|
||||||||||||||||||||||||||||||
Tracy Brennaman | ||||||||||||||||||||||||||||||
|
|
|
Useful Information For Buyers For Sellers For Both General Info Glossary
A
B
C
D
E
F
G
H
I
J
L
M
N
0
P
Q
R
S
T
U
V
W
Z
Balloon Mortgage- A mortgage where the final payment is considerably larger than the preceding payments. Balloon Payment- A large final payment due at the end of a loan, typically a home or car loan, to pay off the amount your monthly payments didn't cover. Many states prohibit balloon payments in loans for goods or services that are primarily for personal, family or household use, or require the lender to let you refinance the balloon payment before forcing collection. Bill of Sale- A written instrument given to pass title to personal property. Blanket Mortgage- One mortgage on a number of parcels of real property. Blockbusting- The illegal practice of inducing panic selling in a neighborhood by making representations of the entry, or prospective entry, of members of a minority group. Breach of Contract- Failure, without legal excuse, of one of the parties to a contract to perform according to the contract. Brokerage- For a commission or fee, bringing together parties interested in buying, selling, exchanging, or leasing real property. Buffer Zone- A strip of land separating one parcel from another. Building Line- A line fixed at a certain distance from the front and/or sides of a lot beyond which no structure can project. Bundle of Rights- Ownership in real property implies a group of rights, such as the right of occupancy, use and enjoyment, the right to sell in whole or in part, the right to control the use, the right to bequeath, the right to lease any or all of the rights, the right to the benefits derived by occupancy and use of the property, etc. Buy Down- A cash payment, usually measured in points, to a lender in order to reduce the interest rate a borrower must pay. Buyer's Broker- A licensee who has declared to represent only the buyer in a transaction, regardless of whether compensation is paid by the buyer or the listing broker through a commission split. Some brokers conduct their business by representing buyers only. Capital Gains- The profit on the sale of a capital asset, such as stock or real estate. If you sell your primary residence, you can exclude $250,000 in profit from capital gains tax. A couple can exclude $500,000. Capitalization- The estimation of the value of income producing property by dividing the annual net income by the capitalization rate. Capitalization Rate- The rate of expected return on investment property. A ratio of income to value. Ceiling- The maximum allowable interest rate over the life of the loan of an adjustable rate mortgage. Certificate of Eligibility- The document given to qualified veterans which entitles them to VA guaranteed loans for homes, business, and mobile homes. Certified Check- A check which the bank guarantees to be good, and against which a stop payment is ineffective. Chain of Title- A history of conveyances and encumbrances of a property from some starting point, whereby the present owner derives title. Chattel- Personal property which is tangible and moveable. Clear Title- A land title that doesn't have any liens against it. Closing- The conclusion of the sales transaction when the seller transfers title to the buyer in exchange for consideration. Closing Costs- Costs the buyer must pay at the time of the closing in addition to the down payment which may include points, title charges, credit report fee, document preparation fee, mortgage insurance premium, inspections, appraisals, prepayments for property taxes, deed recording fee, and homeowners insurance. Closing costs can vary considerably from one financial institution to another. Closing Statement- A detailed written summary of the financial settlement of a real estate transaction, showing all charges and credits made, and all cash received and paid out. Cloud on Title- A claim or encumbrance that may effect title to land. Collateral- Something of value deposited with a lender as a pledge to secure repayment of a loan. Commingling- The illegal practice of combining or mixing clients' funds with the agent's own funds. Commission- The compensation paid to a licensed real estate broker or by the broker to the salesman for services rendered. Usually a percentage of the selling price of the property. Common Areas- Land or improvements designated for the use and benefit of all residents, property owners and tenants. Comparables- Properties which are similar to a particular property and are used to compare and establish a value for that property. Compound Interest- Interest which is computed on the principal and any unpaid accumulated interest. Condemnation- The act of taking private property for public use, through due process under the right of eminent domain, with compensation to the owner. Condominium- A form of real estate, usually a dwelling with individual ownership of separate portions of the building plus shared ownership of the common areas. Consideration- The price or subject matter, which induces a contract; may be in money, commodity, exchange, or a transfer of personal effort. Constructive Eviction- The provision of housing that is so substandard that, for all intents and purposes, a landlord has evicted the tenant. Because the premises are unlivable, the tenant has the right to move out and stop paying rent without incurring legal liability for breaking the lease. Usually, the tenant must first bring the problem to the landlord's attention and allow a reasonable amount of time for the landlord to make repairs. Contingency- A provision in a contract stating that some or all of the terms of the contract will be altered or voided by the occurrence of a specific event . Contract- A legally enforceable agreement to do, or not to do, a particular thing for a consideration. Contract for Deed- A contract for the sale of real estate where the deed (title) of the property is transferred only after all the payments have been made. Also known as a land contract, agreement of sale, conditional sales contract, or installment contract. Buyers should be wary of this type of contract, since they can lose their entire investment