
SHERIFF'S SALE The forced sale of a property to satisfy a debt or judgment.
shingle ripper A flat, bar-like tool with a sharp hook that's designed to make removing shingles an easier job. You slip the hook up under wood shingles then rap the tool with a hammer to shear-off nails with the sharp hook.
shingle style An alternative style of Victorian home that evolved in the late 19th century to simplify the complexity of the traditional Victorian house.
shingles Thin, wedge-shaped pieces of wood or flat rectangular pieces of slate, mineral fiber, glass fiber, or composition asphalt installed on a roof to prevent water seepage.
shiplap A milled pattern of siding designed to shed water when applied horizontally.
shoe molding An unobtrusive finish trim between the floor and the baseboard. Shoe molding is designed to hide any irregularities in the seam between the floor and wall or baseboard.
shutoff valve While a shutoff valve may be any water or gas valve, it generally refers to the small valve under a sink or behind a toilet that controls the water supply to the plumbing fixture.
shutters Covers mounted at either side of a window.
sidelights Tall, narrow windows that stand on one or both sides of a door to admit light and allow residents to see the person at the door. Also known as door lights.
siding A type of covering on a home's exterior walls.
SIGN BACK The act of countering an offer with a return offer. The original offer document is amended, initialled by the person amending it, and sent back to the original offeror as a new, counter offer.
SIGNED SEALED AND DELIVERED A legal phrase suggesting that the party executing a document intends it to be enforceable even if no consideration is given to her for signing.
sill The lowest horizontal member across a door or window opening. In the case of a door, the sill is often called a threshold.
sill cock An exterior threaded faucet connection for garden hoses that provides water outside a home.
sill plate A horizontal piece of wood placed on top of the foundation.
sill sealer A material that seals gaps between the foundation and sill plate.
simple assumption A type of loan assumption in which the original borrower remains secondarily liable should the assumptor default.
SIMPLE INTEREST A charge for the use of money which is calculated on a periodic basis as a percentage of the principal borrowed. No further interest is charged on interest accumulated in earlier periods.
SINGLE AGENCY The representation of only one party to a transaction.
single agent Any agent who represents either the buyer or the seller in a transaction.
SINGLE-FAMILY RESIDENCE (UNIT) A property designed for the use and occupancy of one family group.
single-pole switch A conventional light switch that controls one or more lights from a single location.
sink trap The P- or S-shaped section of drainpipe directly beneath a sink. Its shape is intended to hold a small amount of water so that it blocks sewer gasses from rising into the house.
SITE The location of something.
skylight A window in a roof that allows natural light to illuminate a room.
slab foundation A foundation built directly on soil with no basement or crawl space.
slider window A window that is composed of two windows, or sashes, that glide open and closed on a metal track.
snubber A spring-like device fastened between the top of a door and the door jamb to pull the door shut.
soffit An external area under the overhang of a roof.
SOFT MARKET Also known as "buyers' market", when vendors far outnumber buyers and prices fall.
soils test A test of the subsoil to ensure that foundations can be safely constructed.
sole plate The bottom horizontal component of a frame wall on which the studs sit.
solid-core door A door with a solid interior.
soundboard A special board used beneath the wallboard to reduce the transmission of sound through the wall.
Spanish mission style A design derived from Spanish missions established in the Southwest.
SPEC HOUSE A new dwelling which is being built or has been completed by a builder before a purchaser has been found to buy it.
SPECIAL ASSESSMENT The levying of an additional tax on a property for a specific purpose (i.e. to apportion the cost of infrastructure upgrades among area land owners). An amount of money levied upon owners in a homeowners' association for the purpose of public improvements.
special deposit account An account required in rehabilitation mortgages. Restoration and remodeling funds included in the loan are disbursed from the special deposit account to the appropriate contractors as work is completed.
SPECIAL USE PERMIT A temporary exemption from zoning use by-laws or ordinances.
SPECIAL WARRANTY DEED An instrument of conveyance in which the vendor warrants she has done nothing to cloud title but nothing further.
SPECIAL-PURPOSE PROPERTY A piece of land specifically designed and improved for a specific purpose -- a school or hospital.
SPECIFIC PERFORMANCE A remedy for breach of contract, where the breaching party is ordered to complete the contract according to its terms.
specifications The written requirements for materials, equipment, and construction systems and standards.
speculation home A home that has been built without a buyer.
SPECULATIVE BUILDER A developer who constructs housing without pre-selling.
SPECULATOR Someone who buys property on the expectation that its value will increase and it will be sold at a profit.
SPILLOVER EFFECT The impact of changes to or development of one parcel of land on a neighboring or nearby parcel.
splash block A slanted block used to divert runoff water from a downspout away from the foundation.
spline A thin piece of wood, metal, or vinyl that secures a joint. In the case of a window screen, a wood or vinyl spline seals the screen fabric into a groove cut in the screen window or door.
split-level style A home style similar to ranch style, but stacked to fit on a smaller lot and perhaps to accommodate a garage.
SPOT ZONING The practice of applying zoning ordinances or bylaws to specific properties when neighboring lands may be under a different classification.
SPREADING AGREEMENT A contract in which the borrower gives the lender additional security for a loan by allowing it to be lodged against other property owned by the borrower.
square footage The number of square feet of livable space in a home or building.
SQUARE-FOOT METHOD Method of estimating cost of construction on the basis of the area of the building to be built.
SQUATTER'S RIGHTS The legal rights to occupy a property which accrue to a person as a result of their long-time, open, notorious and adverse possession of it.
STAKING A surveyor's method of marking the boundaries of a property by placing a physical entity (a stake or bar) in the ground.
STAMP TAX The charge levied by governments on the transfer of property.
standard metropolitan statistical area (SMSA) A designation given by the U.S. Office of Management and Budget to cities of 50,000 or more residents.
STANDARD MORTGAGE A mortgage which has equal periodic payments and is paid out at the end of its term.
standard payment calculation A calculation that is used to determine the monthly payment necessary to repay the balance of a home loan in equal installments.
STANDARDS OF PRACTICE A professional code of behavior for real estate professionals promulgated by the National Association of Realtors.
STARTER HOME A small home, inexpensive, suitable to first-time home buyers. A first home that is generally of a lower-than-average price.
STATE STAMPS State levied land transfer taxes.
STATEMENT OF RECORD A filing required by the Department of Housing and Urban Development (HUD) from a developer with a project involving 50 or more lots who plans to market it across several states.
STATUTE OF LIMITATIONS The period of time after the originating incident in which an injured party may start a legal claim against the party who caused the injury.
STATUTORY LIEN A claim which may be registered against property and is created by a law.
steel framing A construction method used by commercial and residential builders.
step-rate mortgage A loan that allows a gradual increase in the interest rate during the first few years of the loan.
stigmatized property Property that has an undesirable reputation because of an event that occurred on or near the site.
stiles The vertical members that make up a door's construction. The hinge stile receives the hinges; the lock stile receives the lockset.
stool Part of the interior window frame that, like a shelf, extends horizontally across the lower part of the opening.
stop A thin strip of wood fastened to the face of a doorjamb, intended to stop the door when you close it (sometimes called a doorstop).
storm sewer A drain line not connected to the sewer line that removes all other wastewater from a home.
storm window A windows installed on top of an ordinary window for additional protection in extreme weather conditions.
straight purchase A transaction in which a buyer gives the builder a deposit to begin building, and the balance when the sale of the house closes.
STRAW MAN A slang term for a trustee who purchases property on behalf of another who wishes to remain anonymous.
STREET ADDRESS See "municipal address".
strike plate Flat metal plate fastened to a doorjamb that receives a lockset's latch or bolt to keep a door closed.
stucco A mixture of sand and cement used to cover the exterior surface or interior walls of a home or building.
studs The upright pieces of lumber or steel in a wall, to which panels, siding, drywall, or other coverings are attached.
subagent An agent who assists another agent in representing a principal, or party, in a transaction. A seller's subagent who writes the buyer's offer owes loyalty to the seller, though many states presume any agent working with a buyer is the buyer's agent.
subcontractor Specialty construction companies hired by the general contractor to perform certain tasks.
subdivision 1. The creation of a number of smaller lots out of one or more large lots for the purposes of developing each smaller lot and selling them. 2. A newly created urban development. The division of a large piece of property into smaller parcels. Also, the divided property itself.
SUBDIVISION REGULATION(S) Rules set out by the local government that set out minimum requirements for approval of a new subdivision.
subflooring The plywood or boards beneath finish flooring that, nailed directly to floor joists, provides a structural base for finish materials.
SUBJECT BUILDING A term used to identify the building being dealt with, examined or considered, as distinguished from other buildings.
SUBJECT PROPERTY A term used to identify the property being dealt with, examined or considered, as distinguished from other properties.
SUBJECT TO An indication that title to a property includes an obligation of some sort, an easement, right of way, lien, right of claim. Opposite of "together with".
SUBJECT TO MORTGAGE A term of an agreement which states that the purchaser will assume an existing mortgage registered on title to the property.
subject-to The transfer of rights to pay a debt from one party to another, with the original party remaining liable for the debt if the second party defaults.
SUBLEASE A rental contract between a tenant and someone who rents from the tenant.
SUBLESSEE A tenant's tenant.
SUBLESSOR A tenant who leases the premises to another person.
SUBMARGINAL LAND Real property that could not be developed in a financially useful way.
SUBMORTGAGE Where a mortgage is pledged as security for a loan to the mortgagee (the original lender).
SUBORDINATE FINANCING See "secondary financing".
subordinate loan A second or third mortgage.
SUBORDINATION Placing the right of one person behind those of another.
SUBORDINATION CLAUSE An agreement by the lender which allows the current mortgage to be "postponed" or placed behind a later mortgage in priority.
subsequent rate adjustments The interest rate for adjustable rate loans (ARMs) adjusts at regular intervals. This adjustment period could in some cases differ from the initial interest rate duration period.
subsequent rate cap A specific limit defined by most adjustable rate loans (ARMs) for the maximum amount the interest rate may increase at each regularly scheduled interest rate adjustment date. This limit may differ from the initial rate cap.
SUBSTITUTE OF TRUSTEE An instrument registering a change of trustee under a deed of trust.
SUCCESSION The conveyance of property to the heirs of a deceased person under the laws governing intestate distribution of assets.
SUFFERANCE A legal concept, the deemed consent to the actions of another person which results when a person who could be expected to react to the other person's actions refuses to do so.
SUIT A legal action commenced to enforce a claim or right.
sump pump A pump that moves water from a basement sump pit.
SUPERADEQUACY A feature of a property which may not be recognized fully in the price of the property.