if the owner declares bankruptcy, before the deed has been transferred. Contract of Sale- The agreement between the buyer and seller on the purchase price, terms, and conditions necessary to both parties to convey the title to the buyer. Conventional Loan- A real estate loan, which is not insured by the FHA or guaranteed by the VA. Conveyance- Written instrument, such as a deed or lease, that evidences transfer of some ownership interest in real property from one person to another. Cooperative Housing- (A) A form of real estate, usually a dwelling in which residents own shares, but do not directly own the space they inhabit. Rather, owning a share of the building entitles the shareholder with the right to inhabit a certain space within the dwelling, such as an apartment. Shares are usually proportional to the amount of space in each apartment. (B) A living arrangement in which residents must perform certain duties or chores to benefit the entire residence, in addition to paying room and board. A common form of dormitory living. Cooperative Sale- A sale of property in which the buyer is brought to the transaction by a real estate agent who works for a different real estate broker than the listing agent. Both brokers/companies have agreed to cooperate in closing the property, and typically, splitting the commission. Offers of cooperation and compensation are commonly found in the MLS property listings. Cost Approach to Value- An estimate of value based on current construction costs, less depreciation, plus land value Counter Offer- The rejection of an offer to buy or sell that simultaneously makes a different offer, changing the terms in some way. The legal significance of a counteroffer is that it completely voids the original offer, so that if the Seller decided to sell for $160,000 the next day, the Buyer would be under no legal obligation to pay that amount for the property. Covenant- A restriction on the use of real estate that governs its use, such as a requirement that the property will be used only for residential purposes. Credit Report- An account of your credit history, prepared by a credit bureau. A credit report will contain both credit history, such as what you owe to whom and whether you make the payments on time, as well as personal history, such as your former addresses, employment record and lawsuits in which you have been involved. Credit Score- Credit scores are numbers calculated based upon your credit history. The better your credit, the higher your number or score will be - the worse your credit, the lower the score. The number of inquiries or times your credit has been pulled in the past 90 days will also lower your "score". In some instances, lack of credit results in "no score" on your report requiring you to provide "alternative credit" via your rental, utility or telephone payment histories. Creditor- A person or entity (such as a bank) to whom a debt is owed. Cul-de-sac- A dead end street which widens sufficiently at the end to permit an automobile to make a "U" turn. Deed- A written instrument by which title to land is conveyed. Deed in Lieu (of foreclosure)- A means of escaping an overly burdensome mortgage. If a homeowner can't make the mortgage payments and can't find a buyer for the house, many lenders will accept ownership of the property in place of the money owed on the mortgage. Deed Restrictions- Common name used to denote covenants and restrictions. Deed restrictions cover allowable land uses and home types and sizes within a neighborhood. Default- Non-performance of a duty arising under a contract or otherwise. Defeasance- A clause in a deed, lease, will or other legal document that completely or partially negates the document if a certain condition occurs or fails to occur. Defeasance also means the act of rendering something null and void. Delivery- The actual transfer of the deed, or an act of a seller showing intent to make a deed effective, without which, there is no transfer of title to the property. Depreciation- A loss in value. Descent- Acquisition of property through inheritance laws when there is no will (when a person dies intestate). Devise- A transfer of real estate by will or last testament. Disclosure- The making known of a fact that had previously been hidden; a revelation. For example, in many states you must disclose major physical defects in a house you are selling, such as a leaky roof or potential flooding problem. Discount Points- The amount paid either to maintain or lower the interest rate charged. Each point is equal to one percent (1%) of the loan amount (i.e., two points on a $100,000 mortgage would equal $2,000). Dispossess- To oust from land by legal process. Down Payment- An amount of money the buyer pays which is the difference between the purchase price and the mortgage amount. Dual Agency- Representing the buyer and the seller in the same transaction by the same agent. Due on Sale- A clause in a mortgage agreement providing that, if the mortgagor (the borrower) sells, transfers, or, in some instances, encumbers the property, the mortgagee (the lender) has the right to demand the outstanding balance in full. Duress- Forcing action or inaction against a person's will. Earnest Money- A deposit made by the buyer as evidence of good faith in offering to purchase real estate and to secure performance of the contract. Earnest money is typically held by a title company, in an escrow account, during the period between acceptance of the contract and the closing. Easement- A right to use another person's real estate for a specific purpose. The most common type of easement is the right to travel over another person's land, known as a right of way. In addition, property owners commonly grant easements for the placement of utility poles, utility trenches, water lines or sewer lines. The owner of property that is subject to an easement is said to be "burdened" with the easement, because he or she is not allowed to interfere with its use. Easement by Prescription- A right to use property, acquired by a long tradition of open and obvious use. For example, if hikers have been using a trail through your backyard for ten years and you've never complained, they probably have an easement by prescription through your yard to the trail. Economic Obsolescence- Loss of value of real property due to external forces or events; eg., a sewer plant is built next door to the subject property. Emblements- Annual crops produced by cultivation. They are deemed to be personal property. Eminent Domain- The right of government to take private property for public use, through court action known as condemnation. Encroachment- A fixture, or structure, such as a wall or fence, which invades a portion of a property belonging to another. Solutions range from paying the rightful property owner for the use of the property to the court-ordered removal of the structure. Encumbrance- A cloud against clear, free title to the property which does not prevent conveyance, such as unpaid taxes, easements, deed restrictions, mortgage loans, etc. Equity- The difference in dollars between a house's value and the mortgage amount. Escalator Clause- The clause in a contract permitting adjustments of the payments. Escheat- The reversion of property to the state in the event the owner thereof dies without leaving a will (intestate) and has no heirs to whom the property may pass by lawful descent. Escrow- A trust arrangement by which none or more parties deposit things of value with an authorized escrow agent in accordance with the terms of a real estate agreement. Escrow Account- (A) A third party account that holds money safely while a sale is in progress. (B) An account used to save monies required for the payment of an eventual debt. Often used by lenders to save for property taxes, hazard insurance, homeowner's dues, etc. Eviction- Removal of a tenant from rental property by a law enforcement officer. Exclusive Agency (EA)- A listing agreement which gives the listing agent the right to sell the property for a specified time. The owner reserves the right to sell the property himself without paying a commission to the agent. Brokers run the risk of investing their time, effort, and money in a listing that, even if sold through their marketing efforts, does not produce a commission. Exclusive Right to Sell (ERS)- A listing agreement which gives the listing agent the right to sell the property for a specified time, with the right to collect a commission if the property is sold by anyone, including the owner, during the listing period. Fee Simple Estate- The most complete form of ownership of real property; absolute ownership. Commonly used to to denote a property where the owner has undivided title to the land on which the property is situated. FHA- The Federal Housing Administration which insures mortgage loans made by approved lenders, in accordance with FHA regulations. Fiduciary- The relationship of trust, honesty and confidence between agent and principal; the faithful relationship owed by an agent to the principal. First Mortgage- A mortgage which is in first lien position, taking priority over all other liens (which are financial encumbrances). Fixed Rate Mortgage- A mortgage with an interest rate and monthly payment that doesn't vary for the term of the loan. Fixture- Personal property which has been attached to real estate so as to become part of the real property Flood Insurance- A special and separate type of homeowner's insurance the provides coverage for damages resulting from flooding. Flood insurance is required by most lenders only if the property is located within a designated flood plain. The cost of the policy is related to the associated flooding risk. Flood Plain- Flood plains are by definition subject to periodic flooding. They are generally characterized by relatively flat topography and soil types that were laid down during past inundations by flood waters. If your property is in the 100-year flood plain, there is a 1-in-100 chance in any given year that your property will flood. If it is in the 25-year flood plain, there is a 1-in-25 chance in any given year that your property will flood. The statistical chance of flooding is not changed by any one flooding event; but repeated flooding may result in the flood plain being recalculated. For Sale By Owner (FSBO)- An individual homeowner who is attempting to sell his property without a real estate broker. The acronym, FSBO is pronounced "fizzbo." Foreclosure- A legal process instituted by a mortgagee or lien creditor after the debtor's default. Forfeiture- The loss of property or a privilege due to breaking a law. Fraud- A misstatement of a material fact made with intent to deceive or made with reckless disregard of the truth, and which actually does deceive. Front Foot- One linear foot (12 inches) along the street side of a lot. Functional Obsolescence- Loss of value of real property caused by modernization or changing tastes or standards; e.g.. single bath, inadequate closet space, etc. General Lien- A lien that includes all the property owned by a debtor, rather than a specific property. Contrast with Specific Lien. General Warranty Deed- A deed in which the grantor fully warrants good and clear title to the property. A general warranty deed offers the most protection of any deed. Good Faith Estimate- A written estimate of closing costs which a lender must provide you within three days of submitting an application. Grace Period- A period of time during which a loan payment may be paid after its due date but not incur a late penalty. Such late payments may be reported on your credit report. Grant Deed- A deed containing an implied promise that the person transferring the property actually owns the title and that it is not encumbered in any way, except as described in the deed. Grantee- A person to whom real estate is conveyed; the buyer. Grantor- A person conveying real estate by deed; the seller. Gross Lease- A commercial real estate lease in which the tenant pays a fixed amount of rent per month or year, regardless of the landlord's operating costs, such as maintenance, taxes and insurance. A gross lease closely resembles the typical residential lease. The tenant may agree to a "gross lease with stops," meaning that the tenant will pitch in if the landlord's operating costs rise above a certain level. Habendum Clause- The "to have and hold" clause which defines or limits the quantity of the estate