SUPPORT DEED An instrument conveying ownership of land in exchange for a promise on the part of the grantee to care for the grantor for his lifetime.
SURETY BOND A legal document issued to assure the completion of an act by another person.
SURFACE RIGHT A legal interest in the use or occupation of the top of land. As opposed to "subsurface" or "mineral rights".
SURPLUS FUNDS Money gained in a mortgage enforcement sale of property which is in excess of the money required to satisfy the mortgage, interest, penalties, and costs.
SURRENDER To give up, to turn over something to a person claiming interest in it.
surround The material surrounding a bathtub or shower.
SURVEY A pictorial depiction of land and the improvements on it. Shows boundary lines (with measurements and bearings), buildings, sheds, easements, etc. A precise measurement of a piece of property by a licensed surveyor.
SURVEYOR A professional who is trained to map out land and improvements to land accurately.
SURVIVORSHIP The condition of outliving others. Surviving joint tenants have the right to take title to the land from a deceased joint tenant by right of survivorship.
swale A wide, shallow depression in the ground designed to channel drainage of rainwater.
SWEAT EQUITY Slang term for the contribution to the value of a property made by manual labor. The non-cash value added to a piece of property by the owner, such as do-it-yourself home improvements.
SWEETENER Slang term for an added incentive to a party to induce her to enter a transaction.
SWING LOAN A short-term loan designed to bridge the borrower's finances between two events. For example, a person who buys a new home in April but cannot sell her old home until June may require a swing loan to carry both homes for the interim period until the old home may be sold and the proceeds used to pay out the swing loan. Also known as "bridge financing".
T1-11 A hardboard exterior siding with vertical grooves to simulate boards.
TACKING Adding an extra period of time to the term of a contract. 1. Government acquisition of land through condemnation. 2. Restrictions on the use of land that are so harsh as to block any reasonable use of the property.
TANDEM PLAN A joint program of the Government National Mortgage Association (GNMA) and the Federal National Mortgage Association (FNMA) to provide low-interest home loans.
TANGIBLE PROPERTY Assets that can be touched, that have a physical existence.
tank stopper A rubber plug or flapper that seals the valve seat between a toilet tank and bowl. Upon flushing a toilet, the tank stopper is lifts to allow water to rush through the flush valve into the bowl.
tap fees A fee charged by most companies for hooking up utilities.
TAX 1. To strain or push to the point of exhaustion. 2. To levy an assessment against, usually by government powers. Unpaid taxes usually form a special lien on property owned by the taxpayer, ahead of registered mortgages. 3. The money charged as an assessment.
TAX AND INSURANCE ESCROW See "escrow account".
TAX BASE The pool of property, value or income from which a government may draw assessments.
tax deduction A tax break given by the government. Mortgage interest, loan points, and property taxes can be deducted.
TAX DEED The instrument of conveyance when a property is sold by a government body to pay for arrears of taxes.
TAX FORECLOSURE The process leading up to the sale of a property to pay for arrears in taxes.
TAX LIEN A claim registered against a property by a government authority for non-payment of assessed taxes. A lien placed against a property for nonpayment of taxes.
TAX MAP A pictorial representation of the properties in a municipality, showing dimensions and other information about each property for tax purposes.
TAX ROLL Also known as "assessment roll", the listing of all properties in a jurisdiction that are subject to taxation, including owners' names, assessed value of each property, municipal addresses, legal descriptions and assessment roll number.
TAX SALE Sale of property by a governmental body for non-payment of taxes, ether by tender or auction. The public sale of a property by the government for nonpayment of taxes.
tax service fee A fee collected to set up third-party monitoring of the borrower's property tax payments. This is done to ensure that the payments are made on time, and to prevent tax liens from occurring to the detriment of the lender.
tax shelter A term often applied to real estate investment, referring to various tax advantages.
TAX-EXEMPT PROPERTY A property that is not subject to realty taxes.
tear-down A house in such poor condition as to require rebuilding from the ground up.
TEASER RATE A lower interest rate charged on an adjustable or variable rate mortgage for a brief, introductory period as an inducement to the borrower to accept the loan from the lender. A low, short-term interest rate offered on a mortgage to entice the borrower.
TENANCY The right to use and occupy all or part of a property under a rental agreement.
TENANCY AT SUFFERANCE Form of tenancy created when a tenant remains in occupation of the premises after the end of the lease. The landlord is at liberty to evict the tenant at any time, subject only to the local tenancy laws.
TENANCY AT WILL Form of tenancy created by written agreement in which the landlord may evict the tenant at any time.
TENANCY BY ENTIRETY See "joint tenants".
tenancy by the entirety Ownership by a husband and wife in which they together hold title to the whole property with right of survivorship.
TENANCY FOR LIFE See "life estate".
TENANCY FOR YEARS Form of tenancy created by a written agreement in which the tenant has the right to occupy the premises for a stated period of time.
TENANCY FROM YEAR TO YEAR (MONTH TO MONTH) A form of tenancy in which the tenant's right to occupy the premises lasts for a stated period of time but may be extended by mutual consent for another period.
TENANCY IN COMMON Ownership of property in which several owners each own a stated portion of the property (a percentage). Each owner may deal with her portion of the property as she wishes (giving it away, mortgaging it, selling it, bequeathing it, etc.) and, upon her death, her share becomes part of her estate. A form of ownership in which two or more owners hold an undivided (though not necessarily equal) interest in the property, with no right of survivorship.
TENANCY IN SEVERALTY Ownership of property by a single person.
TENANT FIXTURES Items added to a leased premises by a tenant that might normally be considered fixtures (and, therefore, part of the premises) but that, by contract or law, the tenant is entitled to remove at the end of the lease period.
TENANT IN COMMON A person who owns property with one or more others, where each owns a stated portion of the property and is free to deal with his portion as he wishes.
TENDER 1. To deliver payment or an item one is obliged to deliver. 2. To produce evidence of one's ability to meet one's obligations under a contract for the purposes of preserving one's right to sue another party to the contract who is not able to carry out the contract.
TENEMENTS 1. A legal word for a property or fixed asset (see dominant or servient tenement regarding easements). 2. Term for units in an aging apartment complex or building.
tenure A common-law term referring to the way in which a piece of property is held, such as a fee simple or leasehold.
TENURE IN LAND The fashion in which an owner holds title to land.
TERM LOAN A loan that comes due on a given date, often before the periodic payments would pay the loan out.
TERM, AMORTIZATION Term: The period of time during which the loan contract is active, during which the borrower makes periodic payments to the lender and at the end of which the balance of the loan becomes due and payable.
TERMITE CLAUSE A term in an Agreement for sale which allows the Purchaser to inspect for termites. If any are found, the Vendor may be required to treat the problem or the Purchaser may rescind. Many clauses now refer more generally to "wood-damaging or destroying insects".
TERMITE INSPECTION The examination of a building for wood destroying insects.
TERMS The various clauses that make up a contract. Sometimes used to described the financial portions of the contract only.
terra cotta A red, low-fired tile that is a popular roofing material.
terrace A terrace can be several things: a veranda, a roofed balcony, an unroofed paved area next to a house, or a raised bed of earth constructed to enhance a landscape.
TESTAMENT Another word for a will.
TESTAMENTARY DISPOSITION The transfer of ownership of an asset by way of a will.
TESTATE To die leaving a valid Will. Opposite of "intestate".
TESTATOR (TESTATRIX) The person who makes a will.
TESTIMONIUM The clause in a legal instrument that sets out the date and other information regarding the signing of the instrument.
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thermocouple A safety device on a pilot light gas ignition system. If the thermocouple isn't being warmed by the pilot light, it shuts off the flow of gas. A thick copper wire that acts as a safety device on a gas burner. If the pilot light for the burner goes out, the sensor on the end of the wire cools and prevents the flow of gas to the burner.
thermostat A control that automatically turns on a heater, furnace, or air conditioner when room temperature reaches a set level.
thermostatic control A device used to regulate the point at which the burner for the water heater is activated.
THIRD PARTY A person who is not a party to a contract but may become involved in an indirect way or be affected by it.
third-party origination In a third-party origination transaction, the lender has another institution originate all or part of a mortgage.
three-way switch A three-way switch controls one or more lights from two different locations. These are often placed at both ends of a stair or hallway.
threshold A flat trim strip normally made of oak or aluminum that offers a durable and finished transition between the floors on both sides of a door or between indoors and out.
throw The distance a deadbolt extends out from the edge of a door when in its locked position.
TIME IS OF THE ESSENCE A standard statement in a contract which ensures that all dates and times of day noted in the contract are important and cannot be ignored by any of the parties without the consent of the others except in breach of the contract. A phrase in a purchase contract that indicates a certain period of time in which an act must be performed.
timeshare Ownership that involves the acquisition of a specific period of time or percentage of interest in a vacation home or resort.
TIME-SHARING A form of joint ownership of property where numerous owners share title and enjoy use or occupation of the property according to a specific schedule.
TITLE The legal term for one's ownership interest in land. The legal document conferring ownership of a piece of real estate.
TITLE COMPANY Also known as "title insurance company" or "title insurer". A corporation which is in the business of selling policies of insurance guaranteeing the ownership and quality of title to land. A firm that ensures that the property title is clear and provides title insurance.
TITLE COVENANTS Clauses and promises inserted into instruments of conveyance which are designed to give the Purchaser assurances that she is receiving good title.
TITLE DEFECT A claim against or competing interest in a property which affects the title of the registered owner.
title examination An examination of the public record to determine that the seller is the legal owner and there are no encumbrances (such as claims or liens) affecting the property.
title insurance A policy issued to lenders and buyers to protect against loss due to disputed property ownership.
title insurance binder A title insurance company's written commitment to insure title to the property, subject to the conditions and exclusions shown on the binder.
TITLE INSURANCE POLICY A form of insurance contract which guarantees to indemnify an owner or mortgagee of property for damages suffered as a result of undiscovered title defects which arise later.
TITLE PLANT Also known as "abstract plant". An assemblage, available to the public, of information and documents relating to title to a particular property.
TITLE REPORT A document which sets out the current state of title to a property.
title risk Possible impediments to the transfer of a title from one owner to another.
title search The process of reviewing all recorded transactions in the public record to determine whether any title defects exist that could interfere with the clear transfer of ownership of the property.
TITLE SEARCH OR EXAMINATION The act of examining in detail the public records relating to ownership of a parcel of land to ensure that the current owner has clear title, free of any liens, claims, mortgages or competing and adverse interests. Usually performed by a lawyer, qualified title searcher, or title insurance company on behalf of a proposed purchaser or mortgagee.