granted in the premises of the deed. Hazard Insurance- A contract between purchaser and an insurer, to compensate the insured for loss of property due to hazards (fire, hail damage, etc.), for a premium. Most common, lender required feature of homeowners insurance. Highest and Best Use- The particular use of a real property which will produce the greatest financial return. The optimum use of a site as used in appraisal. into commercial property, it can meet it economic potential. Hold Harmless- In a contract, a promise by one party not to hold the other party responsible if the other party carries out the contract in a way that causes damage to the first party. Home Equity Loan- A fixed or adjustable rate loan obtained for a variety of purposes, secured by the equity in your home. Interest paid is usually tax-deductible. Often used for home improvement or freeing of equity for investment in other real estate or investment. Recommended by many to replace or substitute for consumer loans whose interest is not tax-deductible, such as auto or boat loans, credit card debt, medical debt, and education loans Home Warranty- A service contract that covers a major housing system--for example, plumbing or electrical wiring--for a set period of time from the date a house is sold. The warranty guarantees repairs to the covered system and is renewable. A basic, one year Buyer's warranty costs $295 to $350 with additional coverage available for garage door openers, spas, swimming pools, sprinkler system and other appliances. Homeowners' Association (HOA)- An organization comprising neighbors concerned with managing the common areas of a subdivision or condominium complex. These associations take on issues such as maintaining common land and recreation areas, and collecting dues from residents. The homeowners' association is also responsible for enforcing any covenants, conditions & restrictions that apply to the property. Payment of dues and participation in the homeowner's association may be either voluntary or mandatory, depending on the neighborhood. Homeowners' Insurance- See Hazard Insurance (above). HUD - A federal cabinet department officially known as the Department of Housing and Urban Development. Hypothecate - To pledge specific real or personal property as security for an obligation, without surrendering possession of it. Improvements- Valuable additions to the land, such as buildings, fences, roads, etc., which increase the value of the property. Incidents of Ownership- Any control over property. If you give away property but keep an incident of ownership--for example, you give away an apartment building but retain the right to receive rent--then legally, no gift has been made. This distinction can be important if you're making large gifts to reduce your eventual estate tax. Income Approach to Value- An estimate of value based on the monetary returns that a property can be expected to generate; capitalization. Index- A number, usually a percentage, upon which future interest rates for adjustable rate mortgages are based. Inspection Clause- A stipulation in an offer to purchase that makes the sale contingent on the findings of a home inspector. Insurable Title- A title which a title company will insure. Interest- (A) The sum paid in return for the use of money; could be considered rent for the use of money. (B) The type and extent of ownership in property. Interest Rate- The periodic charge, expressed as a percentage, for use of credit. Intestate- Legal designation of a person who has died without leaving a valid will. Intimidation- As defined in the fair housing laws, it is the illegal act of coercing, intimidating, threatening, or interfering with a person in exercising or enjoying any right granted or protected by federal, state or local fair housing laws. Joint Tenancy- A way for two or more people to share ownership of real estate or other property. When two or more people own property as joint tenants and one owner dies, the other owners automatically own the deceased owner's share. For example, if a parent and child own a house as joint tenants and the parent dies, the child automatically becomes full owner. Because of this right of survivorship, no will is required to transfer the property; it goes directly to the surviving joint tenants without the delay and costs of probate. Judgment- The official and authentic decision of a court of justice concerning the respective rights and claims of the parties to an action or suit. Laches- Delay or negligence in asserting one's rights. Landlord- The owner of any real estate, such as a house, apartment building or land, that is leased or rented to another person, called the tenant. Latent Defect- Hidden structural defects and flaws. Lease- An oral or written agreement (a contract) between two people concerning the use by one of the property of the other. A lease should cover basic issues such as when the lease will begin and end, the rent or other costs, how payments should be made, and any restrictions on the use of the property. The property owner is often called the "lessor," and the person using the property is called the "lessee" Lease Option- A contract in which an owner leases his house (usually for one to five years) to a tenant for a specific monthly rent, and which gives the tenant the right to buy the house at the end of the lease period for a price established in advance. This allows a potential home buyer move into a house he may wish to eventually buy without having to come up with a down payment or financing at that time. Lease Purchase- A contract in which an owner leases his house (usually for one to five years) to a tenant for an increased monthly rent, and which gives the tenant the right to buy the house at the end of the lease period for a price established in advance, with the incremental rent increase being used to form a down payment. Buyers should be wary of this type of contract since they may lose their extra rent/down payment money should the owner suffer financial setbacks before the purchase has been completed. Leasehold Estate- A form of real estate in which a tenant is allowed to construct permanent structures upon a parcel of leased land, and derive some use or