TITLE THEORY STATES Jurisdictions in which ownership of land is divided into two interests: legal title and equitable title. When an owner registers a mortgage in favor of a lender, legal title is transferred to the lender while the owner retains equitable (or beneficial) title. Once the mortgage is paid out, legal title is transferred back to the owner.
toilet seal A gasket that seals the joint between the bottom of a toilet and the drain piping. This prevents water leakage and the escape of sewer gases.
tongue and groove Lumber with a small groove down one side of each board and a protruding piece (tongue) on the other side that fits into the groove when the boards are installed.
top producer A real state industry term that refers to agents and brokers who sell a high volume of homes.
top rail The horizontal structural member of a door that runs across the top of the door.
top soil The top layer of soil that is removed when lots are graded in preparation for construction.
TOPOGRAPHY The form and structure of the surface of land (i.e. hilly, flat, etc.)
TORRENS SYSTEM Developed in Australia, a system of the registration of interests in land in which documents are closely regulated, monitored and examined by the recording authority to ensure that they are correct and that title is transferred without flaw. Property may not be transferred if uncorrected title defects exist.
TOTAL DEBT RATIO Comparison of the total costs of living for a person (including debt, food, utilities) over a given period with the gross income of that person.
total expense ratio The percentage of monthly debt obligations relative to gross monthly income.
TOTAL INTEREST PAYMENTS A calculation of all interest paid on a loan over its life.
total lender fees Fees required by the lender to obtain the loan, apart from other fees associated with transferring a property between buyer and seller. Also known as finance charges.
total loan amount The base loan amount plus any financed closing costs.
total monthly housing costs The sum of principal, interest, property taxes, and if applicable, private mortgage insurance (PMI) and either hazard insurance or homeowners' association dues.
total of all payments The total cost of the loan, including repayment of the principal amount and the sum of monthly interest payments.
total paid at closing All closing costs, prepaid fees, and the down payment. The lender may require you to demonstrate extra cash reserves equal to two months' worth of housing expenses as well.
TOWN HOUSE A type of dwelling which shares at least one common wall with neighboring dwellings.
townhouse An attached home that is not a condominium.
TPRV Temperature/pressure relief valve. A device that releases built-up energy in a tank at a certain temperature or pressure.
tract home Another term for a production home, a mass-produced house constructed by one builder in a project.
trade equity Other real estate or assets that a buyer gives to a seller as part of the down payment.
trading down Buying a home that is less expensive than the one's current house.
trading up Buying a home that is more expensive than one's current house.
Trans Union Corporation Trans Union Corporation is one of the "Big Three" credit-reporting bureaus that operate nationwide. Address: 760 Sproul Road, P.O. Box 390, Springfield, PA 19064-0390. Phone: (800) 888-4213 .
transaction broker A real estate professional who is hired to help a buyer and seller reach an agreement. The transaction broker does not represent either the buyer or the seller.
TRANSACTION FEE A charge for making a withdrawal on a line of credit or other bank account.
transfer of ownership Any legal means by which a piece of real estate changes hands.
transfer tax An assessment by state or local authorities at the time a piece of property changes hands.
transom A small hinged window directly above a door.
trap A trap is the U- or S-shaped section of drainpipe directly beneath a plumbing fixture such as a sink or shower. Its shape is intended to hold a small amount of water so that it blocks sewer gasses from rising into the home. In plumbing, a curved section of drainpipe that fills with water, providing a liquid seal to prevent the emission of sewage gases.
tray ceiling A tray ceiling has edges that slant toward the middle from the walls.
tread The flat part of a stair step.
Treasury bills Securities issued by the Treasury Department that have the full backing of the U.S. government.
Treasury index An index used to determine interest rate changes for adjustable rate mortgages.
trellis A decorative landscape structure made of thin strips of wood or plastic.
TRESPASS Entry onto or possession of the property owned by another without the owner's consent.
trim work The finishing of doors, doorways, window frames, and floors.
TRIPLE-NET LEASE A rental agreement which requires the tenant to pay all operating costs of the building.
truss A prefabricated framework of girders, struts and other items used to support a roof or other load-bearing elements.
TRUST ACCOUNT A bank account held by a professional for the purposes of keeping money held on behalf of clients separate from the funds of the professional or her business. A special account used by a broker or escrow agent to safeguard funds for a buyer or seller.
TRUST DEED An instrument of conveyance of title to property wherein the transferee will be holding the title to the property on behalf of another person.
TRUSTEE A person who holds title to property on behalf of another (a "beneficiary of the trust"). A legally empowered person who holds or controls a piece of property for another person.
TRUSTEE'S SALE Sale conducted by a trustee (often the lender) under the terms of the deed of trust.
Truth in Lending Act A federal law that allows a consumer to cancel a home-improvement loan, second mortgage, or other loan until midnight of the third business day after a contract is signed, if the home was pledged as security (except for a first mortgage or first trust deed).
TRUTH-IN-LENDING ACT A federal law which requires lenders to disclose all terms of a loan arrangement to the borrower in a specified form.
tuck-point The process of removing old mortar from between bricks and replacing it with new mortar.
TUDOR A heavy looking, fortress like style of home in the English style. Stone and brick construction, may also feature stucco and exposed timbers. Windows feature stone trim.
two- to four-family property A piece of property that is owned by one person but provides housing for up to four households.