income from said structures during the period of the lease. Leasehold estates usually involve long-term leases, ranging from 20 to 99 years. Land owners are able to have their property developed, with no out of pocket expenses. Instead of having to sell their land too soon, they retain their family's rights to the land, while receiving a steady income stream. The tenant saves the initial land acquisition costs and may gain access to property that would be otherwise unavailable. The downside is, as the lease nears the end or its term, the tenant's investment becomes uncertain, and the landlord is in a position to make demands for compensation, above the fair market price. Legal Description- A description of a specific parcel of real estate which is acceptable to the courts in that state, and which will allows an independent surveyor to locate and identify it. Lessee- Tenant leasing property. Lessor- One who leases property to a tenant. Leverage- The use of borrowed funds to finance an investment and to magnify the rate of return. Lien- A monetary claim against a property. These should be settled before the sale is finalized. Life Estate- An interest in property only for the duration of someone's life. Life Tenant- One who has a life estate in real property. Lis Pendens- A notice indicating that legal action is pending on a property. Listing Agreement- The legal agreement between the listing agent/broker and the vendor, setting out the services to be rendered, describing the property for sale, and stating the terms of payment. Littoral Land- Land bordering on the shore of a sea or ocean and thus affected by the tide currents. Loan-to-Value Ratio (LTV)- The ratio of the amount being loaned in respect to the appraised value of the property, usually expressed as a percentage. If a buyer was putting down $20,000, and borrowing a first lien of $180,000, on a $200,000 property, then the loan would have a 90% LTV. Lock or Lock In- A commitment you obtain from a lender assuring you a particular interest rate or feature or a definite time period. Provides protection should interest rates rise between the time you apply for a loan, acquire loan approval, and, subsequently, close the loan and receive the funds you have borrowed. Manufactured Home- A structure built in a factory, that is later shipped to, and placed on, the home site. The term can apply to both mobile homes and pre-fab homes. Margin- An amount, usually a percentage, which is added to the index to determine the interest rate for adjustable rate mortgages. Marginal Land- Property which is barely profitable to use. Marketable Title- Good or clear title reasonably free from risk of litigation over possible defects; also referred to as merchantable title. Marketable title need not, however, be perfect title. Market Approach to Value- An estimate of value based on the actual sales prices of comparable properties. Market Value- The price that a willing buyer and a willing seller, both given full information, and neither under pressure to act, would agree upon. Mechanic's Lien- A legal claim placed on real estate by someone who is owed money for labor, services or supplies contributed to the property for the purpose of improving it. Typical lien claimants are general contractors, subcontractors and suppliers of building materials. Mediation- A dispute resolution method designed to help warring parties resolve their own dispute without going to court. In mediation, a neutral third party (the mediator) meets with the opposing sides to help them find a mutually satisfactory solution. Unlike a judge in her courtroom or an arbitrator conducting a binding arbitration, the mediator has no power to impose a solution. No formal rules of evidence or procedure control mediation; the mediator and the parties usually agree on their own informal ways to proceed. Mineral Rights- An ownership interest in the minerals contained in a particular parcel of land, with or without ownership of the surface of the land. The owner of mineral rights is usually entitled to either take the minerals from the land himself or receive a royalty from the party that actually extracts the minerals. Minimum Payment- The minimum amount that you must pay, usually monthly, on a home equity loan or line of credit. In some plans, the minimum payment may be "interest only,". In other plans, the minimum payment may include principal and interest. Mobile Home- A type of manufactured home, that is transported to the home site using wheels attached to the structure. Month-to-Month Tenancy- A rental agreement that provides for a one-month tenancy that is automatically renewed each month unless either tenant or landlord gives the other the proper amount of written notice (usually 30 days) to terminate the agreement. Some landlords prefer to use month-to-month tenancies because it gives them the right to raise the rent after giving proper notice. This type of rental also provides a landlord with an easy way to get rid of troublesome tenants, because in most states month-to-month tenancies can be terminated for any reason. It is also common for leases to revert to month-to-month tenancies at the end of the original lease period, if another lease has not been signed. Monument- A fixed object or point, either natural or man-made, used in making a survey. Mortgage- A contract providing security for the repayment of a loan, registered against property, with stated rights and remedies in the event of default. Lenders consider both the property (security) and financial worth of the borrower (covenant) in deciding on a mortgage loan. Mortgage Banker- Originates mortgage loans, loaning you their funds and closing the loan in their name. Mortgage Broker- A person or company having contacts with financial institutions or individuals wishing to invest in mortgages. Mortgage Loan- A loan which utilizes real estate as security or collateral to provide for repayment should you default on the terms of your loan. Mortgagee- The lender in a mortgage loan transaction. Mortgagor- The borrower in a mortgage loan transaction. Multiple Listing Service (MLS)- A system by which a number of real estate firms share information about homes that are for sale. Membership usually provides a monthly computer service that provides real estate agents and brokers with detailed listings of most homes currently on the market. Negative Amortization- Amortization in which the payment made is insufficient to fund complete repayment of the loan at its termination. Net Lease- A commercial real estate lease in which the tenant regularly pays not only for the space but for a portion of the landlord’s operating costs as well. When all three of the usual costs--taxes, maintenance and insurance--are passed on, the arrangement is known as a "triple net lease." Because these costs are variable and almost never decrease, a net lease favors the landlord. Nonconforming Use- A permitted use which was lawfully established and maintained but which no longer conforms to the current use regulations because of a change in the zoning. Note- A written instrument of credit attesting to a debt and promise to pay. Notice of Default- A notice to a defaulting party that there has been a default, usually providing a grace period in which to cure the default. Novation- The substitution of a new obligation for an old one; substitution of new parties to an existing obligation, as where the parties to an agreement accept a new debtor in place of an old one. Nuisance - Conduct or activity which results in an actual physical interference with another person's reasonable use or enjoyment of his property for any lawful purpose. Obsolescence- A loss in value of real property caused by changes either internal or external to the property. Offer- A proposal to enter into an agreement with another person. An offer must express the intent of the person making the offer to form a contract, must contain some essential terms--including the price and subject matter of the contract--and must be communicated by the person making the offer. Open House- An opportunity for prospective buyers to view a house in a low pressure environment. Open Listing- A listing under which the principal (owner) reserves the right to list his property with other brokers. Opinion of Title- An opinion by a person competent in examining titles, usually a title attorney, as to the status of the title of a property. Option- The right to purchase property within a definite time at a specified price. There is no obligation to purchase, but the seller is obligated to sell if the option holder exercise the right to purchase. For the option to be valid, it must include consideration. Option Fee- An amount of money paid by a prospective buyer, to a seller, in order to obtain an option period. If a buyer decides to close on the property, the option fee may be credited to his funds at closing. Option Period- During this period, the length of which is negotiable, the buyer has a right to inspect the property and has a right to terminate the offer/contract for any reason, without penalty. In exchange for this option period, the buyer pays an option fee to the seller Ordinance- A law adopted by a town or city council, county board of supervisors or other municipal governing board. Origination Fee- A fee charged by lenders, in addition to interest, for services in connection with granting of a loan. Usually a percentage of the loan amount. Over Improvement- An improvement which by reason of excess size or cost is not the highest and best use for the site on which it is placed. Party Wall- Wall erected on line between adjoining properties for the use of both properties. Patio Home- A single-family home that sits on a small lot, often with one outside wall of the structure sitting on the property line. Patio homes have no common structural walls with adjoining properties, but their zero lot line wall may form part of their neighbors backyard fence/wall. These properties often have a small back or side yard large enough for a patio or garden area. Also known as a garden home. Percentage Lease- Lease in which all or part of rental is a specified percentage of gross income from total sales made upon the premises. Personal Property- Property which is tangible, movable, and not fixed to the land. Physical Deterioration- The loss of value to real property from all causes due to the action of the elements and old age. PITI- Principal, Interest, Taxes and Insurance. Plat Book- A record of recorded subdivisions of land. Points- Fees paid to induce lenders to make mortgage loans at a particular interest rate. Each point is equal to one percent (1%) of the loan principal. Power of Attorney (POA)- A written authorization by a person to another person to act for him on his behalf. Prepayment- Paying off all or part of the mortgage before the scheduled date. Prepayment Clause in a Mortgage- Statement of the terms upon which the mortgagor (borrower) may pay the entire or stated amount on the mortgage principal at some time prior to the due date. Prepayment Penalty- A fee paid to the lending institution for paying a loan prior to the scheduled maturity date. Primary Mortgage Market - Lenders who originate loans and makes funds available directly to the borrowers. Prime Rate- The interest, or discount rate charged by a commercial bank to its largest and strongest customers. Principal- The amount of money owed to the lender not including interest. Principle of Conformity- An appraisal principle which holds that the maximum value is realized when a reasonable degree of homogeneity (sameness) exists in a neighborhood. Private Mortgage Insurance (PMI)- Default insurance on conventional loans, normally insuring the top 20%-25% of the loan and not the whole loan. Promissory Note- An unconditional written promise of one person to pay a certain sum of money to another, or order, or bearer, at a future specified time. Property Taxes- Taxes that are paid yearly on real property. Property taxes are ad valorem, based on the assessed value of the real property Pro-rate- To divide or distribute proportionally. At closing, various expenses such as taxes, insurance, interest, rents, etc. are prorated between the seller and buyer. Punch List- A discrepancy list showing defects in construction which need some corrective work to bring the building up to standards set by the plans and specifications. Purchase Offer- A document that lists the