TWO-STEP MORTGAGE A mortgage contract in which the interest rate changes after a given period of time, such that the rate charged is lower for the first part of the term of the mortgage and then market rate or higher later in the term. An adjustable mortgage with two interest rates: one for the first five or seven years of the loan, and the other for the remainder of the loan term.
U.S. Department of Housing and Urban Development Also known as HUD. A federal agency that oversees the Federal Housing Administration and a variety of housing and community development programs.
unbundled real estate services Real estate services not bound together, but purchase transaction at a time.
UNDERIMPROVED LAND Property that is not being used so as to produce the maximum income it is capable of producing.
UNDERINSURANCE Insurance which would provide insufficient proceeds to compensate for the loss of the value of the insured item.
underlayment A layer of wood between the subfloor and the floor.
UNDERTAKING A promise, reduced to writing, which is legally enforceable.
UNDERWRITER A person who reviews and evaluates an application for a loan or insurance policy.
underwriters' knot A code-approved knot tied at the end of an electrical cord to prevent the wires from being pulled away from their connection to electrical terminals.
UNDERWRITING The decision as to whether or not to accept a loan or insurance application. The process in which lenders evaluate the risks posed by a particular borrower and set appropriate conditions for the loan.
underwriting fee A fee charged by the lender to verify information on the loan application, authenticate the property's worth as collateral, and make a final determination about whether to grant a loan to the applicant.
UNDEVELOPED LAND Real property that has not been subjected to man's labour to make it more valuable of profitable. Raw land.
UNDISCLOSED AGENCY When a person deals with another party on behalf of a third person but does not inform the party with whom he is dealing of this relationship.
undisclosed heir A person who claims the right to a piece of property after the death of an owner without a will.
UNDISCLOSED PRINCIPAL The identity of the person whom an undisclosed agent represents.
undisclosed spouse A marital partner who can claim the right to a piece of property but is not identified in the owner's will.
UNDIVIDED INTEREST The term to describe the title of co-owners of a property as joint tenants such that the co-owners' title cannot be separated.
UNDUE INFLUENCE The exertion by a third party of any kind of control such that a person signs a contract or other instrument which, absent the influence of the third party, he would not have signed. A contract or instrument may be set aside as not binding on any party who signs it while under undue influence.
UNENCUMBERED PROPERTY Land that has no claims, liens or mortgages registered against it.
UNENFORCEABLE CONTRACT Any agreement that will not stand up to legal challenge. May result from the incapacity of a party, the illegality of the terms of the agreement, or the presence of undue influence, threat or coercion upon a party which caused that party to sign the contract.
UNIFORM VENDOR AND PURCHASER RISK ACT A law that apportions responsibility for damage due to fire between a purchaser and vendor for the period between the signing of the agreement of sale and the closing date.
UNILATERAL CONTRACT An agreement to exchange payment for services, where payment becomes due only once the service has been successfully performed. A listing agreement for the sale of real property may be a unilateral contract. A one-sided contract. If one party makes a promise to do something, the second party is not legally required to perform. If the second party does comply, however, the first party is obligated to keep its promise.
UNIMPROVED LAND See "undeveloped land".
UNINSURABLE TITLE Ownership of land which is subject to flaws such that a title insurance company refuses insure it.
UNIT A single dwelling within a larger complex: especially in condominium projects where the unit is the portion of the complex which is for the exclusive use of the owner of the unit.
UNITY OF POSSESSION A right of each joint tenant to use, occupy and enjoy the entire property.
UNITY OF TIME For joint tenants, the requirement that each of the tenants acquires her interest at the same time, as part of the same conveyance.
UNITY OF TITLE For joint tenants, the requirement that each of the tenants acquires her interest in the same instrument of conveyance.
UNLAWFUL DETAINER The illegal possession of land by one whose original possession was legal.
UNMARKETABLE TITLE Similar to "uninsurable title:, ownership of land which is defective such that no one would wish to purchase it.
unrecorded deed A deed that transfers ownership from one party to another without being officially recorded.
UNRECORDED/UNREGISTERED INSTRUMENT A legal document which purports to affect rights and interests in land but which has not been added to the public record for the property.
UNSECURED LOAN A loan in air, with no asset pledged as collateral or security for it. An unsecured loan is a loan that is not backed up by collateral. Often, loans from family members or pesonal acquaintances are unsecured loans. A gift from another person that is not expected to be repaid is not an unsecured loan. Any loan that is not backed by collateral.
UP RENT POTENTIAL An estimate of the amount rent on a property may be reasonably raised over a period of time.
upgrades Options offered to buyers in a new-home project that go beyond the standard carpeting, lighting, finish carpentry, and other amenities.
UPLAND Property which borders on a body of water.
UPSET PRICE An amount set by the court which creates the reserve bid for an auction of property; the property may not be sold for less than the upset price.
upzoning The process in which a property is zoned from a lower to a higher use.
URBAN DEVELOPMENT ACTION GRANT (UDAG) A program of the Department of Housing and Urban Development (HUD) lending money for the revitalization of commercial areas.
URBAN RENEWAL The process of acquiring and redeveloping property for the purposes of increasing its profitability or utility. May be conducted by government, private interests or a combination of the two.
URBAN SPRAWL Slang term for the growth of cities in an unplanned and often wasteful manner. The unplanned expansion of development over a large area.