price, terms and conditions under which a buyer is willing to purchase a property. Qualify- To meet a mortgage lender's approval requirements. Qualifying Ratios- Comparisons of a borrower's debts and gross monthly income. Quiet Enjoyment- The right of a property owner or tenant to enjoy his or her property without interference. Quitclaim Deed- A deed that transfers whatever ownership interest the transferor has in a particular property. The deed does not guarantee anything about what is being transferred, including an actual ownership interest. A quit claim deed may also be used to clear up a cloud on the title to the property in cases where there is a question of a possible ownership claim. Ready, Willing and Able- A buyer who is prepared to buy on the seller's terms and has the financial capacity to do so. Real Estate- Refers to land and improvements and the rights to own or use them. Real Estate Board- A non profit organization representing local real estate agents/brokers and salespeople, which provides services to its members and maintains and operates the Multiple Listing Service in the community. Real Estate Agent- A person licensed to negotiate and transact the sale of real estate on behalf of the property owner. Real Estate Appraiser, licensed- A person licensed to legally appraise real estate property for a fee. Real Estate Inspector, licensed- A Licensed Real Estate Inspector is someone who is licensed and who holds himself out to the public as being trained and qualified to inspect property. Real Property- Refers to the right to own land and improvements. Commonly used interchangeably with real estate and realty. REALTOR®- A real estate broker or an associate who holds active membership in a local real estate board that is affiliated with the National Association of Realtors®. Realty- Refers to land and buildings and other improvements from a physical standpoint. Recording- The act of entering in the public records, the written record of title to real property, thereby giving constructive notice to the public. Refinancing- To apply for a new mortgage in order to gain better terms, usually either a lower interest rate or a different principal amount. Release- To relinquish an interest or claim to a piece of property. Remainder- The future interest in an estate which takes effect after the termination of another estate, such as a life estate; what is left at the termination of a life estate. Reserves- Amounts of money set aside by a mortgage company to assure payment of property taxes, homeowners' association dues, and insurance premiums. The money is kept in an escrow account Reservation- A right reserved by a grantor in the sale or lease of a property. In a sale, the title of all property passes to the grantee, but the use may be reserved for the grantor. RESPA - Real Estate Settlement Procedures Act is a federal law which deals with the procedures to be followed in a real estate closing, and is intended to make borrowers more knowledgeable about possible costs and charges. Restrictions- Limitations on the use or occupancy of real estate contained in a deed or in local ordinances pertaining to land use. Right of Survivorship- The right of a surviving joint tenant to take ownership of a deceased joint tenant's share of the property. Right-of-Way- The right or privilege, acquired through accepted usage or by contract, to pass over a designated portion of the property of another. Riparian Owner- One who owns land bounding upon a river or water course (stream, creek, bayou, etc.). Running With the Land- A phrase used in property law to describe a right or duty that remains with a piece of property no matter who owns it. Sales Contract- A written agreement stating the terms of the sale agreed to by both buyer and seller. Secondary Mortgage Market- Buying and selling of existing mortgage loans, designed to provide additional liquidity for lenders. Security Deposit- A payment required by a landlord to ensure that a tenant pays rent on time and keeps the rental unit in good condition. If the tenant damages the property or leaves owing rent, the landlord can use the security deposit to cover what the tenant owes. Security Interest- An interest that a lender takes in the borrower's property to assure repayment of a debt. Self Amortized Loan- A loan which will retire the debt by systematic payments of principal and interest, so that at the end of the loan period, the balance will be zero. Servicing a Loan- The ongoing process of collecting your monthly mortgage payment, including accounting for and payment of your yearly tax and/or homeowners insurance bills. Setback- The distance a building must be set back from the property lines in accordance with local zoning ordinances or deed restrictions. Shared Equity Mortgage- A home loan in which the lender gets a share of the equity of the home in exchange for providing a portion of the down payment. When the home is later sold, the lender is entitled to a portion of the proceeds. Short Sale (of house)- A sale of a house in which the proceeds fall short of what the owner still owes on the mortgage. Many lenders will agree to accept the proceeds of a short sale and forgive the rest of what is owed on the mortgage when the owner cannot make the mortgage payments. By accepting a short sale, the lender can avoid a lengthy and costly foreclosure, and the owner is able to pay off the loan for less than what he owes. Simple Interest- Interest computed only on the principal balance. Single-Family Home- A free-standing, residential structure, designed to accommodate one family. Special Warranty Deed- A warranty deed which, instead of warranting the title from sovereignty of the soil to the last grantee, merely warrants the title against every person whomsoever lawfully claiming or to claim the same, or any part thereof, by, through or under the grantor. Specific Lien- A claim that only applies to or affects a certain property or group of properties. Specific Performance- Carrying out of the precise terms agreed upon in a contract. Statute of Frauds- The law which requires among other things, that all contracts transferring real estate, or for the leasing of property for over one year, must be in writing to be enforceable. Subject to Mortgage- The buyer of an already mortgaged property makes the payments, but does not take personal responsibility for the loan. Should the mortgage be foreclosed and the property sold for a lesser amount than is owed, the grantee-buyer is not personally liable for the deficiency, but the grantor-seller is liable. Sublease- A rental agreement or lease between a tenant and a new tenant (called a sub-lessee) who will either share the rental or take over from the first tenant. The sub-lessee pays rent directly to the tenant. The tenant is still completely responsible to the landlord for the rent and for any damage, including that caused by the sub-lessee. Succession- The passing of property or legal rights after death. The word commonly refers to the distribution of property under a state’s intestate succession laws, which determine who inherits property when someone dies without a valid will. Suit for Specific Performance- A legal action brought by either a buyer or a seller to enforce performance of the terms of a contract. Survey- The process by which boundaries are measured and land areas are determined; the on-site measurement of lot lines, dimensions, and position of houses in a lot including the determination of any existing encroachments or easements. Tenancy by the Entirety- A special kind of property ownership that's only for married couples. Both spouses have the right to enjoy the entire property, and when one spouse dies, the surviving spouse gets title to the property (called a right of survivorship). Tenancy in Common- A type of ownership in which two or more people have an undivided interest in property, without the right of survivorship. Upon death of one of the owners, his/her interest passes to his/her heirs or devises. Tenant- Anyone, including a corporation, who rents real property, with or without a house or structure, from the owner. Tenement- Everything that may be occupied under a lease by a tenant. Term- The actual life of a mortgage, at the end of which the mortgage becomes due and payable unless the lender renews the mortgage. Time Is of the Essence- A clause, which if included in a contract, makes failure to perform by a specified date a material breach or violation of the contract. Timeshare- An arrangement under which a purchaser receives an interest in real property and the right to use an accommodation or amenities, or both, for a specified period and on a recurring basis. Used primarily for selling vacation properties. Title- The right of ownership of a property. Title Company- A company that provides title insurance policies. Title Insurance- Protection for lenders or homeowners against financial loss resulting from legal defects in the title. Title Search- Checks all the records relating to the property to determine whether the seller can sell the property, and can do so free of liens. Title Theory State- The system in which the lender has legal title to the mortgaged property and the borrower has equitable title. Townhouse- A dwelling unit usually with two, three or four floors, and shared structural walls. Trustee- One who as agent for others handles money or holds title to their land. Underwriting- The process of verifying data and approving a loan. Unilateral Contract- A contract in which one party makes an obligation to perform without receiving in return any express promise of performance from the other party, such as an open listing contract, where the seller agrees to pay a commission to the first broker who brings in a ready, willing and able buyer. Useful Life- That period of time over which an asset, such as a building, is expected to remain economically feasible to the owner. Usufruct - The right to use property--or income from property--that is owned by another. Usury- Charging more than the rate of interest allowed by law. VA- The Veterans Administration, a federal agency which guarantees loans made to qualified veterans on approved property. Variable Rate- An interest rate that changes periodically in relation to an index. Payments may increase or decrease accordingly. Variance- An exception to a zoning ordinance, usually granted by a local government. For example, if you own an oddly shaped lot that could not accommodate a home in accordance with your city's setback requirement, you could apply at the appropriate office for a variance allowing you to build closer to a boundary line. Vendee- Purchaser Vendor- Seller. View Ordinance- A law adopted by some cities or towns with desirable vistas--such as those in the mountains or overlooking the ocean--that protects a property owner from having his or her view obstructed by growing trees. View ordinances don't cover buildings or other structures that may block views. Virtual Home Tour- Any method used to provide internet users with a graphical presentation of a home, or homes. Void- Having no legal force or effect; legally invalid. Voidable- A contract which appears valid and enforceable on the surface, but may be declared invalid by one of the parties, such as a contract entered into by a minor. Waiver- The intentional or voluntary relinquishment of a known claim or right. Walk Through- (A) A Buyer's on-site inspection of the property being purchased, just prior to closing. (B) A detailed inspection of a new construction home, in which punch list and cosmetic items are addressed, prior to final acceptance. Warranty Deed- A type of deed that contains express assurances about the legal validity of the title being transferred. Writ of Execution- A court order which authorizes and directs the proper officer of the court (usually the sheriff) to carry into effect the judgment or decree of the court. Zero Lot Line- A term generally used to describe the positioning of a structure on a lot so that one side rests directly on the lot's boundary line (no set back). Zoning- Exercise of police power of city in regulating and controlling the character or use of property. Zoning laws divide cities into different areas according to use, from single-family residences to industrial plants. Zoning ordinances control the size, location, and use of buildings within these different areas. |
Copyright ©
2006 Raleigh NC Properties. All Rights Reserved.