UREAFORMALDEHYDE FORM INSULATION (UFFI) A form of residential and commercial insulation popular in the 1970s which was found to give off toxic gases. Properties insulated with UFFI sell for much less than similar, non-UFFI properties as a result of the fear of health problems. In many jurisdictions, the Vendor of a residential property must inform a prospective purchaser of the presence of UFFI or provide a warranty that there is no UFFI in the property.
USE Noun: Term for the purpose for which a property is occupied, mostly related to zoning by-laws or ordinances. Some typical uses would be residential, commercial, industrial, etc.
USEFUL LIFE An estimation of the period of time over which a property, building or other asset will be of value or use to its owner.
USURY The illegal act of charging extremely high interest rates on a loan. Illegally excessive interest charged on any loan.
UTILITIES Services, such as gas, electricity, water, sewers, which are required in any dwelling and for which the owner must pay separately. In some jurisdictions, arrears in payment of charges for utilities may form a lien on the property.
U-value The amount of heat a door or window conducts between the inside air and the environment.
VA (Veterans Administration) A key program of the U.S. Department of Veterans Affairs. The Veterans Administration allows most veterans to purchase a house without a down payment.
VA LOAN A loan on below market terms guaranteed by the Department of Veterans Affairs, given to former members of the armed forces. A loan through the Veterans Administration program, which allows most veterans to purchase a house without a down payment.
VACANCY RATE The calculation of the percentage of all available rental units in a particular area that are not occupied.
VACANT LAND Land that may be improved and developed but is not currently in use.
VACATE To leave or move out of a premises.
VACATION HOME An occasional-use property, often in a resort area (ski, sun, ocean), which may be rented out by the owner to other vacationers while not in use by the owner.
VALID Legally binding; authorized.
valley The angled intersection between two roof planes where water collects and runs off the roof. Valleys are often protected with special metal flashing because they must handle heavy water flow without leaking.
VALUATION The estimation of the worth or sale price of an asset. The estimated worth or price. The act of valuation by appraisal.
vapor barrier A material such as plastic that prevents the passage of moisture.
VARIABLE EXPENSES Operating costs of a property which are not fixed, which change as a result of certain contingencies, such as percentage occupation of the property, type of use of the property, perhaps even the season of the year (for heating and air conditioning costs).
VARIABLE INTEREST RATE An interest rate that may change according to change in the index rate. See "adjustable interest rate". A loan rate that moves up and down based on factors including changes in the rate paid on bank certificates of deposit or Treasury bills.
variable rate An interest rate that changes with fluctuations in such indexes as the U.S. Treasury bill index.
variable rate mortgage (VRM) A loan with an interest rate that hinges on factors such as the rate paid on bank certificates and Treasury bills.
VARIABLE-MATURITY MORTGAGE A long-term loan in which the date the balance is due may be changed to adjust the level of periodic payments.
VARIANCE An indulgence granted by a local zoning commission or authority to allow a non-conforming use of a property to continue. The zoning bylaw or ordinance is actually amended as it pertains to the particular property.
vaulted ceiling An elongated half-cylinder that arches above the floor.
V-cap A specially shaped piece of ceramic tile used at the edge of a counter to trap liquids.
VENDOR Seller. Purchasee.
VENDOR AND PURCHASER APPLICATION Also known as "V&P Application". The bringing before a court in Ontario of any dispute between parties to an Agreement of Purchase and Sale with regard to the terms of the Agreement. Named after the Vendors and Purchasers Act, the statute which sets out the procedure for such an application.
VENDOR TAKE-BACK MORTGAGE See "mortgage back".
VENEER Any kind of thin wood or brick finish which is attached to the exterior of an item, be it a wall or a piece of furniture. A thin facing material that is applied over a structural base. A veneered door, for example, may have a hollow or solid wood core and a thin surface layer of fine hardwood.
vent A pipe that allows air to flow in a drainage system.
ventilation The process of replacing stale air with fresh air, usually by circulation through a series of vents or a mechanical system such as an air conditioner.
verification of deposit Part of the loan process, in which a lender will ask a borrower's bank to sign a statement verifying the borrower's account balances and history.
verification of employment Part of the loan process, in which a lender asks the borrower's employer for confirmation of the borrower's position and salary.
VEST To become the property of someone through action of law.
vestibule A small entrance hall or room.
Veterans Administration (VA) A key program of the U.S. Department of Veterans Affairs. The Veterans Administration allows most veterans to purchase a house without a down payment.
Victorian style An architectural style that dates from the mid-19th century.
vinyl-clad windows Wood windows sheathed in vinyl on the outside.
VIOLATION Any breach of a contract, rule, law or ordinance. An act, deed, or condition contrary to the permissible use of property.
Visqueen A brand of polyethylene sheet used to cover the ground in a crawl space.
VOID Null, not legally enforceable.
VOIDABLE A contract that may be treated as legally unenforceable at the option of a party (usually the injured party) but remains enforceable until that party exercises her option.
voidable contract A contract that may seem to be valid, but can be rejected by either one of the parties.
volt The unit used to measure electrical force between two points in a circuit. The current at most receptacles in the United States and Canada is approximately 120 volts.
voltage The pressure behind the flow of electricity.
volt-ohm meter An electrical test device used for making a variety of electrical measurements, including voltage and current.
VOLUNTARY ALIENATION Transfer of title to an asset with the consent of the owner.
VOLUNTARY LIEN A claim that is recorded/registered with consent of the owner. A lien that a homeowner willingly gives to a lender.
wainscoting Wood paneling, tongue-and-groove boards, or similar material installed between a baseboard and a chair rail.
WAIVE To voluntarily give up a legal right or claim.
WAIVER The voluntary giving up of a right or claim. A document to evidence such a relinquishment. A voluntary relinquishing of certain rights or claims.
walk-out basement A feature that allows a door to open onto ground level.
walk-through A buyer's final inspection of the home to determine if conditions in the purchase agreement have been satisfied.
WALK-THROUGH INSPECTION A physical examination of the property which usually takes place immediately prior to closing to ensure that no changes have taken place and no new damage has been done to the property. May also be used to confirm that fixtures and chattels included in the sale remain on the premises.
WALKUP A small apartment building with rental units on upper floors and no elevator. The tenant literally has to walk up to her apartment unit.
wallboard Sheets of compacted gypsum with a paper exterior. Also known as dry wall, sheetrock, gypsum board, and plaster board.
WAREHOUSE A large building used for receiving and storing goods, materials or merchandise.
WAREHOUSE FEE Charge to a borrower to cover the costs of the lender taking short term loans from other lenders to cover the borrower's mortgage. A closing-cost fee representing the lender's cost of holding a borrower's loan temporarily before it is sold on the secondary mortgage market.
WAREHOUSING The process of assembling mortgages for sale to the secondary mortgage market.
WARRANTY A signed statement which guarantees the condition or continued usefulness of an asset or guarantees the truth of the facts set out in the statement. The person signing is legally liable if the statement turns out to be untrue or if the asset proves in worse condition than stated. A legally binding promise to do something in the future.
WASTE Allowing or causing a property to suffer damage or undue wear and tear to the detriment of another person who has an interest in or claim to the property.
WASTELAND 1. (With "The"), A classic American poem of the early 20th Century by Thomas Stearns Eliot. 2. A property which cannot be developed for profitable use.
WATER COURSE Any conduit of running water which occurs naturally on land: a river, stream, brook.
WATER RIGHTS The legal right to use water from a water course or body of water on a property.
WATER TABLE The natural accumulation of water either above or below ground, often used for well purposes. May also refer to the distance from the surface of the land to the location of the water. The level at which the ground is saturated with water.
watt The unit used to measure the rate at which a device consumes electricity.
WEAR AND TEAR The term for the reduction in value of an asset resulting from normal use.
weather stripping Individual lengths of rubber or plastic used to plug air leaks around doors and window frames.
WEEKLY PAYMENTS An alternative to the more traditional monthly payments on a loan or mortgage. Results in faster pay-down of principal, lower total interest paid.
weep holes Spaces or small openings left in a masonry wall to allow water to drain from behind the wall.
Western style A cabinetry term referring to a style of cabinet with a face frame around the front opening.
WETLANDS Lands restricted for development as a result of their proximity to bodies of water and the fact that they are occasionally or often flooded. May also be environmentally sensitive. Watery areas such as swamps, marshes and floodplains.
wild deed An improperly recorded deed.
WILL A written statement of a person's wishes for the disposition of that person's estate after their death. A legal document outlining the disposition of a person's estate in the event of his or her death.
window light An individual pane of glass.
window seat A bench built under an interior window.
window well A curved, corrugated steel insert used to isolate basement windows from moisture if they're below the soil line.
window well covers Curved plastic covers designed to be installed on top of a window well to cover the opening.
WIRE TRANSFER The movement of funds from one place to another electronically.
WOOD DESTROYING INSECT REPORT See "termite report".
WORK ORDER A requirement by a local government body for work to be performed on a property so as to bring it into conformance with local regulations.
WRAPAROUND MORTGAGE A secondary financing option in which new money borrowed is blended with money already owed and registered on title to the property. A second mortgage is registered as security for the new money but the old mortgage remains in existence and the rate of interest is a blend of the rate chargeable on the old mortgage and the rate chargeable on the newly borrowed money. A loan given to a buyer for the remaining balance on a seller's first mortgage and an additional amount requested by the seller. Payments on both amounts are made to the lender who holds the wraparound loan.
WRIT OF EXECUTION A claim or lien which is registered with the local enforcement officer to enforce a judgement of a court. The officer is then required to enforce the judgment against the judgment debtor and any property owned by that debtor in the jurisdiction.
ZERO LOT LINE A zoning regulation which allows certain properties to have buildings placed up to the line dividing separate properties.
zero-lot line The positioning of a house near or on top of the lot boundary, resulting in little or no space between houses.
zero-net When the seller receives little or no net proceeds from the property sale.
Z-flashing A special type of metal flashing that protects horizontal joints between siding panels that don't overlap. It has a Z-shaped profile and is designed to tuck up under the upper panel and overlap the lower one.
ZONE An area of a municipality to which certain rules, regulations, bylaws or ordinances apply.
zoning Regulations that control the use of land within a jurisdiction.
ZONING BYLAW A rule passed by the local government which regulates the use of property according to its location within the municipality, placement of structures on the property, maximum floor area, minimum lot area, minimum floor-to-lot area ratios, etc.
zoning variance A one-time modification of existing zoning law.
This government agency operates a variety of loan programs including the Section 203(b) program, which provides low-rate mortgages to buyers who make a down payment of as little as 3 percent.